operations management and marketing
Article 1 - Marketing.pdf
From market-driving to market-driven
An analysis of Benetton’s strategy change and its implications for long-term
performance Raffaele Filieri
Newcastle Business School, Northumbria University, Newcastle upon Tyne, UK
Abstract Purpose – The purpose of this paper is to extend the literature on market-driven and market-driving management and analyzes the Benetton’s market orientation change from a market-driving to a market-driven orientation. Additionally, this study uses longitudinal data to measure the degree of success of the market-driven orientation. Design/methodology/approach – The study is based on a qualitative case study method and it discusses how Benetton has moved from a market-driving to a market-driven orientation. Findings – The paper analyzes the principal transformations the Benetton Group has gone through to implement a market-driven orientation, including the delocalization of the manufacturing and of trusted suppliers; the downstream integration process; the adoption of a flexible, efficient and responsive logistics; the implementation of a modern information systems infrastructure. Revenues data show that the company has benefited of the new orientation, but only in the short-run. Moreover, the early adoption of the market-driven orientation by competing firms (e.g. Zara) and the economic environment seem to play an influence on the performance of market-driven companies. Research limitations/implications – The single case study approach may limit the generalizability of the findings. However, this case study is unique and of high importance for managers in different industries. Originality/value – Although some studies have discussed the benefits of market-driven and market- driving orientations, no study has analysed how companies move from a market-driving to a market- driven orientation. Additionally, existing studies have proved market orientation’s influence on business performance using static measures. This study uses longitudinal data to show the effect of market-driven orientation on a company’s long-term competitive advantage. Keywords Organizational change, Benetton Group, Fashion industry, Market-driven orientation, Market-driving orientation Paper type General review
Introduction The double-dip recession, the growth of low cost retailers, and the capability to rapidly satisfy ever changing consumer fashion needs are three different but intertwined factors which are reshaping the map of competition in the fashion industry. Today’s fashion market place is highly competitive and companies need to constantly “refresh” product ranges within a store to adapt to volatile fashion trends (Christopher et al., 2004). Market-driven companies such as Zara and H&M seem to master this capability to match customer requirements in real time by offering trendy items at affordable prices.
Marketing Intelligence & Planning Vol. 33 No. 3, 2015 pp. 238-257 © Emerald Group Publishing Limited 0263-4503 DOI 10.1108/MIP-02-2014-0037
Received 27 February 2014 Revised 27 February 2014 Accepted 29 April 2014
The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/0263-4503.htm
I would like to thank Professor Helen Woodruffe-Burton and prof. Fraser McLeay for their comments on the paper.
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A market-driven orientation has been proved to be positively related to business performance in all types of markets (Narver and Slater, 1990; Jaworski and Kohli, 1993; Slater and Narver, 1994). Market-driven companies are those companies that generate and disseminate market intelligence across the different levels of an organization (Kohli and Jaworski, 1990; Narver and Slater, 1990; Day, 1994). However, scholars have argued that to be successful companies need to adopt a more proactive attitude towards the business environment, namely a market-driving orientation ( Jaworski et al., 2000). Market-driving firms are those firms who focus more on their capacity to achieve competitive advantage by redrawing the structure of a market and/or behaviours of its players through breakthrough innovations (Slater and Narver, 1998; Jaworski et al., 2000; Kumar et al., 2000).
Research in marketing has mostly focused on measuring the benefits of a market- driven orientation (e.g. Narver and Slater, 1990; Jaworski and Kohli, 1993; Deshpandé et al., 1993; Slater and Narver, 1994; Kirca et al., 2005; De Luca and Atuahene-Gima, 2007; Kumar et al., 2011); however, scholars have not discussed how companies switch from one orientation to another. In particular, no study has analysed the key organizational changes that enable an organization to pass from a market-driving to a market-driven orientation.
Increasingly, the existing studies that have measured the effect of a market-driven orientation for business performance have mostly used static figures so nothing is known about the long-term benefits of market-driven orientation (Kumar et al., 2011). Moreover, the existing studies have not investigated if having a market orientation benefits a company even when other competitors pursue a market-driven orientation.
The present study attempts to provide an answer to these research questions and focuses on global manufacturers in the fashion industry. The paper adopts the case study method and focuses on the Benetton Group, a typical market-driving company (Kumar et al., 2000), which have started a process of reorganization with an attempt to imitate competitor’s (Zara, H&M, etc.) market-driven orientation. The aim of the paper is threefold: first, it narrates the history of the Benetton Group focusing on the characteristics which make Benetton a market-driving company; second it aims to describe the main transformations the Benetton Group has gone through in order to implement the market-driven orientation; third, it attempts to provide an indication of the long-term benefits of the market-driven orientation.
Market driven and market-driving orientations A market orientation is the firm’s organizational culture. According to Deshpandé and Webster (1989, p. 3), a market orientation is “a fundamental shared set of beliefs and values that put the customer in the centre of the firm’s thinking about strategy and operations”. Narver and Slater (1990, p. 21) state that market orientation is “the organization culture that most effectively creates the necessary behaviours for the creation of superior value for buyers and thus a continuous superior performance for the business”. There are four main orientations to marketplace: sales driven, market driven, customer driven, and market driving (Kumar et al., 2000). In this paper we focus on both the market-driving and the market-driven orientation, which have received the most attention of scholars in the last few years (Kumar et al., 2000).
Market-driven companies are those companies that generate and disseminate market intelligence across the different levels of an organization (Narver and Slater, 1990; Kohli and Jaworski, 1990; Jaworski and Kohli, 1993; Day, 1994; Sinkula, 1994;
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Hult et al., 2005). Jaworski et al. (2000, p. 47) define market-driven management as the activity of “learning, understanding, and responding to stakeholder perceptions and behaviours within a given market structure”. Market driven refers to a business orientation that is based on understanding and reacting to the preferences and behaviours of customers within a given market structure through conducting market research and delivering incremental innovations. This orientation is strongly linked with the acquisition of information and knowledge about customers and competitors, which enable the firm to generate product innovation (e.g. Li and Calantone, 1998; De Luca and Atuahene-Gima, 2007) and to sustain a competitive advantage (Day, 1994). The firms’ responsiveness to market needs depends on the propensity to act based on the knowledge acquired from the market ( Jaworski and Kohli, 1993). Several studies have proved that a market orientation is positively related to business performance in different markets (Narver and Slater, 1990; Ruekert, 1992; Jaworski and Kohli, 1993; Deshpandé et al., 1993; Slater and Narver, 1994; Pelham and Wilson, 1996; Rodrigues and Pinho, 2012). However, existing empirical studies that provide support for the benefits of market-orientation are mostly based on cross-sectional databases and only provide a static snapshot of a business performance (Kumar et al., 2011). Additionally, research has also established that the market-driven orientation does not guarantee a sustainable competitive advantage ( Johnson et al., 2003; Slater and Narver, 1995). Hamel and Prahalad (1994) argued that the market-driven approach leaves the organization open to the tyranny of the served market in which managers see the world only through their current customers’ eyes. Berthon et al. (1999) suggest that being market oriented detracts from innovation. To this regard, Christensen and Bower (1996, p. 198) stated: “firms lose their position of industry leadership […] because they listen too carefully to their customers”. The common theme among the criticisms is that businesses pay a penalty for being market oriented. Likewise, while a strong market orientation is indicative of a propensity to innovate, it is not necessarily indicative of successful innovation ( Jaworski and Kohli, 1993). In order to induce changes in the behaviours of customers and competitors, simply being receptive to current market trends through market sensing abilities is not sufficient to sustain innovation ( Jaworski et al., 2000; Johnson et al., 2003).
It has been suggested that in order to achieve a superior business performance, firms need to actively influence the market (Child, 1972; Pfeffer and Salancik, 1978; Weick, 1995) rather than being only ready to react to it (Lawrence and Lorsch, 1967). To shape the market, scholars have found that a market-driving orientation is better able than a market-driven orientation to gain a sustainable advantage by changing the structure or composition of a market and/or behaviours of its players (Slater and Narver, 1998; Jaworski et al., 2000). Market-driving firms are more likely to be incumbent firms, as established firms find it difficult to generate and launch radical innovations (Kumar et al., 2000). In fact, established firms tend to be more bureaucratised, routinized, and risk averse than incumbent firms (Kumar et al., 2000). Accordingly, market-driving firms are those firms that achieve breakthrough technology or breakthrough marketing and include firms such as Ikea, Benetton, Tetra Pak, Body Shop, Starbucks (Kumar et al., 2000). In order to breakthrough innovations, market-driving firms coalesce around visionaries rather than around traditional market research, redraw industry segmentation by attracting new segments, and overwhelming customer expectations. This orientation goes beyond satisfying customers’ expressed needs and recommend companies to proactively analyse and satisfy the latent and unarticulated needs of customers. To this regard,
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market-driving companies work to discover latent needs by observing customers’ behaviour in context to uncover new market opportunities, by working closely with lead users, by undertaking market experiments to discover future needs, and by cannibalizing sales of existing products ( Jaworski et al., 2000; Narver et al., 2000). Vision and creativity are two fundamental key-assets in the market-driving orientation. Innovation is a pre-requisite for creating customers and this is consistent with the “forward sensing” approach, in which market sensing is aimed to acquire state of the art knowledge which allows firms not only to be responsive but also to generate new concepts and ideas that alter the market structure (Harris and Cai, 2002). Kumar et al. (2000) state that over time even successful market-driving firms change, as they should, into market-driven firms. However, the marketing literature does not discuss how this change of orientation is implemented by companies. Additionally, the benefits of market-orientation are more likely to be observed in the long period rather than in the short period, however only few studies have used longitudinal data (Kumar et al., 2011). Thus, still nothing is known about the long-term relationship between market orientation and organizational performance (Kumar et al., 2011). Increasingly, does a market orientation still provide a competitive advantage if the firm’s competitors are also market-oriented? In particular, if a company adopts a market-driven orientation following its competitors, does this orientation change still benefit the company?
This paper aims to extend the literature on market-driven and market-driving orientations. The goal of this paper is twofold: first, the study attempts to provide an analysis of the key-factors that enable the strategy change from a market-driving to a market-driven orientation, by describing the strategy change at Benetton, a company that is renowned in literature for pursuing a market-driving strategy (Kumar et al., 2000). Second, it discusses the results in terms of financial performance achieved by Benetton through this transformation taking into account the importance of the market orientation of competing firms.
Methodology A qualitative approach has been adopted as the study aims at building theory and enables to investigate a large number of variables (Eisenhardt, 1989). A case study method has been adopted because the phenomenon under investigation is new and it is hard to find similar cases and researches on this topic (Eisenhardt, 1989). Moreover, the scope of the study is to analyse the strategy change occurring at Benetton. Strategy change plans have a medium/long-term horizon; therefore a quantitative snapshot at a specific point in time would not be effective to analyse the phenomenon. Increasingly, one of the purposes of this study is to investigate the relationship between market- driven orientation and business performance using longitudinal data. Therefore, the qualitative approach is the best to study the evolution of this phenomenon.
Case studies can involve either single or multiple cases (Yin, 2003). A single case study method has been adopted and the Benetton Group has been chosen because it is a rare and unique example of a typical market-driving multinational company (Kumar et al., 2000) that has recently gone through a reorganization, which has transformed its orientation to the market. The strategy of Benetton has always been aimed to drive market needs, rather than reacting to them. This orientation was achieved through its strong commitment to innovation at every stage of the value chain and to its innovative advertising campaigns (Kumar et al., 2000).
According to Yin (2003), there may be descriptive, exploratory, and explanatory case studies. The present case study is descriptive as it analyzes the orientation of the
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Benetton Group through the review of its history, and the recent transformations implemented by the company to change its market orientation.
Through the help of online and archival sources, books, reports, online interviews, and the published autobiography of the main entrepreneur, this paper examines the key-elements that characterize Benetton’s market-driving orientation and describes the company’s market orientation change from a market-driving to a market-driven orientation. Moreover, financial reports have been used to collect secondary data about the company’s revenues in the years preceding and following the strategy change. The analysis of the market-orientation of the main competitor, Zara, is also added to this paper in order to not exclude the competitive scenario, which is key to understand Benetton’s market-orientation change.
The Benetton Group – history Early days The Benetton Group is about to celebrate its 50th anniversary. Many things have changed from 1965, when the “Maglierie di Ponzano Veneto dei fratelli Benetton” was founded in a small village in the province of Treviso (Ponzano Veneto) by the four Benetton brothers: Luciano, Gilberto, Giuliana and Carlo. The Benetton’s family was poor and the province of Treviso was one of the poorest areas in Italy in the 1960s. Gilberto Benetton was the first of four sons, and early at the age of 14 years old he had to start to work as assistant in a textile shop to support the family after his father’s death. The history of the Benetton’s company as we know it today started when Giuliana, the Gilberto’s sister, manufactured a yellow jumper for his older son (Benetton and Lee, 1990). When Gilberto’s friends started to ask him for a similar jumper, he suddenly understood the commercial potential behind coloured jumpers. Brightly coloured jumpers were very attractive and unusual in the late 1960s; the Benetton’s coloured pullover was innovative since existing jumpers were dressed under the jacket and all had dark colours. Coloured pullover was a dramatically different value proposition from the traditional dark coloured pullovers offered by existing companies. The company started his activity by producing sweaters for local independent retailers in Italy. In 1966 Benetton opened his first shop in Belluno but soon expanded across all Italian regions.
Expansion At the end of the 1980s, Benetton started to expand across Europe in order to face the difficulties deriving from the saturation of the Italian market (Favero, 2005). During these years the company abandoned its family-management style and started to recruit managers from outside the company. The company was also quoted in Milano’s stock’s exchange in 1986 and later in the Frankfurt and New York Stock’s Exchanges and started to expand in Japan and USA. In the attempt of minimizing risks and maximizing profits, Benetton adopted a precautionary step-by-step entry strategy, first licensing local producers to use its trade mark, then entering in joint venture with them, and finally establishing a local branch of the company only when the market was considered to be profitable enough. At the end of the 1980s, the Benetton Group started the process of horizontal integration in the value chain, by acquiring important textile and knitting factories in several Italian provinces through the affiliated company Olimpias.
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The market-driving company The history of the company is characterized by many changes that have shaped and revolutionized the fashion industry. Below we analyse the main innovations introduced by the company, which show a constant attempt to drive the market, namely the redesign of the shops layout, the creation of the quasi-franchising system, innovative suppliers’ relationships, the postponement strategy, and the social advertising.
Shops layout A first important innovation carried out by the company was the reconceptualization of the layout of fashion retailers’ shops. When the Benetton Group started its business, all shops had counters with workers showing products to their customers. Benetton removed the counter from his shops, so that customers could easy see the products and the shops did not need many staffs to assist clients. This innovation guaranteed lower staff costs and higher margins to independent retailers.
Retailer relationships and the quasi-franchising system Another important innovation introduced by the Benetton Group is the quasi- franchising system that was developed to manage the relationships with retailers. This system consisted in bypassing wholesalers and in selling directly to retailers. Other characteristics of this system include: the absence of a formal contract between the company and its retailers, and the payment of royalties was not requested (Favero, 2005). In dealing with retailers the Benetton’s did not ensure the exclusivity of the distribution of products in a specific geographical area, they did not repurchase unsold products, but they suggested the prices of products and imposed the layout of the store (Favero, 2005). This innovative system to deal with retailers enabled the company to expand across Italy without having to sustain huge investments.
Supplier relationships In the 1980s and 1990s the main part of the manufacturing was made by hundreds of subcontractors located in the textile industrial district in the province of Treviso, in the Veneto region (Nardin, 1987; Benetton and Lee, 1990). The rest of the production was manufactured in the two factories of Villorba and Monzambano, where also the design and the quality control took place. As well as with retailers, the relationships with suppliers and subcontractors were aimed at maximizing profits, minimizing financial risks, and sustaining a fast growth. Benetton used to pay subcontractors less than other manufacturers however there was a strong relationship of trust between the suppliers and the Benetton’s family. Suppliers could benefit of regular orders, moreover the company transferred technologies and know-how to suppliers and so profit margins were guaranteed and the plant could work at full production capacity (Brusco and Crestanello, 1995). As Martin et al. (1998) pointed out, strategy theorists tended to view suppliers and buyers primarily as antagonists seeking to appropriate the profits of existing business activities in an industry chain. However, Benetton used a different approach to deal with suppliers by leveraging their skills and knowledge and by advising them on new technologies. Moreover, the company provided them with financial assistance through its leasing and factoring company (Dapiran, 1992). The activity of the company drove the creation of a whole textile industrial district in the province of Veneto made by thousands of small and medium-sized enterprises.
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The Postponement strategy innovation The Benetton Group’s innovative “postponement” idea can be considered one of the latest innovations and probably the antecedent of the fast fashion philosophy. Postponement is a strategy that enables to match colour trends during the season, the colours of products are postponed until the customer requirements are known (through an EDI system) and once they are known, the garments are assembled according to fashion trends (Dapiran, 1992). Benetton internalized the dyeing process to take full advantage of its dyeing know how, while subcontractors were used for finishing operations (Dapiran, 1992). For example, a Benetton’s sweater would be stitched and assembled from its grey original yarn, and then based on the distribution network’s feedback on the colours that are being sold most the sweater was dyed at the very final stage of production. Retailers ordered plain sweaters in advance and then specify the colours during the selling season. The dyeing postponement process allowed a drastic reduction of costs due to less expensive inventories and to a smaller unsold stock and provided the company with the advantage of a rapid response to the fashion trends on colours. The postponement process was limited to colours and based on the traditional fashion-retailing model, which was seasonal, and typically made-up of two seasonal launches: Spring and Autumn collections. Independent fashion retailers would buy for these collections from their suppliers’ network, a year in advance, and allow for between 20 and 30 per cent of their purchasing budgets open to specific fashion changes in the market.
