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Prada Business Model Evolution

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The company was started in 1913 by Mario Prada and his brother Martino as a leathergoods shop - Fratelli Prada (English: Prada Brothers) - in Milan, Italy.[1][2] Initially, the shop sold leather goods …

The company was started in 1913 by Mario Prada and his brother Martino as a leathergoods shop - Fratelli Prada (English: Prada Brothers) - in Milan, Italy.[1][2] Initially, the shop sold leather goods and imported English steamer trunks and handbags.
Mario Prada did not believe that women should have a role in business, and so he prevented female family members from entering into his company. Ironically, Mario's son harbored no interest in the business, so it was his daughter Luisa Prada who took the helm of Prada as his successor, and ran it for almost twenty years. Her own daughter, Miuccia Prada, joined the company in 1970, eventually taking over for her mother in 1978.

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  • 1. Karin MaandiMihkel Külaots Stella Pinsel 2012
  • 2. AGENDA Establishment Early years (1913-1989) Beginning of Prada-Bertelli reign (1978-1989) The Golden Age (1990-2006) The Present (2007-2011) Sneak peak into the future business
  • 3. Early years (1913–1989)establishment & search for a differential
  • 4. Early years (1913–1989) CAPABILITIES CUSTOMER• HOW? RELATIONSHIPS• CLIENT Production• SEGMENTS Importation (U.K)• VALUE PROPOSITION Personal assistance• “High quality luxurious products”•• Products:• Trunks, bags, suitcases•• PARTNER• VALUE PROPOSITION NETWORK CUSTOMER• COST STRUCTURE “High quality luxurious CLIENT• Production related costs, stores HOW? SEGMENTS• CUSTOMER products” SEGMENTS• Raw material and RELATIONSHIPS Aristocracy and• Personal assistance upper class• luxury items CUSTOMER Products:• SEGMENTS suppliers (Europe and US• Aristocracy and upper class (Europe and US travelers mostly) Trunks, bags, suitcases• (incl. I.P.I. Spa) KEY RESOURCES travelers mostly)• Staff• Material• Know-how•• CAPABILITIES KEY RESOURCES DISTRIBUTION•• Production Staff CHANNELS• Importation (U.K) Material Stores in Milan (1)•• REVENUE Know-how• FLOW• Sales of goods• DISTRIBUTION CHANNELS• Stores in Milan (1)•• PARTNER NETWORK• COST STRUCTURE REVENUE• Production related Raw material and luxury items suppliers FLOW•• costs, stores Sales of goods••
  • 5. Prada-Bertelli reign (1978-1989) time for expansion
  • 6. Prada-Bertelli reign(1978–1989) reign (1 CAPABILITIES Production – 1989) CUSTOMER RELATIONSHIPS R&D Personal assistance New stores VALUE PROPOSITION CUSTOMER “High quality luxurious SEGMENTS PARTNER products made of NETWORK Upper class (Europe, innovative materials” US and Japan) Raw material and luxury items Fashionistas Products: leather goods, Models, mostly suppliers footwear, accessories, women backpack, women’s clothing line DISTRIBUTION KEY RESOURCES CHANNELS Staff Stores in Milan (2) + Material DOS in New York, Know-how Madrid, London, Paris, Tokyo COST STRUCTURE REVENUE Production related costs, FLOWS stores Sales of goodsSales by 1980 - $450.000
  • 7. The Golden Age (1990–2006)growth, aspiration and acquisitions
  • 8. The Golden Age (1990–2006) reign CAPABILITIES CUSTOMER Production, R&D RELATIONSHIPS Personal assistance Combining fashion & fine arts, globalization, Innovative shopping marketing, stock actions service VALUE PROPOSITION PARTNER “Smart, sophisticated, CUSTOMER NETWORK luxurious high quality SEGMENTS Raw material and products with innovative Upper middle class, luxury items suppliers, shopping experience“ celebrities, Luxottica, Azzedine Products: leather goods, fashionistas Alaia, Puig Beauty & women’s clothing, footwear, Fashion, architects accessories, backpack, Men&women and designers Miu Miu, Car Shoe, Church’s Sport line, men’s collection, DISTRIBUTION KEY RESOURCES skin care, eyewear, fragrances CHANNELS Staff Stores in Milan + Material DOS in NY, Madrid, Know-how London, Paris, 8 factories & 4 Tokyo, Japan, LA manufactures COST STRUCTURE REVENUE Production related FLOWS costs, DOS, marketing Sales of goods, stock actionsSales by 1990 – $31.7 million
