Strategic Proposition

executive summary
United Colors of Benetton is part of the Benetton
Group, a renown Italian clothing manufacturer, wholesaler and retailer. Operating its sub-brands - United
Colors of Benetton, Undercolors of Benetton, Sisley,
and Playlife - on a global scale with a sales network of
over 6.500 stores in 120 countries, the Group generated a total turnover amounting to €2.032bn in 2011.
Under the Benetton umbrella, the Group offers an
extensive product mix to a broad array of consumers. Even though their product range became more
diverse throughout the past decade, United Colors of
Benetton has always stayed true to their distinctive
feature - colour.
In an international context complicated by economic
uncertainty and the slowdown in consumption in the
brands major markets, Benetton will take the steps
necessary in order to revive its former position of being a top-of-mind brand: United Colors of Benetton
will not only build on its strengths but by determinately addressing its weaknesses and effectively taking
advantage of its opportunities, Benetton will regenerate itself as a globally perceived ‘must-have‘ brand.
The two strategic focus points - ‘value connection‘
and ‘re-direct retail-led consolidation‘ - are part of
a strategic set-up built on five building blocks to effectively translate corporate decisions on operational
level.
Through a time-bound strategic communication plan,
United Colors of Benetton will re-establish a strong,
sustainable value connection and brand loyalty with
- groups of - consumers. And by adapting a consistent and contemporary form of communication (open
for co-evolution), Benetton will create a coherent, accessible and engaging value proposition of (local) relevance (budget for 2012: €87m).
By re-directing the sales network, United Colors of
Benetton will adopt a dynamic, contemporary and
profitable retail model. Wholesale/ franchise, today
accounting for 76% of total sales against directly operated sales, will be consecutively balanced by the
year ended 2016 (budget for 2012: €59,2m). The focus will lie on strategically relevant key geographical
areas/ cities and under-penetrated markets worldwide in order to increase brand awareness, brand
perception, higher margins and efficient time-to-market operations.
Rolling out an e-commerce platform (multi-channeling) at the beginning of 2013 is the proximate operation within this two-step and will not only leverage
store closures in over-saturated markets, but will increase accessibility and accelerate consumer reach,
accounting for 3% of revenues in the initial business
year (budget: for 2013: €324,700).
Consistency within the translation and implementation of the strategic decisions is key. All objectives
and related goals consider processes on every level
of the business and will be evaluated on the basis of
specific, measurable, achievable, realistic and timebound KPIs. The investment amounting to €172,6m in
2012 (€159,2m in 2013) will be conducted by Edizione
S.r.l., one of the largest Italian holding companies
controlled by the Benetton family itself.
Table of contents
Introduction
4
Strategic Formulation
6
Company Description
9
Operational Plan
Retail-led Consolidation
Franchising
E-Commerce
Value Connection
Communications Plan
14
14
14
16
22
22
Organisational Plan
Organisational Structure
Organisational Changes
28
28
29
Financial Plan
Income Statement
Master-Budget
30
30
31
Balance Score Card
32
Conclusion
35
Appendix
36
References
40
list of figures
Figure 1. Strategic Formulation
6
Figure 2. Value Connection Pyramid
9
Figure 3, Positioning Graph
10
Figure 4. Moodboard Mentality Group
11
Figure 5. Moodboard Existing Consumer
12
Figure 6. Table Target Group
13
Figure 7. Performance Mapping
14
Figure 8. Benetton’s Wholesale - DOS
15
Figure 9. Revenues Europe
17
Figure 10. E-Commerce; Entering Markets
18
Figure 11. First Years Budget E-Commerce
19
Figure 12. Design United Colors of Benetton
Online Shop
21
Figure 13. Visual List Magazines
23
Figure 14. The Colour festival Holi in India
23
Figure 15. Jeremy Scott Fashion - Etro Fasion
24
Figure 16. Collection schedule
26
Figure 17. Plan of Events
27
Figure 18. Organisational Chart
28
Figure 19. Statement of Income
30
Introduction
Our goal is to re-establish United Colors of Benetton as a ‘must-have‘ brand.
Ever-since their foundation in 1965, Benetton‘s story is built on innovation and a universal form of communication, creating both a phenomenon and cultural debate. Benetton’s ‘universal’ communication has become one
of their key characteristics, an approach that has always been part of the company‘s heritage and distinctive
competitive advantage. Receptive to the present time and attentive to the environment, human dignity and
societal change, Benetton‘s approach to differentiation, unfortunately, missed the big picture in recent years!
United Colors of Benetton is part of the Benetton Group, a renown Italian clothing manufacturer, wholesaler
and retailer. Operating its sub-brands - United Colors of Benetton, Undercolors of Benetton, Sisley, and Playlife - on a global scale with a sales network of over 6.500 stores in 120 countries, the Group generated a total
turnover amounting to €2.032bn in 2011. Under the Benetton umbrella, the Group offers an extensive product
mix to a broad array of consumers. Even though their product range became more diverse throughout the past
decade, United Colors of Benetton has always stayed true to their distinctive feature - colour. Their products
include womenswear, menswear, childrenswear and underwear. Their licensed products cover fragrances,
eyewear frames for men, women and children, luggage sets, stationery and home wear.
United Colors of Benetton has lost direction: not only in times of over-expansion, but its over-dependency
on markets that remain to be clouded in an uncertain economic context have slowly put Benetton into an
unfavourable and difficult position. Amid the uncertain economic-outlook, Benetton‘s future determinants will
be the effects of their over-dependency on crisis-ridden Italy (= home market), the European debt crisis and
cost-efficiency of raw materials, their highest expense going forward. Even though the dynamic development
of fast-growing countries outside of Europe indicates the potential of Benetton‘s scope of operations, the
brand‘s strength within growth economies is not high enough to offset the weakness in traditional, Western
markets. More than that, a.o. Benetton‘s weak brand appeal translates into stagnating top-line growth and
depressing margins - turnover has risen less than 2% since 2000, whereas its nimbler competitors increased
revenue sixfold in the last decade (e.g. Zara) (A. Kenna, 2011). If Benetton does not approach a new and longterm visioned strategic direction, the company is going to face severe risks posed from the negative (macroeconomic) outlook.
4
We believe that United Colors of Benetton has the potential to (re-)establish a strong market presence, a high
brand awareness and a sustainable brand loyalty. Being consistent in their strategic approach is key; and not
only by building on the brand‘s strengths but by determinately addressing its weaknesses and effectively taking advantage of its opportunities, Benetton will regenerate itself as a globally perceived ‘must-have‘ brand
(SWOT, Appendix, page 37). Effectively addressing the following (sub-)goals is a prerequisite for a long-term
competitive position:
(1) Re-establish a strong,
sustainable value connection with - groups of - consumers through a viable and
coherent value proposition
Why: A strong brand presence
(brand awareness) and a high
and relevant meaning (being socially involved) leads to a strong
value connection, hence increases brand loyalty (M. Mossinkoff,
2012).
How:
translating
Benetton‘s
brand-DNA (also: identity) and
core values into a coherent, accessible, relatable and understandable communication. Create
the perception of valuable innovation and connection for the consumer - consistency is key
(‘Communications Plan‘ page 22).
(2) Re-connect to the
‘young‘ (market segment)
Why: Consumers feel that United
Colors of Benetton is ‘somewhat
passé‘ (L. Solca, 2011), conveying the perception of both low
product innovation and an outdated, repetitive communication
approach (= no innovation). The
existing consumer (age: 35+) has
aged with the brand. In order to
re-establish Benetton‘s competitiveness on the market, it needs
to address todays ‘young‘ market segment effectively
(‘Mentality Group‘, page 11).
How: By adapting a precise form
of communication and by being open to co-evolution with
the consumer, United Colors of
Bentton will be able to engage
the ‘young‘ consumer and create
(local) relevance (‘Communications Plan‘ page 22 ).
(3) Re-direct the sales
network by approaching a
dynamic and contemporary
retail model
Why: Reforming Benetton‘s retail and sales network (reducing
franchise model) will not only
contribute to higher margins
(top-line growth) but will provide
the flexibility necessary in order
to react efficiently and effectively
to fast-moving consumer tastes.
