United Colors of Benetton

IExecutive Summary The United Colors of Benetton a familiarity of colors and controversies. Offering the world an insight to spurt, as well as, human equality and world issues, Benetton gives us stylish wear and innovative promotion. While assay to capture an audience favoring Italian character in style and project, the company additionally desires to present the world with contentious campaigns to awaken thoughts and debates. These controversies be jeopardizing Benettons survey in the exertion, and its reputation of being trendily unique and committing to world harmony.II. Introduction The United Colors of Benetton (Benetton), an Italian based company, is primarily focusing its air on clothing and controversial advertising. Presented all over the world, the company is available to young and old in combined colors and stylish fashion. In the following pages a execute internal and external analysis of the company will be explained, as well as, a description of the companys o verall standing. The alternatives as seen are described to include the advantages and drawbacks of each alternative.Conclusively, a recommendation based upon all of the findings outlined is prescribed. III. External Analysis A. Customer Analysis Benetton sells womens and mens dress up, accessories, shoes and fragrances to clients that are almostly fashion-oriented women and men between the ages of twenty to thirty- five. Colors is published in three editions and four languages, with a website that is both familiar and praised by critics. The magazine is bi monthly and reaches young people all over the world.Benetton is an interesting trans national corporation that truly has a social scruples and tries to employ models who look like the human race withal featuring gay models who are HIV positive. B. Competitor Analysis The clothing industry is a in truth broad industry selling products ranging from pants and shirts to accessories. It is affected by the la test trends in desig n, models, colors and styles, and as well as by consumer preference. There are some(prenominal) similar companies selling comparable products, so competition is incredibly fierce. Benetton does not outsource any of its procedures, but is in charge of design, production and distribution.It is therefore concentrated to compare the company with other organizations in the same industry since competitors can be smaller and concentrate on only one aspect of the silvermaking(prenominal) chain. Consequently, Benettons competitors were selected by viewing thewww. hoovers. comweb site. According to the organizations available here offering approximately the same products as Benetton the main competitors are Industria de Diseno Textil (Inditex), ranch and Hennes and Mauritz (H&M). It is sour that these three organizations are Benettons nighest competitors due to the fact that they target the same consumer separate.According to the CBS grocery store Watch the competitors are not all p resent in exactly the same industry due to the fact that Benetton and Inditex actually produce clothing and fabrics, design and retail fashion products, while GAP only retails, and H&M retails and designs its goods. It is assumed that the exact industry is irrelevant because all companies still aim for the same target grocery and therefore compose a terror to Benetton. Furthermore, all four organizations originated from four contrary countries, but this is in like manner looked at as unimportant because they are a global company with global customers. . Inditex Inditex is the closest competitor to Benetton because it is present on the stock market place and it also designs and retails its fashion. It is a global company with more than 1,300 shops in almost 40 countries. It is most best-selling(predicate) in Europe, just like Benetton, perhaps due to its origin Spain. Inditex introduces new products by answering to popular trends presented by customers. The company has a larger market share than Benetton in the clothing and textile industry with sixty-eight percent compared to Benettons twelve percent (CBS Market Watch).This could be as a final result of Inditexs six banners compared to Benettons five, and also because of the fact that Benetton has been having several difficulties selling its products after its highly noticeable marketing campaigns were banned in several countries. Furthermore, Inditex is mentioned as number three hundred and ninety on the FT Global 500 the worlds largest companies list, while Benetton is not on this list (Financial Times). 2. GAP GAP is an American-based company with almost 4,250 stores worldwide. GAP only retails its products, but the company is a strong competitor toBenetton. GAP sells basic, causal styles for men, women and children. The company has three bondage and all clothes are privatelabeled merchandise made specifically for GAP. GAP is on the Fortune 500 as number one hundred and thirty, and also on the FT G lobal 500 as number three hundred and forty-eight (Hoovers). 3. H&M H&M is a fashion company from Sweden. It has about 844 stores in 14 countries and is in the midst of developing further. H&M designs its clothes by using 90 different designers who realise collections for women, men, teenagers and children.H&Ms intention is to uphold a high fashion content which is up-to-date within design concepts and at the forefront of the latest internationalist trends (hm. com). The organization also sells underwear, sportswear, accessories and cosmetics. The competitive structure of the clothing industry can be explained as very assorted and complicated to plot. Organizations do not segment by age as much as by lifestyle or theme for example, designer accessories, formal wear and casual wear. There are several channels of distribution available, such as catalogue retailing, department stores and outlets, as well as the typical brand store.The industry can be viewed as fairly fragmented and t here is a large amount of different chains available on the market. The industry is therefore highly competitive. Barriers to first appearance are low, and chains can expand quickly and grow large in size and popularity. Present companies have to struggle with new competition frequently and intensely. Companies are very dependent on customer preference and reputation can fluctuate distinctly due to modifications in, for example, fashion and image (Institute for Retail Studies). C. Market AnalysisToday, the Benetton Group is present in 120 countries around the world. Its core business is clothing a group with a strong Italian character whose fashion, design proficiency and enthusiasm are clearly seen in the United Colors of Benetton and the more style-orientated Sisley brands in The Hip Site, the brand for teenagers and in the sportswear brands, Playlife and Killer Loop. Benettons sports goods brand, Prince (tennis racquets, footwear & apparel), has a 30 percent global market share , and Rollerblade In-line skates also has a 30 ercent global market share. Additionally, NordicaSkis (ski boots & mountain wear) has a 28 percent global market share. Ektelon Racquetball is the market leader. The Group produces over 100 million garments every year over 90 percent of those are in Europe. Its retail network of 5000 stores around the globe is progressively more focused on large floor-space points of sale presenting high-quality customer services and additionally generating a essential turnover of two billion euros net, of retail sales.Benetton has experienced tremendous growth and above-average profitability over the years, and what makes it especially striking is the fact that it has been achieved in mature industry apparel in an apparently hostile environment labor-expensive and unionized northern Italy. Benettons financial reports from 1996 to 2002 show growth and increasing revenue except in 2002 total sales in 2002 amounted to approximately 2. 