  • 9. The Present (2007-2011) technology flows in
  • 10. The Present (2007–2011) CAPABILITIES CUSTOMER Production, R&D, RELATIONSHIPS Combining fashion & fine arts, globalization, Personal assistance marketing, stock actions Innovative shopping Combining fashion experience &technology VALUE PROPOSITION PARTNER NETWORK “Smart, sophisticated, CUSTOMER Raw material and luxury luxurious high quality products SEGMENTS items suppliers, with innovative shopping Upper middle class, Luxottica, Puig Beauty & experience“ celebrities, Fashion, architects and fashionistas, men & designers, Products: leather goods, women’s women LG and men’s clothing, footwear, accessories, backpack, sport line, skin care products, eyewear, KEY RESOURCES fragrances DISTRIBUTION Staff, material, mobile phones CHANNELS know-how 358 DOS , Franchise 11 factories & 4 (30) manufactures E-store COST STRUCTURE REVENUE FLOWS Production related costs, Sales of goods, stock actions DOS, marketingSales by 2010 - $2.7 BILLION
  • 11. Business strategy SWOT analysis STRENGHTS WEAKNESSES - competitors have a stronger brand value and- design/quality/heritage; product portfolio are more aggressive- dynamic capabilities - too scattered business model- controlled distribution and production - few iconic products- marketing strategy and skills - high cost structure- intra-industrial; inter-industrial alliances THREATS OPPORTUNITIES - growing debts- increase brand value through value adding (newvalue proposition), innovation - loosing luxury brand value- new strategic partner - competitors growth is faster- concentration on certain products and brands - unsustainable partnerships- gaining competitive edge over competitors - counterfeits and copying Compiled by authors
  • 12. FUTURE BUSINESS SUGGESTIONS
  • 13. Sell Car Shoe and Church’s brandsEntering new markets: Egypt, Peru, IndiaIncreasing brand value (by focusing on Prada’s roots, cure values and customers expectations)By 2013 - 550 distribution stores, franchises from 10% to 13%, raising franchise feeNEW VALUE PROPOSITION
  • 14. PRADA’S MAIN CUSTOMER Upper middle class – high society Aged 35-60 Luxury products with high quality Personality and exclusivity Culture and art Luxury traveling
  • 15. “Exclusive Prada travel and lifestyle experience” Fashion, luxury travel and cultural related services and privileges all over the world!
  • 16.  Strong global presence, premium network for high-spending clients Criteria: Annual purchase volume (existing client), income and assets ($3250; $121923) for a new client
  • 17.  Deepend trust Stronger customer relations  Prada’s clientele– new value proposition for  Increased awareness ofexisting client their brand and awareness inNew customers with high Asia and Europeincomes Re-enforced brand image Increased brand value Annual fee - $300 per clientAdditional source of revenue
  • 18. Potential future business model CAPABILITIES CUSTOMER Production, R&D, RELATIONSHIPS globalization, marketing, Personal assistance, stock actions innovative shopping globalization experience, Combining luxury with AMEX PRADA fashion, travel and culture PARTNER NETWORK VALUE PROPOSITION Raw material and luxury „The Real Prada’s experience CUSTOMER items suppliers, – high quality products, SEGMENTS Luxottica, Puig Beauty & innovative shopping Upper middle Fashion, experience and luxury travel class, High society & lifestyle with AMEX Age: 35-60 AMEX PRADA“ Products: bags and other leather KEY goods, women’s and men’s DISTRIBUTION RESOURCES clothing, footwear, accessories, CHANNELS Staff eyewear, fragrances DOS (539), Material Benefits from AMEX PRADA E-store, Franchises Know-how (11), Egypt, Peru, Partners India REVENUE COST STRUCTURE FLOWS Production and Sales of goods, stock partnership related actions, paybacks on costs, DOS, marketing partnership deals
  • 19. Thank you foryour attention!