Fictional project created in a strategic marketing class at UC Berkeley. Based on the case study of PORTS.

1. 1

2. Presented By:
Luisa Baltazar, Ruchita Dudani, Preeti Sampat, Faaiza Khan,
Sakshi Varshney, Hawkin Chan, Zoey Burrows, Anuj Suri

3. Agenda
Overview & Mission Statement
Target Customers
Ports 4 P’s
SWOT Analysis
Management Strengths and Weaknesses
The Competitive Environment
Financial Analysis
Problem Statement
Alternatives
Critical issues
Recommendations
3

5. Overview
1961: PORTS begins in Toronto by Luke Tanabe
70’s to 80’s: 60 stores in Canada, USA and UK
Late 80’s: PORTS starts to lose its stature
1989: ESL, owned by Alfred Chan, acquires PORTS
1992: Tia and Fiona Cibani joined PORTS as
Designers
1993: After ESL filed for bankruptcy, Chan buys back
PORTS and moves operations to China
1994: First stores open in China (to test the market)
2003: Birth of its new brand, Ports 1961
2006: Rated as the 3rd most desirable luxury brand! 5

6. “I dream of breakfast in the Sahara and dinner in New
York.” Luke Tanabe (PORTS founder)
“Every consumer is a blank piece of paper...”
Alfred Chan (PORTS CEO)
“PORTS is committed to fostering a safe and
comfortable workplace. Its corporate culture emphasizes
training, career development and rewarding employees
who excel in their area of responsibility.
Mission Statement
6
To achieve a global image of affordable luxury fashion

8. Target Market
PORTS
Primarily women, clientele of
business executives and wives
of government officials
Career women of ages 25-35
years, successful men between
28-38 years
Younger generation –perceived
as being cool
Primarily the Chinese market
and in other markets including
Dubai, Bahamas, Ireland, Milan,
Japan and Indonesia
PORTS 1961
Sophisticated high-end
consumers
All nationalities and travelled
regularly beyond national
boundaries – jetrosexuals,
global soul, woman who is
international
Interested and knowledgeable
about fashion
Primarily the North America (NY,
LA) and parts of Europe
Conclusion: “Premium quality fabric with relatively affordable pricing in the luxury
market” 8

10. Product
LUXURY FASHION GOODS
Brand
diversification
strategy
More expensive
More Sophisticated
More High end
Cutting edge
designs
Sleek
High Quality
Classic cuts
Minimalist and Simple
Designed for Chinese
taste
Product Expanded to
include accessories
10

11. Place
Shopping
centers Dept.
Stores Flagship
stores
Shopping centers
Dept. Stores
Flagship stores
Distribution through specific major companies, majority shares owned by PORTS.
PORTS Retailers Consumers
GUANGXI : THE EXPERIMENT!
11

12. Place
PORTS
PORTS
Internati
onal
Retail
Corporat
ion
Distribut
ion
Channel
Consu
mers
www.ports1961.com*
www.saksfifthavenue.co
m
www.vivre.com
Montreal * Toronto* Vancouver *
New York * LA + 25 by 2008
Upscale Dept. Stores, boutiques
and flagship stores
Hong Kong International Airport
12

13. Promotion
Achieve Local Sensibility with Foreign
Cachet
Effects of International Celebrity spotting
13

14. 14
Promotion

15. Price
Luxury Fashion Goods
About US $75-
$800
About US $250-$350
Introduction of more goods
between US $100 and $150
BMW lifestyle products: clothing, watches and other accessories
15

17. PORTS
Key Success Factors
Sustainable
Competitive
Advantage
Core
Competencies
17

18. PORTS
Key
Success
Factors
Strategic
Repositioning:
Repositioned their
brand to maintain the
image of high end
luxury product
Effective Market
Expansion:
Worked hard to capture
both domestic and
international market by
opening design stores and
hiring lead designers
Appreciable
efforts for
Product
Expansion:
like adding
accessories line,
BMW lifestyle stores
18

