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Prada Business Model Evolution
The document outlines the historical progression and business strategy of Prada from its establishment in 1913 to its 2011 status, detailing key phases including the early years, the Prada-Bertelli reign, and the golden age. It highlights the brand's focus on luxury products, customer relationships, market expansion, and innovative marketing strategies. It also presents a SWOT analysis and future business suggestions for enhancing brand value and customer engagement.
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Prada Business Model Evolution
- 1. Karin Maandi Mihkel Külaots Stella Pinsel 2012
- 2. AGENDA Establishment Earlyyears (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 goods Sales 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 actions Sales by 1990 – $31.7 million
- 9. The Present (2007-2011) technology flows in
- 11. 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, marketing Sales by 2010 - $2.7 BILLION
- 12. Business strategy SWOTanalysis 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 (new value 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
- 13. FUTURE BUSINESS SUGGESTIONS
- 14. Sell Car Shoeand 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
- 15. 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
- 16. “Exclusive Prada traveland lifestyle experience” Fashion, luxury travel and cultural related services and privileges all over the world!
- 17. Strong globalpresence, premium network for high-spending clients Criteria: Annual purchase volume (existing client), income and assets ($3250; $121923) for a new client
- 18. Deepend trust Stronger customer relations Prada’s clientele – new value proposition for Increased awareness of existing client their brand and awareness in New customers with high Asia and Europe incomes Re-enforced brand image Increased brand value Annual fee - $300 per client Additional source of revenue
- 19. Potential future businessmodel 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
- 20. Thank you for yourattention!