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Swot analysis eyewear industry

08/01/2021 Client: saad24vbs Deadline: 14 Days

SITUATIONAL ANALYSIS


for Luxottica Group SpA


Group 25: Gurinder Singh, Josielene Avelar, Karo Jarajian Muhammad Asad, Nick Kerobyan, and Sarah Joynt


Abstract The Luxottica Group SpA, established in 1961, identifies itself as “a global leader in the design, manufacture


and distribution of fashion, luxury, and sports eyewear with high technical and stylistic quality." The company’s greatest success is attributed to its ever expanding vertically integrated business model.


However, this is proving to become a double edged sword for the glasses giant as continued speculation of its impropriety over monopolistic practices, price gauging, and breech of fair international trade


practices persists in the media. This analysis seeks to provide a systemic collection of past and present data on the company’s performance in an effort to critically access any market trends, forces, conditions


and influences that are most likely to impact suitable future marketing strategies.


TABLE OF CONTENTS Executive Summary.............................................................................................................................................. 1


Company PROFILE................................................................................................................................................ 2 Missions, Strategies and Objectives ........................................................................................................... 4


Competitors ............................................................................................................................................................. 5 Competitor SWOT Analysis for Frames Direct (FD) ........................................................................... 5


Frames Direct strengths: ............................................................................................................................... 5


Frames Direct Weaknesses: .......................................................................................................................... 6


Frames Direct Opportunities: ...................................................................................................................... 6


Frames Direct Threats: ................................................................................................................................... 7


Competitor SWOT Analysis for Warby Parker (WP) .......................................................................... 7


Warby Parker Strengths: ............................................................................................................................. 7


Warby Parker Weaknesses: .......................................................................................................................... 8


Warby Parker Opportunities: ...................................................................................................................... 8


Warby Parker Threats: ................................................................................................................................... 8


Gaps in The Market & Trends at Industry Level: .................................................................................. 9


Customers ................................................................................................................................................................ 9 Costumer Characteristics .............................................................................................................................. 9


Market size and Potential Growth ........................................................................................................... 10


Costumer Wants and Needs ...................................................................................................................... 11


Distribution Channels .................................................................................................................................. 11


Motivation to buy the product .................................................................................................................. 11


LUXOTTICA GROUP S.p.A: SWOT Analysis ............................................................................................... 11 Luxottica Internal Strengths: .................................................................................................................. 12


Luxottica’s Internal Weaknesses ............................................................................................................. 13


Luxottica’s External Opportunities ......................................................................................................... 14


Luxottica’s External Threats ..................................................................................................................... 14


The Future: Marketing & Product Objectives ......................................................................................... 14 Current Market ............................................................................................................................................... 15


New Product Recommendation ............................................................................................................... 15


Target Market.................................................................................................................................................. 16


Perceptual Mapping Studies by Subcategory ..................................................................................... 17


Works Cited .......................................................................................................................................................... 18


1 | P a g e


EXECUTIVE SUMMARY The Luxottica Group S.p.A (Lux.) dominates the ever expanding eyewear market as the single


largest private sector producer worldwide. The company specializes in all things eyewear;


mostly sunglasses and prescription lenses/frames, however they also recently began


dabbling in vision care insurance (Marketline, 2016). The company experienced immediate


post-launch success and became the go-to source for all things eyewear, quickly spreading


their tentacles across international boundaries. Now they hold a supermajority of the


eyewear market globally. Given that Global Market Insights predicts the “Eyewear Market


Size [is] forecast to reach USD 165 Billion by 2022,” the future looks very bright for Lux.


(Global Market Insights, 2016). Subsequently, the company is ideally poised to take


advantage of this prediction and rests at a juncture where critical market analysis to identify


which market segments Lux. will target, in addition to a marketing plan that ensures their


slice of this future growth is secured, is a timely matter.


While the Lux. storyline may be that it is the quality of the glasses they produce, and their


ability to “make people feel good about themselves” that has played a major role in


company’s success ("Company Profile", 2016). There appears to be another more prominent


reason why Luxottica wields so much influence in the eyewear market. More succinctly, it is


because none of their products are marketed under the Luxottica brand. This means the bulk


of the company’s eyewear product consumers have never heard the name "Luxottica" before.


In many ways, this has shaped the firm’s growth because it has shielded the public’s


awareness from the advantages, Lux. enjoy as an oligopoly at best – monopoly at worst.


Even Lux. assert their current success and “One of the competitive advantages underpinning


the Group’s past and future successes” is attributed to the goals met by this broad reaching


2 | P a g e


vertically integrated business model it “has built over the decades.” A model which they


intend to continue building on ("Company Overview", 2016).