19. PORTS
Blue Ocean
strategy to
enter the
nascent
Chinese
market
Sustainable
Competitive
Advantage
Core
Competenc
y
Vertical
Integration of
Operations
19

20. PORTS
V
A
L
U
E
P
R
O
P
O
S
I
T
I
O
N
Well placed product at
upscale departmental stores
at high fashion streets both in
China and overseas
Affordable pricing with high
quality products
Cutting edge designer clothes
which represented “global soul
and urban spirit”, as stated by
their lead designer
20

21. Strength
• PORT’s retail stores expanded rapidly within and
outside China increasing by 7-10%
Aggressive Market Expansion:
• PORTS steady cash flows with current ratio of 4.23 as
of June 2007
Financial Stability
• From a visionary CEO to effective corporate
governance PORTS had it all
Strong Management
21

22. • Resulting in lower operating costs and higher margins
Vertical Integration
• Being market pioneer in China and setting up factory in
SEZ gave them various tax incentives
• Reduced import duties also helped to increase their
bottom line
Market Leader in domestic
market
• Customer loyalty programs
• Educating customers on wardrobe investments
• Celebrity marketing
• Featuring in top magazines like Vogue
Brand Marketing
Strength
22

23. Weakness
Perceived Brand
Image by
Customers
“Made in China”,
stereotyped as poor
quality
PORTS International and
PORTS 1961…
confusion????
Mismatch between
Positioning vs. Pricing
Perceived Brand
Image by Critics
Changing luxury
landscape from
“exclusive” to
“wider range”
Conspicuous consumption
deteriorating brand
building
Women centric designer
brands
23

24. Opportunities & Threats
OPPORTUNITIES
THREATS
Competition:
Global and domestic
External Environment: like
increased fuel prices, currency
fluctuations, safeguard quotas
Global Expansion: Seoul, Mumbai,
Sydney, Paris, London
Direct to consumer sales:
Online marketing
Potential growth in
menswear line
24

26. Management Strengths
Alfred Chan was seen as a visionary. Adopted modern business
management practices.
Excellent employee management tactics.
Expert services from highly skilled manpower.
Maintained a zero tolerance policy about any infringement of its
corporate code of conduct.
Independent board members strictly monitored audit procedures,
finance reporting, internal control and risk assessment.
26

27. Management Weaknesses
Deficiency of setting parameters –
Alfred tried to be too many things
27

29. Luxury Goods
Europe and North
America
2005 – global sales
of luxury goods
industry was
estimated at $174
billion. Up from $103
billion in 2000
Upward trend was
expected to
continue
Origin Market
Of all the luxury
goods, 35 of the
leading brands
control over 60% of
the global luxury
market
Including: Louis
Vuitton, Prada, Gucci,
Giorgio Armani,
Hermes and Chanel
29

30. Moet Hennessy- Louis Vuitton
Pinault- Printemps- Redoute Group
Richmond Group
Hermes
Burberry
Largest Luxury Groups
Europe
Coach
Tiffany
North America
30

31. Asian Market (Cont.)
Asia held world’s fastest growth rate in individual
wealth and became the hottest center for luxury
goods industry in the 21st century
Rising affluence in china and Increased
consumption
New Asian investors: Shanghai Tan – a clothing
chain company in Hong Kong
Western brand acquisitions by Chinese players.
 S.C. Fang and Sons -knitwear brand Pringle of
Scotland in 2000.
 Wang Xiao - French brand Lanvin in 2001
 Guy Laroche was also acquired by YGM
trading. 31

32. Global Expansion
Landscape of luxury is changing
Globalization and advances in IT
Substitutes: H&M and ZARA. These are
luxury style goods at lower prices
Emerging markets such as India, Middle
East (especially Dubai) and Eastern
Europe.
32

34. Luxury Goods Consumption Worldwide
Financial Analysis
40%
28%
24%
8%
Luxury Sales in late 1990's*
Europe
North America
Asia
Other Regions
16%
17%
41%
17%
9%
Luxury Sales in 2005**
Europe
North America
Japan
China
Other Regions
* Source: Nueno, Jose Luis and Quelch, John A. (1998) “The Mass Marketing of Luxury”, Business Horizon, Nov-Dec, pp.61-68
**Source: Ernst & Young (September 2005) “China: The New Lap of Luxury”, EYGM Limited 34