How: Roll out an e-commerce
platform (multi-channeling) at the
beginning of 2013 and consecutively shift from the dominance of
uncontrolled franchise stores to
directly operated stores (focus:
growth economies)
(‘E-commerce‘; page 16 ‘Franchising‘ page 14).
Scope & Limitations
The strategy brought forward in this paper addresses United Colors of Benetton (further referred to as ‘United
Colors of Benetton‘; ‘Benetton‘; ‘UCB‘), the core brand of the Benetton Group. All decisions made relate
specifically to actions on operational level for UCB. We are aware that decision-making processes - as part of
our strategy - on corporate level and back-office changes for UCB will additionally affect the Benetton Group
including its sub-brands - Undercolors of Benetton, Sisley, Playlife. However, this will not be addressed, if not
inevitable for in depth understandings. Long-term goals cover the years 2012 - 2016, KPIs go as far as 2013
(2 year perspective) and the consolidated financial information includes fiscal 2012-2013.
5
Strategic formulation
Tactics are a pre-dominant tool in today‘s fast-moving world in order to achieve (short-term) goals. It is all
about ‘winning the game against your competitors - now‘, not about achieving excellence (Birnbaum, 2008).
Short-term, incremental change is not about strategy formulation. The following strategy is based on a longterm goal and from there moves backwards by determining the steps needed to reach that goal and considers
strategic decision-making on corporate-, business-unit- and operational level.
Goal: Re-establish Benetton as a ‘must-have’ brand
Strategic Direction: Turnaround
Differentiation
thought based on
M.E. Porter
Value Connection
thought based on
M. Mossinkoff,
Osterwalder&Pigneur,
van Kralingen
5 Strategic Themes
Re-direct
Retail-led Consolidation
thought based
-to parts- on J. Schumpeter, Ansoff
Operational Excellence
thought based on
Treacy&Wiersema
Consistency Principle
thought based
-to parts- on
M.E. Porter
Figure 1.Strategic Formulation
6
The strategic direction of the above illustrated strategy is a company turnaround. The decision is based on
extensive research and analytical outcomes that have
lead to the conclusion that United Colors of Benetton has to: re-focus on its core identity and -values,
re-connect to - groups of - consumers, re-direct its
uncontrolled global over-expansion and re-evaluate
consistency management within the company.
The strategy is based on 5 strategic themes. Effectively and efficiently balancing these five ‘building
blocks‘ will result in the desired outcome: re-establishing Benetton as a ‘must-have‘ brand. The strategy brought forward is not profit driven. Nevertheless,
higher margins, increasing profit and growth will coevolve with the translation of the strategy.
The two highlighted strategic themes - ‘value connection‘ and ‘re-direct retail-led consolidation‘ - are the
major focus points of this paper and their implementation will be evaluated on an operational level.
Value Connection
The goal is to create a strong value connection with
- groups of - consumers through a viable value proposition. Increasing Benetton‘s brand awareness and
creating (local) relevance is key in order to (re-)connect - groups of - consumers to the brand. This in
turn, will lead to higher emotional value, consumer
engagement, a feeling of reciprocation and belonging and eventually to a sustainable brand loyalty (see
‘Communications Plan‘, page 22).
Key words: value connections (M. Mossinkoff); the relation between branding and distribution - from mythical brand to cluster brand (v. Kralingen); emotional
value (Osterwalder&Pigneur)
Re-direct Retail-led Consolidation
The goal is to create an organic sales network which
is dynamic, contemporary and profitable. Creating a
balance between DOS and wholesale/franchise will
not only reduce uncontrolled over-expansion but will
support Benetton in identifying consumer demand,
controlling communication/information flows, reducing time-to-market and accelerating top-line improvement. Focussing on key geographical areas (and under-penetrated markets)worldwide will increase brand
awareness, brand perception and will guarantee the
communication of the desired brand identity and -image. Establishing an e-commerce platform (2013) is
not only an inevitable prerequisite in today‘s time, but
will balance store closures in over-saturated markets
and will provide the possibility to cater to a wide array
of consumers worldwide.
Operational Excellence
OE includes operational effectiveness (top-line
growth) and operational efficiency (bottom-line improvement). OE strongly comes in to place on the
supply chain side of the company‘s operations. For
instance, maximising the use of their inputs, controlling and improving functional performance, replenishment, planning, logistics and sourcing. The implementation of Benetton‘s e-commerce platform (2013)
will be fully integrated into the Benetton Group‘s innovative dual supply chain model and Castrette hub
system, an indicator for the companies operational
excellence.
Key words: operational effectiveness and -efficiency
(M.E. Porter); operational excellence ,resource-based,
inside-out (Treacy & Wiersema)
Differentiation
A unique set of activities embraces, in particular, the
use of social media, technologies, consumer engagement, consumer relationship and numerous communication and marketing activities (operations and
tactics). Differentiation and competitive advantage,
however, is not achieved through one creative design,
through one engaging campaign or one S.M.A.R.T.
operation. Instead the combination and balance of all
5 strategic themes will be the decisive determinant for
Benetton‘s long-term differentiation in terms of both
consumer perception and competitive advantage.
Key words: unique mix of values, different set of activities, differentiation (M.E. Porter)
Consistency Principle
The strategy brought forward will only unfold its full
potential - sustainable profitability, coherent brand
identity, strong brand loyalty, viable competitive position - if the entire set of the company‘s activities is
combined and interlocked. This principle embraces
the idea of ‘strategic fit‘ and consistency. In turn, activities will reinforce one another, will strengthen competitive advantage will complicate imitation.
Leadership: a turnaround requires consistency in
management and leadership, since it implies credibility, clarity and courage.
Key words: coherency, consistency, competitive advantage, strategic fit (M.E. Porter)
Key words: creative destruction - ‘resign‘ in one market to open in a new one (J. Schumpeter); market
penetration and market development (I. Ansoff)
7
Company Description
Vision
United Colours of Benetton sees fashion as a global medium, which connects people of every race and identity. It overcomes geographical, political and ideological boundaries.
Mission
By using a universal form of communication, Benetton creates value - vital for everyone. The distinctive variety
of colours, celebrates diversity on a personal, cultural and global scale.
Ethical Statement
United Colors of Benetton is receptive to the present time and attentive to the environment, to human dignity
and to the transformation of society. They are committed to being a globally responsible company in social,
environmental and economic terms.
Value Connection Pyramid
Brand Identity
unite people of all races
celebrate diversity through colour
Core Values
ethically responsible
democratic
accessible
universal
authentic
Campaign Values
accessible for everyone
‘UNHATE‘
cultural debate
united diversity
global community
Localised Associations
commercialised ethical branding
collaborations with (socially) committed, global artists
sharing and supporting creative talent
Figure 2. Value Connection Pyramid
9
Positioning
based on van Kralingen (2002)
High Involvement
Informational Brand
Mythical Brand
Functional
Expressive
Cluster Brand
Territorial Brand
Low Involvement
= shift from current position (cluster brand) to intended position (mythical brand).
Figure 3, Positioning Graph
USP
United Colors of Benetton creates added value by celebrating diversity through colour and addressing ethical
issues that are globally relevant.
10
Figure 4. Moodboard Mentality Group
The mentality group is the group of people that Benetton’s communication aims at and is part of the
target group. (See ‘Communications Plan’ page 22)
Mentality Group
•
•
•
•
•
•
•
•
•
•
•
•
ca.20 - ca.45
intellectual
open-minded
balanced (introverted - extroverted)
socially and ethically responsible
democratic
ambitious
ideological
aware (political, cultural, environmental)
tolerant
positive
trend-following
•
•
•
Shared aspiration:
cultivated
globally aware
sophisticated
11
Figure 5. Moodboard Existing Consumer
12
Target Group
Demographic Segmentation
Age
20-45
Gender
Male & Female
Family Size
Size Singles or small Family (1-2 children)
Income
Average-above average
Education
College graduates
Purchasing Behaviour
User occasion
Casual and work
Benefits wanted
Long-lasting, high qualitative, colourful products, modest
style with a twist
Loyalty level
Loyal purchaser, comes always back to Benetton
Purchase frequency
Men: twice a season - Women: every two month
Readiness to purchase
The Benetton network and awareness of their values and
valuation make the consumer more ready to buy. Recommendations are given to one to another.
