This research proposal is objectively aimed at understanding all the hurdles currently experienced by Ed Hardy in expanding their business in India. The business organization with intent to expand in different market entered India in the year 2007 as part of its expansionist policy to explore the commercial viability of the market objectively aiming at high profitability (Khilnani 2009).
In the year 2002, Ed Hardy who initially commenced his career as a tattoo artist entered into an agreement with Ku USA, Inc. to carry out and market a clothing line with the basis of his tattoo art design which was extraordinarily popular in the U.S.A. In a span of just two years, the international corporate giant Saks expressed interest in Ed Hardy clothing line. Hardy and Ku USA created the Hardy Life LLC, an organization possessing trademark ownership in addition to copyrights to all of Ed Hardy’s images.
Christian Audigier entered the Ed Hardy scenario in 2004 gaining rights for the clothing line production based on the artistic designs of Ed Hardy. Ed Hardy in today’s day and age has a commanding global position with outlets in New York, Los Angeles, Seattle, Honolulu, the Gulf Nations and India.
Iconic Brand Group made an acquisition of 50% of shares in Hardy Way, LLc. Iconic Brand Group made a payment of $ 17 million for major share in the Hardy Way as it estimates sales revenue to be to the tune of approximately £110 million by 2011.
Ed Hardy is undoubted recognized as an organization of high repute with its product lines having immense popularity especially among the younger generation. In European nations such as the U.K., U.S, Germany and France, the organization commands a high market share as its varied line of products such as t-shirts, shirts, shoes, belts and deodorants are highly consumed by the consumers. The organization has branches globally and has recently set up branches in India. (Chaudhari 2009)
India as a market is attracting a great number of Multinational as the high populace makes provision for a ready market for the merchandise dispatched for sale. Though Ed Hardy has numerous outlets at strategic consumer locations in India especially Mumbai that is the capital centre of the country, the business is primarily plagues with issues relating to counterfeiting. (Kotler 2007)
This decision for conduct of this research was essentially taken to highlight the issues faced by Ed Hardy. This brand has been a victim to Counterfeit Branding. Counterfeit Branding is highly prevalent in countries like India and China and these results in economic losses to the respective governments by way of taxes and the business are affected in terms of profitability. Ed Hardy T-shirts which are a rage amongst the college-going consumer and young adults commence at a pricing range of approximately Rs 1000 (20 USD) which is relatively on the higher side in terms of pricing. The pricing, though is not directly a contributing factor for the declining sales of the brand, counterfeiting of Ed Hardy products cause a massive impact on the sales and consequently the revenue (Keller 2007).
http://www.bestshoeswomen.com/images_products/Ed_Hardy_Original_Lowrise_100_Women_Shoes_Sneakers.jpg http://www.celebrityclothingline.com/wordpress/wp-content/uploads/2009/12/Ed-Hardy-Tshirt-Beautiful-Ghost-Graphic-Original-62-4499.JPG http://eleven.se/files/w/wallet-black-1_250x250.jpg http://www.funkytrend.com/wp-content/uploads/2009/02/ed-hardy-true-love-belt-thumb.jpg http://www.clothingcheapprice.com/images_products/Ed_Hardy_Emerald_City_Elphaba_Tote.jpg http://www.newwavefragrances.com/images_up/1239994301_art_EH-M-LINESHOT-450x400.jpg
Comparative Analysis of the Ed Hardy’s original and counterfeit products: http://www.revolveclothing.com/Brands.jsp?c=Ed+Hardy&sc=Shoes
Ed Hardy Product Line
Original
£ (Pounds)
Counterfeit
£ (Pounds)
Pricing Difference
£ (Pounds) (Approximately)
1
T-Shirts
26
6
20
2
Shirts
31
2
29
3
Converse Shoes/Heels
65
12
53
4
Belts
25
5
20
5
Wallets/Purses
60
7
53
6
Handbags
265
25
240
7
Perfumes
109
10
99
Ed Hardy commenced its retail chain at Mumbai, India in 2007 and has in continuity reported declining sales for the last three financial years citing counterfeiting issues as the primary reason for the failure of the brand to succeed in the Indian market. There is a huge pricing difference between the original and counterfeit product leading prospective consumers to continue the purchase of counterfeit products. The counterfeit products are reported almost similar to the original in terms of design, dimensions and labeling but lacks quality of the original yet it this factor does not prove to be discouraging for consumer who continue to patronize counterfeit Ed Hardy products. Ed Hardy, Nike, Rolex, Louis Vuitton, Dior, Yves St Laurent, Prada, Hermes and Cartier are generally the brands that are highly counterfeited. These brands have not reported higher profits in the last several years. (Simon 2005)
Year
Sales Revenue (Pounds)
1
2007
40 million pounds
2
2008
28 million pounds
3
2009
10 million pounds
The above table is clearly indicative of a constant and steady decline in the sales of the Ed Hardy Mumbai Outlet wherein at the first year of establishment of the outlet the reported sales was at 40 million pounds which declined to 28 million pounds and finally to 10 million pounds in the accounting year of 2009 (Kumar 2009).
