7/30/2019 Benetton case analysis

1/19

By Sergio Signorelli & James L. Heskett

7/30/2019 Benetton case analysis

2/19

Situation analysis

Problem statement

Options

Criteria for evaluation

Evaluation of options

Recommendation

Action plan

Contingency Plan

7/30/2019 Benetton case analysis

3/19

World leader in the field of knitwear.

60% of all the garments sold were made upof wool.

Excellent execution of marketing,manufacturing, distribution and logisticsstrategies.

Sell a wide variety of good quality garmentsin different colours at low prices ascompared to the competitors.

7/30/2019 Benetton case analysis

4/19

Present situation:- Current product lines have reached

saturation

Increased competition from firms emulatingtheir strategies

Growing amount of imported merchandise

Stagnant economy

Looking for expansion in new markets likeUSA, Japan and existing Europeanmarkets in Europe.

7/30/2019 Benetton case analysis

5/19

How to increase Profits ?

7/30/2019 Benetton case analysis

6/19

Entering US market

Expanding in European markets

Diversification of products

Consolidation in existing markets

7/30/2019 Benetton case analysis

7/19

Profitability

Brand Image

Competition

7/30/2019 Benetton case analysis

8/19

1.Entering US market:i. Profitability:a. Increased cost due to Freight charges and

Import duties

b. High establishment and labour costsc. US is currently reeling under recession

d. Preference for Easy-to-care-for garments

e. No short-run profits. Long-run profits are also

not assuredf. Many risks are involved

7/30/2019 Benetton case analysis

9/19

ii. Brand Image:a. Benettons name and its label not well

known in USA

b. Huge investments on promotions are

needed to create a favorable brand imagec. Establishing and sustaining brand image is

hard due to competition

iii. Competition:

a. Increased competitionPresence ofestablished big players

7/30/2019 Benetton case analysis

10/19

2. Expanding in European markets:

i. Profitability:

a. Not much investment is needed ascompared to entering US markets

b. Brand awareness among consumers is high

c. Logistics will be easier

d. Consumer preferences are aligned with thecompanys core competencies Naturalwool

7/30/2019 Benetton case analysis

11/19

ii. Brand Image:a. Already has a good brand image that can

be leveraged

b. Increased as it will be present everywhere in

Europe and will not be seen only as anItalian brand

iii. Competition:

a. Benetton is the market leader and henceenjoys an edge over competitors

7/30/2019 Benetton case analysis

12/19

3. Diversification of products:

i. Profitability:

a. The existing distribution network can be

utilizedb. Can earn reasonable profits with low

investments

c. Advertising costs are minimal

ii. Brand image:

a. Good brand image of Benetton can beleveraged to sell the accessories

7/30/2019 Benetton case analysis

13/19

iii. Competition:

a. Competitive advantage as Benettonbecomes a One-stop shop for all apparel

purchases

7/30/2019 Benetton case analysis

14/19

4. Consolidation in existing markets:

i. Profitability:

a. Reduced costsincreased profitsb. Construction of warehouse will lead to

efficient supply chain management

c. Designing of the new information system will

lead to better inventory management

7/30/2019 Benetton case analysis

15/19

ii. Brand Imagea. Not much effect on brand image

iii. Competition

a. Competitors will emulate Benetton'sstrategy, but not possible immediately

7/30/2019 Benetton case analysis

16/19

After scrutinizing the implications of theoptions available we recommend that

It is not right time to enter US markets at this

stage

Benetton should expand in the Europeanmarket and consolidate its position as No.1 in

Europe

7/30/2019 Benetton case analysis

17/19

Target countries where we have notpenetrated muchSpain, Sweden, etc,.

Perform market analysis to find the level

of demand and the maturity of themarket

Perform competitor analysis tounderstand our competitive advantage

Expand accordingly in these countries

7/30/2019 Benetton case analysis

18/19

Diversification of products

Expanding our product line by adding shoes,belts, ties and all other accessories

Introduction of a perfume brand

Become a One-Stop shop for all apparel

purchase

7/30/2019 Benetton case analysis

19/19

Thank you