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Prada Initial Presentation
Transcript of Prada Initial Presentation
1913 - Mario Prada opened his first storefront in Milan’s prestigious Galleria Vittorio Emanuele II.
Originally named "Fratelli Prada," the luxury store featured leather handbags, traveling trunks, beauty cases, and various other leather accessories.
1919 - Prada became an official supplier to the Italian Royal Family
1984 - Prada introduced a black nylon backpack bearing the brand’s famous metal tag in the shape of an inverted triangle. Although sales staggered at first, this bag would become the ultimate status symbol by the early 90's
Prada CEO - Patrizio Bertelli (appointed in 1978)
Head Designer - Muiccia Prada (appointed in 1977)
The brand operates in over 70 countries worldwide
388 unique Prada boutique locations, with an additional 69 stores scheduled to open around the world by 2015
4 Brands under Corporation - Prada, Miu Miu, Church's, and Car Shoe
Within Italy alone, there are 44 stand-alone Prada boutiques
Prada reported yearly net revenues of 2,555.6 million Euros as of FY 2011, with leather goods accounting for 56% of total sales.
11 Production Plants - 10 in Italy and 1 (Church's) in Great Britain
3,514 direct employees in Italy
7,855 direct employees worldwide
Looking forward, the luxury goods market is expected to grow by 65% by 2015
Prada follows a product differentiation strategy, emphasizing the high-quality, hand-made benefits of their products.
Although most of their handbags are made in Italy, Prada recruits artisan from around the world who are experts in their craft
To sustain demand, Prada strategically supplies boutiques below the expected demand projections.
For VIC clientele, Prada offers made-to-order services
Patented Saffiano leather and "Pocone" fabric
Positioned as a classic yet modern fashion house
Prada sticks to its modest, subtle-branding roots by offering elegant and masterfully made leather goods and apparel
The brand emphasizes creative vision through experimentation with unconventional fabrics as well as the artistic backdrops in Prada's retail stores
Overall, the brand targets affluent consumers who are intellectual, culturally creative, and value the art of self-expression
Luxury Goods Industry is highly competitive and fragmented due to low barriers to entry
Prada's Direct Competitors:
The House of Gucci
Majority of Prada's sales in 2012 came from Asia Pacific and Europe
Asia Pacific = 35.6%
Europe = 21.7%
Prada Sales Broken Down
Fun Fact: Prada went public on June 24, 2011
Listed in HK and raised $2.14 Billion in its IPO
Indicators for Prada:
Fashion Forward Country
Political risks attainable
Belgium is a leading European region in the logistics and distribution sector.
Belgium is the most globalized country in the world
General Business Environment
Gross Domestic Product (GDP):
Rate of Inflation:
Pros/Cons of Prada in Belgium
Strong foreign business environment
Good cultural match
Risks too high with government and debt
Decreasing growth rate
International Marketing Analysis:
The country known as the Netherlands, and unofficially as Holland, is situated in Western Europe, bound by Belgium to the South, Germany to the east, and coastline on the north and west.
Firstly a neutral state, The Netherlands has joined many organizations, most prominently, NATO, the EU, and the UN.
These geographical advantages, together with the inherent "can do" attitude of the Dutch people, have established the Netherlands as a great trading nation.
The Dutch economy is very open and relies on international trade.
"God create the world, but the Dutch created Holland"
Government intervention has historically been minimalist. The workforce in the Netherlands is highly educated, flexible and extremely motivated - and is, of course, one of the most multilingual nations in the world!
The openness of the Dutch economy is just one of the reasons which has made the Netherlands extremely popular with foreign companies. The government's favourable tax treatment for profits made by multinationals has done much to encourage foreign direct investment.
Netherlands GDP & Market Share
GDP/Capita 2012: $46,054.41
GDP Growth Rate 2012: -1.0% annual change
Avg. Income/Capita 2012: $48,250 High Income, 9th on GNI Index
Inflation Rate 2012: 2.4%
The market for luxury goods remains highly fragmented with mainly international brands gaining the largest distribution presence and their position reinforced by continuing support in terms of advertising and new product development.
The Netherlands provides businesses with a perfect strategic location from which to serve and service markets within the EU, plus central and Eastern Europe, the Middle East and Africa.