Advertising and brand innovations The global expansion of the brand was favoured by the unconventional advertising campaigns of photographer Oliviero Toscani, which created a multi-ethnical and unique image for the brand, which became rapidly well-known all over the world. The Benetton’s campaigns revolutionised the style and language of advertising. In the 1984 campaign “All the Colours of the World”, Toscani introduced the “United Colors of Benetton” slogan, explicitly associating the company’s brand identity with the values of peace, racial equality, and multi-ethnicity. Toscani’s shocking and controversial print advertising campaigns often disconcerted for the subject of images, such as the advert depicting a nun kissing a priest, or the newborn baby still attached to the umbilical cord, or a war cemetery photo that was circulated on occasion of the Gulf-War outbreak. Toscani created the concept of social advertising (Favero, 2005), in which the company pursued a social-political responsibility by communicating to target audiences about important social issues such as drugs abuse, racism, and war. In these campaigns the brand and the product was always in the background while the social message was put in the foreground. The target of Toscani’s communications is an active, intelligent, receiver and the goal of advertising is to make people thinking and talking about social issues. Thanks to Toscani’s advertising, the Benetton brand was immediately associated with the values, opinions, and ideas in vogue among a large part of the young generation of the time. Because of their controversial nature, these campaigns led the mass media around the globe to talk about them, with huge returns in terms of free publicity. Toscani’s campaigns transformed the Benetton brand into one of the most known and popular brand in the world (Favero, 2005; Edmondson, 2003). However, the relationship between the company and Toscani deteriorated in 2000 when, after a campaign against the death sentence, the photographer and the company were sued by the state of Missouri and criticized by the families of the inmates’ victims. This event prompted
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retailer Sears, Roebuck & Co. to cancel a multimillion-dollar contract to sell Benetton’s clothes in 800 of its department stores, which lead to Toscani’s resignation from the job.
The new competing environment and the rise of market-driven companies In the 1990s international incumbents such as Zara, started to erode Benetton’s market position (Barela, 2003). The rigidity of Benetton’s approach to distribution did not enable the company to rapidly match changing customer’s needs, a capability that was perfectly managed by competitors such as Zara and H&M, due to a total control of the retail-chain (Edmondson, 2003; Barela, 2003). Benetton had lost the opportunity to benefit of the advantages linked with owning retailers and being able to install information systems that would have enabled the transfer of sales information in real time. As stated by Branchini, president of Milan consultancy InterCorporate: “[…] 93% of Benetton’s sales come from franchise operations. Zara and H&M, in contrast, own their shops, which make it easier to install unified systems that track global sales electronically’ (Edmondson, 2003). As declared by Silvano Cassano, who took over as the Benetton Group’s CEO in 2003, the company was not exploiting the technological transformation occurring in the industry: “We didn’t take advantage of the quick transformation of the industry”.
Fast-fashion The market-driven orientation is implemented also through the fast fashion concept in the fashion industry. The fast fashion concept indicates how some European fashion retailers are adopting effective strategies for answering in real time to consumer fashion trends, revolutionizing the fashion industry. Fast fashion necessitates that companies own an increasing number of shops worldwide, so that through the information infrastructure they can connect the consumer demand with the upstream of design, procurement, production, and distribution. To be successful fast fashion companies require a fast and highly responsive supply-chain. Finally, fast fashion companies achieve short development cycles, rapid prototyping, small batches and variety so customers are offered the late trends in small amounts (Tokatli, 2008).
Fast fashion is a strategy that has been developed to deal with constant changes in fashion trends. Fast fashion brands have created a system that is able to monitor and match consumer requirements and trends in real time. Many experts in the industry see Zara as the classic illustration of the fast fashion concept in operation (Bruce and Daly, 2006; Tokatli, 2008).
Zara: fast-fashion in operation Zara is the main brand of the Inditex Group, a global fashion retailer created by Ignacio Amancio Ortega in Galicia, which is one of the poorest regions of Spain. This group adopts a multi format strategy with different store brands targeting different customers’ target such as Pull & Bear, Massimo Dutti, Bershka, Zara Home, Oysho, Uterque, and Stradivarius. Zara operates in five Continents with 5,527 stores in 82 markets (Zara, 2011). It has become very hip all over the world, for its value for money, and stylish designs. The chain is building large number of brand devotees because of its fashionable designs that are with the very latest trends and a very convincing price-quality offering. Zara’s “fast fashion” is the emphasis of putting fashionable and affordable design concepts matching consumer demand onto the high street as quickly as possible.
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The company can get a new garment from design, through production and ultimately on the shelf in a mere ten to 15 days whereas the average lead-time for the fashion industry typically ran into several months. Zara’s business model tries to fulfil real time fashion retailing and not second-guessing what consumers’ needs are for next season, which may be six months away. As a result of Zara utilizing this ultra- responsive supply chain, 85 per cent of their entire product range obtains full ticket price, whereas the industry norm is between 60 and 70 per cent.
Zara’s garments are produced in small amounts, so as not to be over exposed, if a particular item is a very poor seller. If a product is a poor seller, then it is removed after as little as two weeks. Roughly 10 per cent of stocks fall into this unsold category, in direct contrast to industry norms of between 17 and 20 per cent. Stock are seen as assets which are extremely perishable and that if they are sitting on shelves or racks in a warehouse, they are simply not making money for the organization.
Another important strategy of Zara’s “fast fashion” philosophy is to frequently supply new items to retailers’ shops. These “fresher” product ranges stimulate shoppers into frequenting these stores on a more regular basis, on an average of 17 times a year (Pearlson and Saunders, 2010). Through increased stock replenishment of new fashionable items, these stores are developing brand images for being cutting edge, trendy, and fashionable. The group’s basic business philosophy is to attract customers with the latest fashion at attractive prices. For the “fast fashion” concept to be successful, it requires close relationships between suppliers and retailers, information sharing, and the utilization of technology. Information is utilized along the entire supply chain, as to what is in demand. Zara managers in the retailing units transmit hard and soft information about sales and consumers needs to the designers at headquarters so that they know what customers want or are demanding (Tokatli, 2008).
The resulting increased consumer footfall in shops eliminates the need for large expenditure on advertising and promotion. In fact, Zara does not undertake any conventional advertising. Zara locates its stores in prime commercial areas and adopt the same layout for all its shops; the store itself is the company’s main promotional vehicle.
Zara utilize a vast network of suppliers, so that their stores are replenished with the latest designs. Originally, Zara used to source all of its garments from Spain but it is increasingly outsourcing the manufacturing activity to Eastern Europe countries, especially Turkey and Morocco where the cost of production is low and suppliers have gained the competence to manufacture intricately worked high-quality garments with the required flexibility and at high speeds (Tokatli, 2008). Thus, Zara adopts a hybrid approach, sourcing basics (e.g. t-shirts) from the Far East, and sourcing closer to markets for more fashion oriented lines.
Fast fashion has been adopted also by other global fashion retailers, such as H&M, Mango, Gap, and Next. The successful adoption of the “fast fashion” concept by these international retailers has drastically altered the competitive landscape in the apparel retailing. Consumers’ expectations are also rising with these improved retail offerings. Clothes shoppers are seeking out the latest fashions at value for money prices, in enticing store environments. Now other well-established high street fashion retailers have to adapt to these challenges, being more responsive, cost efficient, speedy, and flexible in their operations.
The Benetton Group from market-driving to market-driven Until 2000 Benetton was considered a typical market-driving company, leveraging its controversial advertising to generate loads of free publicity and to develop a global and
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unique brand image which aroused strong feelings among those target audiences who supported and among those who were against Benetton’s social campaigns (Kumar et al., 2000, p. 134; Elg, 2007).
However, at the beginning of 2000, market-driven competitors started to challenge the market leader position of Benetton in Italy by opening new shops in the main Italian cities. At the same time, Benetton’s revenues and market share started to decline. Thus, the model of the global manufacturer that start its value creation process from the designers’ table and that invest heavily in advertising for driving customer’s tastes had become obsolete. Soon the Benetton Group had to realize that its market- driving approach was ineffective to cope with the changes occurring in the business and competitive environment in which market-driven firms were rapidly acquiring increasing market shares.
This imposed a strategy change which necessitated Benetton to become more competitive in terms of satisfying consumer needs in a more rapid and effective way.
As stated by Alessandro Benetton, the executive vice-president of the group: “[…] there is a level of competition which is very high and very much focused on speed and ability to face every single market with its own differences. In this respect I think we have done a lot in the last couple of years and so we can provide much more collections and faster re-assortment at the store level. So we are very much contemporary from this point of view” (Cem, 2007).
Consequently, from 2002 the need to monitor and answer quickly and effectively to customer needs have become the most important objective of the company. In order to achieve these goals the company has urged to reshape its operations strategy by focusing on speed and quality, and reduced time-to-market. Investments in advertising have declined dramatically in favour of investments in: information technology (IT), process reengineering, staff training, delocalization and real estate (Benetton Financial Report, 2003-2006). Owning the shops was in fact paramount to install advanced information systems so to be able to transfer strategic information about consumer fashion trends in real time. Creativity in design has been supplanted by sales’ forecasting and planning that work for responding to the market in a timely manner through the reduction of productions time.
The Benetton Group has implemented these changes which have fostered a change in its market orientation from a market-driving to a market-driven one. The Benetton’s market orientation change has been achieved through a series of transformations occurring at the different levels of the value chain, including: the downstream integration, the adoption of a modern information infrastructure, the introduction of automated logistics and of a warehousing multi-hub model, the delocalization of the manufacturing while keeping relationships with trusted suppliers. Below we describe each in detail.
First change: downstream integration and entry in emerging markets The first transformation is the acquisition of retailer shops and the opening of new store formats in different capitals. The complete downstream integration process was started in November 1999 (“Retail Project”). At the end of 2002 Benetton owned less than 100 megastores worldwide. The downstream integration process was accelerated from 2002 with the opening of new megastores in many emerging countries, which are actually sustaining Benetton’s growth (Benetton Financial Report, 2007-2011). The company acquired retailer shops with the attempt to increase the control over the value chain, and most importantly, to access and redistribute daily reliable information
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and data about sales. This was a critical change in Benetton’s traditional licensor’s role and it was accomplished to better respond to market changes. Thus, Benetton has dramatically increased investments in new stores, which in 2008 accounted for 22 per cent of total sales. The following markets are strongly contributing to the company’s revenues in the last years: India, China, Russia, Mexico, and Turkey.
The increased number of shops has called for a restructuring of the supply-chain management (SCM) process. The management of the distribution has been committed to a centralized Retail Unit, which also serves to connect the various units throughout the world. In order to rationalize the structure of the organization, the commercial department has been redesigned around the two main sales’ channels: wholesale distribution and the retail chain. Benetton has committed the management of relationships with proprietary retailers to business area mangers, while independent sales representatives deal with wholesalers. The role of these managers is to coordinate the production activities of a group of SMEs, often setup and managed by ex-Benetton employees or Italian subcontractors.
Investments were also made to facelift the owned shops as according to Cassano “They are too lifeless and cold. They need more excitement” (Edmondson, 2003). In order to satisfy consumers demand for bigger, brighter and more friendly stores (Barela, 2003), Benetton’s new shops are bigger than the previous ones, the average area increased from 50 to 200 square metres and the displayed products continuously rotate in order to increase customers’ footfall into stores. New megastores with similar formats were opened by the company in big cities all over the world and mainly located in strategic traffic areas, imitating the strategy of his direct competitor, Zara.
Second change: information infrastructure The Benetton Group has made huge investments to modernize its information systems infrastructure, which represent the new central nervous system of the firm’s network. In 1984, the company was already planning to introduce a new IT infrastructure which would have enabled the company to access instant data on sales and other information from retailers, an aspect that is paramount within market-driven firms. However, the project failed because of the resistance of shopkeepers and agents, who saw the project as a threat to their autonomy (Rullani and Zanfei, 1988). The launch of the new information system infrastructure, named “Phoenix project”, links together production, logistics and retailing. An Oracle platform is used for communicating with retailers, the system manages the main processes (financial planning and management of both corporate and stores activities) globally through a single centralized system. In particular, orders for continuative products are entered directly, and through the integration with the information systems of the production and logistics units, the system provides immediate confirmation and guaranteed delivery times (first in, first out, FIFO).
The system acquires information on sales from owned retailers, then these data are analysed and production schedules are rapidly sent to manufacturers. The goods are sent to the main Benetton stock centres and then distributed all over the world.
The traditional forecast-based way of responding to customer demand implies relevant risks of over-stocked or under-stocked situations (Christopher et al., 2004). This process has been supplanted by giving a renewed importance to market trends at the start of the production process. The information flow is changed too, from a
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unidirectional flow from the headquarters to plants (for manufacturing) or from the retailers to the company (for orders) to a two-way flow, through which Benetton can flexibly adjust production requirements to match customer tastes.
Benetton utilizes SCM principles and practices in order to better fit to market changes and to manage its network of suppliers and manufacturers. The SCM applications are back-end applications designed to link suppliers, manufacturers, distributors, and retailers in a cohesive production and distribution network and thus allow to track and streamline the flow of materials and data through the process of manufacturing and distribution to customers. By enabling greater data sharing between supply chain partners, SCM applications improve production efficiency and flexibility. The sharing of information improves the collaboration between supply chain partners. The company can monitor sales, and when a product is sold-out, such information is sent to specific manufacturers based on the typology of the collection and to delivery times. If new items are required in Europe, the committed manufacturers are located in Europe (Croatia, Italy) or in Middle-East countries, which enable a more rapid supply than Asian countries. The system allows helping to keep track of market trends in real time and to gather reliable and analytical information from all owned stores.
Third change: automated logistics and warehousing multi-hub model Asian subcontractors often provide a “full package production”, which includes also the logistics and the quality control reducing enormously transactional costs. Benetton provides the supplier with the design of a garment, often a draft. The final product is manufactured and sourced by external subcontractors and stocked in the main warehousing centre. The Benetton Group has two main hubs, one located in Castrette (Italy) and another one located in Hong Kong (Asia), which stocks all the items coming from worldwide manufacturers.
This multi-hub model is supported by a centralized IT system, which coordinates and optimizes product deliveries according to required dates and destinations, providing the timeliness of information as well as a better control of the business. The two HUBs connect the different suppliers and manage the entire production process from raw materials to final product and allocate production tasks among their SMEs according to path-dependent skills and capabilities. All products return to the HUBs, from where they are sent out to the 6,200 proprietary and independent retailers of all over the world.
Benetton keeps a direct control of the logistics phase and has invested heavily in automating logistics processes which was done with an attempt to achieve total integration within the production cycle, from customer orders to packaging and delivery. The investments in automated logistic processes have allowed the Benetton’s logistic agency (Benlog) to handle 10,000,000 items/month and to obtain a seven days lead-time, a leading performance for the industry (Ghezzi, 2009). The new system is more efficient, flexible, and integrated, and makes it possible to optimize quality, service, and product delivery times, while being able to sustain desired growth in production over the coming years.
These transformations in the company’s logistics and operations have enabled to increase the number and structure of collections. Before 2003, retailers had to order the most of the items (80 per cent) before the beginning of the commercial season and only two collections were available, the Spring/Summer and the Autumn/Winter. The rest of the items (reassortments or flash) were mainly reorders and, only in small amounts,
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orders of new products designed during the selling season (20-30 per cent) (Crestanello and Tattara, 2009).
Because of this rigidity, customers searching for the last fashion trends did not return to the shops. To face this problem, the Benetton Group has increased the number of collections and decreased the amount of orders received before the selling season.
The traditional seasonal collection was substituted by two main collections (Contemporary 1 and Contemporary 2) articulated in four launches: Spring, Summer, Autumn, and Winter with a time-to-market between four and eight months (Benetton, 2013). In addition, in order to favour customers’ footfall to shops, Benetton has introduced new collections during the selling season:
• trends, a collection more sensitive to the fashion tendencies with time-to-market between one and four months;
• just in time, a collection that aims to satisfying sensitive customers fashion; • continuative items, these items represent the core of the Benetton collection and
are manufactured in stocks and brought to the market in a very short time (seven days in Italy and 15 days throughout the rest of the world); and
• nice price articles, which are basic yet original and are inspired by the practical needs of day-to-day living.
In the contest of broadening the production variety, the increasing of foreign supplying, in particular from Asia, has deepened Benetton’s logistic problems (Crestanello and Tattara, 2009). However, products and collections more sensitive to trends are manufactured in Eastern Europe countries (like Hungary, Romania Tunisia, Croatia) or Mediterranean countries (like Turkey and Tunisia), because the transportation from these countries is more rapid and enables to respond more quickly to customer taste changes. To this regard, Walter Giuriato, head of the Product Development Unit, says: “we are working to provide the necessary creativity in the design of our collections, taking into account the demands of rationalization and organization, so as to combine product innovation and planning in a quick and effective response to the needs of the marketplace” (Benetton, 2005).
Fourth change: the delocalization of the manufacturing and of trusted relationships Benetton is still renowned in the international literature to be a firm that manufactures the majority of its products in Italy (Berger, 2005; Tokatli, 2008). Until 2003, 48 per cent of the production was still manufactured abroad and 62 per cent in Italy (41 million items). However, today the most of the production is realized in Asia (especially in China and India) and other Eastern countries (Hungary, Romania Tunisia, Croatia). Production abroad increased in just one year, between 2004 and 2005, by 13 million items (Crestanello and Tattara, 2009). In 2007, the Italian suppliers produced only 10.3 per cent (15 million items) of garments, while the rest was produced in Asia (32 per cent), in Tunisia (20 per cent) and in East European countries (28.5 per cent) (Crestanello and Tattara, 2009). Accordingly, the Italian subcontractors belonging to the industrial district suffered a decrease of commitments and consequently rising unemployment rates. The number of subcontracting firms in the industrial district in Treviso diminished between 2007 and 2008 from 208 to 116 and very few of them still remain today (Crestanello and Tattara, 2009). However, many of them were convinced by the Benetton’s to delocalize their plants in Eastern European countries. This was mainly due to the high importance given to “familial”, strong ties and trusted relationships with suppliers and retailers
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(Barela, 2003), which is always been in the DNA of the company. In particular, the trust created with these suppliers represented for Benetton an asset too important for its growth and for reducing the threat of opportunistic behaviours. The importance of trusted suppliers was in fact a very important condition for a safe delocalization and for maintaining high quality standards. Italian subcontractors have new roles: they guarantee the flexibility of the value chain, and solve problems arising in dealing with distant sourcing from Eastern countries such as: transport delays, errors in production plants, product faults, and so on (Crestanello and Tattara, 2009). The delocalization has provided to the Benetton Group huge costs savings because of the lower labour cost, the use of cheaper local raw materials, and because of the advantage deriving from the use of dollars in transactions with Asian partners.
Benetton performance as a market-driven company The Benetton Group’s network is today made of over 6,400 stores, the Group employs 9,557 people and is present in 120 countries around the world and generates a total turnover of over two billion euros (Benetton, 2012).
The change in market orientation has taken place between 2003 and 2004; from the analysis of financial data from 2004 to 2011, the adoption of a market-driven orientation appears to have benefited the company’s revenues for a relatively short period of time, namely the first four years. The revenues of the Benetton Group had started to decline in 2002. After a period of settlement that was needed to implement the strategy change (2003-2004), the Benetton Group has restarted to grow until 2008, when revenues have started to decline again (see Table I).