35. Financial Analysis
The average price of a PORTS product was one-third that of
foreign imported luxury brands
Entire apparel production in China – achieving a low cost
advantage
77%
93%
81% 82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PORTS PPR LVMH Richemont
Average Cost Over Sales (Euro Millions) 2005-2007*
* Source: Relevant figures extracted from annual reports of these companies 35

36. Financial Analysis
PORTS has grown steadily every year since its IPO in 2003
In 2006 PORTS operating income exceeded USD$138 million
204
593
677
760
914
0
100
200
300
400
500
600
700
800
900
1000
2002 2003 2004 2005 2006
Rmb(millions)
PORTS Financial Performance, 2002-2006*
* Source: PORTS Design official website, http://www.portsdesign.com 36

38. What is the best marketing strategy for PORTS to expand their
footprint globally and be distinguished as a premium brand in
the luxury world?
Problem Statement
PORTSStatus Quo
International
Expansion
Domestic
Expansion
38

40. Status Quo – Keep their current Market Strategy
 Continue to focus on working women in China
 Continue with PORTS retail stores, OEM and
ODM business (BMW Lifestyle)
 Continue with PORTS 1961 in North America
Alternative 1
40

41. Focus on Domestic Markets:
 More stores in highly populated Chinese cities
 Expand on vertically-integrated approach
 Introduce more affordable brand to
attract Chinese youth & establish a 'coolness-
factor'
 Import duties restriction: boost sales
domestically & strengthen relations with
Chinese government
 Strengthen PORTS Int. brand by sponsoring
clothes for local celebs/sports stars
 Bring PORTS 1961 into China to cater to
affluent customers
Alternative 2
41

42. Expand in International Markets
 Open stores in highly fashionable, metropolitan
cities
 Focus on the PORTS 1961 brand image
 Enhance “global spirit” with a multi-cultural
approach to design
 Expand efforts in promoting the menswear line
 Online focus for PORTS
 PORTS International overseas at a more
affordable price point than PORTS 1961
Alternative 3
42

44. Analysis Chart
Criteria
Mission & Objectives
Market Opportunity
Profitability
Brand Positioning
Total
Weight
0.2
0.2
0.3
0.3
Alternative 1
Status Quo
3
3
3
3
3
Alternative 2
Domestic
4
2
3
2
2.7
Alternative 3
International
4
4
4
5
4.3
Alternative 3
International
4
4
4
5
4.3
44

46. Recommendations
Expand in International Market
 Adapt a marketing strategy to promote an
innovative style that portrays a
"global soul and urban spirit"
 Devise a better distinction between the 2 brands
46

47.  Expand flagship stores in highly fashionable,
metropolitan cities
 Sao Paulo, Seoul, Mumbai, Sydney, LA, Chicago,
European cities etc.
 Design custom dresses for celebs around the world
 Redesign the store and visual merchandising to
recreate more luxury environment
 Online focus to market the brand
 Presence at International Airports
 Increase PR and marketing by sponsoring major
NY fashion events
Recommendations (Cont.)
It’s all About “Distinction”
PORTS 1961
47

48.  Introduce PORTS International overseas at a more
affordable price point than PORTS 1961
 Expand their efforts in promoting the menswear line
 Expand PORTS International concessions in departmental
stores for wider outreach abroad
 Adapt a multicultural approach to design
 Online focus for PORTS International website and
other stores websites
 Currently hard to find their website on Google
and other search engines
 Improve SEO on local search engines
 Create a community – customer feedback,
social media
Recommendations (Cont.)
It’s all About “Distinction”
PORTS International
48

49.  More radical marketing approach by highlighting "Made in China"
rather than hiding it.
 Certify PORTS 1961 factories by an outside auditing company
Recommendations (Cont.)
It’s all About “Distinction”
Improve overall brand image in International market
49