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					      "Successful “Baltika
   Group” re-branding strategy.
   "Mosaic" case in Lithuania".




Daina Daubarė
September, 2007
                                                                 2
Baltika today

                   Baltika Group is a rapidly growing fashion
                    retailer in the Baltics and Eastern Europe
                     •   four retail concepts
                     •   124 stores with shop floor space of
                         23,011 m2 (June 2007)
                     •   retail coverage of six countries
                     •   vertically integrated business model

                   The company aims to be the leading
                    specialist fashion retailer in Central and
                    Eastern Europe

                   The Group employs 1,900 people

                   Since 1997, it has been listed on OMX
                    Tallinn Stock Exchange

                                Baltika’s retail markets

                                  CEE region
                                                                     3



Some history
• 1928 “Gentleman” is established in Tallinn;
  1959 The company is restructured and named Baltika;
  1988 The company starts to manufacture ladies’ clothes
  1991 Baltika is privatised
  1991 The first gentlemen’s clothes collection – Baltman;
  1993 The first ladies’ clothes collection – Christine Collection
  (CHR)
  1995 The Evermen collection is created
  2002 Strategic changes are launched to make the company
  into a clothes retailing company
  2002 Monton fashion brand is launched in five markets;
  2006 The names of CHR and Evermen retail concepts are
  changed; the new name becomes Mosaic
  2006 Baltika opens its 100th store
  2006 Baltika acquires an Estonian well known fashion brand Ivo
  Nikkolo
                                                                                   4
  Vertical model in fashion business
                                    ↓ CUSTOMER ↓
                              ↑              ↑             ↑
                                                                    Heavy
             Retail company                                      competition
         (net profit margin 3-7%)         Retailer
                                                               Differentiation &
                                                                speed counts

   V
   e                                Brand manufacturer           Creating a
   r                                                               brand -
   t          Wholesale                                         expensive &
   i          company                                             complex
   c           (3-5%)
   a                                 Label manufacturer         Retailer
   l                                                           makes the
(≥10%)                                                          decision

                                                               “China”
                                    Product manufacturer       attacks
                                    (does not own label)
              Production
               company
                (0-3%)
                                       Subcontractor
                                                                                                         5
    Vertically integrated business model: unique in the
    Baltic's
                                         Centralised management

•   Centralised brand-based management: product design, supply chain, logistics,
    etc.
•   Efficient inventory control and sales information systems: monitoring and
    analysis on a daily basis
                                                 Sourcing

•   Own production base (four factories): specialisation in men’s and women’s
    tailored suits, shirts, jackets, coats (ca 40% of sales)
•   Worldwide purchasing (ca 60% of sales)


                 Retail: ca 80% of total sales                        Wholesale: ca 20% of total sales

•   A balanced portfolio of different brand store                 •   Distribution through
    chains (Monton, Mosaic, Baltman and Ivo                           wholesale to department
    Nikkolo)                                                          stores in the Baltics,
•   Strong retail organisations in target markets                     Finland and Eastern Russia
                                                                                                  6

Retail Brands
                •   trendy and fashionable fast fashion brand for ladies and men
                •   store format 350…600 m2
                •   end 2008: 65-75 stores
                •   possible franchising



                •   stylish and high-quality professional and smart casual apparel for women, men and
                    children
                •   store format 200…350 m2
                •   end 2008: 65-75 stores
                •   enlargement of wholesale business



                •   stylish, classic and high-quality clothes for men
                •   store format 100…130 m2
                •   end 2008: ca 30 stores




                •   premium level fashion brand for women
                •   store format 130…170 m2
                •   end 2008: 10-15 stores
                                                                7

Retail network

                 Baltika’s retail markets




                                            *Preliminary data
                                                             8

Sales division between retail concepts, 2006


                                    +56% yoy



                         33%


                                11%
                                                  +39% yoy
                   52%
                               4%
   +31% yoy                         Ivo Nikkolo
                                      & other
                                                                  9