Anti-counterfeiting laws and legislations though in existence have not been strictly imposed. The ACTA Act which is an Anti-Counterfeiting Trade Agreement Act between global trading nations of the world such as U.S.A. , U.K., Japan, France, India and many Asian countries has been ineffective in reducing if not totally eliminating the production and sale of counterfeit products. Counterfeit products in India are a booming industry which is crippling the economy and business ventures of especially fashion brands such as Ed Hardy. The Indian Judicial System is not as stringent and enforceable as the European counterparts. Strict punitive action is not taken against individual or firms indulging in counterfeiting reputed brands and hence this activity continues to flourish cause huge financial losses for organizations such as Ed Hardy and many more that have invested highly in the Indian market in terms of setting up retail outlets, promotion and advertising and all related expenditure. (Hakan 2009)
At times there have been recorded cases of legal action taken against offenders who are let off after an imposition of a penalty charge which is very minimalistic defeating the very purpose of the exercise. (Nayadu 2009)
India is generally characterized as a cost conscious economy with the general tendency of the consumers to buy or patronize products which are specifically low on cost. Quality of the product is a second consideration after the pricing factor of the product. Hence, international fashion brands such as Ed Hardy target a certain market segment which is the upper middle class wherein affordability of the product does not pose a problematic issue. This results in a narrowed target market segment. This segment would have issues in buying the high priced Ed Hardy product but with counterfeit Ed Hardy products flooding the market, the credibility of the original product is at stake as its exclusiveness is lost in the market of this product. The consumers that cannot afford the original product line of Ed Hardy turn to counterfeit substitutes to gain satisfaction of possessing the product and this has a negative effect on the limited market segment consumers of Ed Hardy as the novelty of the product is lost. (Puri 2009)
Besides high level counterfeiting of Ed Hardy product, the business House faces severe competition from other popular and well established brands such as Levis, Spykar, Adidas, Nike, Louis Phillip and many more that entered the Indian Market several years ago and have successfully gained good market prominence. These brands are well aware of the price conscious mentality of the Indian consumer and constantly indulge in competitive pricing strategies and promotional techniques to increase sales and subsequent profitability. Ed Hardy being relatively new in the Indian Market Scenario is hence confronted with hurdles in this form of excess competition thereby retarding growth and progress in the process. (Armstrong 2005)
The Government of India taxation policies toward FDI (Foreign Direct Investment) especially of luxury brands is comparatively and competitively high thereby creating a need for such multinational business organizations such as Ed Hardy to have higher sales to sustain themselves in the Indian market and grow simultaneously. The taxation rates of such brands amount to 40% of the product price which is ultimately borne by the consumer. Such taxation policies towards fashion brands are imposed with the intention to protect local and national entrepreneurs and their businesses form highly popular reputed brands such as Ed Hardy that command a high percentage of clientele globally.
This taxation policy of the Government of India has proven to be a deterrent factor contributing to slack in growth for Ed Hardy. (Keegan 2002)
To understand the obstacles faced by Ed Hardy and strategize ways to counter attack these problems
To identify the hurdles confronted by the Fashion Brand Ed Hardy in business expansion in the Indian Market
To ascertain if the business house been in a progressive state post-commencement in India
To establish what the future business prospects of the organization are
To gain knowledge if the Indian business market scene too competitive for the survival of Ed Hardy
To analyze if the Indian business market scene too competitive for the survival of Ed Hardy
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