A true family business, Benetton started when Italian native Luciano Benetton decided

A typical Benetton shop is a low capital, high turnover operation and franchise owners can expect to recoup their capital investment within four years. Both the Benetton shop and the retailing system can be considered fundamental Benetton organizational innovations. The resulting system has been modified over time and different patterns of ownership exist. There is generally an owner/manager and then the employed sales associates.

Role of Advertising in the Promotional Strategy

The company’s small factories can be found sometimes housed in barns or other unconventional locations. The workshops and factories are mainly family run and are premised on simple handshake agreements. There are about 220 small workshops each employing 30 - 200 people and the operating arrangements are informal and flexible. At the center of things, there is a large, fully automated distribution center that handles approximately 43 million garments a year that the company manufacturers. Benetton is structured so that they may rival their competitors with the technology available to them but at the same time they remain small. The overhead is extremely low, they have a small payroll and a very small inventory since no garment is made before an order is received.

In a crowded market, Benetton has succeeded in standing out from the crowd. However, with shattered department store deals and the lawsuits and bans sometimes faced because of the controversial advertising, John Shannon of Grey Advertising International suspects that their ads may have to be taken down a notch if it wants to continue to prosper. Yet many have written these recommendations for years now and Benetton has continued to advertise in the way that it uniquely Benetton - and the company has continued to grow.

Nevertheless, Benetton does employ ad agencies, like McCann Erickson, Delhi in India. The agency has recently launched the new ad campaign “Global Warming” and would like the company to be perceived as a casual fashion garment company rather than a T-Shirt company, which it currently is viewed as in India. Different agencies are employed throughout the company’s international locations and utilized to target their market specifically based on tastes and preferences unique to the region. An example of this is that the multi-national campaigns don’t work very well in India, other brands like Coca-Cola and Colgate have tried using this approach and have invariably failed. So, the idea is to alter the ads a bit toward a more accepted style for the region.

The future looks good for Benetton in that they are expanding in different directions and creating a virtual presence that is Benetton. That is one thing that cannot be said for The Gap, The Limited, or H&M. Finding a niche in the U.S. market where they can place their clothes, as initially desired within the Sears and Roebuck deal would work but only with a very diverse company. Already Benetton has created their own megastores around the country which house their product lines. This may be what is needed to revitalize their United States presence.

Benetton prepares two ranges of product designs a year for its clothing lines. A sample collection is made as a result of a concerted effort between the design office and the marketing staff. If a garment is made that is not within these two sample collections and is acceptable, a “fashion flash” is issued and brought to the attention of all relevant people. In some instances, “fashion flash” garments can be put into production immediately. In this way, Benetton is exercising its responsiveness to the market’s needs.

Role of Selling in Promotional Strategy

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