Why new name?
Main reasons:
• For the brand development, one name for menswear and
  womenswear was needed
• The brand has become international and more quality, new name
  should reflect that better

Also:
• The name was complicated to pronaunciate and difficult to
  remember, that is why in some countries Christine was used
  instead of CHR – it has been making our marketing activities
  more complicated and expensive
• CHR/Evermen was not a brand, just combination of menswear
  and womenswear label
• No sole rights in Latvia
                                                                 10



The Process of Choosing the New Name
• International competition
• A choice made between several hundreds of names
• Evaluation from different markets; feedback
• When comparing the logotypes of the names, we
  observed the values communicated by CHR/Evermen
  brand: warmth, naturalness, self-confidence, joy of life and
  reliability
• The name needed to have a good international sound
  while being easy to pronounce and remember, visually
  distinctive and able to communicate the brand’s values
                      11




CHR/Evermen became…
12
                                                                                13



 Baltika Lietuva
 •   1993. First “Baltman” shop in Kaunas.
 •   1996. “Christine Collection” and “Respect” brands for ladies clothing in
     “Baltman” shops;
 •   2002. Launched new fashion brand and retail chain “Monton”.
 •   2003. Launched new fashion brand and retail concept “CHR/Evermen”.
 •   2006. Re-branding of “CHR/Evermen” to “Mosaic”.
 •   2007. Launched new fashion brand and retail concept “Ivo Nikkolo”.



Baltika Lietuva        1993     2003      2004        2005         2006 2007F
Sales, mln.LT          0,47     20,33     27,62      34,97         46,57      63
Number of shops           1        15        17         24            26      30
                                                                 14



Baltika Lietuva shops

       6
                11      Mosaic
   2                    Monton
                        Ivo Nikkolo
                        Baltman
           11




                                      3   2
                                                   8   Vilnius
                                                       Kaunas
                                                       Klaipėda
                                 6                     Šiauliai
                                                       Panevėžys
                                              11
                                              15



Why Mosaic?

•   Each item or object that we see has
    been pieced together from smaller
    pieces that connect with each other
    forming a whole entity.

•   On an emotional and personal level,
    each human being is an individual
    comprised of different ingredients -
    character, thoughts, behavior,
    upbringing, preferences etc.

•   Part of this individuality is clothing,
    which is an integral part of creating
    an impression. Clothing and the
    other components must harmonize
    to achieve equilibrium between
    outside and inside
                         16



Mosaic target customer
                                  17

USP, differentiation and values
                                                            18



Mosaic launch
• Objective:
• Keep the current clients and attract new clients to the
  stores



• Strategy:
• 2006-1 transition period to connect CHR/Evermen to
  Mosaic
• 2006-2 new brand communication
                                                    19



Communication Solutions for the transition period


•   Idea
     • Maintaining strong
        developmental linkage
        between the old and new
        names – clearly
        demonstrating that
        CHR/Evermen is going to
        be Mosaic
•   Used:
     • In retail outlets of the Baltika
        Group
     • In media channels
        (depending on the country)
                                               20

Transition period communication in shops

•   Wall behind the cash desk
•   Stickers on the window
•   Plastic bags
•   T-shirts for sales assistants
•   Catalogues
•   Additional paper labels on every garment
                                           21



Mosaic Shop During the Transition Period
               22



Plastic bags
           23



T-shirts
                                          24

Catalogue (examples of different pages)
                               25



Additional label on products
                                           26

Transition period communication in media
channels
• Prind advertisements
• Outdoor
• TV clip
                                 27



Mosaic marketing communication




        –
                          –
                                                                         28



“Mosaic” development


Baltika Lietuva   2005    2006 Growth     2007 I H         Growth LFL

Sales, mln.LT      9,2    14,8      61%              8,6           34%
Number of shops      9       9        0               11             2


Baltika Group     2005    2006 Growth    2007 I H    Growth LFL
Sales, mln.LT      33,9   53,4     57%          31,1         32%
Number of shops     32      45        13          51            6
Thank you!

				
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posted:8/17/2011
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