Benetton

Q1. What are the most important elements of Benetton’s marketing, manufacturing, logistics and financial strategies?

Marketing:

• 19-25 yr old target market

• Youthful, sporty appeal

• Bright colors

• Retailers only sold Benetton

• High advertising and promotion budget

• Establishing lead stores prior to expanding

• Many local stores under different names

• pricing lower than competition

• Price quality combination with high fashion content w/bright colors

• Layout of stores - open shelves

• Several opportunities for retailers to order / Flash collection / Reassortment

Logistics:

• Limited storage space for back-up stock

• manufacturing short delivery time items to order

• Part ownership in everything

• In-depth knowledge of seasonal issues

• planning process based on 5-10% of initial orders

• Receive orders prior to manufacturing

• Warehouse would save 20% in transportation costs

• Inventory turnover high considering large variety

• 5% cost of transportation

• Freight is included to any location

Manufacturing:

• Efficient use of plant capacity

• Increased capacity through outsourcing

• Dyed garment after assembly - instead of dying the yarn

• Advances in drying technology and softness techniques

Financial

• Payment of subcontractor after production

• Large investments in manufacturing and logistics operations

• Stores were much smaller than competition with twice the revenue

Q2. How does Benetton gain advantage over competitors in Europe?

• backward and forward integrated: Raw material control through ownership of retail stores

• Advanced centralized distribution center

• Stores are selling only Benetton

• Raw material price leverage

• Differed differentiation

• Heavy use of promotion

• Lower production costs...