Thus, from these data gathered we cannot conclude that market-driven guarantees a long-term competitive advantage. If Benetton’ sales have decreased by 1 per cent in 2011; H&M and Zara, who are first-movers in adopting a market-driven orientation, in the same year have seen an increase of their sales of 8 and 12 per cent, respectively. Moreover, a closer look at Zara’s revenues in the last decade (see Table II), enables us to state that a market-driven orientation enhances long-term performance. It appears that the early adoption of a market-driven approach to the market can be critical in achieving and keeping leadership positions in an industry. Therefore, it seems that Benetton has been too late in adopting the change in its market orientation, while its competitors have benefited of the first-mover advantage.
Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Revenues 2.03 2.05 2.04 2.1 2.0 1.9 1.7 1.6 1.8 1.9 2.0 2.0 % −1 0.2 −3.7 3.9 9.1 8.3 3.6 −9.3 −6.7 15.0 3.9 – Net income 77 102 122 155 145 125 112 123 108 [10] 148 243
Table I. Benetton revenues
(product and service sales) (in billion euros) and net
income, 2000-2012 (in million euros)
Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Net sales 13.7 12.5 11.0 10.4 9.4 8.1 6.7 5.6 4.6 3.9 3.2 2.6 % 10 14 12 14 22 22 21 23 16 22 24 27 Net income 1,946 1,741 1,314 1,253 1,250 1,002 803 639 448 438 340 259
Table II. Inditex Group net sales, 2000-2012 and net income (in billion euros)
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The negative results of the Benetton Group can be only partially explained by the double-dip economic recession, which has deeply hit the company’s most important markets (i.e. Italy, Spain, and Greece) and has fostered the expansion of low-cost retailers such as Zara and H&M.
Discussion This paper advances the literature on market-driving and market-driven management by analysing the change in the market orientation from a market-driving to a market-driven orientation achieved by the Benetton Group. The Benetton Group has been presented in literature as a typical market-driving company due to its strategy being aimed at leading the change through continuous innovations and for its attempt to drive consumer needs by using innovative advertising styles and his unique brand image (Kumar et al., 2000). In this study we have documented how the Benetton Group has been forced to reorganize its entire value chain in order to respond to successful market-driven competitors such as Zara and H&M. In order to face competition and to adopt a more flexible, rapid, and adaptive approach to the market, the company has transformed its orientation to the market, from market-driving to market-driven. This approach clearly highlights the importance for the company of adapting and satisfying customers’ ever changing fashion trends better than competitors rather than creating new needs and trends through radical innovations, as it is the case for market-driving companies. Accordingly, Benetton has reshaped marketing communications investments and creativity is now subject to market trends, which influences also the production process. The main challenge for the company is to be able to analyse and respond to customer’s needs more rapidly and effectively than in the past. The ownership of retailers shops has given the company full control over the installation of modern information and communication systems which have fostered a more frequent and rapid transfer of strategic information about customer preferences and needs from retailers to designers to manufacturers, who produce and ship the quantity needed in a shorter period of time compared to the past.
Logistics have become more flexible, responsive, efficient and rapid enabling the company to reduce lead times, which has enabled the increases in the number and variety of collections. The efficiency in the logistics and operations is in fact crucial to permit that the new items reach the different markets as soon as possible in order to optimize sales. Flexible production and rapid logistics therefore have become paramount for adapting quickly and effectively to the needs of the market, also thanks to a modern system of scheduling and planning that manage complex situations of medium and long-term supply.
The current case study also contributes to the scant literature studying the long- term effects of a market-driven orientation on business performance (Kumar et al., 2011). The passage from a market-driving to a market-driven orientation appears to have benefited the Benetton Group but only in the short-run. In fact, the company has been capable of inverting the declining trend in revenues initiated in 2002 (see Table I) and restart its growth in the following years with alternate results. The findings suggest that the growth of Benetton in terms of revenues has been sustained only for a short period of time (the subsequent four years) following the implementation of the market-driven approach. These findings do suggest that a market-driven orientation may not be able to sustain competitive advantage in the long run. However, we
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highlight the importance of taking into account also the intensity of competition, and in particular the number of early adopters of market-driven orientation in this relationship. It seems that a first-mover advantage applies in the adoption of the market-driven orientation. In fact, we have seen that a first-mover in the adoption of a market-driven orientation such as Zara has sustained sales growth in the last decade, while a follower like Benetton has experienced a constant decline of its revenues due to its inability to cope with new competitors. Thus, the Benetton’s decline of sales may be attributed to it being late in adopting the market-driven approach to the market. In fact, Zara, H&M are all first-movers in the adoption of a market-driven approach, which has enabled them to gain and leverage competencies and capabilities and to establish their brands in the different market. Therefore, market-driven competitors have benefited of the first mover advantage of adopting this approach to the market. Accordingly, the time advantage is critical in adopting a market-driven orientation especially for global corporations like Benetton. Large corporations need time to assimilate and implement the capabilities and competencies that are needed to implement a market-driven approach. However, this has enabled Zara and other companies to establish their brands into the different fashion markets and to make perceive the Benetton brand as an old brand incapable to follow fashion trends, in one word “out of fashion”.
Additionally, it is important to point out that other environmental conditions may have contributed to the Benetton’s decline of revenues in the last few years. The economic situation has deteriorated in the primary markets of the Benetton Group, such as Italy, Greece, and Spain. The double-dip recession has certainly favoured the growth of fashion retailers offering trendy products at cheap prices, such as Zara and H&M, and now Primark.
The results of this study have important implication for practitioners in the fashion industry, in particular for managers that are planning to change the strategy of their company in order to adopt a market-driven approach. Managers can learn from this study how to implement a market orientation change (from market-driving to market-driven), so they can better and more precisely plan the allocation of investments and the required organizational changes.
Finally, this study has some limitations; the most important one is of it being a single case study focused on a single industry (fashion retail) so as the findings might not be generalizable to other industries. A larger sample might help to strengthen the results of this study across different industries.
Conclusion This study has described the principal transformations the Benetton Group has gone through in an attempt to change its orientation to the market: from a market- driving orientation to a market-driven orientation. The main transformations that have permitted the company to implement this strategy change to happen have been discussed in this paper, namely: the delocalization of the manufacturing while keeping relationships with trusted suppliers; downstream/vertical integration (acquisition of retailers); the adoption of a flexible, efficient and responsive operations and logistics; the implementation of a modern information systems infrastructure. Additionally, this study has discussed the importance of mediating factors such as the stability of the economic environment and the first-mover advantage in adopting a market-driven orientation, which also contribute in explaining the benefits of the market-driven orientation in the long-run.
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Benetton Group (2004), “Annual report 2004”, available at: www.benettongroup.com/sites/all/ temp/doc/2004_annual_report_en.pdf
Benetton Group (2006), “Annual report 2006”, available at: www.benettongroup.com/sites/all/ temp/doc/2006_annual_report_en.pdf
Benetton Group (2008), “Annual report 2008”, available at: http://www.benettongroup.com/sites/ all/temp/doc/2008_annual_report_en.pdf
Benetton Group (2009), “Annual report 2009”, available at: www.benettongroup.com/sites/all/ temp/doc/2009_annual_report_en.pdf
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Benetton Group (2010), “Annual report 2010”, available at: www.benettongroup.com/sites/all/ temp/doc/2010_annual_report_en.pdf
Benetton Group (2011), “Annual report 2011”, available at:www.benettongroup.com/sites/all/ temp/doc/annual_2011_report_en.pdf
Camuffo A., Romano, P. and Vinelli, A. (2001), “Back to the future: Benetton transforms its global network”, MIT Sloan Management Review, Vol. 43 No. 1, pp. 46-52.
About the author Dr Raffaele Filieri is a Senior Lecturer and Programme Leader in Marketing at Newcastle Business School. His research focuses on different topics such as social capital, knowledge transfer, innovation, consumer cocreation, e-word of mouth, and marketing strategy. Dr Filieri’s articles have appeared in: Industrial Marketing Management, Journal of Travel Research, Journal of Knowledge Management, Journal of Business Strategy, Marketing Intelligence & Planning, International Journal of Agile Systems and Management. Dr Raffaele Filieri can be contacted at: [email protected]
For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: [email protected]
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Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
Article in Fashion Theory The Journal of Dress Body & Culture · February 2002
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83Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
Fashion Theory, Volume 6, Issue 1, pp. 83–110 Reprints available directly from the Publishers. Photocopying permitted by licence only. © 2002 Berg. Printed in the United Kingdom.
Paul Antick
Paul Antick is a photographer and lecturer in Visual Culture and Media at Middlesex University, UK.
Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion Each society has its regime of truth, its “general politics” of truth: that is, the types of discourses which it accepts and makes function as true; the mechanisms and instances which enable one to distinguish true and false statements, the means by which each value is sanctioned . . .
Michel Foucault in Rabinow 1984: 73.
Introduction
While the field of visual culture studies may occasionally consider advert- ising photography a useful historical indicator of a particular culture’s
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“structure of feeling,” (Williams 1965: 64) the position of relative infer- iority it is held to occupy within the field of culture generally tends to preclude its inviting the same methods of critical enquiry that are often afforded to a wide variety of other media cultures. More specifically, in the relatively compact field of photography theory, advertising photo- graphy is generally considered to be beyond the bounds of any form of inquiry that seeks to understand (and produce) the photograph as a complex, multi-faceted and unpredictable object.
In other words, the establishing of advertising’s identity within visual culture studies generally, and photography theory in particular, as the quintessential purveyor of dominant ideology in capitalist culture (part- icularly in relation to constructions of gender); its propensity to structure a “false” set of needs and desires; and its concomitant facilitation of a sense of “misrecognition” on the part of the viewing subject, have, arguably, constituted the theoretical boundaries within which most acad- emic debates about advertising and photography have been allowed to take place.1 In this way it could be argued that, instead of expanding and challenging the ways in which advertising photography is considered, reflected upon and analyzed in contemporary visual culture, photographic theory has actually succeeded in limiting the consideration of forms of encounter between advertising photography, consumers and cultural producers. By privileging one set of ideas about advertising photography above all others, photographic theory may have foreclosed the possibility of considering the ways in which advertisements do not simply establish and reproduce dominant cultural agendas but intersect with a multiplicity of other competing agendas and discourses articulated in, and in relation to, advertising itself.2
In the introduction to a recent collection of essays from the highly influential British photography magazine, Camerawork, Jessica Evans (1997) highlights the “need” for audience-based research in the field, and in so doing identifies one of the ways in which different possibilities for the analysis of photography might be explored within the field.
It is to be hoped that the work developed in media studies by David Morley, Janice Radway and others on the ethnography of audiences, and that of Bourdieu on the habitus of audiences will be taken up in future work on photography, for we urgently need to incorporate a sense of the capacity for human agency into our analyses of photography and its uses (1997: 32).
What I would like to consider here is how this kind of work might happen in relation to that sphere of photographic production which is, arguably, negotiated by more people on a daily basis than any other but, at the same time, most denigrated within the field: advertising photography. The problem of how people make use of, and produce meanings in relation to, advertising photography is one that can be approached in several ways.
85Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
The approach I wish to focus on here, however, involves an examination of the relationship between advertising and its “significant others”— specifically, how making explicit the connections between advertising and its “others” can alert us to the ways in which the denigration of advertising might actually represent one of the ways in which, to para- phrase Stallybrass and White (1986), the high defines the low precisely in order to define itself as high, and, as such, the extent to which certain methodological orthodoxies—far from providing us with a set of impart- ial analytical tools—all too often collude in the reproduction of a set of socially anachronistic cultural taxonomies.
Suffice it to say that the theoretical perspectives alluded to above, indicative of most post-1970s photography theory, have largely emanated from academia. In the broader cultural context, however, there also exist a set of anxieties about advertising: anxieties that specifically informed the Benetton debate. These anxieties appear to be less bound up with the ideological nature of advertising photography, and more concerned with the ways in which certain advertising strategies, Benetton’s in particular, might undermine a set of historically established discursive procedures that define, regulate and differentiate fields of culture—specifically, the ways in which different forms of knowledge are conventionally classified as either authentic or inauthentic; the cultural value ascribed different systems of representation; and the division of ethical labor among various institutions of culture.
In examining these concerns, I want to focus on Benetton’s trans- gressions of certain visual or representational boundaries and consider the extent to which such transgressions may have both signaled and stimulated a profound re-alignment and re-evaluation of the role and status of informational culture (photography) in contemporary capitalist societies. In doing so I shall argue that the nature of the criticisms leveled against Benetton during the 1980s and early 1990s was indicative not only of the kinds of tensions that exist between different cultural instit- utions—advertising and the press, for instance—who suddenly find themselves in competition over the same cultural territory, but also of the tensions and contradictions that exist within specific institutions. Namely, advertising, the press and, to a lesser extent, academia.
In contemporary cultural theory it has become commonplace to suggest that the boundaries between different representational genres and cultural institutions, are becoming increasingly blurred.3 Indeed, one could hold up Benetton’s 1992 Shock of Reality campaign as an excellent example of this.4 What is not conventionally acknowledged, however, is the extent to which the blurring of aesthetic boundaries can destabilize cultural institutions. An example of this is the kind of identity crisis sparked in the British press in relation to the Shock of Reality campaign. One symptom of this crisis might be the repeated implication in the press5 that knowledge—articulated through documentary photography—considered instrumental in one context can be socially useful when deployed in another.
86 Paul Antick
In order to unravel and evaluate the cultural and discursive implications of the criticisms leveled against Shock of Reality during the early 1990s, I intend to examine the ways in which Benetton’s advertising campaigns, from United Colors of Benetton (1983) to Shock of Reality (1992), were themselves represented in a variety of journalistic and academic contexts. In doing so, I will concentrate on the ways in which certain statements were permitted to be made about Benetton at the expense of certain others; the extent to which these statements articulated a set of anxieties relating to the increasing difficulty that contemporary print media arguably have in reproducing certain key journalistic ideologies; and, finally, the ways in which the establishment of a particular set of “truths” about Benetton tended to preclude any critical consideration of the ways in which Benetton’s adverts might actually have “worked” in specific historical and spatial contexts.
This article is not intended to act as a simplistic defence of advertising or advertising photography as such. Rather, I wish to draw attention to the ways in which the denigration and classification of advertising photography as a fundamentally “inauthentic” type of “speech act” can often serve to obfuscate the particularities of its communicative potential, specifically in relation to the ways in which particular adverts might use photography both to reinforce and subvert dominant ideologies in specific interpretative contexts.
Benetton, 1983–1991
According to Oliviero Toscani, Benetton’s art director, photographer and, according to one Arena journalist, all-round “creative genius”:6 “Until 1983 . . . the nature of Benetton’s advertising was clearly product oriented, showing the product and nothing else.”7 Toscani went on to suggest that Benetton’s post-1983 campaigns represented a shift away from the “superficial” and “stupid” preoccupations of conventional advertising to what he called “issues of global concern.”8
Toscani’s reinvention of Benetton through these campaigns was signifi- cant for two reasons. First, in terms of the changes to the actual content of Benetton’s adverts, and, secondly, because in being seen to refer to “social issues,” Toscani—knowingly or not—was bidding to incorporate a set of values or knowledges, commonly associated with other more “legitimate” cultural institutions, into the lexicon of advertising. It could be said that the primary reason for this was to enhance Benetton’s own cultural status in relation to, for example, the institutions of art and journalism.9
Thus, Toscani’s first campaign, All the Colors of The World,10 was intended to provide people with “food for thought with its images of happy . . . racially different children all laughing and smiling together” (Benetton Group 1993: 9). His subsequent campaign, United World of
87Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
Benetton (“a call for peace in the world” (Benetton Group 1993: 9) was followed by United Colors of Benetton, where, according to Toscani, “. . . [in] choosing models with accentuated ethnic features and names written in their own languages, the campaign strives for and achieves an image which is even more multi-racial and international” (1993: 9; Figure 1). This theme, in which racial, ethnic and cultural distinctions are both blurred by and redefined by Benetton—representing what Les Back and Vibeke Quaade, writing in Third Text, refer to as a “fantasy of multi-racial and inter-communal harmony” (1993: 65)—continued in the two subsequent campaigns: United Fashions of Benetton (1987) and United Superstars (1988).
However, although the thematic encoding of United Colors may have signaled a break with mass advertising’s conventional thematic preoccup- ations, on a formal level United Colors still retained certain key generic features that not only enabled it to be firmly situated within the advertising genre—something facilitated by its use of young, conventionally good- looking models; high key lighting codes; the ubiquitous white studio backdrop; large-format camera technologies; and fine-grain film stock— but also prevented its being confused with representational forms char- acteristic of other, more legitimate, cultural institutions—journalism, for example—thus limiting the extent to which their epistemological and cultural legitimacy would have been threatened by the, admittedly limited, extent of Benetton’s thematic transgressions during the 1980s.
However, despite the fact that between 1989 and 1991 Benetton’s advertisements continued to “explore the subject of equality between blacks and whites” (Back and Quaade 1993: 11)—their rhetorical potency generated by what Back and Quaade refer to as “the stark presentation of racial oppositions” (1993: 68)—they also represented a far more radical
Figure 1 United Colors of Benetton. © Oliviero Toscani
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disruption of conventional advertising codes and techniques than had been achieved during the mid-1980s, something that was compounded by the absence of any iconographical reference to Benetton’s “actual product.”
In Manacles and Fetters (Figure 2),11 for example, the conventionally “good-looking” models of previous campaigns have been replaced by a pair of anonymous lower torsos (one black, one white), clad in regulation- issue blue American prison uniforms, and joined together at the wrists by a pair of handcuffs. Arguably, it is the absence of certain key generic indicators—the fabulous face and body of the stereotypical fashion model—in this advertising image, as well as the way in which the photo- graph formally articulates concerns more often associated with “socially concerned” forms of photography (documentary, for example), that marked a defining moment in Benetton’s gradual symbolic shift from advertiser to “social commentator”—a shift that was rendered conven- iently confusing by their use of signifiers redolent of more “staged” (which is to say, “inauthentic”) forms of photography, as well as a mode of repres- entation that explicitly referred to certain postmodernist sub-genres of art photography. Perhaps the most obvious references to postmodernist art photography are to Andreas Serrano’s stylized studio shots of “down and outs,”12 which implicitly reference the documentary genre, but, in doing so, redefine, expand and apparently deconstruct it through an intertextually oblique selection and combination of generically disparate signifiers. Specifically, the viewer is potentially disarmed by Serrano’s conflation of two mutually exclusive systems of representation, where dissolute figures from the American “underclass” are “lovingly” photo- graphed against a plush, but muted, gray studio backdrop.
