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executive summary
United Colors of Benetton is part of the Benetton Group, a renown Italian clothing manufacturer, whole-saler 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 gener-ated 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 consum-ers. 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 be-ing a top-of-mind brand: United Colors of Benetton will not only build on its strengths but by determinate-ly addressing its weaknesses and effectively taking advantage of its opportunities, Benetton will regener-ate 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 ef-fectively 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 consist-ent and contemporary form of communication (open for co-evolution), Benetton will create a coherent, ac-cessible and engaging value proposition of (local) rel-evance (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 op-erated sales, will be consecutively balanced by the year ended 2016 (budget for 2012: €59,2m). The fo-cus will lie on strategically relevant key geographical areas/ cities and under-penetrated markets world-wide in order to increase brand awareness, brand perception, higher margins and efficient time-to-mar-ket operations.Rolling out an e-commerce platform (multi-chan-neling) at the beginning of 2013 is the proximate op-eration within this two-step and will not only leverage store closures in over-saturated markets, but will in-crease 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 implementa-tion 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 time-bound 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
Strategic Formulation
Company Description
Operational PlanRetail-led Consolidation Franchising E-CommerceValue Connection Communications Plan
Organisational PlanOrganisational StructureOrganisational Changes
Financial PlanIncome Statement Master-Budget
Balance Score Card
Conclusion
Appendix
References
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list of figures
Figure 1. Strategic Formulation
Figure 2. Value Connection Pyramid
Figure 3, Positioning Graph
Figure 4. Moodboard Mentality Group
Figure 5. Moodboard Existing Consumer
Figure 6. Table Target Group
Figure 7. Performance Mapping
Figure 8. Benetton’s Wholesale - DOS
Figure 9. Revenues Europe
Figure 10. E-Commerce; Entering Markets
Figure 11. First Years Budget E-Commerce
Figure 12. Design United Colors of Benetton Online Shop
Figure 13. Visual List Magazines
Figure 14. The Colour festival Holi in India
Figure 15. Jeremy Scott Fashion - Etro Fasion
Figure 16. Collection schedule
Figure 17. Plan of Events
Figure 18. Organisational Chart
Figure 19. Statement of Income
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Introduction
Ever-since their foundation in 1965, Benetton‘s story is built on innovation and a universal form of communica-tion, 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 Play-life - 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 long-term visioned strategic direction, the company is going to face severe risks posed from the negative (macro-economic) outlook.
Our goal is to re-establish United Colors of Benetton as a ‘must-have‘ brand.
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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 tak-ing 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 connec-tion with - groups of - con-sumers through a viable and coherent value proposition
Why: A strong brand presence (brand awareness) and a high and relevant meaning (being so-cially involved) leads to a strong value connection, hence increas-es brand loyalty (M. Mossinkoff, 2012).
How: translating Benetton‘s brand-DNA (also: identity) and core values into a coherent, ac-cessible, relatable and under-standable communication. Create the perception of valuable innova-tion and connection for the con-sumer - 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), convey-ing the perception of both low product innovation and an out-dated, repetitive communication approach (= no innovation). The existing consumer (age: 35+) has aged with the brand. In order to re-establish Benetton‘s competi-tiveness on the market, it needs to address todays ‘young‘ mar-ket segment effectively (‘Mentality Group‘, page 11).
How: By adapting a precise form of communication and by be-ing open to co-evolution with the consumer, United Colors of Bentton will be able to engage the ‘young‘ consumer and create (local) relevance (‘Communica-tions Plan‘ page 22 ).
(3) Re-direct the sales network by approaching a dynamic and contemporary retail model
Why: Reforming Benetton‘s re-tail 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 consecu-tively shift from the dominance of uncontrolled franchise stores to directly operated stores (focus: growth economies) (‘E-commerce‘; page 16 ‘Fran-chising‘ page 14).
Scope & LimitationsThe 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.
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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 long-term 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.
Differentiation
Value Connection
Re-direct Retail-led Consolidation
Operational Excellence
Consistency Principle
thought based on M.E. Porter
thought based -to parts- on M.E. Porter
thought based on M. Mossinkoff,
Osterwalder&Pigneur, van Kralingen
thought based-to parts- on J. Schum-
peter, Ansoff
thought based onTreacy&Wiersema
Goal: Re-establish Benetton as a ‘must-have’ brandStrategic Direction: Turnaround
5 Strategic Themes
Figure 1.Strategic Formulation
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The strategic direction of the above illustrated strate-gy is a company turnaround. The decision is based on extensive research and analytical outcomes that have lead to the conclusion that United Colors of Benet-ton 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. Effec-tively and efficiently balancing these five ‘building blocks‘ will result in the desired outcome: re-estab-lishing Benetton as a ‘must-have‘ brand. The strat-egy brought forward is not profit driven. Nevertheless, higher margins, increasing profit and growth will co-evolve with the translation of the strategy.The two highlighted strategic themes - ‘value connec-tion‘ and ‘re-direct retail-led consolidation‘ - are the major focus points of this paper and their implemen-tation will be evaluated on an operational level.