Geographic Segmentation
Country
European countries as well as emerging and developing
countries with a growing disposable income of a broader
mass.
City
The mentality group prefers to live in mid to large sized cities
Reach
High accessibility
Psycho-graphic segmentation
Social Class
Middle class-upper middle class
Lifestyles
Socialising and networking is of high importance, balanced
lifestyle between free time and work, co-evolves with its surroundings
Spending Behaviour
Conscious buying
Figure 6. Table Target Group
13
Operational Plan
Retail led consolidation
Franchising
Goal: re-direct the sales network by approaching a dynamic and contemporary retail model
Benetton’s franchise system proved to be an important strategic decision in terms of global expansion in
times when the company was young and lacked the capital to operate its own stores. As Benetton became a
company of global dimensions, this system became a weakness (T. Barber, 2012). Once a successful driver
of growth, the Italian clothing maker has over-expanded their franchise strategy, leading to an unfavourable
balance between wholesale and directly operated sales, a lack of control, and top-line stagnation.
With a wholesale to DOS (= directly operated sales) ratio of 76%:24%, United Colors of Benetton is not only
missing out on revenues (revenue is half the retail value) (R. Sanderson, 2012), but margins are adversely affected and demand, consumer taste and merchandise assortment are difficult to track, putting Benetton at a
disadvantage to fast-fashion, demand-led rivals. Working with a wholesale and franchise formula means being
one step apart from the consumers.
The aim is to achieve a 50/ 50 balance between DOS and franchising/ wholesale by 2016. On an operational
level this means closing down (also: buying out) franchise-led stores in poor performing countries (see ‘Performance Mapping‘, figure 7) and opening directly operated and controlled sales points in key geographical locations (growth economies and capital cities). More than that, controlling own stores in core geographical areas
is not only an issue of turnover, but of spreading the right brand identity, -understanding and -perception.
14
Figure 7. Performance Mapping
Figure 7 (‘Performance Mapping‘) illustrates Benetton‘s global sales performance distinguishing between
growth, decline and relevant growth economies. Initial closures will be in crisis-ridden South Mediterranean
economies (Italy, Spain, Portugal, Greece), not only due to their weak performance, but also due to their negative economic outlook and the over-exposure of stores in these respective markets.
The focus of new points of sale will be in growth market economies and key geographical areas. Core openings
include the markets: Mexico, South America and South Africa. These respective markets not only experience
above-average growth (Goldman Sachs) but show accelerating interest in the brand United Colors of Benetton.
Sales in Russia reported a growth of 25% in 2011 and first quarter results (2012) show a strong upward trend
in Mexico, India, Korea and South America.
(Annual report 2011, Benetton.com)
In order to reach Benetton‘s franchise goal (see KPIs) in a specific, measurable, achievable and realistic relation
between cost-efficiency and time, a ratio of 2:1 will guide this conversion. Additionally, the S.M.A.R.T. objectives guiding this process include strict terms and conditions, and linking the production, logistic and retailing
units through an real-time information system in order to guarantee delivery times and efficient and competitive
replenishment. This in turn, will translate into 1 DOS opening to 2 franchise closings. The table below illustrates
a forecasted estimation of time-based steps, implementing the structure by 2016. (see ‘Formula and Calculation‘, Appendix page 38)
2011
Wholesale
DOS
4940
1625
76%
2012
4498
24%
1846
70,9%
2013
4056
29,1%
2067
66,2%
2014
3614
33,8%
2288
61,2%
2015
3172
38,8%
2509
55,8%
2016
2730
44,2%
2730
50%
50%
Figure 8. Benetton’s Wholesale - DOS
Ratio of DOS openings to closings: 2:1. In this way, total revenues stay relatively stable and balanced, since the
ratio of retail revenue to wholesale revenue is 1:0,5.
(A Global Network and its Local Ties. Restructuring of the Benetton Group – Working Paper University of Venice
2009)
15
E-Commerce
Our goal is to:
- strengthen brand awareness
- increase accessibility
- cater to a wider audience
- generate sales
E-commerce is of one the most rapidly growing markets in Europe, reporting continuous growth from
year to year (PressDE).
throughout the previous years, highlighting France,
UK and Germany, collectively accounting for 72% of
total European online sales in 2011 (marketingcharts).
The implementation of an e-commerce platform taking the step to convert their marketing site (www.
benetton.com) into a selling location - will transform
and modernise Benetton’s business in new ways. In
particular, the introduction of this contemporary sales
direction will add a dimension to their multi-channelling approach. Applying e-tailing in their business
has numerous benefits: a.o. to generate sales, to do
business more economically, to reach a wider target
market and to be successively accessible for nearly
everyone in the world in the coming years. By rolling
out an online platform, Benetton is able to address
their national and international base of existing and
potential consumers, focusing effectively on the end
consumers and providing him with a new shopping
environment and experience. Not only sales will be
stimulated through their new distribution channel, but
also Benetton’s brand identity, business profile and
its positioning will be strengthened. One key advantage is the availability, being open 24 hours, 7 days
a week, 365 a year. Therefore, e-commerce is an important vehicle for Benetton in order to prevent further turnover declines in the short- to medium term
and to eventually drive growth in the long-term.
In this respect, United Colors of Benetton will begin
its e-commerce implementation in Europa. At the beginning of 2013 the e-platform will be introduced to
numerous European markets (see details below), UK,
Russian and ex-USSR markets. The choice for the
initial markets is based on market research (‘E-Commerece Growth in EU‘, see Appendix, page 38) and
Benetton‘s performance in these respective markets,
reporting strong sales even in turbulent times of high
market uncertainty (Company Analysis Benetton).
With the introduction of an online platform/ shop,
Benetton will be able to operate their multiple brands
through an additional channel (multi-channelling) and
across multiple geographical areas, which sets the
basis for a powerful and successful sales network.
The Benetton Group has a strong presence in countries with Western style economies representing 74%
of their total revenue. More than that, European business-to-consumer e-commerce increased rapidly
16
In the short- to medium-term, United Colors of Benetton will expand its online commerce presence in Asia
(2014), South America and North America (2015),
Australia (2016) and South Africa (2016); markets,
in which Benetton is either reporting growth and in
which Benetton’s franchising goes hand in hand with
their e-commerce.
A further identified advantage is the balance between
online- and brick-and-morter availability when rationalising the sales network in over-exposed and weak
markets (see Franchising, page 14). While rationalising on low-performance (and weak forecasted sales
performance in the future) markets, Benetton‘s online
shop will maintain the availability and accessibility of
products for the consumers in these respective markets.
Countries in which Benetton Introduces E-commerce in the Short- to Medium-term
Revenues Europe
Figure 9. Revenues Europe (2011)
Italy: is the country of origin and accounts for 57 % of total revenues (see figure 1). Italy is experiencing a considerable growth (+19% from 2010-2011) in the e-commerce industry. A further growth of +18% is expected
for 2012 and the Italian e-tailing apparel industry is anticipated to increase by +30% in 2012 (E-business
Consulting).
Competitive advantage: Italy is still experiencing a lack of online supply by national-based companies. Only
4% of the Italian firms supply their products via an e-commerce channel, putting Benetton into a position
of national competitive advantage by being at the forefront (national-wise) of introducing e-commerce (Ebusiness Consulting).
Germany: Benetton‘s sales were up + 6 % in 2011. Additionally, Germany is showing a considerable growth
in e-commerce. In 2010, 24% of total European online sales were made in Germany.
Russia & ex-USSR|EU: strong growth in Russia (+25%) and ex-USSR|EU countries (e.g. Ukraine, Lithuania
+20%).
17
Figure 10. E-Commerce; Entering Markets
Organisation and Logistics
There are numerous factors that have to be considered when rolling out an e-commerce platform.
Benetton will outsource the set up of their online shop
by collaborating with an agency that will arrange not
only the programming of the online shop but will be
responsible for maintaining and updating the site.
The chosen creative agency will require background
knowledge and experience in branding, concept marketing, web management and customer behaviour.
