Benetton's Diversifications
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Case Code: BSTR145 Case Length: 18 Pages Period: 1980-2004 Pub Date: 2005 Teaching Note: Available |
Price: Rs.500 Organization: Benetton's Industry: Diversified Countries: Italy Themes: Unrelated Diversification |
Abstract Case Intro 1 Case Intro 2 Excerpts
Background
The Benetton family comprised four siblings - Luciano, Giuliana, Gilberto and Carlo. In the early 1960s, they started a sweater business out of their home in Ponzano Veneto, a small town 30 kilometers north of Venice, Italy. The business began with Giuliana knitting the sweaters at the kitchen table, but as the business grew she became responsible for design and fabrication, and Luciano took up the responsibility of marketing and sales. Luciano went to England to study a new technique of dyeing; instead of dyeing the yarn, the sweaters were dyed after they were made. That way, the sweaters could be dyed in the colors that were popular and in fashion. In 1963, the Benettons began opening their own shops in Italy and created a network of exclusive distributors using subcontractors. In 1965, the Benetton Group was established and the first factory was set up in 1966. This was a true family business, as all four siblings were involved in various capacities.
While Luciano handled marketing, Guiliana was in charge of design, Gilberto looked after administration and finance, and Carlo managed production. Also in 1966, they hired French designer Lison Bonfils, who worked with them for 10 years. In 1969, the Benettons opened their first boutique in Paris. The shop in Paris also did very well with its popular styles, availability of a wide range of colors and affordable prices. Following the success of the Benetton outlets, the Benetton family bought the Villa Minelli4 in 1969, which became the company's head-office in the mid-1980s. In 1972, Benetton engaged Eldorado, a publicity agency in Paris, to boost its popularity further. In 1974, Benetton bought the exclusive rights to use the name of a popular brand 'Sisley', a French clothing brand which had been launched in Paris in 1968. However, Benetton set up the brand as an exclusive line with its own team of creative and sales staff only in 1985. Sisley was aimed at the more fashion-conscious and trendy segments.
In the late 1970s, Benetton started sponsoring sports teams. It sponsored the Trevisse rugby team in 1978 and Tyrell's Formula One team in 1983. In addition, in 1983, Benetton launched Tip-Top as its footwear brand. To manage the increased number of clothing labels it had introduced as well as its overseas operations the Benetton family set up Benetton International Holding headquartered in Luxembourg, in 1985. By this time, Benetton had different labels for various age groups, all of which were sold under the brand, United Colors of Benetton. The labels were '0-12' with pullovers, trousers and shirts for children; 'Merceria' with pullovers, and shirts mainly for women; 'My Market' with pullovers and shirts, 'Benetton' with pullovers, trousers and shirts, and 'Tomato' with pullovers, trousers and shirts for juniors. In 1985, they bought the Toleman's Formula One team. The Benetton family took an important step forward for the company when they took it public in 1986...
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