Public Relations: Source of Competitive Advantage in the Fashion and Luxury Goods Industry

The aim of this work is the analysis of activities and processes of public relations in the fashion and luxury goods industries.
This subject is examined from a theoretical perspective from the resource -based approach to the strategic formulation, with the objective of proving the contribution of PR activities to the creation of intangible resources, and consequently long-term competitive advantage. Corporate image and brand are the key factors in companies’ success; thus all the activities that support them are essential to build up sustained advantage. The objective of this thesis is to prove the weight of public relations in this context and the elements necessary to strategically manage this tool. The research has been conducted through literature review and the analysis of qualitative data provided by the Diesel and LVMH press office.
Brand image is one of the key elements behind the success of Diesel and Tag Heuer (part of the LVMH group) that, since the beginning, have undertaken a policy oriented to the exploitation of all the resources available for the enrichment of the brand.
Both companies share the same approach towards technological innovation and its application in all the sectors, from the product to corporate organization, logistic and distribution.
Innovation is also found in their way of communicating the brand to the public. Diesel is the symbol of eye catching and strong advertising campaigns; Tag Heuer is synonym of precision and omnipresent in the world of sports and action films. The first chapter is an introduction to the work, the methodology used and the objectives. The second chapter introduces the resource-based approach applied to corporate strategy, for which the primary sources of competitive advantage are resources and competencies owned by firms, and there are fundamental to secure sustained success.
Following the description of Porter’s model (1980) for the industry analysis the attention is focused to the VRIO model ideated by Barney (1997), created to identify, among the resources and competencies of a firm, those that are able to ensure sustained competitive advantage since they are difficult to imitate by competitors.
Difficult imitability is one of the main characteristics owned by intangible assets. Such assets can be of knowledge and trust, their key feature is the ability to self-increase their value.
The third chapter analyses the three fundamental intangible assets: corporate culture, image and brand. Relatively to the latter, the brand equity and its dimensions: knowledge (brand awareness, brand identity and brand image), loyalty and relations are analysed.
The fourth chapter is all about public relations. It defines the role of PR in the internal environment of firms and, following the examination of the marginal importance given to this practice by traditional marketing; it presents the provocative theory developed by Ries and Ries (2002), according to which the most important contribution in marketing communication for the development of the brand is given by PR and not advertising, as traditionally assumed.
Furthermore, subsequently to the comparison between PR and advertising and the analysis of limits and qualities, there is a paragraph regarding the evaluation of PR activities. The final part of the chapter includes two case studies: the sponsorship at LVMH group, and in particular the case of Tag Heuer; and an in-depth analysis of Diesel and its PR network. The first case begins with an introduction of LVMH and a brief presentation of Tag Heuer and its history. The focus is then shifted to the sponsorship that enforced the brand image through the years and the most recent collaborations in the sport and cinema industry.
The Diesel case study begins as well with a presentation of the company, history and development, followed by the analysis of the elements that have contributed to the growth of the brand since the early years: the founder, the advertising communication and distribution network. Then, the last part is focused on the organizational structure of PR departments and their position in the corporate organization chart, with the description of the activities carried out by each department and the contribution given for the creation of competitive advantage. The final chapter is a review of the observations emerged in the analysis of the cases and their relation with the issues discussed in the initial chapters.