Figure 2 Manacles and Fetters. © Oliviero Toscani
89Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
In the light of these formal and thematic shifts it was (perhaps pre- dictably) significant that Benetton’s tactics failed to present much of a threat to the ideological legitimacy of the art world, perhaps because Benetton’s use of irony—commercially “interested” knitwear company playfully masquerading as socially concerned commentator—was some- thing that could only ever enhance its position in relation to, and eventually even in, the postmodern art market—something that perhaps accounted for the success of Benetton’s Genitalia at the 1993 Venice Biennale.13
However, despite the postmodern art world’s unabashed enthusiasm for Benetton’s advertising techniques, David A. Bailey (1989: 68) argued that “Benetton’s campaign strateg[ies] foster the process . . . of ‘object- ification,’ in which cultural difference is commodified.” For Bailey Benetton’s postmodern playfulness, its transgression of representational boundaries, was reprehensible because, as Bailey remarked, “Benetton has commodified cultural difference as a marketing ploy.” In other words “. . . the exploitation of particular stereotypical images of nations around the world serves the interest of Benetton as a seductive marketing device to sell and distribute their clothes worldwide” (1989: 64–5). Admittedly, it would be difficult to disagree with the oxymoronic point that Benetton’s advertising strategies remained inextricably linked to a set of explicitly commercial business interests. But the idea that this in itself might be enough to invalidate, or worse, render unmentionable, those messages encoded in Benetton’s advertisements is one that is worth taking up.
Bailey’s suggestion that the reproduction of knowledge in a commercial context necessarily renders such knowledge “inauthentic” implicitly draws on the idea that there exist areas, or institutions, of knowledge that are “untainted” by the pollution of commerce. While I am not suggesting that knowledge is always a commodity, it is perhaps worth wondering why Bailey isolates the Benetton images for censure while failing to level the same criticism at the art world,14 the print media or academia.
When, for instance, an “eye-catching” photograph of the destruction of the World Trade Center’s Twin Towers appears on the front page of The Guardian,15 one might argue that, as much as this image is part of a carefully orchestrated “consciousness-raising” strategy on the part of The Guardian, it is also involved in the everyday business of selling newspapers and, more to the point, satisfying the demands of those who choose to advertise on its pages. As Donna Schwartz points out (Brennen and Hardt 1999: 171), a newspaper’s front page “can be conceived as an advertisement that sells the advertising inside the newspaper,” and one of the ways in which this is achieved is precisely through the visual “pull” exerted by the drama played out in the documentary photograph.
Thus, given that even the most apparently disinterested forms of know- ledge—“quality” photojournalism, for example—are arguably always caught up with—and to some extent defined by—the vicissitudes of what Andrew Wernick calls “promotional culture,”16 Bailey’s objection to the
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objectification and commodification of race in Benetton’s advertising campaigns begins to look problematic.
The Shock of Reality, 1992
It was as if the reality of suffering only had dignity and moral value in the editorial section of a newspaper and lost all its ability to denounce, and sensitise people when in contagious contact with advertising.
(Benetton Group 1993: 25).
In Shock of Reality, arguably Benetton’s most contentious campaign to date, Benetton appropriated a variety of documentary photographs: Family in Ohio, Boat People, Car Bomb, Flood, Murder, Refugees and Soldier (Figures 3–6). These images were, according to Toscani, chosen because they apparently “express powerful human themes of global concern” (Benetton Group 1993: 12); the most notorious of which was Family in Ohio, an image that apparently depicted a man actually dying of Aids. Complaints about Family in Ohio (an image that only ever appeared in The Face (Jan. 1992)—that is, in the way it was originally intended to appear) were subsequently upheld by the British Advertising Standards Authority, who “deplored the advertiser’s apparent willingness to provoke distress with their advertising approach” (The Sunday Times 26.1.1992). The “Aids ad” was subsequently condemned by adver- tising authorities in Italy, Holland, Spain, France and Belgium, as were four other images from the campaign.17 “Nothing,” Benetton modestly
Figure 3 Family in Ohio. © Oliviero Toscani
91Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
Figure 4 Refugees. © Oliviero Toscani
Figure 5 Boat People. © Oliviero Toscani
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Figure 6 Soldier. © Oliviero Toscani
suggested, “. . . has shaken world opinion in relation to advertising as much as this campaign” (1993: 22).
Putting the issue of “world opinion” to one side, it is worth noting that, as well as generating sustained press hostility, Shock of Reality marked the wholesale appropriation by an advertiser of a completely “other” language (documentary photography) as well as the absolute dissolution of conventional advertising codes (apart from the ubiquitous brand logo).18 Thus, Shock of Reality arguably represented a crucial symbolic break with the so-called “lies” and “superficiality” of advertising (something Benetton had never quite managed in its previous campaigns), as well as marking a kind of aesthetic and intertextual watershed for the advertising industry in general. A crucial symbolic threshold appeared to have been crossed with this campaign: the divide that separated “authentic” and “inauthentic” photographic aesthetics; and, arguably, it was precisely this that made Shock of Reality so intolerable for so many.
Commenting on Family in Ohio, The Times quotes a “spokesman” from the Advertising Standards Authority, “. . . we urge publishers to exercise their discretion so they do not carry an advert that would offend people . . . If this advert appears it is likely to be a depiction we would expect to get complaints about” (24.1.1992). Furthermore, according to Maggie Alderson, editor of Elle, “The advertising space for Family in Ohio was booked by Benetton well in advance for our next issue, but the copy arrived very late, and when we saw it we simply said: ‘No way.’” (24.1.1992). Significantly, Alderson went on to say: “I remember seeing the photograph when it was in Life and thinking it was superb as a piece of photojournalism. But it has nothing to do with fashion and it has no place in a fashion magazine” (Daily Mirror 24.1.1992).
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But what exactly was it that the Advertising Standards Authority, The Times and Elle found so objectionable about Family in Ohio? To answer this question—that is, in a way that goes beyond the “only doing it to sell jumpers” argument—we need to interrogate not just the form or content of the advertising image itself, but the discursive value that such images (and the institutions they “belong” to) are conventionally afforded in contemporary culture. Thus, if we acknowledge that Benetton’s manu- facturing of a novel kind of commodity aesthetic in Shock of Reality provided the press with an initial point of entry into the debate about the meaning of Shock of Reality, then perhaps it is worth going on to consider the extent to which press debate was, in part, sustained by a largely unconscious objection to the transgressive fusion of fashion and “hard news”: a fusion that was made more difficult by the pollution of the masculine logic of documentary photojournalism with the “feminized” “pseudo-logic” of advertising, fashion advertising in particular. In other words, it was not only the alliance forged between documentary photo- graphy and the commodity form per se that stimulated negative press reactions, but the nature of the particular type of commodity with which the documentary photograph was associated.19
Just as the institution of fashion is bound up with notions of the ephemeral, fashion’s identity—as well as its construction of identity— has conventionally been denigrated as “transient,” “superficial” and “depthless”; values that not only characterize the subject of fashion and the institution of fashion as a whole, but that also stand in opposition to those pan-historical and transcendent values and qualities conventionally associated not only with “serious” journalism but also with the High Modernist art object as it is represented in traditional art histories and criticism.20
On the one hand, then, it was the drawing together of two symbolically disparate sign systems in Family in Ohio that was held to be so offensive: the conflation of the “real” world of documentary photography and the “superficial” world of middlebrow fashion advertising. On the other hand, however, it is also worth noting that what was considered equally reprehensible about this campaign was the juxtaposition of fashion—with its connotations of “brand newness”—with “death” and “degeneration”, ideas conventionally associated with HIV/Aids.21
Thus, although Benetton’s previous campaigns (from 1984 onwards) had attracted criticism, it had tended to concentrate on, for example, their multi-racial content and its mobilization for explicitly commercial purposes rather than the form that the advertising campaigns assumed. The press debate surrounding Shock of Reality, however, was largely fueled by an unconscious objection to Benetton’s transgression and blurring of the symbolic and discursive boundaries that conventionally differentiate “hard news” from advertising generally, and to Benetton’s “dumbing down” of the documentary photograph in particular.
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Documentary Photography, Ideology and The Press
What is it then about documentary photography—and the type of knowledge it represents—that remains so precious that any perceived disturbance of its aesthetic and contextual integrity can provoke such emotive displays of collective hostility?
According to Howard Chapnick, former President of the Black Star Photo Agency, the “essence” of the photojournalistic image can be conceived of in terms of its depiction of a series of “implausible” and “inconceivable” events.22 In other words, its particularity and specificity partly result from the distance it establishes between itself and the multi- tude of other photographic images that, arguably, represent what they themselves constitute: that is, the banality of the image world in everyday life. The advertising image would represent perhaps—from a photo- journalistic point of view—a prime example of this.
Furthermore, according to Michael Griffen, the legitimacy of the photo- journalistic image is ultimately realized through its production of affect. In other words, as a result of the photographer’s production of “high drama and emotional pull”—the conventional aesthetic criteria by which most successful documentary photographs are judged—it is held that an effective documentary photograph will be capable of transforming the mood of the viewer—which is to say that he or she will be “moved” by it.23
One might argue, however, that the realization of affect relies as much on the relationship between the documentary photograph and the “ideology of realism”24—which frames the discursive conditions of its production and consumption—as it does on anything in the image itself. Consequently, the production of affect, rather than being contingent on the form that any one image assumes, is actually an effect of the viewer’s belief in the veracity of the documentary image (something that is certainly encouraged but not wholly determined by its form); and it is this that enables one to be “moved” by it in a way one would not necessarily be moved by an advertising image, however “moving” its content might appear to be.
It is worth noting that although documentary photography has been subject to the deconstructive ire of photography theory since the mid- 1970s, as well as a variety of aesthetic changes since its inception as a mass media form,25 its basic ideological function (its facility to render the world “as it is”; to provide an “eyewitness” account of what Roland Barthes refers to as “that [which]—has—been” (Barthes 1982: 82)—a function that exists in contradistinction to the function of the “artificial” world of fashion photography), has remained intact. In other words, the documentary photograph has continued to maintain its ideological grip on the social imaginary, in spite of the academic broadsides leveled against it and the various ways in which the form of the documentary photograph has evolved historically.26 So, while various technical and
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critical interventions may have modified the actual form of the docu- mentary photograph, as well as its reception in certain restricted contexts, they have not impacted on its popular epistemological status.
How then, in this context, has the commodity aspect of documentary photography been disavowed in such a way as to secure its position as a privileged form of objective knowledge? To what ends is the myth of documentary photography’s disinterestedness sustained by those instit- utions for which it performs such a vital role?27 In a journalistic context the photograph’s promotional role is repressed by a set of historically established discursive procedures,28 which constrain the ways in which the documentary photograph is received by its audience.29 In relation to Shock of Reality, the invalidation of advertising, coupled with a reiteration of the “integrity” of the documentary project, as it exists within a journal- istic context, clearly provided the discursive framework through which most press criticism was refracted.
Arguably, however, the press’s attack on Benetton, and its parallel defence of documentary photography, betrayed another set of concerns, arguably linked to the fragility of the press’s self-image. In other words, the press’s assault on Benetton might not only represent a specific crisis of institutional identity, primarily made manifest through Benetton’s use and abuse of an assortment of documentary photographs, but a reaction that may be seen as nothing less than a symptom of a more deep-seated malaise. In other words, what was ultimately significant was not just Benetton’s instrumental use of documentary photography, but also the way in which Benetton effectively obliged the press to unconsciously re- evaluate its own status as a commercially disinterested institution.
The Press’s Repressed
The business of journalism seems to be impinging on the basic functions of journalism in a way that is ultimately dangerous to journalism and perilous to the public interest. Across a broad spectrum of news organ- izations, the balance between the bottom line and professional news judgements, between journalism’s private and public functions, has been tilting toward the forces of the market place and maximum return and away from the newsrooms—and the public interest.
Former Washington Post correspondent Dan Oberdorfer, quoted in Sparrow (1999: 3)
Like the documentary photograph, the press is conventionally held to be a privileged eyewitness to world events. Moreover, its primary role in “civilized” liberal society is, again like the documentary photograph, to relay such events to the general public in a reasonable and disinterested fashion (see Schwartz in Brennen and Hardt 1999). In being seen (or at
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least imagined) to be doing this, the press has come to represent what Thomas Carlyle described as a “Fourth Estate” (Powe 1991: 261)—in other words, “a political institution able to act independently . . . and, therefore one capable of safeguarding democracy” (Sparrow 1999: 3). Given its position of privilege in relation to other institutions of culture (a privilege secured in the US, where the press—unlike any other American industry—is protected under the American constitution’s “right to free speech”) it is not difficult to understand why the bringing into question of press impartiality should elicit such a defensive response from the industry.
Jacques Lacan’s remarks about the formation and comprehension of identity may be useful here.30 Although Lacan is referring to the ways in which individual subjectivities are constituted, it is possible to understand his argument in relation to the ways in which an institution might potentially misrecognize itself. Indeed, it appears to be precisely the way in which the “I” of the press misrecognizes itself31 in the mirror of journalistic ideology, effectively repressing the material conditions that constitute its identity, that serves to perpetuate the “un-real” image the press continues to have of itself.
That the psychic history of the press can be characterized by the fraught relationship that exists between its commercial aspect on the one hand and, on the other, its status as disseminator par excellence of value- free knowledge means that, given the immiscible relationship that exists between these two aspects of the press, it is hardly surprising that for its “disinterested” side to maintain a position of ideological pre-eminence in relation to its “other,” its “other” must be evacuated in order to avoid any unnecessary epistemological and discursive complications.
Thus it is precisely that sense of incoherence and fragmentation—the coexistence of contradictory properties in the same body—that, for Lacan, is fundamentally constitutive of identity that is not only refused by the press (for good ideological reasons, perhaps) but that is “returned” to it in the cracked mirror of Shock of Reality—as a result, that is, of Benetton’s redeploying the documentary photograph in an unambiguously com- mercial context. Indeed, it was precisely the conflation of the worlds of documentary photojournalism and business commerce in Shock of Reality that served to draw attention to the contradictions that remain largely unacknowledged in the press itself—that perhaps rendered Shock of Reality so uncannily disarming.
Moreover, one might argue that the more press organizations become indistinguishable from the variety of other related business concerns with which they are increasingly being linked, the greater the likelihood that the integrity of the press will be even more difficult to maintain. Consequently, the return of the press’s repressed, as it has been returned in an age of global mass media monopolization involving the integration of the entertainment and information industries, for example, represents perhaps a partial—and heavily disguised—acknowledgment on the part
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of the press itself that it is actually not so very far removed from the thing it strives to define itself against.32
Indeed, in the light of this one could just as easily ask the question: precisely how ethical is it for the press to use Aids to sell newspapers ? It would, I think, be ridiculous to suggest that, because the press is as subject to the diktats and whims of the market-place as a fashion company is, anything one might find in the press is necessarily rendered invalid. By the same token, however, I would argue that this is also potentially true of fashion photography and advertising.
Relocating “Family in Ohio”
Having outlined the ways in which a set of discursive procedures—largely organized around issues of commodification, gender, race, photography and advertising—were deployed in relation to Benetton’s advertising campaigns during the 1980s and early 1990s effectively to prohibit consideration of their impact on the social imaginary, I now want to imagine what might have been. In other words, I want to offer some informed speculations regarding the ways in which Family in Ohio not only intersected with a variety of other Aids-related “utterances” in Britain, but positively contributed, in a moderately subversive fashion, to oppositional Aids-related discourses elsewhere.
As I have implied, issues of context and interpretation in relation to Shock of Reality are conveniently elided by Bailey et al. by virtue of the ways in which they fetishize the sphere of production, to the extent that any consideration of the ways in which the discursive environments within which Shock of Reality was actually situated may have shaped the variety of ways in which it was consumed becomes pointless.
Having said that, even where meaning is considered as something other than a straightforward effect of the image’s commodity status, this is generally done in such a way as to prevent any critical evaluation of the relationships between a particular advertising photograph, its exhibition in a specific cultural context and, finally, its reception. Arguably, this mode of analysis does the important ideological work of naturalizing or rendering commonsensical the relationship between a “tainted” sphere of image production (mass advertising) and the inevitability of its “react- ionary” messages; an outcome of what White, writing in The Sunday Times (1992), refers to as the unacceptable “imbroglio of sweaters and morals.”33
This isn’t to say that the content of Shock of Reality may not amount to the reproduction and dissemination of a series of “reactionary” messages in relation to HIV/Aids. However, in order to assess this, it is worth considering the ways in which specific advertising images have been deployed in a variety of historically specific and discursively uneven contexts. As one such example, I want to consider the ways in
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which Benetton’s most notorious Shock of Reality ad intersected with a variety of Aids-related utterances in Britain and Italy. In doing this I want to consider how those utterances could be understood as having inflected Family in Ohio with strikingly different sets of meanings and significances.
To begin with, it is worth noting that Family in Ohio evokes an atmosphere of religiosity. This is suggested by the depiction of a bed- ridden Christ-like figure; a painting directly above his head featuring the image of a man with outstretched arms, dressed in Christ-like robes; and a black-clad arm (suggestive of a priest) entering the image from left of frame, uncannily echoing the outstretched arms featured in the painting. Furthermore, although Family in Ohio certainly appears to make explicit reference to documentary photography (a reference reinforced by the swathes of comment surrounding it) it also refers to a variety of other sign systems. Indeed, Oliviero Toscani refers to this image as a “modern- day pieta” (1993: 36); that is, “a representation of the dead Christ . . . in which the sufferings of Christ are exaggerated and distorted” (Murray 1978: 345).
On one level then, the kinds of religious connotations identified above might constitute a “positive” message about HIV and Aids—one that, in Britain, may be understood as a reaction against the type of “negative” Aids imagery that came to characterize dominant media representations of the illness, particularly during the 1980s and early 1990s.34 Thus, in contrast with those representations of Aids that suggest, as Simon Watney (1987) implies, that people with Aids have “brought it on themselves and, therefore, deserve everything they get,” what we, arguably, have in Family in Ohio is an image that re-articulates Aids as a curiously privileged condition: synonymous with spiritual transcendence, resurrection and an intimacy with God.