All logistics operations for the online shop are fully
coordinated by the existing, automated Castrette hub
in Italy, offering Benetton a good geographical position. This platform optimises the deliveries and services between the Castrette hub and the warehouse
used for Benetton’s online shop. Benetton will make
use of their existing warehouses in Italy, which are not
working to full capacity at the moment, offering them
18
the opportunity to save costs and time. The fully automated, electromagnetic sorting system in the hub
will not only manage individual orders placed around
the world, but will additionally monitor all online shop
orders. The garments (folded and hung) are automatically sorted, packaged and sent via a kilometre-longtunnel to the Automated Distribution centre, from
where all the products are sent to the warehouse
which keeps the online shop assortment. Managing
all online shop orders, including packaging and shipping, will require additional workforce (see Organisation, page 28). Due to this optimised distribution system (Castrette hub), Benetton‘s e-commerce will be
easily implemented into the existing logistics system,
enabling a quick start in 2013. When expanding their
e-commerce in the short- to medium-term, Benetton
will make use of the national distribution centres in
Asia, North- and South America.
Costs
•
•
•
•
•
•
Products
Warehousing
Logistics
Marketing
Business taxes
Accountancy fees
Guidance for a first year’s budget to setup the online shop of United Colors of Benetton:
Annual Recurring Costs
Domain
SSL Certificate
Total Annual Recurring Costs Monthly Recurring Costs
Website
SEO
SEM (based on Adwords clicks)
Payment integration
Shipping integration
Total Monthly Recurring Costs
200 €
500 €
700 €
10.000 €
500 €
2.000 €
1.000 €
1.000 €
14.500 €
One Time Costs
Design
Customisation
Total One Time Cost
100.000 €
50.000 €
150.000 €
First Years Budget Estimate
324.700 €
Figure 11. First Years Budget E-Commerce
United Colors of Benetton’s goal is to introduce a strong global e-commerce platform in order to not only drive
global online growth, but to strengthen their brand awareness and product accessibility. Their e-commerce will
also be part of their communications plan resulting in social engagement that encourages younger customers
to buy online. Since Benetton started to integrate high-tech tools (e.g. Apps) in their spring/summer collection
2012, they will additionally develop and offer an App tailored to their e-commerce platform, starting in 2013.
Search Engine Optimisation and Search Engine Marketing (e.g. Google Adwords) will support Benetton to
build and expand brand awareness and to achieve a strong and competitive online presence worldwide.
Layout
With a strong, clean and concept-and-value-oriented-design of the online shop, Benetton’s aim is to build
a strong relationship with the consumer and to attract over 12 million visitors annually in the years to follow.
Benetton’s online shop is designed with personality, providing the consumer with a new shopping environment and experience that reflects their values and style.
19
Figure 12. Design United Colors of Benetton Online Shop
[remark: each of the Group‘s sub-brands will launch its own online platform, but will be inter-linked with
the sub-brands Sisley and Playlife]
In the medium-term, Benetton will expand their online presence to numerous key performance countries
worldwide. This in turn, will result in a higher brand awareness, a strong global presence and an increase in
turnover.
21
value connection
Communications Plan
Goal: Re-establish a strong, sustainable value connection with - groups of consumers through a viable and coherent value proposition.
Sub-goals: • emphasise the product • re-connect to the young • create social meaning
The goal of the communication plan is to (re-)establish a sustainable value connection and to ensure a consistent communication in the external and internal environment. Consistency is key and leads to a clear understanding of the brand for both the consumer and the employee.
The following text describes who the targeted consumer is, what Benetton’s communication strategy consists
of, how it is achieved, where it takes place and why it is done. Furthermore, a plan of events illustrates in which
order intended marketing events will take place. The scope of the plan of events is 3 years.
The following campaign values - translated from Benetton’s core values and brand identity (see also ‘Value
Connection Pyramid‘, page 9) - constitutes the basis for the brand’s communication activities.
Campaign Values:
-
‘UNHATE‘
-
Understandable for everyone
-
cultural debate
-
united diversity
-
global community
Specific
Who?
This plan distinguishes between - groups of - targeted consumer, existing consumer and mentality consumer.
A clear differentiation in targeted consumer, the existing consumer and the mentality consumer makes it possible to identify a focussed group which requires a more specified penetration through marketing. This group
is defined and referred to as mentality group. The target group comprises mentality and existing consumer.
Benetton’s target market research has shown that the existing consumer is loyal to the brand (Kay Plantes).
The identified - group of - consumers is between 35 and 45, is cultivated, globally aware and sophisticated.
The identified mentality group is younger (age: 20-35yrs), however, values overlap with those of the (older)
existing - groups of - consumers.
Since Benetton‘s marketing approach lacked innovation over the years, the brand failed to address a young
audience; instead the Benetton‘s initial consumer aged with the brand. What Benetton has claimed being a
‘universal form of communication‘ has not lead to a common (democratic) understanding (= intended message) by the consumer group, but has created offence and high controversy (= perceived message). The outcome of Benetton’s intentional, however aggressive, campaigns was not in line with the brand’s core values.
Hence, Benetton‘s communication approach has to shift to a less controversial communication, emphasise
the product and needs to create relevance in a specific socio-cultural and historical context. In this way, the
message is coherent (in line with brand DNA and core values) and the ‘young‘ - group of - consumer is effectively addressed (the Glue Value of Brands, M. Mossinkoff 2012).
Target group: Existing consumer:
Mentality group: 22
Men & Women 20-45yrs
Men & Women 35-45yrs
Men & Women 20-35yrs
What?
The marketing model used for Benetton’s communication consists of 5 layers: The outer layer - ‘One-way
advertising’ - is a more impersonal way of addressing the consumer. It functions as a reminder of the brand
for the consumer. Benetton will only focus superficially on one-way advertising. It is essential for the brand to
create a relationship with the consumer through two-way communication, experiential marketing and personal
marketing. The following points describe Benetton’s operations:
One way advertising
Magazines advertising
Figure 13. Visual List Magazines
The main focus of Benetton’s ad campaigns will be on fashion, style, art, design, culture and lifestyle magazines. The group of readers (of the above exemplified magazines) is in line with the mentality group Benetton
will be aiming at (see Mentality Group page 11).
Two-Way communication
Research has shown that messages communicated amongst friends have a higher credibility than messages
sent by brands (Tim Jackson and David Shaw). Good brand examples are the ‘Dove Evolution’ video by Unilever (15 000 000 likes on youtube) or the ‘Kony 2012’ video by Jason Russel/ invisible children (90 000 000
likes on youtube)
Why does it work? By sharing these videos people get emotionally involved. It triggers the feeling of creating
social meaning.
•
•
The new communication approach for Benetton will include viral campaigns run via Youtube (the new ‘UNHATE‘ approach). Consequently, Benetton will create social meaning and engagement. The communication via videos will replace Benetton’s provocative campaigns and will accentuate on their ethical commitment [Benettongroup].
Other ad campaigns will focus on the product.
Experiential
The aim is to create the perception of global relevance through local relevance. The consumer will interact
and experience the brand through organised events. This active marketing approach aims at a stronger value
connection with the consumer and increases brand loyalty.
•
The Colour Festival by Benetton will be organised once a year during summer. It is inspired by the
Indian ‘Holi‘ festival. Coloured powder will relate back to Benetton‘s distinctive feature - colour - and its way
of celebrating diversity. Being positive plays a significant role in Benetton’s new way of engaging advertising.
Figure 14. The Colour festival Holi in India
23
•
•
•
•
Art Exhibitions: exhibited local art and design in pop-up stores, but also art events by Benetton in inspirational spaces in the brand‘s most important capital cities
‘Live Windows‘ is an existing advertising project of Benetton which aligns perfectly with Benetton’s new strategy. ‘Live Windows‘ is an experience-design-research-project applied to front stores com
munication. Stores are the real meeting point between consumer and brand. Benetton‘s stores will turn into intelligent places for a new language, connecting people and brand. Technology is key to trigger new experiences within the retail space for Benetton’s main concept stores in key fashion cit
ies such as Milan, London, Paris, Istanbul and Barcelona.