Value ConnectionThe goal is to create a strong value connection with - groups of - consumers through a viable value prop-osition. Increasing Benetton‘s brand awareness and creating (local) relevance is key in order to (re-)con-nect - groups of - consumers to the brand. This in turn, will lead to higher emotional value, consumer engagement, a feeling of reciprocation and belong-ing and eventually to a sustainable brand loyalty (see ‘Communications Plan‘, page 22).
Key words: value connections (M. Mossinkoff); the re-lation between branding and distribution - from myth-ical brand to cluster brand (v. Kralingen); emotional value (Osterwalder&Pigneur)
Re-direct Retail-led ConsolidationThe 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, reduc-ing time-to-market and accelerating top-line improve-ment. Focussing on key geographical areas (and un-der-penetrated markets)worldwide will increase brand awareness, brand perception and will guarantee the communication of the desired brand identity and -im-age. 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.
Key words: creative destruction - ‘resign‘ in one mar-ket to open in a new one (J. Schumpeter); market penetration and market development (I. Ansoff)
Operational ExcellenceOE includes operational effectiveness (top-line growth) and operational efficiency (bottom-line im-provement). OE strongly comes in to place on the supply chain side of the company‘s operations. For instance, maximising the use of their inputs, control-ling and improving functional performance, replenish-ment, planning, logistics and sourcing. The imple-mentation of Benetton‘s e-commerce platform (2013) will be fully integrated into the Benetton Group‘s in-novative 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)
DifferentiationA unique set of activities embraces, in particular, the use of social media, technologies, consumer engage-ment, consumer relationship and numerous com-munication 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 ac-tivities, differentiation (M.E. Porter)
Consistency PrincipleThe strategy brought forward will only unfold its full potential - sustainable profitability, coherent brand identity, strong brand loyalty, viable competitive posi-tion - 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, ac-tivities will reinforce one another, will strengthen com-petitive advantage will complicate imitation.Leadership: a turnaround requires consistency in management and leadership, since it implies credibil-ity, clarity and courage.
Key words: coherency, consistency, competitive ad-vantage, strategic fit (M.E. Porter)
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Company Description
VisionUnited Colours of Benetton sees fashion as a global medium, which connects people of every race and iden-tity. It overcomes geographical, political and ideological boundaries.
MissionBy 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 StatementUnited 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 Identityunite people of all races
celebrate diversity through colour
Core Valuesethically responsible
democraticaccessibleuniversalauthentic
Campaign Valuesaccessible for everyone
‘UNHATE‘cultural debateunited diversity
global community
Localised Associationscommercialised ethical branding
collaborations with (socially) committed, global artistssharing and supporting creative talent
Figure 2. Value Connection Pyramid
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Positioningbased on van Kralingen (2002)
USPUnited Colors of Benetton creates added value by celebrating diversity through colour and addressing ethical issues that are globally relevant.
High Involvement
Low Involvement
Functional Expressive
Territorial BrandCluster Brand
Informational Brand Mythical Brand
= shift from current position (cluster brand) to intended position (mythical brand).
Figure 3, Positioning Graph
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• 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
Mentality Group
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)
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Figure 5. Moodboard Existing Consumer
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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. Recom-mendations 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 sur-roundings
Spending Behaviour Conscious buying
Target Group
Figure 6. Table Target Group
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Operational Plan
Retail led consolidation
Goal: re-direct the sales network by approaching a dynamic and contempo-rary retail model
Franchising
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 af-fected 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 ‘Perfor-mance Mapping‘, figure 7) and opening directly operated and controlled sales points in key geographical loca-tions (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.
Figure 7. Performance Mapping
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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 nega-tive 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. objec-tives 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 Calcula-tion‘, Appendix page 38)
Wholesale DOS
2011 4940 1625
76% 24%
2012 4498 1846
70,9% 29,1%
2013 4056 2067
66,2% 33,8%
2014 3614 2288
61,2% 38,8%
2015 3172 2509
55,8% 44,2%
2016 2730 2730
50% 50%
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)
Figure 8. Benetton’s Wholesale - DOS
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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 mar-kets in Europe, reporting continuous growth from year to year (PressDE).