Having suggested one of the ways in which Family in Ohio may be understood as a “positive” reaction to the kinds of negative Aids imagery Simon Watney refers to in Ten 8, we might, on the other hand, argue that, in fact, Family in Ohio actually represents an equally polarized point of view where individuals suffering with Aids are crassly figured as quasi- religious figures whose physical martyrdom through Aids ludicrously signifies a first, feeble step on the rocky road to spiritual redemption. As Roger Clarke, writing in The Guardian about popular, liberal represent- ations of Aids, remarks, “We make a saint of Derek Jarman, a fallen angel of Bruce Chatwin and a Madonna of the Princess of Wales” (1.12.1994). Thus, inasmuch as the physical suffering of Aids becomes synonymous with “spiritual health” (ibid.) Family in Ohio may arguably be seen to contain another “negative” message, inasmuch as Aids here is hysterically romanticized by Benetton—to such an extent that the actual ways in which most ordinary mortals experience dying from an Aids-related illness—(a frightening “shitty” thing where “nothing is resolved”)— remain unspoken. It is perhaps an example of cruel irony that Benetton
99Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
chose to describe this image as showing us the “reality of suffering” (Benetton Group 1993: 25, my italics).
However, even if the kind of “alternative Aids myth” I have provis- ionally identified in Benetton’s Family in Ohio actually operates to foment further the climate of cultural negativity that arguably exists in relation to Aids, any serious evaluation of the extent to which Family in Ohio represents a fundamentally reactionary mythologization of Aids must surely be measured against its relationship with all those other images of Aids in circulation in Britain at the time and immediately prior to it. In other words, it may be the case that, in an ideal world, the reactionary nature of Family in Ohio would go without saying; but in a world where messages or sign values are constantly in competition for positions of hegemonic pre-eminence one could argue that, however ideologically imperfect Family in Ohio might be, it does, at the very least, represent a flawed attempt to subvert and displace those images constitutive of an especially virulent type of Aids-related discourse—images largely situated in the field of popular journalism. Which is to say that Family in Ohio’s ideological or discursive significance is as much a consequence of the specificity of its relationship with a host of other images as it is an effect of its semiotic singularity.
However, in suggesting some of the potentially contradictory ways in which Family in Ohio may have operated in one particular social context, it is worth pointing out that this is not a guarantee that Family in Ohio would have performed a similar task elsewhere. Which is to say that, even if its apparently implicit idealization of Aids continued to inform its reception outside Britain, the cultural and political value afforded to such an idealization may have varied dramatically from context to context.
Bearing this in mind, I want to consider the social, ideological and political climate pertaining to Aids-related issues in Italy in 1992 and the cultural value that Family in Ohio was afforded in this particular context.
On 10 November 1992 The Guardian reported that “. . . a young middle-class Roman (A.G.) wrote at length about his solitude, his shame and his thoughts of suicide . . . to the editor of La Stampa, the Italian newspaper. La Stampa published his appeal in full on the front page and triggered a nationwide debate about AIDS, which has never been confronted head on in a country where unspoken but strict religious and social codes mean such issues are taboo.” Following its appearance in La Stampa, The Guardian went on to report that the story of “A.G.” “. . . was leading the national television news and becoming a topic in bars” (ibid.) Furthermore, The Guardian stated that “The controversy over an advertisement by clothing manufacturer Benetton featuring an AIDS death-bed . . . [had] kept the issue in the news” (ibid.).
I am not suggesting that Family in Ohio was single-handedly res- ponsible for a sudden turnaround in dominant attitudes towards Aids in Italy at this time. But, clearly, investing “Aids sufferers” with Christ-like
100 Paul Antick
connotations in a country where the Catholic Church arguably represents the key player in terms of the definition and reproduction of the dominant moral and ethical codes, was a strategy that afforded Family in Ohio the kind of incendiary ideological status it could never have acquired in Britain. The fact that the Church in Italy had largely defined Aids using, to paraphrase Back and Quaade (1993), “the grammar of religion” (Aids being conventionally figured as a kind of “divine retribution” visited on various amoral types, i.e. homosexual “perverts” and drug addicts) meant that Family in Ohio’s evocation of a type of alternative, and fund- amentally redemptive, Aids myth, relying upon and ultimately subverting the “grammar of religion,” would have afforded it considerable cultural weight. Moreover, given that Aids is generally represented in terms of its being a “gay disease,” the conflation of Christ with the idea of a gay man would have had added significance.
The Guardian reports A.G. as saying, “. . . because of my homo- sexuality I have been close to suicide many times, but a sense of the power of life and Christ himself stopped me” (10.11.1992). Thus it is possible to understand Family in Ohio, as it existed in an Italian context, not as simply alerting the world to a set of “issues of global concern,” as Toscani would have us believe, but as intersecting with a constellation of inter- woven discourses where it was not just the meaning of Aids that was at stake, but the meaning of Christ and, by implication, the veracity of dominant forms of Christianity—in other words, the authority and legitimacy of the Roman Catholic Church itself.
Conclusion
Clearly, taking into account the social, political and discursive climates within which advertisements such as Benetton’s inevitably find themselves situated brings into question the usefulness of methodologies that dwell exclusively on the commercially driven nature of the advertising industry. In many ways, however, it would be counter-productive to argue that because advertising photography may operate in ways that cannot simply be reduced to “the reproduction of dominant ideologies” or “the mis- recognition of the self” it is, therefore, not ideological at all. The point is, perhaps, to acknowledge that while advertisements can sometimes perform several different, often contradictory, tasks at the same time, it is worth paying close attention not only to the specificities of any given advertising campaign but also the precise nature of those evaluative techniques or tools one brings to bear upon them. In doing so one should ideally become sensitive to the ways in which such tools can work to conceal as much as they reveal. Thus, as Victor Burgin saliently points out, “The question is not ‘Is this tool better than that tool?’ The question is rather ‘What tool is best suited for this particular job?’” (Evans 1997: 75).
101Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
Acknowledgments
Thanks to Benetton for allowing me to reproduce their advertising images.
Notes
1. See Victor Burgin’s “Looking at Photographs” and “Photography, Phantasy, Function” in Burgin (1982). Here Burgin echoes the theo- retical sentiments expressed in “Screen Theory” when he states that “Photography is one signifying system among others in society which produces the ideological subject in the same movement in which they ‘communicate’ their ostensible ‘contents’” (1982: 153). It is worth noting that Burgin’s emphasis on the seemingly effortless production of the subject of ideology in photography is one that still characterizes much contemporary photography theory. For a more recent example of this approach see Hirsch (1997). The essay that, perhaps, best characterizes the theoretical position assumed by Screen—which, broadly speaking represented an amalgam of Lacanian psychoanalysis and Althusserian Marxism; what Mulvey refers to as “political psycho- analysis” (1975: 6)—is Laura Mulvey’s “Visual Pleasure and Narrative Cinema” in Screen 16(3), Autumn 1975, p. 6. Here Mulvey evaluates the ways in which the visual conventions of popular cinema structure and prescribe the female subjects’ identification with an alienated, and alienating, representation of femininity that is always, according to Mulvey, “. . . displayed for the gaze and enjoyment of men,” whom she describes as the “the active controllers of the look . . .” (1975: 13). As Marianne Hirsch points out, “Mulvey is writing about the film camera and not about still images but . . . in its reception, her argument has been and can be extended to the camera gaze more generally” (1997). For an incisive critique of “Screen Theory” see Paul Willemen’s “Notes on Subjectivity” in Screen 19(1) and Morley (1992: 59–71). Willemen (1978) suggests, in relation to “Screen Theory,” that “There remains an unbridgeable gap between ‘real’ readers/authors and ‘inscribed’ ones. Constructed and marked in and by the text, real readers are subjects in history, living in social formations, rather than mere subjects of a single text. The two types of subject are not commensurate. But for the purposes of formalism, real readers are supposed to coincide with the constructed readers.” Similarly, Morley suggests that “. . . psychoanalytically based work has ultimately mobilized what can be seen as another version of the hypodermic theory of effects (see Adorno and Horkheimer 1972)—in so far as it is, at least in its initial and fundamental formulations, a universalist theory which attempts to account for the way in which the subject is necessarily positioned by the text” (1992: 59). He goes on to state that: “The text . . . may offer the subject specific positions of intelli- gibility, it may operate to prefer certain readings above others; what
102 Paul Antick
it cannot do is to guarantee them – that must always be an empirical question” (1992: 71).
2. See, for example, Berger 1972 (especially Ch. 7, which represents a condensed version of some of the arguments presented in Debord 1967); see also Williamson (1982); Victor Burgin’s “Art, Common Sense and Photography” in Evans (1997) (and its theoretical precursor, Roland Barthes “The Rhetoric of the Image” in Barthes 1977); and Myers 1986.
3. Indicative, perhaps, of the extent to which such a cultural “common sense” now routinely informs debates in popular culture is the appear- ance in Dazed and Confused of Rachel Ames’s “Austrian Label, Wendy & Jim Blurring The Boundaries Between Fashion and Art” (Ames 2001). For an example of the ways in which academic debate is begin- ning to question some of the epistemological and conceptual difficulties attendant on “the blurring of boundaries” see Coles and Defert (2000).
4. The advertising campaign The Shock of Reality of spring 1992 marked a new step in Benetton’s campaign strategies: the seven images presented were not traditionally commissioned fashion images, but actual docu- mentary photographs taken by photo journalists and already published in newspapers and magazines. The subjects, in accordance with the “corporate philosophy of information and concern” (http://www. benetton.com/wws/aboutyou/ucdo/reality/file1848.html), included: an obscure and insidious illness; violence and intimidation; forced emigration; natural catastrophes.
5. See also G. Adair, “In the name of God, go stick it up your jumpers” in The Guardian 13.2.1992; Anon, “Benetton profits from con- troversy” in The Times 28.3.1992; P. Corrias, “Beneath Jumpers” in The Guardian 8.6.1993; J. Erlichman, “Benetton defends shock tactics as art” in The Guardian 20.2.1992; A. Fresco, “Benetton uses Aids victim in advert” in The Guardian 24.1.1992; S. Moore, “Graphic Violence” in The Guardian 2.10.1993; J. Moir, “Ad Nauseum” in The Guardian 11.2.1995; J. Mullin, “Benetton plays new card in rolling back the frontiers of shock” in The Guardian 24.1.1992; N. North, “Sick! Benetton Use Dying Aids Man” in The Daily Mirror 25.1.1992; I. Webb, “One jumper ahead of the pack” in The Times 15.1.1994; C. White, “Blood, sweaters and designer tears” in The Sunday Times 16.2.1992.
6. Russell 1993: 25. 7. Benetton Group 1993: 9. 8. According to the writers of the official Benetton Web Site (http://
www.benetton.com/wws/aboutyou/ucdo/race/file1847.html) Benetton started its “Campaigns for Racial Equality” when Oliviero Toscani’s first photographs, in which different races are seen living in harmony, were used in the advertising campaigns of 1984. Benetton’s new communication strategy began this campaign entitled “All the Colors of the World,” which included “ads which spotlight groups of young
103Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
people of different races and colors as they play and laugh together. This campaign appeared in 14 countries and sparked off yet another racial polemic in South Africa: the photos featuring white and black youths together published in magazines targeted at the black popul- ation were refused by publications reserved for whites.”
9. There are three ways in which this strategy was, and continues to be, realized. First, through Benetton’s gradual, and discontinuous, appropriation of signs conventionally held to belong to a set of discursively opposing institutions—a strategy complemented by the dissolution of sign structures that constitute the visual and linguistic rhetoric of conventional advertising images generally, prior, that is, to the early-mid-1980s. Secondly, through a sustained mythologiz- ation of the “visionary idiosyncrasies” of Oliviero Toscani himself, Benetton’s former “artist in residence”; and thirdly, through the investment in Benetton of “oppositional” values, something which is largely realized through the circulation of Benetton’s own secondary promotional materials (Colors magazine, press releases, catalogs etc.) as well as the various ways in which Benetton’s campaign style was (and is) represented in both the press and academe—this article being yet another example. For an example of recent press coverage see Clark (2000).
10. http://www.benetton.com/wws/aboutyou/ucdo/race/file1847.html. 11. Toscani Manacles and Fetters (also known as “handcuffs”), Benetton
Advertising campaign, 1989, see http://www.benetton.com/wws/ aboutyou/ucdo/race/file1846.html
12. See “Nomads” in Andreas Serrano, Body and Soul, Takarajima Books, 1995.
13. A selection of Benetton’s advertising images were also featured in shows at the Musée D’Art Contemporain, Lausanne, Switzerland, Benetton par Toscani (1995); and the Museo de Arte Moderno, Mexico City, Mexico, Toscani Al Muro: 10 anos de imagenes para United Colors of Benetton (Mantle 1999: 314).
14. See the section on dealerships in Nairne (1987). 15. Spencer Platt, The Guardian, 12 September 2001. 16. According to Wernick, “. . . with the development of the market,
promotion is a condition which has increasingly befallen discourses of all kinds; and the more it has done so, the more its modalities and relations have come to shape the formation of culture as a whole,” quoted in Lee 2000: 305.
17. Of the seven images produced for display on billboards and mag- azines in Europe, five were either subject to court injunctions or voluntary bans: Soldier, France; Family in Ohio, Britain and Spain; Soldier, Britain; Car, Ireland (Benetton Group 1993: 173).
18. In the light of this, it is interesting how many students in my own department at Middlesex University have remarked, when confronted with an especially powerful documentary image, that, although they
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can’t be exactly sure where it comes from, it is, in their opinion, just as likely to be a Benetton advert as anything else. Arguably then, branding a product with an immediately identifiable and distinctive set of visual signs—the color-saturated documentary photograph, for example—could easily obviate the need to reference the brand logo altogether. Thus, as much as Benetton’s appropriation of docu- mentary photography might have effected a re-branding of Benetton, it also potentially represented, for many people, the re-branding of documentary photography itself.
19. According to Stuart Ewen, during the early years of what Michell Aglietta refers to as the Fordist “regime of accumulation,” “the primary function of advertising was the creation and stimulation of new consumer needs as well as to sell the system of mass consumption itself” (1976: 90). Thus, where “commodity consumption became the natural means to need satisfaction” advertising was the “critical intermediary agency bridging the industrial process and everyday life” (Ewen 1976: 93). Furthermore, in the visual rhetoric of advertising photography, men were largely featured as the producers of goods and women as the producers of domestic lifestyles, which were always—according to the logic of advertising discourse—contingent on the goods being made available to them by the men who labored away on the proverbial Fordist production line. The development of advertising, and advertising photography, then, became not only the “means by which women could be educated into the correct modes of consumption” (Ewen 1976: 95) but also the way in which women’s sense of their own social identity came to be constituted in relation to the “soft,” “cosmetic,” “fantasy-oriented” world of advertising itself. Furthermore, in the same way that these values coalesced around the sign “woman,” so the idea of the “feminine” arguably came to define the cultural and discursive value of advert- ising knowledge itself. Thus, not only did the process of consumption become feminized, but the institution of advertising and—by implic- ation—the knowledge it furnished the world with acquired a “soft” or feminine gloss. In addition, I would suggest that fashion discourse, as it is articulated through fashion photography in advertising, constitutes the very apotheosis of “soft knowledge” in contemporary capitalist culture. First, because fashion—unlike “hard” news— is generally considered to be solely preoccupied with the body in particular and the commodity form in general, something that has historically facilitated its classification as “superficial” or, worse still, “trivial.” So, where “serious” journalism does the work of fostering the reproduction of universal values (conventionally synthesizing a particular news event through a set of blanket, humanistic principles and beliefs intended to “unite the populace” (Schwartz in Brenen and Hardt 1999: 162)), fashion is held to cast its “unethical” and immaterial eye upon a collection of disparate bodily forms whose
105Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
social identities are constituted through a set of transient, and, there- fore, culturally insignificant, desires and passions.
20. Particularly where the value of the art object—be it “modern” or “postmodern”—is constructed according to a set of evaluative tech- niques and procedures characteristic of High Modernist criticism, i.e. where the measure of a “good” piece of art is determined by the extent to which it is perceived to satisfy a set of criteria—organized around notions of authorial intent, aesthetic integrity etc.—that pre- exist the object itself.
21. The Guardian quotes “Aids expert” Nick Partridge, “acting chief executive of Aids charity, The Terrence Higgins Trust” thus: “Using the distressing depiction of any form of serious illness or deathbed scene to sell clothing for commercial profit is offensive. Benetton is trying to cash in on the plight of millions dying from Aids.” Significantly, Partridge is also quoted as saying that “. . . not only is the ad. offensive, but it leaves me wondering what Benetton is trying to communicate to the general public” (24.1.1992).
22. Quoted in Michael Griffen, “The Great War Photographs: Con- structing Myths of History and Photojournalism” in Brennen and Hardt 1999: 128.
23. Michael Griffen in Bremen and Hardt 1999: 129. 24. See Taylor 1998: 52–6. See also Martha Rosler, “In around, and
afterthoughts (on documentary photography)” in Bolton 1992; Pierre Bourdieu The Social Definition of Photography in Evans and Hall (eds), 1999 and Abigail Solomon-Godeau 1991. According to Solomon-Godeau, “the documentary photograph . . . is ‘spoken’ within language and culture; its meanings are both produced and secured within those systems of representation that a priori mark its subject—and our relations to the subject—in preordained ways. The fact that a photograph appears to speak itself, as do realist forms in general, should alert us . . . to the working of ideology which always functions to naturalize the cultural” 1991: 171.
25. See Solomon-Godeau 1991: 171. 26. The historical evolution of the documentary photograph would
include such things as its incorporation of color; its appropriation of surrealist aesthetics (see, for example, Humphrey Jennings’s Mass Observation project and, more recently, the work of Magnum photo- grapher, Martin Parr); and, most significantly perhaps, the ways in which it has embraced a variety of innovative photographic technologies; 35mm film, faster lenses, etc.
27. It is worth noting, in relation to criticisms of Benetton’s use of documentary, that if a documentary photograph can only retain its “authenticity” within a particular institutional context—a point of view that underpins objections voiced in the press and, to a lesser extent, academe—then the idea that there is something inherently truthful about the documentary image itself is obviously brought into
106 Paul Antick
question. It is ironic perhaps that we, as newspaper readers, are as much alerted to the contingent nature of photographic meaning by the ways in which the debate about Benetton was structured in the British press and print media—institutions for which the inherent veracity and truthfulness of the documentary photograph, are argu- ably, inestimable—as we are by anything in the images themselves. See also Donna Schwartz’s remarks on “the establishment of photo- journalism as an objective reportorial strategy” (in Brennen and Hardt 1999).