WOW! project WOW! = ‘Windows of Wonder‘, an already existing non-profit art project. It is a social network for artists and designers worldwide intended to share and exhibit their work. (‘white canvas approach’)
Live Windows Award: once a year an award is given for the most innovative artwork of the year to one of the artists exhibited.
Viral communication/personal engagement
•
A new innovative and up-to-date marketing approach, will be Guerilla stores (pop up stores)., which will play a big role in Benetton’s future. This, in turn, will not only lead to high cost efficiency but will also create a feeling of exclusivity. Through online activities (eg. Facebook) consumer will be engaged
personally. The Guerilla stores will offer the consumer to shop limited edition collections, designed in collaboration with fashion designers such as Jeremy Scott and Kean Etro. Art from the WOW! Project
will add to the exclusive experience.
Figure 15. Jeremy Scott Fashion - Etro Fasion
Where?
Fashion cities worldwide:
Milan, Berlin, Paris, Barcelona, Tokyo, New York, London, Cape Town, Moscow, Sydney, Istanbul.
The focus will be in particular on cities with diverse ethnical groups through a colonial background.
How?
•
Benetton will set up an own graphic design agency, running as self standing business next to the
already existing communication and research centre Fabrica in which young designers and artists get the opportunity to realise their own visions. Benetton will redirect this department with a strong focus on Benetton’s
marketing projects. It will be renamed into Benetton/Research (old: Fabric). Additionally, another department
will be set up: Benetton/Agenzia. It will be responsible for the implementation and realisation of the results
of the Benetton/Research department. It will organise and plans Benetton’s advertising, visual coherency in
shops and special events. It will also offer its expertise to third-parties. (Benetton/Ricerca and Benetton/Agenzia Itl. Agency and Research). Benetton/Agenzia: “Young, creative people speak to young people.”
24
•
Using brand ambassadors whose personality reflects Benetton’s core values and identity will be one
main communication tool for the Benetton colour festival. They will a.o. organise parties and Benetton giveaways in order to create a new, positive image of the brand, connected to enjoyment.
•
The promotion of Benetton marketing activities will be online. Already existing and known projects,
such as ethical projects, the Wow! Project or the communication research centre Fabrica were never explicitely connected to the brand Benetton. In the future, it will be important to place Benetton visibly behind activities. Benetton’s website URLs will from then on contain the brand’s name. The will be interlinked with each
other. Additionally, the consumer will be informed about collections, campaigns, projects etc. on a daily basis
(eg through Facebook and Twitter)
1.
2.
3.
4.
5.
6.
7.
http://icon.benetton.com/
http:// wow.project.Benetton.com/
http://livewindow.Benetton.com/
http://agencia.Benetton.com/
http://ricercia.Benetton.com/
http://socialcommitment.Benetton.com/
http://shop.Benetton.com/
Benetton Youtube channel shows videos of:
-
Benetton live windows
-
Benetton fashion campaigns per season
-
Benetton awareness videos (telling a story)
Why?
The implementation of a communication plan, as part of a new strategy, is essential for Benetton. A lack of
innovation caused the co-ageing of brand and initial consumer. The objective of this communication plan
is to a re-establishment a sustainable value connection between young - groups of - consumers and the
Benetton brand. Additionally, a clear communication of the brand values will supports the goal of a coherent
value proposition. Consumer engagement will be a main focus point and will be implemented through art and
design. Art is a universal language everyone understands; Art does not need a common spoken language it
is about feelings and emotion.
Visual Merchandising
Benetton’s flagships stores located in key fashion cities will trigger consumer attention, brand perception
and brand awareness. Therefore the merchandise will focus on artistic excellence within concepts, developed in collaboration with renowned artists. The toned down concepts, on the other hand, will be integrated
in the remaining DOS and franchise stores. These concepts will be coherent, however, adjusted from country
to country (local relevance).
Product
Woman
T-Shirts/Tops
Pullover
Cardigan & Blouses
Dresses & Skirts
Pants & Trousers
Jeans
Outer wear
Accessories
Belt
Shoes
Men
T-Shirts
Pullover
Shirts
Jackets & Blazers
Shorts & Trousers
Jeans
Outer wear
Accessories
Socks
Shoes
Kids
T-Shirts/Tops
Hoodies
Sweaters
Jeans
Pants & Capris
Shorts
Skirts
Leggings
Dresses
Rompers
Outer wear
Activewear
Undercolours
Underwear Men
Underwear Women
Beachwear Men
Beachwear Women
Basics
Lifestyle
Eyewear
Kids Eyewear
Travel bags
Parfume
Stationary
25
•
•
•
•
Benetton will launch 5 collections per season (1 continuative line, 1 capsule collection + 3 fashion
lines)
Plus exclusive, collaborative designer collections for Guerilla stores
Benetton designs will stay true to the colour through basic shapes and colour blocking (focus on qual
ity of the garment)
Benetton will not adopt fast fashion in the future. Different colour and print concepts changing through
out the season will give the consumer the feeling of finding a new piece with every shop visit
Collections
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept Oct
Nov
Dec
Spring/Summer
Contemporary I
Contemporary II
Contemporary III
Capsule
Continuitive
Autumn/Winter
Contemporary I
Contemporary II
Contemporary III
Capsule
Continuitive
Figure 16. Collection schedule
Price
A clear pricing structure through the use of even numbers:
T-shirts and tops: Pullover: Trousers: Blazer and Jackets: Dresses: 14.00-27.00€
34.00-78.00€
73.00-112.00€
94.00-158.00€
58.00-73.00€
Measurable: In order to measure our outcomes, Benetton will assign a market research company to conduct
surveys analysing the development of Benetton‘s brand awareness. The results of these surveys will serve as
future guidelines for marketing decisions.
Achievable: Benetton will establish a new division - consistency management - to ensure a coherent communication and up-to-date understanding within the internal and external business environment (see ‘Organisational Structure‘, page 28)
26
Realistic
Communication Budget
Financial year 2011
58 m
Financial year 2012
87 m
Financial year 2013
72.5m +25% *
+50% *
*based on the FY 2011
*Advertising and promotion costs accounted 58 million accounting 2.8% of revenues. [Annual report 2011,
Benetton]
Time bound
Plan of events - Purpose of each step
Marketing Events
J/A/S ‘12 O/N/D ’12 J/F/M ‘13 A/M/J ’13 J/A/S ‘13 O/N/D ’13 J/F/M ‘14 A/M/J ’14 J/A/S ‘14 O/N/D ’14 J/F/M ‘15 A/M/J ’15
Magazine ads
Youtube ‘UNHATE’
Ad Campaigns
Colour Festival
Art Exhibition
Wow! Project
Live Windows
Live Windows Award
Pop-Up Store
Launch online store
Evaluation fashion
advertising
Surveys
Figure 17. Plan of Events
27
DOS
Benetton/Ricerca
Raw Material Sourcing
Distribution Management
Supply Chain Management
Benetton/Agenzia
Design Management
Design
Accounting
Board of Directors
Logistic Management
Collection Management
Human Resource
Management
Distribution Centre
Latin America
Pop- Up Stores
Sales Channels
Distributation Centre
Asia
E- Commerce
Production outsourced
Distribution Centre
Europe
Logistic Centre
“Castrette”
28
Web Agency
Production
Consistency
Management
Headquarter
Figure 18. Organisational Chart
Organisational plan
Organisational Changes
Goal: Coherency of information flows throughout the company
The implementation of the strategy brought forward
will consequently lead to changes in the organisational structure on corporate level (Benetton Group) and
on business-unit level (United Colors of Benetten).
In order to address the goals - intended outcomes of
the strategic direction - effectively and to successfully
translate the decisions on operational level, consistency is an inevitable prerequisite. Hence, it is key to
maintain a coherent flow of knowledge and communication from top-level management (HQ) through every
single division and as far as every single employee.
This will not only result in a collective understanding
of brand values, brand identity and the comprehension of internal and external changes but will lead to a
favourable working culture. In order to guarantee the
company‘s vitality and ubiquity, the strategy includes
the establishment of a new department - ‘Consistency Management‘. The tasks of this division will cover
internal auditing and specific training of employees
tailored to the current company’s strategic vision,
conducted shifts and changes. The ‘Consistency
Management‘ will consist of present business-unit
managers, independent consultants and additionally
recruited employees. The latter will be responsible for
the execution on operational level.
integrated in the Group’s supply chain, logistics- and
distribution channel. The programming, updating and
maintenance of the e-platform, however, will be outsourced to a web agency.