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-chan-nelling 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 advan-tage is the availability, being open 24 hours, 7 days a week, 365 a year. Therefore, e-commerce is an im-portant vehicle for Benetton in order to prevent fur-ther turnover declines in the short- to medium term and to eventually drive growth in the long-term.
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 coun-tries with Western style economies representing 74% of their total revenue. More than that, European busi-ness-to-consumer e-commerce increased rapidly
throughout the previous years, highlighting France, UK and Germany, collectively accounting for 72% of total European online sales in 2011 (marketingcharts).
In this respect, United Colors of Benetton will begin its e-commerce implementation in Europa. At the be-ginning 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-Com-merece 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).
In the short- to medium-term, United Colors of Benet-ton 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 ration-alising the sales network in over-exposed and weak markets (see Franchising, page 14). While rationalis-ing 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 mar-kets.
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Countries in which Benetton Introduces E-commerce in the Short- to Medium-term
Revenues Europe
Italy: is the country of origin and accounts for 57 % of total revenues (see figure 1). Italy is experiencing a con-siderable 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 (E-business 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%).
Figure 9. Revenues Europe (2011)
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There are numerous factors that have to be consid-ered 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 mar-keting, 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 posi-tion. This platform optimises the deliveries and ser-vices 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
the opportunity to save costs and time. The fully au-tomated, 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 automati-cally sorted, packaged and sent via a kilometre-long-tunnel 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 ship-ping, will require additional workforce (see Organisa-tion, page 28). Due to this optimised distribution sys-tem (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.
Organisation and Logistics
Figure 10. E-Commerce; Entering Markets
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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.
Annual Recurring Costs Domain 200 € SSL Certificate 500 € Total Annual Recurring Costs 700 €
Monthly Recurring Costs Website 10.000 € SEO 500 € SEM (based on Adwords clicks) 2.000 € Payment integration 1.000 € Shipping integration 1.000 € Total Monthly Recurring Costs 14.500 €
One Time Costs Design 100.000 € Customisation 50.000 € Total One Time Cost 150.000 €
First Years Budget Estimate 324.700 €
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:
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 environ-ment and experience that reflects their values and style.
Figure 11. First Years Budget E-Commerce
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[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.
Figure 12. Design United Colors of Benetton Online Shop
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value connection
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
Communications Plan
The goal of the communication plan is to (re-)establish a sustainable value connection and to ensure a consist-ent communication in the external and internal environment. Consistency is key and leads to a clear under-standing 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
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 pos-sible 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 mes-sage) by the consumer group, but has created offence and high controversy (= perceived message). The out-come 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 effec-tively addressed (the Glue Value of Brands, M. Mossinkoff 2012).
Target group: Men & Women 20-45yrsExisting consumer: Men & Women 35-45yrsMentality group: Men & Women 20-35yrs
Specific
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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 advertisingMagazines advertising
Figure 13. Visual List Magazines
The main focus of Benetton’s ad campaigns will be on fashion, style, art, design, culture and lifestyle maga-zines. 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 communicationResearch 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 Uni-lever (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.
ExperientialThe 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
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• 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.
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 op-portunity 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/Agen-zia Itl. Agency and Research). Benetton/Agenzia: “Young, creative people speak to young people.”
Figure 15. Jeremy Scott Fashion - Etro Fasion
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• 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 givea-ways 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 explic-itely connected to the brand Benetton. In the future, it will be important to place Benetton visibly behind activi-ties. 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. http://icon.benetton.com/2. http:// wow.project.Benetton.com/3. http://livewindow.Benetton.com/4. http://agencia.Benetton.com/5. http://ricercia.Benetton.com/6. http://socialcommitment.Benetton.com/7. 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, devel-oped 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).