28. “The advertising is exploitative” wrote Helen Fielding in The Times, “because it is using Aids to sell jumpers” (26.1.1992); the implication being that if a story about Aids was being used to sell newspapers it would somehow be more acceptable. Fielding goes on to ask, “Where is the social commitment? What does the Benetton group sponsor with its wealth? Aids research? Help for the world’s poor? No: Formula 1 racing, a basketball team and one or two small arts projects in Italy” (26.1.1992). Significantly, this is a demand that can only be made of Benetton—and not News International, for example—precisely because the press refused to allow Benetton’s communicative pretensions a legitimate position within its own normalizing discourse—a discourse within which any ideological difficulties consumers might potentially have had, in relation to a particular cultural institution’s moral responsibilities, were resolved through the construction of an arbitrary institutional division of ethical labor. In other words, consumers were invited by the press to identify Benetton as an “inauthentic,” self-interested knitwear company and News International as a purveyor of “authentic,” “objective” and “impartial” knowledge. Hence the inevitability of the numerous calls made in the press urging Benetton to donate money to Aids charities (24.1.1992)—something that, to my know- ledge, no one ever demanded of News International, The Mirror Group or Tony O’Reilly, owner of The Independent.
29. Arguably, a similar set of constraints proscribe the ways in which academic texts are received. Here I would suggest that it is equally problematic to suggest that the production and circulation of “intel- lectual” knowledge remains free from the constraints of the market. The commercial nature of relationships between academic publishing houses and intellectuals; the ways in which prestige and status afforded intellectuals by their publishing successes are often translated into forms of financial remuneration by their employers; the commodified nature of higher education, inasmuch as students, nowadays, are construed as much as “consumers” as they are “scholars”; and the relationship between the research assessment exercise in Britain, departmental funding and the concomitant proliferation of juried academic journals surely renders any claim for the autonomous nature of academic production extremely dubious. See Andrew
107Bloody Jumpers: Benetton and the Mechanics of Cultural Exclusion
Wernick (in Lee 2000) for a discussion of the commodified nature of Higher Education and Bourdieu 1988 for a provocative account of the relationship between the production of academic knowledge and the instrumental position it occupies within the Academy.
30. See Jacques Lacan, “The Mirror Stage as Formative of the Function of the I as Revealed in Psychoanalytic Experience” in Lacan 1977.
31. For a concise and extremely clear account of Lacan’s theory of the “Mirror Stage,” where, according to Lacan, the subject is enjoined to identify with “a mirage of himself, outside of himself” 1975: 140) see Bowie 1991: 17–43.
32. One can appreciate the ways in which economic imperatives can explicitly determine news content by considering the extent and consequences of Rupert Murdoch’s News International’s aggressive drive towards vertical integration—that is, the acquisition of comp- anies involved in the production of the same product. For example, as part of News International’s shift from content provider to global distributor, Murdoch “purchased Hong Kong’s Star TV satellite system in July 1993; Star also carried BBC World. However, because the Chinese authorities did not want the BBC’s coverage entering China from Hong Kong, Murdoch dropped the BBC from Star” (Sparrow 1999: 100). For a useful account of the political and financial consequences of the interrelatedness of different media organizations owned by the same parent multinational, and their propensity for self-promotion (the Sun providing favorable coverage of BSKyB, for example) see Peter Golding and Graham Murdoch’s discussion of “media synergy,” “Culture, Communications and Political Economy” in Curran and Gurevitch 2000: 70–93.
33. This mode of analysis is exemplified by Back and Quaade, who argue in relation to United Colors that “images of human difference are fixed within Benetton’s discourse” and that “. . . race and ethnicity are presented as essentially unchanging and eternal social categories” (1993: 68).
34. Watney states that “I am not aware of a single photojournalistic Aids narrative published in the United Kingdom which does not collude in every respect with the overall discursive tendency to criminalise and stigmatise its hapless subjects” (1987: 22). Also, for a concise discussion of media representations of Aids in the British press during the 1980s and 1990s, see Eldridge, Kitzinger and Williams 1997: 60– 72.
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Case Study.pdf
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Electronic copy available at: http://ssrn.com/abstract=1397103
D S E Wo r k i n g Paper
A Global Network and its Local Ties. Restructuring of the Benetton Group
Paolo Crestanello Giuseppe Tattara
Dipartimento Scienze Economiche
Department of Economics
Ca’ Foscari University of Venice
ISSN: 1827/336X No. 11/WP/2009
Electronic copy available at: http://ssrn.com/abstract=1397103
W o r k i n g P a p e r s D e p a r t m e n t o f E c o n o m i c s
C a ’ F o s c a r i U n i v e r s i t y o f V e n i c e N o . 1 1 / W P / 2 0 0 9
ISSN 1827-3580
The Working Paper Series is available only on line
(www.dse.unive.it/pubblicazioni) For editorial correspondence, please contact:
Department of Economics Ca’ Foscari University of Venice Cannaregio 873, Fondamenta San Giobbe 30121 Venice Italy Fax: ++39 041 2349210
A Global Network and its Local Ties. Restructuring of the Benetton Group
Paolo Crestanello and Giuseppe Tattara
Università Ca’ Foscari Venezia Abstract The paper investigates the change in strategy of the Benetton Group, since the mid nineties, in face of the severe intensive competition in the international fashion market. New competitors, in particular the European brands Zara, Mango and H&M, have challenged the Benetton position in the Italian and the European clothing market and have pushed the Group towards cost reduction through globalization of his suppliers. Benetton is a vertically integrated producer that controls (in different ways) the whole value chain from textile raw materials to the sales to the consumers. Till 2000 Benetton made part of its production in its own factories and through a wide network of domestic sub- contractors, mainly specialized in sewing. Now Benetton has drastically moved to a new strategy, abandoning Italy and organizing production around a dual supply chain: close locations (East Europe and North Africa) for quick production and far away locations (Asia) for more standardised products. The paper discusses also the redefinition of competences for the Treviso clothing district, where Benetton traditional sub-contractors have been in few years, drastically curtailed. Benetton restructuring marks the transition to a new network of competences between agents in the district. Keywords Global value chains, Internationalization, Benetton, Apparel. JEL Codes L22, L23, L67
Address for correspondence: Giuseppe Tattara
Department of Economics Ca’ Foscari University of Venice
Cannaregio 873, Fondamenta S.Giobbe 30121 Venezia – Italy
Fax: (++39) 041 2349176 e-mail: [email protected]
This Working Paper is published under the auspices of the Department of Economics of the Ca’ Foscari University of Venice. Opinions expressed herein are those of the authors and not those of the Department. The Working Paper series is designed to divulge preliminary or incomplete work, circulated to favour discussion and comments. Citation of this paper should consider its provisional character.
Electronic copy available at: http://ssrn.com/abstract=1397103
1
A Global Network and its Local Ties. Restructuring of the Benetton Group1. 1. Introduction
Since the 90s, the European clothing market has experienced a massive
process of restructuring. There are several causes: from the modest growth of consumption caused by the stagnating income of Western countries in most recent years, to the appreciation of the Euro over the Dollar that refrained European exports and to the strong competition coming from low wage countries, particularly China after the abolition of clothing quotas (Adam 1971; Finger 1976-1977; Baden 2000; Graziani 2001). The consequences for the richer European countries have been a growing import of garments and the loss of hundreds of thousands of jobs in the domestic textile and clothing industry. Italy, as the only exception in the EU-15 countries, maintains a clothing trade surplus that is however diminishing with the time. In fact, between 1995 and 2007, the normalized Italian balance of clothing trade fell from 50% to 17% and during the same period the imports from China, as a share of total Italian imports, arose from 11% to 25%. In these last few years, the clothing market overall has appeared stagnant, but the companies who have adopted strategies based on quick response have grown faster than others have (Ciappei e Sani 2006:55). These companies have increased the variety of products that can be brought to the market in a short time. The fashion market is volatile and risky and consumers are incessantly stimulated to renew their purchases through a rich offer of new products. The successful marketer on the one hand needs to meet the variable fashion demand of the customer but on the other hand requires to build a network of fast and reliable suppliers (Gereffi 2005). Fast fashion and production flexibility contrast with the necessity, especially for firms that are in the low or medium-end market, to produce at competitive prices. It is possible to reduce costs of production by sourcing to countries with lower wages, but importing from distant countries increases the time it takes to have the garments on the market and makes production less flexible. Consequently, the governance of the supply chain is now much more complex as it requires more efforts on design (to create a greater number of new products) and on controlling and managing distant suppliers (Abecassis- Moedas 2006).
Benetton is one of the largest European garment producers and its core business consists of designing, producing and selling garments for men, women and children in wool and cotton. Its clothing production is marketed under several brands: “United Colors of Benetton”, the flagship brand mainly for men and children, and Silsey, the fashion-oriented brand for women, represent respectively 77% and 18% of the total sales. Other minor brands,
1 We wish to thank Pietro Arnaboldi, Mara Di Giorgio, Giuliano Franco, Diego Favaro, Lorenzo Zago of the Benetton Group staff and Tiziana Crosato and Sergio Spiller, of the Trade Unions, who provided us with the necessary information. We also thank participants to the Prin Bologna research group, to the Sase Meeting Copenhagen, 29 june 2007, and to other seminars held at the University of Venice, CDS Trivandrum, IDIS Delhi, Bank of Italy where a preliminary version of this paper has been discussed.
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“The Hip Side” for trendy, “Play Life and Killer Loop” for the leisurewear, cover the remaining 5%.
Benetton, with Zara, is considered an exception in a context of large international brands mainly owned by pure retailers, such as Gap, H&M and Mango, that do not own factories, but keep market relations with large independent suppliers (Tokatly 2008:23). Benetton is still renowned in the international literature to be a firm that manufactures the majority of its products in Italy (Berger 2005; Dicken 2006; Tokatly 2008). If this was true in the past, today it is no more. In the last five years, Benetton has quickly increased the process of production relocation abroad and at present only 20% of its products is manufactured in Italy, and it is foreseen that this percentage will halve in the next few years. The majority of the production is made in North Africa and in East Europe, but the recourse to the Asian producers, that did not appear in Benetton’s suppliers list until 2003, is greatly increasing.
Parallel to this, the production planning has deeply changed. Up to 2003, production was entirely based on two seasonal collections and 80% of the orders from the retailers were received before the beginning of the selling season. The remaining 20% were mainly reorders and, only in small amount, orders of new products designed during the selling season. Today the number of collections has increased and the amount of orders received before the selling season has greatly decreased.
In the contest of broadening production variety, the increasing of foreign supplying, in particular from Asia, has deepened Benetton’s logistic problems. Furthermore, the newly adopted strategies have had tangible consequences on the garment district of Treviso that in the last few years has greatly downsized.
2. The roots of success: the period 1960-1970
The firm Benetton was founded in 1965 at Ponzano Veneto, a small town
near Treviso, by four brothers’ initiative. In the beginning, Benetton was only a small company that was producing sweaters for local independent retailers. The keys to the success consisted in some innovations related to the product and its distribution and to an efficient production organization based on the work of a large network of small local subcontractors specialized in knitting, cutting and sewing garments. Right from the beginning, Benetton offered a new product characterized by bright colours and targeted to young people. The fully fashion knitwear was made on cotton looms and it was strictly in plain colour2. In this way it is possible to knit plain wool into sweaters and postpone dyeing the entire stock just before going to the market, according to the latest fashion trends. Retailers could order plain sweaters in advance and specify the colour during the selling season3. Together with the advantage of a rapid
2 Carpi district, which had the Italian knitwear’s leadership at that time, was instead specialized in a production of cut and sew knitwear with a very wide offer of models. So Benetton, differently from Carpi, offered a limited number of models, using the colours as strategy to differentiate its products (Brusco e Crestanello 1995). 3 Gaeta in the introduction of Nardin’s book (1987:8) defined the Benetton’s organization as Fordist and the Ford’s expression: “any customer can have a car painted any colour that he wants so long as it is black” could have been adapted in Benetton’s case to: ”any sweater he wants so long as it is basic and fully coloured”.
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response to the fashion market, the dyeing postponement process allowed a drastic reduction of costs due to less expensive inventories and to a smaller unsold stock. This process was made possible thanks to an advanced dyeing process set up by Benetton, able to offer an wide number of colours and the guarantee that garments did not lose their colours when washed. Benetton internalized the dyeing process to take advantage fully of its dyeing know how (Dapiran, 1992).
Shortly after the production of knitwear, followed the production of shirts and jeans. In the beginning Benetton sold them under different brands (Tomato, Jeans West, etc.) because the quality of these new products was not yet comparable to the one obtained for the sweaters and there was a fear that it might damage the reputation that the firm had achieved as a knitwear producer.
It is estimated that in the second part of the seventies around 60-70% of the overall Benetton production was made by a hundred of subcontractors located mainly in Treviso and in the surrounding provinces of Veneto (Nardin 1987; Benetton and Lee 1990). The activities such as design, quality control and the manufacturing stages which required greater investments (such as knitting, cutting and dyeing), were instead undertaken in the two factories of Villorba and Monzambano which employed about 1000 workers.
From the very beginning, a tight control was imposed on subcontractors, to whom raw materials and precise technical details to make the garment were sent. The price paid by Benetton to its subcontractors was generally lower than the one paid by other firms, and it was updated yearly according to the rate of inflation. Lower prices, however, were compensated by the certainty and punctuality of payments, by long production runs (which could surpass 10 thousand items per model which was large for the market of the time) and by the guarantee of continuous orders that permitted the subcontractors to work at full production capacity (Brusco and Crestanello 1995; Crestanello 1996).
Parallel to the productive developments, Benetton carried out another revolution: it was the first Italian firm to apply a quasi-franchising system to retailing. This system permitted a fast growth of sales thanks to the fact that there was no need to have great financial resources to open new stores. That was good for Benetton that at the beginning of its success lacked the necessary capital.
The first Benetton’s shop opened in Belluno in 1966 and in just few years Benetton’s stores covered all Italian’s provinces. In the beginning of the 70s, there were about 500 stores under different Benetton’s brands (as well as Benetton, also Tomato, My Market and Merceria). The relationships with the retailers were similar but not equal to those of the franchising contract. In fact, there was not a written contract and royalties were not requested. On the other hand Benetton did not guarantee the retailers an exclusivity of territory, did not repurchase the unsold products and imposed the retail prices (Favero 2005:79). The shops, generally of small size constituted an innovation in the Italian market because they offered, at good price, good quality and highly fashionable sweaters which were displayed in a way so that customers were able to pick them up from the shelves, touch and try them. Even if the retailers worked with a limited mark-up, the selling activity was profitable as it guaranteed a
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high turnover per square meter and per worked hour4. The growth of Benetton depended more and more on the capacity to increase the number of stores under its own brands involving in the business some of its agents who became owners of many stores.
In those years, Benetton contributed to the creation of the casual style, targeted at the beginning for young people, but shortly after spread to other age groups. In the beginning almost all Benetton production was sold on the domestic market and exports became significant toward the end of the 70s with stores opened in France, Germany, United Kingdom, Holland and Belgium (Benetton Group Annual Report, 1990:112). Between 1973 and 1979, the Benetton’s sales increased from 31 to 287 million Euros (Benetton and Lee 1990: 104).
In the seventies, thanks to Benetton and to other firms that followed the trail of its success, Italy became the major producer of knitwear in Europe. Another important producer of Treviso, Stefanel, in those years experienced a market success following the same Benetton’s business model (coloured sweaters sold in franchising) and becoming very soon one of its main competitors.
3. The period 1980-1990: growth by vertical and horizontal integration
The 80s saw a passage from a family-owned company to a managerial one
with the recruitment of a manager from outside the Ponzano factory5. The firm was quoted in Milano’s stock’s exchange in 1985 and later in the New York stock’s exchange (from whose quotation it was withdrawn in 2007). In those years, an important role was played by the promotional campaigns carried out in collaboration with Oliviero Toscani who strengthened Benetton image, building an identity brand that was missing until then. The name “United Colors of Benetton” became the flagship brand of the Benetton Group.
Benetton grew through a strategy of vertical and horizontal integration. At the end of the 70s Benetton’s organization could be defined as “quasi-vertical- integration” (Blois 1972) as the company controlled the whole value chain, even if various activities were not organized through an exclusive hierarchical control. In fact Benetton represented the main, if not the only, client of its subcontractors and could decide the price paid and the general terms of supply (Belussi and Festa 1990). As in the case of the franchisees, there was no a written contract and the orders were tacitly replaced at every season. Benetton established with its subcontractors long-term relationships based on cooperation and trust. Although there was an evident asymmetry in the negotiation power (subcontractors employed an average of 15-20 workers), Benetton, thanks to the constant growth of sales, was able to renew and increase the orders at every season, favouring the subcontractors who updated
4 The mark up of Benetton’s stores was 70% against an average of 100% applied by the other stores. 5 In 1981, Aldo Palmeri, a Bank of Italy officer, became CEO of Benetton. Two years later, Giovanni Cantagalli, another manager coming from an American multinational company, was recruited in charge of personnel and shortly a team of managers was created to reorganize the Benetton’s family-owned company.
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their equipment. Benetton used to advise its subcontractors about new machines that were most profitable and provided to some of them financial assistance through its leasing and factoring company.
It was at the end of the 80s that Benetton started the process of entering directly into the upstream stages of the clothing value chain6. It acquired important textile and knitting factories through the affiliated company Olimpias that today owns, in several Italian provinces, ten plants supplying the majority of the raw materials necessary to the Group’s clothing division. The control of the entire value chain was then completed: from retailing to clothing and textile manufacturing, to which also the wool production was added later. In 1991 in fact, the Benetton family acquired the company Tierras Del Sur Argentino, becoming the owner of 900 thousand hectares of breeding area for sheeps, for a total production of over 6 million kilos of wool7.
The process of horizontal integration was also achieved. The strategy of total look was completed with the introduction of products such as shoes, spectacles, perfumes, watches and, most recently, jewellery. This strategy was carried out both through acquisitions, as in the case of “Calzaturificio di Varese” in 1988, and through production licences as in the case of perfumes, spectacles and watches. In 1989 it was decided to enter into the sporting good sector with the acquisition (near Treviso) of Nordica, an important producer of boots, skis, skates, skateboard and tennis rackets. The new business was not successful and it was sold in 2003.
