Presentation on theme: "ALESSI Evolution of an Italian Design Factory"— Presentation transcript:
1 ALESSI Evolution of an Italian Design Factory Marketing ManagementTeam CEMBA ’06
2 How to control and expand distribution without compromising the brand image?
3 Distribution Structure Distribution and the Brand ImageChallengesNext Step
4 Why Controlling Distribution? Control Brand ImageProblem of heterogeneity in retailer strategies over product displayDiversity in distribution channelsRecovering from price and brand confusion of past ten yearsIncrease turnover
5 Distribution Structure Use distribution asA channel of distributionDiversified channels: retail outlets, museum stores, gift shops, …A place to increase brand equityLuxury retail shops in ItalyOffering: between shopping and specialtyDesign-oriented table and kitchen productsShopping goods (not convenience goods!): about 50% purchases as gifts, wedding presents, Christmas: overall 25-30% of annual sales.Specialty goods: best sellers like M.Suicide, Magic Bunny, etc…Consumer side distribution structure~1983: Change into streamlined distribution system
6 Distribution Structure 1983: streamlined distribution systemManufacturerManufacturerorders - deliveriesordersIndependentDistributorsSingle CountryIndependent agentsor subsidiariesdeliveriesorders - deliveriesordersRetailersRetailersHybrid channel administrationIndirect for orders and direct for deliveriesAgents: independent or company-owned subsidiariesBenefits: increase of control in distribution, reduction of functional discrepancies, reduction of delivery costs, economies of scale in order management, better mapping in assortment of goods and better services by company-owned subsidiaries
7 Distribution Structure Shift in market coverage strategyFrom intensive distribution to selective distribution:Agents as independent entities in exclusive geographical areasFrom 9000 retailers in 1989 to 5000 in 2000.streamlined distribution systemManufacturerordersSingle CountryAgentdeliveriesordersRetailersPUSH strategyInduce cooperation with retailers, keep inventory low, display products, and visibility on shelf spaces to win voluntary co-operation.
8 Management of Power in Distribution Channels Avoidance StrategyDifferentiation: design oriented and product namingFocus: Table and kitchen, high-qualityReduction in costs: Reduction in delivery costs by streamlined distribution system.Lately: Resistance and confrontation strategyDiversification of channels: selected retailers, own stores, licensingControlled distribution system
9 Management of Power in Distribution Channels Power Management increased by streamlined distribution systemBetter control over products and shorter delivery channels thus reduction of costs of opportunity.Services: support in merchandising, inventory risk, trainingservice offeringbasicofferingThreat of revocationRetailer churn=5% in ‘03Coercive sourcesPowerTrainingsMerchandisingReference valueIdentificationNon-coercivesources
11 Distribution on Brand Image Consistent retail experience to strengthen the brandBenefits: Customer Loyalty, more inelastic consumer response, greater trace cooperation and support, possible licensing opportunityShop-in-shop for control over product display, demanding retailer commitment: ask for minimal surfacesMono-brand stores: show rooms and flagship stores’03: 3 moves to expand distribution while increasing customer-based brand equity value:Consistent retail experienceIncreasing retail penetration in key marketsLicensing the Brand for newer types of products like watches and cars
12 Distribution Challenges on Brand Image ~80s: Too intensive distribution systemPrice discrepancy between luxury retailers and othersconfusing brand imageConstant control challenge over product display, merchandising and pricingThough selective approach, Licensing still putting at risk the brand image by partners controlling manufacturing and distribution.Other retailersLuxury