The communication plan brought forward (see ‘Communication Plan‘, page 22) is the fundament for
launching Benetton/Agenzia, the Benetton Group’s
own marketing agency. This creative agency will not
only be responsible for in-house communication, institutional campaigns and advertising but will further
offer its services to third parties. Although the establishment is rather a formal change for Benetton‘s current advertising division, Benetton/Agenzia will show
its effects in Benetton’s human resources.
In 2011 Benetton employed more than 9.600 people. Considering the above mentioned organisational
changes and openings of DOS (see ‘Franchising’,
page 14), Benetton will increase its workforce by
29,6% (2842 people) until the year ended December
31, 2013.
Rolling out an online platform (2013) will lead to the
establishment of a new department, exclusively focussing on Benetton‘s e-commerce. This department
will operate independently as part of the Benetton
Group‘s multi-channel divisions. Additionally, it will be
29
Consolidated Statement of Income
(thousand of Euro)
2013
2012
2011
(01.01.2013-31.12.2013)
%
(11.03.2012-31.12.2012)
%
(01.01.2011-31.12.2011)
%
Revenues
2,079,328
100,0
2,048,599
100,0
2,032,341
100,0
Cost of Goods Sold
1,154,027
55,49
1,147,215
55,9
1,149,788
56,6
Gross Operating Profit
925,301
44,51
901,384
44,1
882,553
43,4
Distribution & Transport
74,856
3,6
71,701
3,5
71,841
3,5
Sales Commissions
85,252
4,1
86,041
4,2
86,828
4,3
Contribution Margin
765,193
36,8
743,642
36,3
723,884
35,6
Payroll and related costs
234,507
11,3
207,345
10,1
180,937
8,9
Advertising
and promotion
72,500
3,9
87,000
4,2
57,425
2,8
Other expanses
and income
276,551
13,3
272,464
13,3
248,038
12,2
General and
operating expanses
583,558
28,1
566,809
27,7
486,400
23.9
Financial expenses
20,793
0,9
20,486
1,0
33,053
1,6
Net Foreign
Currency Hedging
10,397
0,5
10,243
0,5
9,497
0,47
150,445
7,2
146,104
7,1
194,934
9,6
Depretiation
and amortisation
89,411
4,3
88,090
4,3
88,354
4,3
EBIT
61,034
2,9
58,014
2,8
106,580
5,2
Income tax
18,310
0,8
17,404
0,8
37,729
1,8
Net Income
for the year
attributable to Parent
Company:
42,724
2,1
40,610
1,9
68,851
3,4
-
-
-
-
EBITDA
Figure 19. Statement of Income
30
68,851
-
Financial plan
Key Financial Data
-
-
-
-
-
revenues are expected to increase 2,3% to €2,079bn by year ended December 31, 2013. A supposed
reduction in sales due to the economic downturn, particularly in Italy (= home marker) and the South
Mediterranean markets will be offset by higher revenues through an increase in DOS.
Cost of goods sold, the highest expense going forward, is expected to show marginal change in the
years ahead. The adverse effects by the rise in the cost of raw materials, particularly cotton, are expected to cool down slightly. Additionally, an improvement in production-, cost- and time-to-market-
efficiency, will, in turn, increase the gross margin to 44,51% (2013) compared to 43,4% in fiscal 2011.
Operating profit (EBIT) will be significantly affected through an increase in general and operating expenses. The strategic decisions brought forward on operational level, in particular, payroll- and
advertising costs will accelerate due to organisational changes and extensive promotional campaigns
both online and offline.
Fiscal 2013 is expected to end with a net income of €42,724m (2,1%) against €40,610 (1,9%) in fiscal 2012. Compared to fiscal 2011, the development shows a downward trend (-€26m). This is par-
ticularly impacted by high structural (and promotional) costs, following the take-over of stores previ-
ously operated by third parties. The decline will be balanced and eventually offset in the years to fol-
low, due to the long-termism of the strategy.
*for the year attributable to Parent Company (Edizione S.r.l.): the Benetton Group has commenced a voluntary tender offer to de-list Benetton from the Italian Stock Exchange in order to reach the flex
ibility necessary for their future commitments. As a response to their commitment, the Benetton fam-
ily - full owners through Edizione S.r.l. - will disclaim from dividends
Master Budget for fiscal 2012 (E1) and fiscal 2013 (E2):
(A) Communication Plan:
-
(A1) investment for fiscal 2012: €87m
-
(A2) investment for fiscal 2013: €72,5m
(B) Re-directing Commercial Network (DOS:wholesale/franchise):
-
(B1) investment for fiscal 2012 based on 221 openings: €59,2m*
-
(B2) investment for fiscal 2013 based on 221 openings: €59,2m*
(C) Re-directing Commercial Network (e-commerce):
-
investment for fiscal 2013: €324,700
(D) Structural Changes:
-
(D1) investment for fiscal 2012: €26,4m
-
(D2) investment for fiscal 2013: €27,2m
Investment required for fiscal 2012: A1+B1+D1 = E1
= €172,6m
Investment required for fiscal 2013: A2+B2+C+D2 = E2
= €159,2m
Master Budget (total) = E1 + E2
= €331,8m
Investor:
Edizione S.r.l. is one of the largest Italian holding companies with equity investments mainly in the following
sectors: textiles and clothing, food & beverage and travel retail & duty free, infrastructure and mobility services.
Edizione is an unlisted company 100% controlled by the Benetton family itself. In family and shareholder interest, the board of directors has agreed to conduct a recurring investment to the Benetton Group of €331,8m. At
the end of 2010 Edizione S.r.l. reached a net income of €817,4m.
•
the calculation is based on an independent evaluation of annual store opening costs. The result (89,340) serves as an average benchmark for defining the amount of potential cost.
31
Strategy: A company turnaround
Vision: Re-establishing Benetton as a ‘must-have’ brand
CUSTOMER
1.1 In Benetton’s key cities, 5 out of 10 people (Men and Women 20-45) asked will have heard from
Benetton as a fashion brand by the end of 2012.
1.2 In Benetton’s key cities, 6 out of 10 people (Men and Women 20-45) asked will have heard from
Benetton as a fashion brand by the end of 2013.
2.1 By the end of 2012 13% of Benetton-aware people will associate the Brand with its new brand
image.
2.2 By the end of 2013 20% of Benetton-aware people will associate the Brand with its new brand
image.
3.1 Benetton will have an increase of social media activities of 50% by the end of 2012
3.2 Benetton will have an increase of social media activities of 30% (YoY) by the end 2013.
4.1 After the first year (2012) Benetton will have an increase of 5% in consumer loyalty (repeated
purchases in physical stores and online).
4.2 After the second year (2013) Benetton will have an increase of 15% (YoY) in consumer loyalty.
LEARNING AND GROWTH
Franchise
1.1 Benetton’s aim is to achieve a 70,9/29,1 balance between DOS and franchising/ wholesale by
the end of 2012
1.2 The aim is to achieve a 66,2/33,8 balance between DOS and franchising/ wholesale by the end
of 2013
Ecommerce
2.1 Benetton will launch an ecommerce platform by the end of 2013 in numerous European markets, UK, Russian and ex-USSR markets.
2.2 Benetton will launch an ecommerce platform by the end of 2014 in Asia.
3.1 Benetton’s aim is to generate online sales by 3% of their total turnover in2013.
3.2 Benetton’s aim is to generate online sales of 5% of their total turnover in 2014.
4.1 Benetton will offer an App and tailored to their ecommerce platform by the end of 2012 in
numerous European markets, UK, Russian and ex-USSR markets.
4.2 Benetton will offer an App and tailored to their ecommerce platform by the end of 2013 in the
Asian market.
32
Balance score card
INTERNAL BUSINESS PROCESSES
1.1 By the end of 2012 Benetton will educate 50% store personnel to ensure that employees are
1.2
educated by the ‘Coherency Management Department’.