WomanT-Shirts/TopsPulloverCardigan & BlousesDresses & SkirtsPants & TrousersJeansOuter wearAccessoriesBeltShoes
MenT-ShirtsPulloverShirtsJackets & BlazersShorts & TrousersJeansOuter wearAccessoriesSocksShoes
KidsT-Shirts/TopsHoodiesSweatersJeansPants & CaprisShortsSkirtsLeggingsDressesRompersOuter wearActivewear
UndercoloursUnderwear MenUnderwear WomenBeachwear MenBeachwear WomenBasics
LifestyleEyewearKids EyewearTravel bagsParfumeStationary
Product
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• 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
PriceA clear pricing structure through the use of even numbers:
T-shirts and tops: 14.00-27.00€Pullover: 34.00-78.00€Trousers: 73.00-112.00€Blazer and Jackets: 94.00-158.00€Dresses: 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 com-munication and up-to-date understanding within the internal and external business environment (see ‘Or-ganisational Structure‘, page 28)
Figure 16. Collection schedule
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Financial year 2011 58 m
Financial year 2012 87 m +50% *
Financial year 2013 72.5m +25% *
*based on the FY 2011
RealisticCommunication Budget
*Advertising and promotion costs accounted 58 million accounting 2.8% of revenues. [Annual report 2011, Benetton]
Time boundPlan 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 fashionadvertising
Surveys
Figure 17. Plan of Events
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Figure 18. Organisational Chart
29
Organisational plan
Goal: Coherency of information flows throughout the company
Organisational Changes
The implementation of the strategy brought forward will consequently lead to changes in the organisation-al 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, consist-ency is an inevitable prerequisite. Hence, it is key to maintain a coherent flow of knowledge and communi-cation 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 comprehen-sion 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 - ‘Consisten-cy 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.
Rolling out an online platform (2013) will lead to the establishment of a new department, exclusively fo-cussing on Benetton‘s e-commerce. This department will operate independently as part of the Benetton Group‘s multi-channel divisions. Additionally, it will be
integrated in the Group’s supply chain, logistics- and distribution channel. The programming, updating and maintenance of the e-platform, however, will be out-sourced to a web agency. The communication plan brought forward (see ‘Com-munication 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, in-stitutional campaigns and advertising but will further offer its services to third parties. Although the estab-lishment is rather a formal change for Benetton‘s cur-rent advertising division, Benetton/Agenzia will show its effects in Benetton’s human resources.
In 2011 Benetton employed more than 9.600 peo-ple. 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.
30
Revenues
Cost of Goods Sold
Gross Operating Profit
Distribution & Transport
Sales Commissions
Contribution Margin
Payroll and related costs
Advertising and promotion
Other expanses and income
General and operating expanses
Financial expenses
Net Foreign Currency Hedging
EBITDA
Depretiation and amortisation
EBIT
Income tax
Net Incomefor the year attributable to ParentCompany:
2,032,341
1,149,788
882,553
71,841
86,828
723,884
180,937
57,425
248,038
486,400
33,053
9,497
194,934
88,354
106,580
37,729
68,851
68,851
2,048,599
1,147,215
901,384
71,701
86,041
743,642
207,345
87,000
272,464
566,809
20,486
10,243
146,104
88,090
58,014
17,404
40,610
-
2,079,328
1,154,027
925,301
74,856
85,252
765,193
234,507
72,500
276,551
583,558
20,793
10,397
150,445
89,411
61,034
18,310
42,724
-
100,0
55,49
44,51
3,6
4,1
36,8
11,3
3,9
13,3
28,1
0,9
0,5
7,2
4,3
2,9
0,8
2,1
-
100,0
55,9
44,1
3,5
4,2
36,3
10,1
4,2
13,3
27,7
1,0
0,5
7,1
4,3
2,8
0,8
1,9
-
100,0
56,6
43,4
3,5
4,3
35,6
8,9
2,8
12,2
23.9
1,6
0,47
9,6
4,3
5,2
1,8
3,4
-
2013(01.01.2013-31.12.2013)
2012(11.03.2012-31.12.2012)
2011(01.01.2011-31.12.2011)%(thousand of Euro) % %
Consolidated Statement of Income
Figure 19. Statement of Income
31
Financial plan
- 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 ex- pected 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 ex- penses. 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 fis- cal 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
Key Financial Data
(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 inter-est, 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.
Master Budget for fiscal 2012 (E1) and fiscal 2013 (E2):
32
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 20123.2 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.
Strategy: A company turnaroundVision: Re-establishing Benetton as a ‘must-have’ brand
LEARNING AND GROWTH
Franchise1.1 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 mar- kets, 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.