Until the 80s all the Benetton products were made in Italy. The beginning of Benetton’s foreign production can be traced back to 1982 with factories established in France, Scotland and United States. The US factory was linked to a failed attempt to enter in the North American market (Nardin 1987:46). In the beginning of the 90s, the factories in Scotland and in the United States closed and two new plants opened in Spain and Portugal. The share of the foreign production rose to 20%, a limited percentage if compared to that of other large Italian clothing brands. During the 90s, in consequence of the growth of sales the number of Benetton’s Italian subcontractors increased and reached its maximum of 866 units in 2000. Therefore, in that period production remained mainly in Italy and the strategy of producing abroad, rather than for reducing costs, was driven by the desire to move production closer to the consumption market avoiding the currency exchange risk.
Starting from the second half of the 90s, Benetton faced an increase in competition, in particular from Zara, H&M and Mango, whose products had generally lower prices8. The yarn and fabrics produced by Olimpias became expensive compared to the ones sold in the market. Furthermore, the export advantages due to the weak Lira exchange ended in 1995 with the decision of Italy to peg the Lira rate of exchange in order to enter the European Monetary
6 In 1987 Benetton tried unsuccessfully to acquire Lanerossi, a large Italian textile company, which was its main supplier of carded yarn. The bidding winner was Marzotto that, after this acquisition, became the largest textile company in Italy. 7 < benetton.linefeed.org/archives/000058.html> 8 Zara is a vertical integrated firm both upstream, with factories located in Galicia, and downstream, with a large network of mono-brand stores. All the outlets transmit to the headquarters a continuous flow of information on their sell-out, allowing in this way a quick production response to the market’s requests.
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Union two years later. The fixed exchange rate made impossible to Italian companies to transfer the increase of production costs on higher export prices and the progressive opening of the Eastern European markets to foreign investments induced Benetton to follow the strategy, already adopted by other Italian firms, to delocalize production first in Hungary, then in Rumania and Croatia9. Also Tunisia was interested by this process, mostly for cotton sweaters and jeans, in which this country is specialized. The manufacturing factories in France, Spain and Portugal lost their importance little by little and stopped their activity.
4. The last decade: change of the collections time-table and productive internationalization
At the beginning of 2000, Benetton speeded up the process of changing the
production organization, in consequence of the strong competition mainly coming from Zara, H&M and Mango, which are the main foreign brands to have their own stores in Italy.
The process of restructuring was extremely fast: in 2003, 48% of the volume of production was still manufactured abroad and 62% in Italy. Production abroad increased in just one year, between 2004 and 2005, by 13 million items and the employment in Benetton’s Italian subcontracting firms shrank, from 2003 to 2005, by 3100 workers10. This great shift was due to the decision taken in 2004 to move production to China. The recourse to Asian suppliers with a large autonomy in managing a broader range of manufacturing functions, including the sourcing of inputs and sometimes logistics, is described as “full package production”. Benetton provides the design, often a simple sketch, and buys the final product that is delivered to its warehouse and then distributed to the stores. In 2007, Benetton’s full package production represented, in terms of volume, 37.6% of the total11 and the increasing importance of this form of sourcing has made Benetton much more similar to the large clothing international retailers (e.g. H&M, The Gap, Marks&Spencer) than to a clothing manufacturer.
In 2005 Benetton’s organization shifted from a system based on productive units referring to the different product categories (such as wool, cotton, etc.), to a structure based on the different activities (such as design, quality control, marketing etc); a move that underlines the change in the governance of the value chain (Annual Report 2006:24; Camuffo, Romano and Vinelli 2001). Also the structure and the number of collections changed radically. Until 2003, the production was based on two seasonal collections (Spring/Summer and Autumn/Winter) that were designed much in advance of the selling season and 80% of the production was decided on the basis of orders collected before the season by Benetton’s agents. The remaining 20%
9 According to Benetton in that period “the increase of Ebitda margins came from a significant reduction of industrial costs due to the production delocalization to East Europe” (Benetton, 2003) 10 The loss of jobs was the result both of the closing of firms and the reduction of employees per firm. Furthermore, several subcontractors stopped working exclusively for Benetton and had to diversify their customers’ portfolio to face a situation of uncertainty. 11 Nowadays 90% of the Benetton’s full package production comes from Asia.
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came from reorders. The products designed during the selling seasons “flashes” were a very small part of the production and were made just to “refresh” the shop windows. This organization did not permit taking advantage of the market opportunities, and was not encouraging consumers to pay more visits to the shops in search of the last fashion trends12. Following the success of Zara, able to offer constantly updated products in its stores, Benetton changed its collections timetable.
The traditional seasonal collection was split taking the names of Contemporary1 and Contemporary2. Each one of these collections has a time-to- market that varies between 4 and 8 months and is articulated in 4 launches: Spring, Summer, Autumn and Winter (Figure 1). Additionally, during the selling season, Benetton introduced three collections: “Trend” a collection more sensitive to the fashion tendencies with time-to-market between 1 and 4 months and the collections “Just in time” and “Continuative items” that use standardised raw materials (“Continuative items” is manufactured on stock) and are brought to the market in a very short time (7 days if the products are made in Italy and 15 days if imported from abroad). While “Just in time” aims to satisfy fashion sensitive consumers, “Continuative items” guarantees that a collection’s core products are restored in a very short while13.
The passage from a production planned well in advance to a flexible one, with a reduction of the time-to-market and an increase in the number of collections, required a new selling organization. The independent retailers, in fact, have to bear the risk of the end of season markdown and they put the orders only after having seen the products. There is in fact the need for the agents to visit the retailers more than one time a season to show the collections and this implies high transactional costs and difficulties in planning production. A direct control of the shops, instead, guarantees a better coordination of the entire value chain reducing the time needed for the independent retailers to decide their purchases. For this reason, Benetton, in the last few years, has increased the number of its own stores that now sell about a quarter of the value of total sales. Furthermore, in the last two years Benetton invested a great deal of resources in retailing activities, opening new stores in new markets, giving economic incentives to the franchisees and linking the production, logistic and retailing units through a new information system, in order to receive information about the sell-out and the retailers can have immediate confirmation and guaranteed delivery times for their orders14.
12 Zara customers pay an average of 17 visits a year to the brand’s shops, against an average of four visits for competitors (Gallaugher, 2008). Furthermore, it’s a strong consumption incentive to know the product you see on the shelves might be no more available the day after. 13 The two collections Contemporary1 and Contemporary2 represent 75% of the annual production sold under the brand United Colors of Benetton. The collections Trend, Just in Time and “Continuative items” have instead a greater relevance for the fashion-oriented brand Sisley and they represent 50% of the total production under this brand. 14 Starting from 2005 Benetton has renewed its informative system. Furthermore, Benetton monitors constantly what is selling and what is not in 500 mono-brand shops, to have a better production planning and to keep its inventory low.
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This shift of focus from production to retail activities confirms the transformation of Benetton from a manufacturing to a buying company15.
Figure 1 – New collections structure Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Spring/Summer
Continuative Items
Contemporary1 Spring
Contemporary1 Summer
Contemporary2 Spring
Contemporary2 Summer
Trend
Just in time
Autumn/Winter
Continuative Items
Contemporary1 Autumn
Contemporary1 Winter
Contemporary2 Autumn
Contemporary2 Winter
Trend
Just in time
Source: Benetton website 5. The present production organization
In 2007, Benetton produced 145.2 million items (garments and clothing accessories, such as footwear, bags, belts, etc.), for a turnover of 1,856 million euros (Table.1). Other sales, concerning textile production sold to the independent clothing firms, royalties and other minor incomes, led the total Benetton’s turnover to a value of 2,085 million Euros16. About half of the Benetton’s production was sold in the Italian market, 36% in other European countries, 11% in Asia and a minor part in the Americas. Benetton sold its products in 124 countries17 through 5800 mono-brand stores, 95% of which are in franchising.
15 This change was anticipated in 2005 by the CEO Silvano Cassano who explained how Benetton was shifting investments from the manufacturing area to the retailing one (Benetton 2005). This strategy was also confirmed recently by a financial analyst: “Benetton is implementing new organisational procedures, with a better coordination among all the stages of the value chain, without focalising exclusively on the production efficiency. The result will lead to improve the variety of the offer and to reduce the lead time. Benetton is changing its own organisation with the focus on retailing and not on production …” (Benetton 2007). 16 Olimpias, the Benetton’s textile company, sells 2/3 of its yarn and fabric production to the Group’s clothing division and 1/3 to independent firms. 17 More than 2000 shops are located in Italy, 2000 in other European countries, 500 in Asia and 250 in the Americas.
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Table 1 –Benetton Group turnover (in millions of Euros) 2007 2006 2005 Clothing, accessories and footwears 1956.0 1715.1 1579.4 Yarns and fabrics 88.0 85.6 88.6 Royalties 41.0 11.9 15.5 Others - 98.4 81.6 Total 2085.0 1911.0 1765.1
Source: Annual report: various years Benetton owns only 300 stores that sell a proportionately larger amount of
overall sale value, about 21%. In order to keep relations with its many independent retailers Benetton maintains a large network of agents (some of them own several shops) coordinated by a team of area managers.
In 2007, the Group employed 8,896 workers of which 7,737 in various clothing activities such as textile (17%) and retailing (42%). 3,800 workers, 43% of the total, were employed in Treviso headquarters and in ten textile and knittig factories located in various parts of Italy.
The production activities are carried out by the Benetton’s affiliate Benind, which governs, through its own subsidiaries, factories and logistic platforms in Hungary, Croatia, Tunisia, India (Tab. 2), and purchases full package products from the Benetton’s Asian suppliers through the Group’s trade company Asia Pacific.
Table 2 – Intra-trade between the Benetton’s company Benind and its foreign affiliated companies in 2007 (in millions of Euros)
Purchases of finished products
(1)
Sales of raw material and
accessories (2)
Manufacturing value
(3)=(1)-(2) Main activity
Benetton Hungary* Nagykálló 183.1 74.6 108.6 Garments and footwear Benrom Romania * Sibiu 36.8 18.7 18.1 Cotton garments
Benetton Croatia * Osijek 36.3 14.8 21.5 Wool garments, cotton knitwear, dyeing
Benetton Istria * Labin 62.9 30.9 32.1 Knitwear, wool garments, samples (part of) Benetton Tunisia* Sahline 139.9 48.6 91.3 Cotton garments, knitwear, dyeing
Benetton Asia Pacific** Hong Kong 231.0 - - Cotton garments, knitwear and accessories Benetton India* Gurgaon 2.3 0.2 - Cotton garments Total 692.2 187.7 *outward processing production; **full package production; Source: Annual Report. Benind Spa, 2007: 43- 44
The garments manufactured abroad are imported from Benind and then sold to Bencom (the commercial division of the Group), which distributes them to the stores. In 2007 Benind sold raw materials to its foreign affiliates (Benetton India and Asia Pacific excluded) for 188 million Euros and imported from all foreign companies finished garments and clothing accessories for 692 million Euros. In the same year, Benind purchased garments from Italian subcontractors and paid dye-work services for a total of 103 millions.
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In 2007, 32.4% of Benetton’s production, in terms of volume, was produced in Asia, 20% in Tunisia and 28.5% in East European countries. Italy produced only 10.3% (Table 3). Figure 2-- Percentage distribution of garments and accessory items produced by Benetton (number of items)
1993
Italy
Spagna, Francia
2004
Italy
Other
UngheriaCroazia
Tunisia
2007
ChinaItaly
Other
Tunisia
Croazia
Ungheria
Table 3 – Number of garments and accessory items produced by Benetton 2006 2007
Million of items % Million of items % Italy 19.7 14.9 15.0 10.3 Eastern Europe 43.0 32.5 41.4 28.5 Tunisia 26.1 19.7 29.0 20.0 Asia 34.9 26.3 47.1 32.4 Other countries 8.8 6.6 12.7 8.7 Total 132.5 100.0 145.2 100.0
Source: interviews with Benetton staff The choice of the outsourcing countries depends on several factors: labour
cost, economic and fiscal incentives, availability of skilled labour, flexibility and time-to-market. Shifting production from Europe to Asia has cut the unit cost of production because of the lower cost of labour, the use of cheaper local raw materials, and because several Asian countries have their currencies linked to the weak dollar18. The increasing full package imports from Asia have reduced, as well, transactional costs simplifying the control of the production value chain. From 2003, in spite of the presence of a yearly sale growth of 8-9%, and even if a large part of production moved to Asia was to the detriment of East European countries, there has been a further reduction in the level of activity performed in Italy. This is because the recourse to full package production reduces the activities carried out by Italian workers (employed both by Benetton and by its subcontractors) such as quality control and logistics that were connected to the sourcing of part of the manufacturing production in Tunisia and in Eastern Europe. In addition, the amount of raw materials produced by the Benetton textile-knitting division and sent to the European and Tunisia factories, has declined and this has further reduced the value of production made in Italy.
At present, Benetton’s production is organized according to two supply chains (figure 3). The first one uses Italian, European and Tunisian suppliers to
18 According to an interview carried out to a manager of Benetton, the production delocalised in India has permitted to reduce the production costs of 20% (see also Na Thalang , 2007).
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produce fast fashion and more complex products, while the second one employs Asian suppliers for more standardized production, made on long runs and planned in advance. The majority of Asian production is imported in Treviso where, thanks to a fully robotized warehouse, is efficiently stocked and sent to the worldwide shops. The warehouse in Shangai serves mainly the Asian markets. Figure 3 – The global value chain of the Benetton Group. Source: interviews with Benetton Staff
The Italian production Between 2003 and 2007 the Italian share of Benetton’s production, in terms
of volume, shifted from 38% (41.3 millions of units) to 10.5% (15 millions of units) with a reduction of 26.3 millions items19 (Table 4).
Table 4 –Benetton’s Italian subcontractors. Number of firms, employees and production items
years Production (millions) Italian subcontractors Production Employees total Italy firms employees Italy/total per firm per firm
2003 108.7 41.3 525 8249 38.0% 78667 15.7 2004 109.4 30.6 458 5884 28.0% 66812 12.8 2005 113.0 20.3 327 5136 18.0% 62080 15.7 2006 134.0 18.0 351 n.a. 13.4% 51282 n..a. 2007 145.2 15.0 295 n.a. 10.5% 50847 n.a.
Source: data supplied by the Trade Unions
19 The average value per garment is higher in Italy than in the foreign countries, because of the more complex product made by Italian subcontractors.
PProductive and logistic Units: Hungary, Croatia, Tunisia,
Italy
Contemporary1, Contemporary2, Trend, Just
in time
Contemporary1, Contemporary2, Trend, Continuative items, Just in
time
Logistic Units: India, Thai China (Shenzen)
Warehouse for Europe (Castrette-Treviso)
China Warehouse Shangai
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Between 2000 and 2007 the number of Benetton’s Italian subcontractors has shrunk from 580 to 295, while the number of employees, between 2003 (first year for which data are available) and 2005, has declined from 8249 to 5136. In the last three years, the number of subcontracting firms in Treviso diminished from 208 to 116, while their employment in 2005 (last available data) was of 2085 units (Table 5). At present 80% of Benetton’s Italian subcontractors are located in Veneto.
Between 2003 and 2007 the average dimension of the Benetton’s orders per subcontracting firm fell from 79 thousand to 51 thousand items, a volume of production that a subcontractor of average size (15 employees) can deal in 3-5 months. The majority of the firms, that in the past used to work exclusively for Benetton, has now diversified their client’s portfolio. Furthermore, the only orders which remain in Italy are products made on small runs and with short delivery time. Nowadays, Italian subcontractors have the role to guarantee flexibility to the value chain, solving problems that arise in dealing with distant sourcing: transport delays, errors in production plans, product faults, etc..
In 2006, 37% of Benetton’s Italian suppliers was located in Treviso where it represented a share of 30% of the number of the clothing subcontractors with an employment share of 40% in 2004 (last available year). We can estimate that in 2006 the number of garments produced in Treviso was about 2 million items (Crestanello, 2008). In the headquarters and in the robotized warehouse located in the surroundings of Treviso, Benetton employs 1,800 workers involved in design, marketing and logistic activities.
Tab.5 – The Benetton’s Italian subcontracting firms and their employees Italy Veneto region Province of Treviso Firms employees firms firms employees
2000 768 - 580 283 - 2003 525 8249 395 208 3147 2004 458 5884 354 181 2464 2005 327 5136 272 137 2085 2006 351 n.a. 276 132 n.a. 2007 295 n.a. 240 116 n.a.
Source: Trade Unions
Production in Eastern European countries and in Tunisia Benetton owns in Europe five logistic-productive platforms: 2 in
Hungary, 2 in Croatia and 1 in Tunisia. Raw materials are distributed from Italy to the local subcontractors mainly specialized in sewing, ironing, wrapping the final product that is sent back to Italy ready to be distributed to the shops. In Tunisia and in European countries all the production occurs according to an outward processing model that uses raw materials sent from the buyer and requires a continuous technical assistance to keep up the quality and fulfill the delivery times. This is possible thanks to the presence of skilled employees placed at the end of the productive lines (Pickles et al. 2006; Crestanello and Tattara 200). In 2007, the five platforms of Benetton employed 1047 workers and the relative value chains involved 312 foreign suppliers with 19,500 workers (Tab. 6). The average size of the foreign firms is three times bigger than that of the firms that work for Benetton in Italy and the reduction in
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number of subcontractors is undoubtedly an element of organizational simplification.
In these countries there are several Italian entrepreneurs who have been convinced by the Benetton’s management to transfer abroad their activities, so to be able to continue to work for the Group; on the contrary their orders would have been interrupted (Crestanello and Tattara 2005).
Tab. 6 - Benetton’s logistic platforms and subcontracting firms in East Europe and Tunisia, 2007
Benetton
employees Subcontracting
firms
Employees in the subcontracting
firms Number of
employees per firm Hungary and Romania 281 126 9200 73.2 Croatia 375 43 2800 65.1 Tunisia 391 143 7500 52.4 Total 1047 312 19500 62.5
Source: Interviews
East Europe 41.4 million garments are produced in the Eastern European countries,
equal to 28.5% of the whole volume made from Benetton. Production is organized by four logistic-productive platforms. The ones of Nagikallo in Hungary and of Sibiu in Romania employ 281 workers and manage a network of 126 suppliers localized in several Eastern Europeans countries (Hungary, Romania, Poland, Moldavia, Slovakia and Ukraine) for a total of 9,200 employees. In addition, the Hungarian plant carries out cutting and printing operations. The third and fourth platforms are located in Croatia (Osijek and Labin) and make dyeing and knitting, employing 375 employees. The garments production is made by 43 local suppliers with 2,800 employees20.
In the last few years, production in Hungary has started to decline 21, while that in Croatia has increased specializing on fast response production. For this reason Croatia today has become a formidable competitor for Italian subcontractors (Crestanello 2008).