By the end of 2013 Benetton will educate 100% store personnel to ensure that employees are
educated by the ‘Coherency Management Department’.
2.1 Benetton will introduce in the first year 2012 the ‘Coherency Management Department’,
2.2
the Benetton/Agenzia, the Benetton/Ricerca.
By the end of 2013 Benetton will have the 3 mentioned above departments fully integrated into
the company structure.
3.1 By the end of 2012 Benetton/Agenzia Benetton starts working with third parties.
3.2 By the end of 2013 Benetton/Agenzia Benetton will generate income through the work with third parties and resulting from this Benetton will be able to cover 20% of its marketing expenses.
4.1 By end of 2012 Benetton will have increase its workforce by 14.6%.
4.2 By end of 2012 Benetton will have increase its workforce by 13%.
FINANCIAL
1.1 Benetton will have a turnover increase of 0,8% in the first year, the year ended December
31,2012
1.2 Benetton will have a turnover increase of 1,5% in the second year, the year ended December
31,2013
2.1 Benetton will have a Gross Margin increase of 2,1% in the first year, the year ended December
31, 2012
2.2 Benetton will have a Gross Margin increase of 2,6% in the second year, the year ended Decem
ber 31, 2013
3.1 Benetton will own 95% of Benetton share and will be thus be acknowledged as private
company in the first year, the year ended December 31, 2012
3.2 Benetton will be fully privatised in the second year, the year ended December 31, 2013
4.1 Benetton’s net profit margin will not fall below 1.8 in the first year, the year ended December 31,
2012
4.2 Benetton’s net profit margin not below 2 in the second year, the year ended December 31, 2013
33
Conclusion
The proposed strategic direction brought forward in this strategic business plan is built on five interconnected
strategic themes with the long term aim to re-establish United Colors of Benetton as a ‘must have‘ brand. All
objectives and decisions consider processes on every level of the business and their implementation will be
approached through specific, measurable, achievable, realistic and time-bound KPIs. The following intermediary (sub-)goals will consecutively contribute to the revival of the brand, guaranteeing strong brand loyalty,
long-term competitive advantage and profit:
-
strong brand presence, brand awareness and brand loyalty by re-establishing a sustainable value connection to - groups of - consumer through a viable value proposition
-
re-connect to the ‘young‘ market segment through engagement and (local) relevance
-
re-directing the sales network by levelling wholesale/franchise with directly operated sales by 2016
-
approaching a dynamic and contemporary retail model by introducing an e-commerce platform by 2013
-
introducing structural changes in order to effectively and efficiently translate strategic decisionmaking and to maintain consistency both internally and externally
35
Appendix
Strengths
•
•
•
•
•
•
New leadership with Alessandro Benetton who brings in a background in finances and new fresh thinking
Flexibility and productivity due to the unique supply chain
‘Top of mind’ brand due to strong and provocative campaigns in the 80’s
Broad range of brands covering a broad target market
Communication research centre
supporting outcome like brand identity, brand positioning, brand image
Presence in 120 countries and expansion on developing and emerging markets
•
•
•
•
•
•
Imbalance between wholesale and DOS
Non-existence of online shop
Overload franchises
Fail to address target group
Inconsistency between brand identity and communication
Shifting from a mythical brand to a
cluster brand
•
•
•
•
•
•
•
Growth market economies
Beneficial tariffs and trade barriers
Privatising the Group
DOS (geographical areas)
Increased sales and profits through
e-commerce platform
Use of ethical approach in marketing to
appeal to the consumer
Revive brand perception
•
•
•
•
•
•
Over dependency on crisis-ridden south
Mediterranean markets
Cost inflation of raw materials
Strong fast fashion competitors
Debt crisis in Europe
Rising unemployment, debt-to-GDP
(=lower disposable income)
Policy changes on national level
opportunities
Company Analysis Benetton & Gap 2012
Introduction - page 5
36
Weaknesses
threats
D=a
F=b
d(p)=D+1x.p
D = DOS begin =1625
d = DOS per year end
p=year (0,1,2,3)
Year 2
4940-(2x.2)=
4940-(4*221)=4056
1625+(1x.2)=
1625+(2*221)=2067
f(p)=F-2x.p
F = franchise begin = 4940
f = franchise per year end
Year 3
4940-(2x.3)=
4940-(6*221)=3614
End 5th year f(5) = d(5)
1625+(1x.3)=
1625+(3*221)=2289
4940-2x.5=1625+1x.5
3315=15x+6x
3315=15x
3315/15=221
Year 4
4940-(2x.4)=
4940-(8*221)=3172
4940-(10*221)=2730
1625+(5*221) = 2730
1625+(1x.4)=
1625+(4*221)=2509
Year 1
4940-2x.1=
4940-(2*221)=4498
Year 5
4940-(2x.5)=
4940-(10*221)=2730
1625+(1x.1)=
1625+(1*221)=1946
1625+(1x.5)=
1625+(5*221)=2730
Formula for balance between DOS and Wholesale
Franchising - page 15
One-way advertising
Two-way Communication
Experiental
Viral/Personal
Consumer
Wrapping the consumer in layers, Model by Naked Communication
Tim Jackson and David Shaw, 2009, Mastering Fashion Marketing Palgrave Mcmillan
Comunnications Plan
37
Marketing Charts.com, Available [online]: available2001http://www.marketingcharts.com/direct/european-ecommerce-to-reach-323-billion-euros-in-2011-1239/
Operational Plan
E-Commerce - page 16
38
Buying Guide.
General information
•
In which countries is it possible to shop online?
You can currently shop in Italy, Spain, Portugal, France, Germany, UK, Austria, Russia, Ukraine, Lithuania, Denmark, Sweden, Netherlands
•
Are the online stores prices the same as those in the usual United Colors of Benetton store?
Yes.
Delivery
•
Can the delivery country be different from the purchase country?
No. The delivery country must always be the same country in which the purchase
was made.
•
How long will the order take to arrive?
Delivery times depend on the type of delivery selected. Store deliveries take to 3-5 working days, standard deliveries, 3-5 working days and express deliveries, between 1 and 3 working days.
•
What are the costs for the delivery service? Store delivery – FREE
Standard delivery – Express delivery – 3,95 EUR
9,95 EUR (can differ from country to country)
Operational Plan
E-Commerce
39
References
Intro
Annual Report 2011
http://www.benettongroup.com/sites/all/temp/doc/annual_2011_report_en.pdf
Kenna A., November 14, 2011. ‘Benetton Says Economic Outlook in Main Markets ‘Critical‘‘. Bloomberg
Businessweek.
Available[online]:http://www.businessweek.com/news/2011-11-14/benetton-says-economic-outlook-inmain-markets-critical-.html
Barber T., April 12, 2012. ‘Benetton‘s Tactics Miss The Big Picture‘. Financial Times.
Available[online]:http://www.ft.com/intl/cms/s/0/4533f712-84b6-11e1-a3c5-00144feab49a.
html#axzz1sNqnI8ww
Rückheim A. et al, May 2012. ‘Company Analysis Benetton‘
Mossinkoff, M., ‘to be published‘. ‘Marketing in Disguise‘
Strategy Formulation
Birnbaum D., July 1, 2008. ‘Crisis in the 21st Century Garment Industry and Breakthrough Unified Strategies‘
Mossinkoff, M., ‘to be published‘. ‘Marketing in Disguise‘
Mossinkoff M., IFFTI Conference Jaipur, 2012. ‘Diesel: It‘s the product stupid‘
Osterwalder A. & Pigneur Y., July 13, 2010. ‘Business Model Generation: A Handbook for Visionaries, Game
Changers, and Challengers‘
Mossinkoff, M., May 2012. ‘Strategy: Theoretical Frameworks‘. [slide 19]
Mossinkoff, M., April 2012. ‘Strategy: Analysis and Development‘. [slide 7;10;16;24]
Harvard Business Review, November-December 1996. ‘What is Strategy‘.
Harvard Business Review, January-February 1993. ‘Customer Intimacy and Other Value Disciplines‘.
