MBA - Marketing Management - Alessi Case Study

7/31/2019 MBA - Marketing Management - Alessi Case Study

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ALESSIEvolution of an Italian

Design FactoryMarketing Management

Team C

EMBA 06


2/13

How to control and expanddistribution without

compromising the brand image?


3/13

Distribution Structure

Distribution and the Brand Image

Challenges

Next Step


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Why Controlling Distribution?

Control Brand Image

Problem of heterogeneity in retailer

strategies over product display

Diversity in distribution channels

Recovering from price and brand

confusion of past ten years Increase turnover


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Use distribution as A channel of distribution

Diversified channels: retail outlets, museum stores, gift shops,

A place to increase brand equity Luxury retail shops in Italy

Offering: between shopping and specialty Design-oriented table and kitchen products Shopping goods (not convenience goods!): about 50% purchases

as gifts, wedding presents, Christmas: overall 25-30% of annualsales.

Specialty goods:best sellers like M.Suicide, Magic Bunny, etc

Consumer side distribution structure ~1983: Change into streamlined distribution system


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Manufacturer

Independent

Distributors

Retailers

Manufacturer

Retailers

orders - deliveries

orders - deliveries orders

Single CountryIndependent agents

orsubsidiaries

orders

deliveries

1983: streamlined distribution system

Hybrid channel administration Indirect for orders and direct for deliveries Agents: independent or company-owned subsidiaries

Benefits: increase of control in distribution, reduction of functionaldiscrepancies, reduction of delivery costs, economies of scale in ordermanagement, better mapping in assortment of goods and better servicesby company-owned subsidiaries


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Manufacturer

Retailers

orders

Single CountryAgent

orders

deliveries

PUSH strategy Induce cooperation with retailers,

keep inventory low, displayproducts, and visibility on shelfspaces to win voluntary co-

operation.

streamlined distribution system Shift in market coverage

strategy From intensive distribution to

selective distribution:

Agents as independent

entities in exclusivegeographical areas

From 9000 retailers in 1989 to

5000 in 2000.


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Management of Power inDistribution Channels

Avoidance Strategy Differentiation: design oriented and product naming

Focus: Table and kitchen, high-quality

Reduction in costs: Reduction in delivery costs by streamlined

distribution system. Lately: Resistance and confrontation strategy

Diversification of channels: selected retailers, own stores,licensing

Controlled distribution system


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Management of Power inDistribution Channels

Power Management increased by streamlineddistribution system Better control over products and shorter delivery channels

thus reduction of costs of opportunity.

Threat of revocation

Retailer churn=5% in 03

TrainingsMerchandisingReference value

Identification

Coercive sources

Non-coercivesources

Powerbasicoffering

Services: support in merchandising,inventory risk, training

service offering


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Distribution and the Brand


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Distribution on Brand Image

Consistent retail experience to strengthen the brand Benefits: Customer Loyalty, more inelastic consumer response,

greater trace cooperation and support, possible licensingopportunity

Shop-in-shop for control over product display, demandingretailer commitment: ask for minimal surfaces

Mono-brand stores: show rooms and flagship stores

03: 3 moves to expand distributionwhileincreasingcustomer-based brand equity value: Consistent retail experience

Increasing retail penetration in key markets

Licensing the Brand for newer types of products like watchesand cars


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Distribution Challenges onBrand Image

~80s: Too intensive distribution system

Price discrepancy between luxury retailers andothers

confusing brand image

Constant control challenge over product display,

merchandising and pricing Though selective approach, Licensing still

putting at risk the brand image by partnerscontrolling manufacturing and distribution.

Luxury Other retailers


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Next Step: Multiple Trademarks

Documents

MBA - Marketing Management - Alessi Case Study