0 billion euro, d own from 2. 1 billion in 2001. The main reason for this loss is that the program for the disposal of the sports equipment business resulted in the steep decrease in turnover in the sports sectors.It hurt the Groups overall performance. Moreover, Benettons communication campaigns played an important exercise in establishing its brand identity. On the other hand, they alienated the target market and Benetton retailers. For example, in Germany, Benettons second-largest market, partly because of the controversial print- media campaign, awareness of Benetton had significantly increased intercourse to other clothing brands, in part due to the controversial print- media campaign however, measures of likeability relative to competing brands decreased.Also in 1995, several of the 600 German retailers that used to carry the Benetton line tie together in a boycott. Thus, the Group attributed much of its 1994 sales drop to the campaign. Additionally, the company partnered with Sears for a mo re affordable line of Benetton USA, then lost the scale down when Benetton planned to release an ad campaign with death-row inmates. Thus, Benetton lost its place in the U. S. market, as the company became better known for its infamous P. R. than its clothes.The understated image of the fling replaced the aggressive social advertising of Benetton in clothing campaigns as the 90s came to a close, but Benetton is Europes largest clothing maker and the worlds largest consumer of sheepskin in the garment sector. As a result, the market share in the United States has gradually decreased, even in the European area. In contrast, the Benettons market share in Asia area has been increasing, for example in, Japan, Korea, and China due to being the Groups core targets. In 2000, the revenues by geographical area showed European (74. %), the Amercias (12. 3%), and Rest of the world (13. 4%). However, Benettons 2002 revenues by geographical area sho wed a different trend as European (68. 9%), the Americas (9. 6%), Asia (8. 9%), and other (12. 6%). D. Technology Analysis Using communication and information technologies is a very effective strategy for Benetton. The company is referred to as quick response, in which manufacturing, warehousing, sales and retailers are linked together. In this strategy, a Benetton retailer reorders a product through a direct link with Benettons mainframe computer in Italy.Due to the strategy, the company is capable of shipping a new order in only four weeks, and that is several weeks faster than most of its competitors. Furthermore, the company is using integrated information systems therefore, the company checks daily sales data from its own boutiques, which is integra ted with CAD and CIM. Also, global EDI network links agents with production and schedule information. The EDI is ordering transmission to headquarters, and it links with air carriers, as well.Recently, Benetton planned to weave radio frequency ID (RFID) chips into its garme nts to track its clothes worldwide. The chips would help the Italian clothing manufacturer cut costs by eliminating the need for workers to take inventory by manually scanning individual items of clothing. It would also protect the garments against theft. However, the RFID chips could pose significant risks to customers loneliness because they would allow anyone with an RFID receiver to locate customers wearing Benetton clothes, including companies that want to sell them their products.Therefore, consumers would be bombarded with intrusive advertising because a history of customers purchases and their identities would be linked with the tag even after they leave the store. It would weave the engineering into the collar tags of clothes that cost at least 15 dollars to keep track of them as they ship. The RFID technology offers Benetton a number of advantages, not the least of which is its ease of use. Unlike a bar-code scanner, which must be held directly in front of the item being scanned, mployees with RFID receivers or shelves with the technology can scan entire boxes of items from up to five feet away. The technology would thus require fewer people to scan clothing items for inventory purposes. RFID technology also provides business managers easily with store detailed information about customers buying habits that could spur further sales. The tagging system whitethorn also save the company money by reducing theft, because the RFID tags can be programmed to set off an alarm if someone leaves a store without paying for an item.Similarly, the technology would make it harder for merchants to sell stolen or bootlegged versions of clothing in flea markets and other venues a retailer who spots an item that she suspects is either stolen or illegally manufactured could check its origin using the tagging system. It may also help customers find the clothes they want in the store and even make it easier for them to return items without a receipt because the store wou ld have record the RFID tag. E. Socio-Cultural Analysis From a socio-cultural perspective, fashion is a cultural and societal issue that varies from subtlety to culture and from country to country.It also varies within a specific culture with time. A company like Benetton must monitor trends for new opportunities or threats because as the fashion trends change, so does the customer base, and the ethnic/multicultural consumer is the fastest ripening segment. Clothing, however, is a visual representation, which fulfills the de sire of each individual who wants to be noticed in a society in a particular way. Because of this, the apparel industry will never falter or suffer abrupt changes, but will adapt and change due to various conditions.Linked to this phenomenon is the aspiration of different types of individuals with different desires to either have the newest or most significant types of apparel, particularly in the industrialized nations. This requires participants in the indus try to offer the newest styles of clothing in order to defy market share. Despite this overall socio-cultural trend, there is some indication that majority of consumers are not purchasing as rapidly as they have in the past due to the fact that the economy is recovering.Markets for lower-end brands continue to exist, however, in developing nations where individuals cannot afford the cost of newer styles. As a result, the fashion industry is an industry where the socio -cultural environment is of prime importance. The firms in this industry above all, must bring out new designs and keep Top of Form Bottom of Form