E-Commerce
Ecommerce in Italy, 18th May 2012
Available at: <http://www.e-businessconsulting.it/en/home/dettaglio-news/hash/a103ee38c1c43ee639f7d10a190b98ac/news/e-commerce-italiano-nel-2012-a-due-cifre/?tx_ttnews[year]=2012&tx_
ttnews[month]=05&tx_ttnews[day]=18>
Ecommerce in Germany (E-Commerce-Markt in Deutschland konzentriert sich zunehmend)
Availabe at: <http://www.esales4u.de/2011/deutsche-ecommerce-markt-ehi-studie.php>
Ecommerce in Germany (ONLINE-HANDELSUMSATZ IN DEUTSCHLAND WIRD 2011 UM VORAUSSICHTLICH 15% AUF ÜBER 45 MILLIARDEN EURO STEIGEN), 25th January 2011
Available at: <http://presse.kelkoo.de/online-handelsumsatz-in-deutschland-wird-2011-um-voraussichtlich15-auf-uber-45-milliarden-euro-steigen.html>
Costs&Issues starting an ecommerce online business
Availabe at:
<http://www.ecornerstoresplus.com.au/epages/ecornerdemo1.sf/?ObjectPath=/Shops/ecornerstoresplus/
Categories/tips/ecommerce_costs>
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Costs ecommerce platform
Personal talk to the agency dotSource GmbH in Germany
http://www.dotsource.de/
Online shopping
Available at: < http://en.wikipedia.org/wiki/Online_shopping>
How to start a successful ecommerce business
Available at:
<http://www.cashcowcart.com/ecommerce_101_start_a_business_online.html>
Buying guide
Available at: < http://www.zara.com/webapp/wcs/stores/servlet/home/nl/en>
FY 2011 – Preliminary Highlights
Available at: < http://www.slideshare.net/benettongroup/benetton-group-2011-preliminary-highlights>
Marketing Charts.com, Available [online]: available2001http://www.marketingcharts.com/direct/european-ecommerce-to-reach-323-billion-euros-in-2011-1239/
Organisational Structure
Annual Report 2011
http://www.benettongroup.com/sites/all/temp/doc/annual_2011_report_en.pdf
Franchise
Annual Report 2011
http://www.benettongroup.com/sites/all/temp/doc/annual_2011_report_en.pdf
From family company to global icon | Francesca Rinaldi | May 2011
http://www.lescahiersfm.com/en/company-profiles/113-benetton-da-azienda-familiare-a-icona-globale.html
Benetton Uses BOOT Franchise Strategy In India | December 2010 http://indiafranchiseblog.blogspot.
nl/2010/12/benetton-uses-boot-franchise-strategy.html#!/2010/12/benetton-uses-boot-franchise-strategy.
html
Benetton puts its faith in family | Rachel Sanderson | March 2012 http://www.ft.com/intl/cms/s/0/4a695ea474fb-11e1-a98b-00144feab49a.html#axzz1wjxbIefm
Businesses start to die when business model innovation stops | Kay Plantes | April 2011 http://www.plantescompany.com/blog/business-model-innovation-best-practices/businesses-start-to-die-when-businessmodel-innovation-stops/
Benetton: A Must-Have Becomes a Has-Been | Armorel Kenna | March 2011 http://www.businessweek.com/
magazine/content/11_12/b4220021488483.htm
Benetton’s tactics miss the big picture | Tony Barber | April 2012 http://www.ft.com/intl/cms/s/0/4533f71284b6-11e1-a3c5-00144feab49a.html#axzz1wjxbIefm
Path opened to Benetton delisting | Rachel Sanderson | March 2012 http://www.ft.com/intl/cms/
s/0/2477882a-64b5-11e1-b30e-00144feabdc0.html#axzz1wjxbIefm
Principles of Marketing | F. Brassington & S. Pettitt | 2006 | page 583 http://books.google.nl/books?id=dBurt
HQhiEC&pg=PA583&lpg=PA583&dq=franchise+performance+benetton&source=bl&ots=JdmWCRdXer&sig=
HWJkNrr2ximYqb1oOYLU2Fax9Ic&hl=nl#v=onepage&q&f=fals
Franchising a good strategy for a company operating throughout Europe | C. Klock | page 16 http://books.
google.nl/books?id=Z6GNgEW7iVwC&pg=PA16&lpg=PA16&dq=benetton+strategy+franchise&source=bl&
ots=PHJHPFLr7d&sig=JoCfj-PcMaM9h-47Jgz_4G0hYWY&hl=nl#v=onepage&q=benetton%20strategy%20
franchise&f=false
http://www.benettongroup.com/group/business/worldwide-presence
Geographical map
http://www.profudegeogra.eu/wp-content/uploads/2011/05/harta-politica-a-globului.gif
41
Trent closing stores in value fashion chain | Raghavendra Kamath | February 2012 http://www.businessstandard.com/india/news/trent-closing-stores-in-value-fashion-chain/464050/
Benetton Family Looks to Take Retailer Private | JULIA WERDIGIER | February 2012 http://dealbook.nytimes.
com/2012/02/02/benetton-family-looks-to-take-retailer-private/
A Global Network and its Local Ties. Restructuring of the Benetton Group | P. Crestanello &
G.Tattara | 2009 http://www.unive.it/media/allegato/DIP/Economia/Working_papers/Working_papers_2009/
WP_DSE_crestanello_tattara_11_09.pdf
Benetton’s ‘dual supply chain’ system |Indu Perepu | 2008
http://www.scribd.com/doc/88170728/Bennet-On
BEHIND THE BID TO TAKE BENETTON PRIVATE | Sylvia Lambert | 2011 http://bizmology.hoovers.
com/2012/03/06/behind-the-bid-to-take-benetton-private/
Franchising: saviour of the high street or HR nightmare? | Steve Hemsley | April 2012 http://www.hrmagazine.co.uk/hr/features/1072621/franchising-saviour-street-hr-nightmare
Feature: Benetton heir signals new approach to revive famous brand | April 2012 http://www.chinadaily.com.
cn/xinhua/2012-04-25/content_5761332.html
A new era begins at Benetton | Luisa Zargani | June 2011 http://www.benettongroup.com/sites/all/temp/doc/
usa_wwd.com_jun2011_en.pdf
Communications Plan
Tim Jackson and David Shaw, 2009, Mastering Fashion Marketing Palgrave Mcmillan
Benetton target group, Kay Plantes, 2011, Available [online]: http://www.plantescompany.com/blog/business-model-innovation-best-practices/businesses-start-to-die-when-business-model-innovation-stops/
Youtube, Unilever 2006, Dove Evolution, Available [online]: http://www.youtube.com/watch?v=iYhCn0jf46U
Youtube, Jason Russel 2012, Kony 2012, Available [online]: http://www.youtube.com/
watch?v=Y4MnpzG5Sqc
Visual List Magazines, 2012, Available [online]:
http://www.allyoucanread.com/fashion-magazines/
Colour Festival, 2011, Available [online]:
http://www.glamcheck.com/fashion/2012/03/07/beauty-tips-for-playing-holi/
Jeremy Scott Fashion, 2011, Available [online]:
http://6000ad.power2mobiles.com/index.php/accessories/products/sunglasses/jeremy-scott-red-cross.html
Etro Fashion, 2011, Available [online]:
http://www.bwgreyscale.com/ads/etro.html
Shop Concept,2011, Available [online]:
http://interiormagz.com/tag/fashion-shop-design/
Benetton S/S 12, 2012, Available [online]:
http ://statusmagonline.com/united-colors-of-benetton-springsummer-2012
Advertising Budget, 20112 Available [online]:
http://www.benettongroup.com/archive/2011-annual-report
42
Pie Chart Revenues Europe
Benetton Group, Financial Information, ‘2011 Preliminary Highlights’, issued 31 January,
Available [online]: http://www.benettongroup.com/calendar-events/2011-preliminary-highlights
Visuals Magazines
http://www.allyoucanread.com/fashion-magazines/
Colour Festival
http://www.glamcheck.com/fashion/2012/03/07/beauty-tips-for-playingholi/
Jeremy Scoot
http://6000ad.power2mobiles.com
http://www.bwgreyscale.com/ads/etro.html/index.php/accessories/products/ sunglasses/jeremy-scott-redcross.html
43