Tunisia
In Tunisia, the local network of subcontractors, mainly specialized in sewing and upstream operations, is managed by the Benetton’s platform of Sahline. Here Benetton owns two factories with 391 workers which make cotton fabric, knitting, dyeing and special finishing (like printing, stone wash, stone bleach, etc). The subcontractors’ network is made of 143 firms employing 7,500 employees that produce yearly 29 millions of garments, mainly knitwear.
The production in Tunisia has recently increased and 20 million Euros are to be invested in a new factory that will produce knitted cotton fabrics. The new production, estimated in 3.6 million kilos will serve local subcontractors, with a decline in unit cost and increase in efficiency (the network forecasted
20 In 2000 the Osijek factory received 24 large looms from the Benetton’s factory of Troyes (France) which was closing. 21 The tens of years of fiscal benefits of the Hungarian factory are ending and this, together with the abandonment of the sporting goods production (made in this factory), explain the progressive loss of importance of this productive pole.
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production will increase of 21 million garment units). The present preference toward the Tunisian suppliers rather than the Eastern European ones is due to the fiscal benefits allowed to the new factories22, to a lower and stable cost of labor and to the high competences available in Tunisia .
Production in Asia
In Asia production is commissioned to more autonomous local
subcontractors which purchase directly the necessary raw materials, often from selected producers, whose production process is monitored by Benetton. In East Europe and in Tunisia the subcontractors receive the fabric (made in Italy or in other countries as Turkey) directly from Benetton and all accessories as well with a detailed manufacturing schedule.
In Asia are produced, as well as garments all Benetton’s accessories such as shoes, bags belts, umbrellas, toys, perfumes, etc. The imports from Asia have largely increased in the last few years and today they represent in terms of volume 47.1 million items equal to 32.4% of Benetton’s total production23. Benetton’s network of Asian suppliers is managed by Asia Pacific, an affiliated trade company established in Hong Kong, which controls the logistic platforms of Shenzhen and Shanghai. Only a small part of the products manufactured in Asia is sold on the domestic market, the majority is imported in Italy (231 million Euros over a total of 248).
A growing amount of Asian production is manufactured in Vietnam, Cambodia and Bangladesh and is governed by the recently established logistic platform of Bangkok. At present, the number of garments produced in these three countries is around two million items, with a forecasted reach of 18 million items by 2011. The increase of production in these countries is explained by a labor cost which is lower than that of China. Full package production makes the outsourcing organization simpler and, in the case of standardized products made on stock, such as a great part of the accessories, permits a short delivery time too24.
In India production occurs according to a network model that combines vertical integration and subcontracting. In Gurgaon (close to New Delhi) the Benetton’s factory employs 300 workers and organizes the work of many local subcontractors that employ 5,000 workers. The subcontractors receive the raw materials and a precise technical schedule and they produce about 50% of the entire Benetton’s Indian production. Differently from China, almost all the production made in India (about 6 million units) is targeted to the domestic market25. 22 In Tunisia Benetton and other clothing firms like The Gap, Lee Cooper and Yves Saint Laurent benefit duty exemptions on imports, low VAT on the imported capital goods, low taxes on profits (and total exemption on the reinvested profits) and other incentives (Tunisie 2008). 23 It has to be considered that in 2004 Benetton imports from Asia were only 14 millions of Euro against 231 millions of 2007. 24 As Benetton says: “A particular attention is given to the full package production that regards specific markets, such as China. The expansion of this production has produced a competitive advantage in terms of lower costs and shorter lead time” (Annual Report, 2004 : 9) 25 It mainly produces clothing for children and apparel accessories
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6. New markets and production partnerships Benetton’s strategy not only aims to reduce production costs, but also to
expand the number of mono-brand stores, mainly in new markets which offer better business opportunities. In the last few years, in fact, the Russian, Turkish and Asian markets, to which the Mexican market joined more recently, have sustained Benetton’s sales. The rate of growth of Benetton revenues in these markets has been 27% in 2008 (nine months) and 40% in 2007 while revenues in Europe have grown respectively at 4% and 12% (Nine Months Report, 2008:7, Annual Report, 2007:17). In China, at the end of 2006, Benetton has opened more than 100 shops and two mega-stores in Shanghai and Beijing. In India where Benetton is present since 1990, 106 shops have been opened in 43 towns, while in Russia the 150th shop was inaugurated in 2007 (Annual Report 2007:17).
In the last two years economic resources have been invested to open new stores managed directly by Benetton. The majority of these new shops has been set up in the new markets such as India, Korea and Russia, where the franchising system is difficult to introduce.
In some countries Benetton uses productive and commercial partnerships to expand faster its presence. In China, an agreement has been signed with Hemply International Company which will open 150 Sisley shops in the next five years. In India, Benetton’s garments are distributed thanks to a deal with the Trent company, which is part of the Tata Group, while in Mexico a commercial agreement has been made with the distribution company Sears. As regards the licensed productions26, Benetton has two agreements in Turkey: one is concerning house products under the Sisley brand with the Zorlu Group, leader in this sector, the other one with the Boyner Group for the production and distribution of garments also in the Turkey neighbouring countries. 7. Conclusions
In the seventies Benetton’s competitive advantage was grounded on
product innovations based on the use of bright colours, on delaying the dyeing process as long as possible and on the ability to manage a network of small subcontractors located in important industrial districts of Italy. These firms were linked to Benetton by an exclusive pact and by informal and long-term relationships based on trust. Production costs were relatively low - at that time Italian wages were noticeably much lower than the French and the German ones – and Benetton’s subcontractors benefited from long production runs and working at full production capacity. Benetton in fact granted a constant flow of orders to its suppliers that could confidently make new investments and update their machinery.
The Benetton success has been inextricably linked with the development of the Treviso district where the largest share of Benetton production was traditionally localized. The innovations that were at the roots of its success have developed from immersion in the crafts of production, in the close 26 Benetton production licences regard different products: spectacles, perfumes, house products.
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contacts with people who had a daily practice with design, machinery, raw materials and accessories27. At the same time the familiarity that derived from the direct selling experience of Luciano Benetton has contributed to build a retail structure that, without direct capital investment, mushroomed in few years and now is one of the largest retail structures in the European clothing market28.
During the last decade and under a strong competitive pressure, Benetton has focused more attention to the price, moving a large share of its production abroad, and to the need to change the timetable of its collections, introducing many new products during the selling season. There is an evident trade off between these two targets. While the recourse to cheap foreign suppliers risks to increase the delivery time and creates rigidities in production organization, a shorter life product cycle requires more flexibility.
This more complex organization requires a tight and efficient integration between the production, logistic and retailing activities. A difficult task if, as in the case of Benetton, the large majority of mono-brand shops is run by independent retailers. To face this challenge Benetton has increased the number of its own shops and at the same time has recently granted to the independent retailers greater mark-up margins (bearing a heavy cost) in order to strengthen the retail network and receive from the retailers a better feedback (information on sell-out, support for the many seasonal proposals, etc.) (Annual Report, 2007:42). The retail network has so experienced a process of increasing hierarchical control; whereas the production organization is moving towards arm’s-length market relations, phenomenon confirmed by the large amount of full package production outsourced abroad, mainly from Asia.
Such a radical shift of focus from production to retail activities has required new competencies and has changed the relationships with the economic actors in the different stages of the supply chain. In particular, this change has negatively impacted on the clothing district of Treviso where the largest share of Benetton production was traditionally localized. Not only the number of Italian Benetton’s subcontractors has reduced, substituted with foreign low wage suppliers, but also the relationships based on trust, that had in the past linked the Group to its subcontractors, are now much weaker. Many of these firms have diversified their client’s portfolio and now Benetton is no more their exclusive buyer. The clothing district of Treviso is today specialized in activities such as design, quality control, logistic, marketing and in producing short runs with quick delivery times, having lost the large volumes of production that Benetton and other leading brands now get from abroad29.
27 The second generation of Benetton’s managers (and the sons of the four Benetton founders with them) do not have the same level of familiarity with the tools and materials than their parents had when they started the business. 28 See Lane 2004, for an approach to the district as an evolving structure under pressure from globalization.
29 Nowadays local producers deal with high fashion and more sophisticated products, such as seamless garments, and relatively capital intensive manufacturing operations such as CAD-CAM, dyeing and printing (Gomirato 2004).
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Bibliography
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Ciappei C. e A. Sani (2006) Strategie di internazionalizzazione e grande distribuzione nel settore dell’abbigliamento. Focus sulla realtà fiorentina, University Press, Firenze Crestanello P. (1999), L’industria veneta dell’abbigliamento: internazionalizzazione produttiva e imprese di subfornitura, FrancoAngeli, Milano Crestanello P. e G. Tattara (2006), “Connessioni e competenze nei processi di delocalizzazione delle industrie venete dell’abbigliamento e delle calzature in Romania”, in G. Tattara G., G. Corò, M. Volpe (a cura di), Andarsene per continuare a crescere, Carocci, Roma Crestanello P., P. E. Dalla Libera (2003), “La delocalizzazione produttiva all’estero nell’industria della moda: il caso di Vicenza”, Economia e società regionale, 82(2) Crestanello P. (2008), “I processi di trasformazione dell’industria dell’abbigliamento”, Economia e società regionale, 101(1) Dapiran P. (1992), “Benetton. Global Logistics in Action”, International Journal of Physical Distribution & Logistics Management, v.22(6) Dicken P. (2007), Global Shift. Mapping the changing contours of the world economy, Sage Publications, 5th Edition, London Dunford M. (2006), “Industrial Districts, Magic Circles, and the Restructuring of the Italian Textiles and Clothing Chain”, Economic Geography, 82(1) European Community Commission (EC) (1996), Communication from the commission. The competitiveness of subcontracting in the textile and clothing industry in the European Union, Com 96.201 final Favero G. (2005), Benetton. I colori del successo, Egea, Milano Finger J. M. (1976), “Trade and domestic effects of offshore assembly provision in the U.S. tariff”, The American Economic Review, 66(4) Finger J. M. (1977), “Offshore Assembly Provision in the West German and Netherlands Tariffs: Trade and Domestic Effects”, Weltwirtschaftliches Archiv, 113(2) Gallaugher J. (2008) “Zara Case: Fast Fashion from Savvy Systems”, http://www.gallaugher.com/Zara%20Case.pdf Gereffi G., J. Humphrey, T. Sturgeon (2005), “The Governance of Global Value Chain”, Review of International Political Economy, 12 (1) Gomirato E. (2004), “La delocalizzazione dell’abbigliamento in Romania: il caso Stefanel”, Economia e società regionale, 86(2)
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Graziani G. (2001), “International Subcontracting in the Textile and Clothing Industry”,in Arndt S.W., Kierzkowsky H., Fragmentation. New Production Patterns in the World Economy, Oxford, Oxford University Press. 209-230 The Hindu Business Line (2007), Trent, Benetton join hands for strategic partnership, (Our bureau) Wednesday, Sep 19, <www.blonnet. com/2007/09/19/ stories/2007091951220500.htm> Lane D.A. (2004), Innovation led policies for clusters and business networks: Globalization, ontological uncertainty and degeneracy, 23 novembre Nardin G. (1987), La Benetton. Strategia e struttura di un’impresa di successo. Edizioni lavoro, Roma Na Thalang J. (2007), “Outsourcing to India enables Benetton to sell 20% cheaper”, The Nation, 14 maggio <www.nationmultimedia.com/2007/ 05/14/business/business_30034122.php> Pickles J., A. Smith, M. Buck, P. Roukova, R. Begg, (2006), “Upgrading, changing competitive pressures, and diverse practices in the East and Central European apparel industry”, Environment and Planning A 38(12) Sasi A. (2007), “Textile firms leverage Italian tie-ups to move up value chain. For accessing high-end segments of EU, US”, Business Daily from The Hindu Group of publications, 18 luglio <www.blonnet. com/2007/07/18/ stories/2007071850101100.htm>, Wednesday, New Delhi ???? vedere Tokatli N. (2008), “Global sourcing: insights from the global clothing industry. The case of Zara, a fast fashion retailer”, Journal of Economic Geography, 8(1) Tunisie (2008), How to invest in Tunisia?, 12 novembre. <www.animaweb. org/en/pays_tunisie_pourquoiinvestir_en.php>
Journal 2.pdf
Structure.docx
Introduction (随便写的, 供参考, 没有rephrase)
Benetton Group is one of the best-known fashion companies in the world, present in the most important markets in the world with a network of about 5000 stores. The vision of Benetton Group is to be “a responsible group that plans for the future and lives in the present, with a watchful eye to the environment, to human dignity, and to a society in transformation”. The mission is “to be committed to creating increasingly sustainable products and promoting the development of individuals and their communities” and “to plan for the future today, with great attention to the environment and transforming society”. The objectives are “to do its part to achieve the sustainable development goals, namely gender equality, decent work and economic growth, responsible consumption and production, climate action and partnership for the goals”. The values are “colour, freedom of expression, internationality, quality, social engagement and culture”. (from Benetton Group website & annual report)
Globalisation and Information & Communication Technology are changing the name of the game in the textile-apparel industry. Factors like marketing economies of scale and brand equity gain more and more importance, triggering firms’ size increases and concentration of market shares in the hands of companies, usually big buyers who are able to control markets through capillary retail structures. Globalisation affects manufacturing. For example, globalisation has encouraged the move towards the internalisation of certain operations, in order to maintain control over the supply chain and to take advantage of economies of scale and relocation of production abroad, in order to take advantage of cost differentials. New Information & Communication Technology had a double-fold profound impact. First, they dramatically reduce information costs, facilitate communications, eliminate barriers related to geographical distances, and allow real time response to market change. Second, they enhance product development and manufacturing, widening the possibility to achieve, simultaneously, better quality, higher efficiency, and faster time to market. (Case study)
This report aims to deliver a critical evaluation of the value chain activities of Benetton Group. The opportunities for value creation in the marketing and operations management activities of the business will be identified to support Benetton Group in gaining competitive advantage within the sector. Firstly, a strategic level investigation on Benetton Group will be delivered and a critical evaluation of the business’s value added strategy reviewing the marketing and operations activities will be carried out to deliver strategic goals. Secondly, the approaches of Benetton Group in creating value for customers through the integration of core aspects of marketing and operations management will be discussed, which include how value is created holistically through the market research, product development, prototype, supply chain, production, and diffusion into the related markets. Thirdly, a critical appraisal of Benetton Group’s practice to related marketing and operations management theory will be delivered. Lastly, recommendations for Benetton Group to improve marketing and operations management strategy and deliver enhanced value creation and competitive advantage will be provided. (from assignment guide)
1. Benetton Group’s Value Added Strategy
A. Marketing
B. Operations management
2. Benetton Group’s Approaches in Creating Value for Customers
A. Marketing
B. Operations management
3. Appraisal of Benetton Group’s Practice
A. Marketing
B. Operations management
4. Recommendations in Improving Strategy, and Delivering Value Creation and Competitive Advantage
A. Marketing
B. Operations management
A Suggested Structure
· Introduction
· The Case Study – operations and marketing practice
a) Marketing
b) Operations management
· The Theory – how the practice relates to operations and marketing theory
a) Marketing
b) Operations management
· The Analysis – The key elements of your analytical application of knowledge to a SWOT, PESTLE, 5 Forces, 7P's Marketing Mix
a) Marketing
b) Operations management
· The Value Chain – Review of the theory and how the case study creates value and competitive advantage
a) Marketing
b) Operations management
· Recommendations – Using knowledge from the report collate a range of recommendations to enhance value creation in the case study organisation and how this will lead to competitive advantage.
a) Marketing
b) Operations management
· Conclusion
· Reference List (Marketing至少15个, Operations Management 至少15个)一共至少30
· Appendix (May put SWOT, PESTLE, 5 Forces, 7P's Marketing Mix in appendix, and refer back)
Theories.docx
Operations Management Theories:
· Operations Excellence (use in recommendations part)
· Operations Performance Objectives (relate to Benetton case study)
· Process Technology
· Transformation Process
· Work Environment Design
· Capacity Management – supply aspect, make or buy decision,
· Strategies for Modifying Capacity
· Operations Sequencing – Johnson’s Rules
· Capacity Leads Demand
· Technology in Services
· Concept of Lean Management
· Quality Management – external failure costs, internal failure costs, appraisal costs
· Types of Purchasing Activities – vendor managed inventory, time-phased order point
· Benefits from supply chain management – pick 2 to 3 points
· Importance of purchasing – identify purchasing activities within Benetton, cost reduction & materials improvement, buying manufacturing materials, don’t depend on single source
Operations Management Notes:
· What are the service outcomes in Benetton…
· How can Benetton achieve competitive advantage…differentiation…cost leadership
· Benetton always do mass production and batch control
· Capacity to supply during high sales…
· Supply chain concepts – more than one
· Benetton sources of supply – under control
· Benetton – hollowed company – many processes are done outside of the company
· Internationalisation
· EOQ Formula – delivery received must be EOQ
· Demand stability
· Shelf life
· Design stability
· Manufacturing and delivery lead time – affect consumption
· Inventory visibility – actual count is important
· Strengths of Benetton – logistics, supply chain, competitive advantage
· ***Four building blocks of competencies (highlight this in assignment)
1. Superior efficiency (logistics/supply chain)
2. Superior quantity (no error)
3. Superior innovation (time-phased order point)
4. Superior customer responsiveness (how fast response to customers)
· To what extend do we differentiate Benetton from competitors
· Choose 2 points – customer response, inventory planning & management, supply, transportation, warehouse
· Whether Benetton has supply chain? Do they need logistics to activate the movement of materials & transfer of information? Do they have strong logistics?
· Whether Benetton has fantastic supply chain – see principles for supply chain
· Whether Benetton can satisfy the requirements – see optimised supply chain
· Which type of supply chain did Benetton operates – continuous replenishment supply chain/lean supply chain/agile supply chain/leagile supply chain
Marketing
· SWOT
· PESTLED
· Michael Porter 5 Forces
· Value Chain
A Suggested Structure
· Introduction
· The Case Study – operations and marketing practice
· The Theory – how the practice relates to operations and marketing theory
· The Analysis – The key elements of your analytical application of knowledge to a SWOT, PESTLE, 5 Forces, 6P's Marketing Mix
· The Value Chain – Review of the theory and how the case study creates value and competitive advantage
· Recommendations – Using knowledge from the report collate a range of recommendations to enhance value creation in the case study organisation and how this will lead to competitive advantage.
· Conclusion
· Reference List
· Bibliography
Assignment Guide (Case Study Business Report).pdf