This observation is wildly accurate when the vast array of well-known individual subsidiary


brands (SBU’s) that Lux. produces is taken into account. By implementing the complex set of


licensing agreements, global distribution networks, retail stores, and e-retail platforms it


gives the appearance each are in competition with one another (Marketing, 2013). The


brilliance of this business model has proven to be very profitable for Lux. as they can


effectively set the prices across all segments of the eyewear industry. On the other hand, this


pricing practice has started to undermine the firm’s reputation. Outside forces such as


competitors fighting for market share by undercutting on price, a steady stream of bad press


on Lux., and an antitrust ligation suit raised in France about unethical pricing practices in the


European Union (EU) are proving to be threats that must be monitored.


Best marketing practices would suggest that the more exciting and innovative Lux’s new


product developments are -- products that truly exemplify “value-added benefits” to the


user, then the easier the high-price positioning becomes to overlook. By supporting these


must-have product releases with effective marketing initiatives that demonstrate corporate


social responsibility, such as the expansion of Lux's “Onesight” charitable program, then the


more likely Lux. can overcome the taint of these niggling unethical practices and continue


beating-out their rapidly rising competitors (Axelrad, 2009).


COMPANY PROFILE


Established in 1961 by Leonardo Del Vecchio, in Agordo Italy, Lux are responsible for;


designing, manufacturing, distributing, and retailing fashion, luxury, sports, and specialty


prescription and performance enhancing eyewear products. It is widely published that their


3 | P a g e


reputation is based on an assurance of quality across their diverse product lines. As stated


on their company website “One of the Group’s competitive advantages is the vertically


integrated business model built over the years, covering the entire value chain: design,


product development, manufacturing, logistics, and distribution” ("Company Profile", 2016).


While Lux. cannot not attribute its successes to manufacturing anything under its own label,


it carries a plethora of renowned branded eyewear lines. Including, but not limited to; in-


house brands such as; Ray-Ban, Oakley, and Persol, Vogue, Arnette, Killer Loop, Revo,


Sferoflex, and T3. They also produce multiple high-end private labels under license for top


designers like; Armani, Chanel, Ferragamo, Bulgari, Byblos, Genny, Ungaro, Moschino, Anne


Klein, and more. But they don’t stop there..., the Lux. network is spread out over; 29


company-owned branches and 90 independently operated branches, that supplies the


company’s product “to more than 115 countries. They are complemented by an extensive


retail network of over 7,200 stores, with LensCrafters and Pearle Vision in North America,


OPSM and LensCrafters in Asia-Pacific, GMO in Latin America and Sunglass Hut worldwide.”


Luxottica’s product design, “development and manufacturing take place in its production


facilities in Italy, three factories in China, one in Brazil and one facility in the United States


(US) devoted to sports and performance eyewear. Luxottica also has a small plant in India


serving the local market” ("Company Profile", 2016).


If that is not enough, Luxottica not only owns retails stores in the US, such as the as the


aforementioned Sunglass Hut, Lenscrafters, etc., it also owns the insurance companies that


approve the optical glasses of people purchasing their prescription glasses in-store. Thus it


logically follows that an article Luxottica’s Success Story cites; “Luxottica is the largest


provider of eyewear and sunglasses in the world…. It controls more than 80% of the world’s


4 | P a g e


leading eyewear brands” (2016). Owning 80% of the world's eyeglasses market could be


considered monopolizing the eyewear business by any reasonable business standard.


Missions, Strategies and Objectives


In the establishment of their missions and goals, the company identifies their mission is to


“improve the well-being and satisfaction of its customers while simultaneously creating


value for its employees and the communities in which the group operates.” An ethically


sound rather "utilitarian-approach," but one that would appear to be at odds with current


public opinion considering the recent bad press for price issues and the ongoing antitrust


action. Such external threats could potentially overshadow Lux’s stream of success if they


continue to build momentum. A disparity best shut-down quickly to regain consumer


confidence and meet Lux’s core objectives. Which is to make their customers a priority by


seeking to identify what customers prefer at work and at-play, then delivering the most


innovative highest quality version of that ideal to the end-consumer (Luxottica Group, 2016).


To meet these objectives “the company’s strategy is to continue to expand in the eyewear


and eye care sector by growing its various businesses, whether organically or through


acquisitions” ("Company Overview", 2016). When initiating the development of their


products they research and purchase quality parts that will deem the final product a success


when presented to consumer audiences. In an article written by Lux representative, Localita


Valcozzena, she states; “We at Luxottica aim at protecting the eyes and enhancing the faces


of men and women all over the world, by manufacturing and selling ophthalmic eyewear and


sun wear characterized by their high technical and stylistic quality, in order to maximize our


customers' wellbeing and satisfaction” ("Company Overview", 2016).

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