33
Balance score card
INTERNAL BUSINESS PROCESSES
1.1 By the end of 2012 Benetton will educate 50% store personnel to ensure that employees are educated by the ‘Coherency Management Department’.1.2 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’, the Benetton/Agenzia, the Benetton/Ricerca.2.2 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, 20122.2 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, 20123.2 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, 20124.2 Benetton’s net profit margin not below 2 in the second year, the year ended December 31, 2013
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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 interme-diary (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 decision- making and to maintain consistency both internally and externally
36
Appendix
• 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
• 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
• 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
Strengths
opportunities threats
Weaknesses
Company Analysis Benetton & Gap 2012
Introduction - page 5
37
D=a F=b
d(p)=D+1x.pD = DOS begin =1625d = DOS per year endp=year (0,1,2,3)
f(p)=F-2x.pF = franchise begin = 4940 f = franchise per year end
End 5th year f(5) = d(5)
4940-2x.5=1625+1x.53315=15x+6x3315=15x3315/15=221
4940-(10*221)=27301625+(5*221) = 2730
Year 1 4940-2x.1=4940-(2*221)=4498
1625+(1x.1)=1625+(1*221)=1946
Year 24940-(2x.2)=4940-(4*221)=4056
1625+(1x.2)=1625+(2*221)=2067
Year 34940-(2x.3)=4940-(6*221)=3614
1625+(1x.3)=1625+(3*221)=2289
Year 44940-(2x.4)=4940-(8*221)=3172
1625+(1x.4)=1625+(4*221)=2509
Year 54940-(2x.5)= 4940-(10*221)=2730
1625+(1x.5)=1625+(5*221)=2730
Formula for balance between DOS and WholesaleFranchising - page 15
Consumer
Viral/Personal
Experiental
Two-way Communication
One-way advertising
Wrapping the consumer in layers, Model by Naked CommunicationTim Jackson and David Shaw, 2009, Mastering Fashion Marketing Palgrave McmillanComunnications Plan
38
Marketing Charts.com, Available [online]: available2001http://www.marketingcharts.com/direct/european-e-commerce-to-reach-323-billion-euros-in-2011-1239/Operational Plan E-Commerce - page 16
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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 – 3,95 EUR Express delivery – 9,95 EUR (can differ from country to country)
Operational Plan E-Commerce
40
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E-CommerceEcommerce in Italy, 18th May 2012Available at: <http://www.e-businessconsulting.it/en/home/dettaglio-news/hash/a103ee38c-1c43ee639f7d10a190b98ac/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 VORAUSSI-CHTLICH 15% AUF ÜBER 45 MILLIARDEN EURO STEIGEN), 25th January 2011Available at: <http://presse.kelkoo.de/online-handelsumsatz-in-deutschland-wird-2011-um-voraussichtlich-15-auf-uber-45-milliarden-euro-steigen.html>
Costs&Issues starting an ecommerce online businessAvailabe at:<http://www.ecornerstoresplus.com.au/epages/ecornerdemo1.sf/?ObjectPath=/Shops/ecornerstoresplus/Categories/tips/ecommerce_costs>
Costs ecommerce platformPersonal talk to the agency dotSource GmbH in Germanyhttp://www.dotsource.de/
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Online shoppingAvailable at: < http://en.wikipedia.org/wiki/Online_shopping>
How to start a successful ecommerce businessAvailable 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 HighlightsAvailable at: < http://www.slideshare.net/benettongroup/benetton-group-2011-preliminary-highlights>Marketing Charts.com, Available [online]: available2001http://www.marketingcharts.com/direct/european-e-commerce-to-reach-323-billion-euros-in-2011-1239/
Organisational StructureAnnual Report 2011http://www.benettongroup.com/sites/all/temp/doc/annual_2011_report_en.pdf
Franchise Annual Report 2011http://www.benettongroup.com/sites/all/temp/doc/annual_2011_report_en.pdf
From family company to global icon | Francesca Rinaldi | May 2011http://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/0/4a695ea4-74fb-11e1-a98b-00144feab49a.html#axzz1wjxbIefm
Businesses start to die when business model innovation stops | Kay Plantes | April 2011 http://www.plant-escompany.com/blog/business-model-innovation-best-practices/businesses-start-to-die-when-business-model-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/0/4533f712-84b6-11e1-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=dBurtHQhiEC&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%20franchise&f=false
http://www.benettongroup.com/group/business/worldwide-presence
Geographical maphttp://www.profudegeogra.eu/wp-content/uploads/2011/05/harta-politica-a-globului.gif
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Trent closing stores in value fashion chain | Raghavendra Kamath | February 2012 http://www.business-standard.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.hrmaga-zine.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/busi-ness-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
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Pie Chart Revenues EuropeBenetton Group, Financial Information, ‘2011 Preliminary Highlights’, issued 31 January,Available [online]: http://www.benettongroup.com/calendar-events/2011-preliminary-highlights
Visuals Magazineshttp://www.allyoucanread.com/fashion-magazines/
Colour Festival http://www.glamcheck.com/fashion/2012/03/07/beauty-tips-for-playingholi/
Jeremy Scoothttp://6000ad.power2mobiles.com http://www.bwgreyscale.com/ads/etro.html/index.php/accessories/products/ sunglasses/jeremy-scott-red-cross.html