Amsterdam is the largest city in the Netherlands and is the official capital, and it will provide a perfect market for Prada to enter into, with millions of tourists and Dutch alike visiting Amsterdam and the rest of Holland each year.
GDP: 26.5 million
GDP per capita: $1600 (2010 estimate)
Ease of Doing Business Rank: 107
25% below poverty line
Main sector of economy is agriculture - employs 70% of population and makes up 33% of GDP
26% of pop below poverty line
Product Market Analysis
In 2013, luxury goods sales are expected to exceed $318 billion worldwide
Over the next five years, spending within this market is expected to increase by more than 65%
From 2000-2010 - luxury groups’ cumulative market shares have grown from 30% to over 35%
Sales of Competing Brands:
Hermes International –$4.48 B. (24% growth)
Christian Dior –$1.59 B. (24% growth)
Louis Vuitton – $8.8 B. (10.69% growth)
Chanel – $4.20 B. (24% growth)
The House of Gucci –$4.30 B. (15% growth)
Product Market Analysis
Other than Prada's direct competitors, the main threat of substitution comes from imitation
Counterfeits easily penetrate the market, which can take away a portion of the sales that should go to luxury goods companies
The global market value of the counterfeit industry is currently at $600 billion with a growth rate of 1,700%
Interesting Fact: By 2015, the economic value of the counterfeit market is expected to reach $1 Trillion
Related Articles & Works
Global Growth of Counterfeit Trade: http://link.springer.com/chapter/10.1007/978-1-4614-5568-4_2
International Business Intelligence, Netherlands: http://www.lingo24.com/international_business_intelligence/netherlands.html
Luxury Goods Industry Sales Projections: http://www.businessoffashion.com/2013/10/euromonitor-coach-michael-kors-louis-vuitton-versace-fflur-roberts.html
Luxury Goods in India: http://www.euromonitor.com/luxury-goods-in-india/report
Prada Annual Report: www.pradagroup.com/documents/.../E-Annual-Report-2012.pdf
Language, Culture & Customs, Belgium: http://www.kwintessential.co.uk/resources/global-etiquette/belgium-country-profile.html
Prada said to be in talks for India entry: http://www.livemint.com/Companies/ZN9OBSs1nCfP1W4BGeBBPM/Prada-said-to-be-intalksfor-India-entry.html
Indian business is very much relationship based.
India recently changed their restrictions on foreign direct investment.
Since September 2012, India allows 100% foreign direct investment in single-brand retail and up to 51% in multi-brand retail.
India GDP & Growth
The Luxury Goods market in India is expected to grow by 21% in the next five years.
GDP/capita (current US$): $1,489
Market size: 1.22 billion people
Rate of inflation: 8.2%
GDP growth (annual %): 6.3%
Average income per capita: Rs 5,729 per month or $93.00 (US)
10th largest by nominal GDP.
3rd largest by purchasing power parity (PPP).
Following market-based economic reforms in 1991, India has become one of the fastest-growing major economies.
The Indian economy and its financial system weathered the global financial crisis well.
The luxury goods consumer group is expected to grow by almost 80% in India.
India is becoming a rising destination for luxury goods with a bright market outlook and promising value sales projections.
Why Go International?
Prada is one of the most recognizable fashion houses in the world.
Further expand brand awareness and reach
Tap into new markets/increase market share
Desire for luxury items is on the rise worldwide, with Prada being one of the leaders among emerging economies
Exchange and Interst Rate Fluctuations
Implementation of Strategy in the New Market
Credit Risk - trade receivables generated in wholesale channels and cash/cash equivalents
Legal and Regulatory risks
Protection of Intellectual Poperty
At a Glance: Netherlands vs. India
Where Should Prada Go?
Officially the Republic of India
Country in South Asia
2nd-most populous country with 1.2 billion people
Mumbai, home to Bollywood (the equivalent to Hollywood), is expected to be home to almost 40% of this consumer base.
The investment environment in the Netherlands is encouraging and supporting foreign companies to do business locally. There are many favorable tax and investment policies providing a stable business environment as well.
GDP & Growth
Southern China, North of India
3.5% Growth Rate (2013)
Risk of Doing Business