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Presented By:
Luisa Baltazar, Ruchita Dudani, Preeti Sampat, Faaiza Khan,
Sakshi Varshney, Hawkin Chan, Zoey Burrows, Anuj Suri
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
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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
“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
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To achieve a global image of affordable luxury fashion
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
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
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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!
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Place
PORTS
PORTS Internati
onal Retail
Corporation
Distribution
Channel
Consumers
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
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Promotion
Achieve Local Sensibility with Foreign
Cachet
Effects of International Celebrity spotting
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Promotion
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
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PORTS
Key Success Factors
Sustainable Competitive Advantage
Core Competencies
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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
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PORTS
Blue Ocean strategy to enter the nascent Chinese market
Sustainable Competitive Advantage
Core Competenc
y
Vertical Integration of Operations
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PORTSV
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
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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
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• 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
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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
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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
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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.
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Management Weaknesses
Deficiency of setting parameters –
Alfred tried to be too many things
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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
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Moet Hennessy- Louis Vuitton
Pinault- Printemps- Redoute Group
Richmond Group
Hermes
Burberry
Largest Luxury Groups
Europe
Coach
Tiffany
North America
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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
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.
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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
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
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
Rm
b (
mill
ions)
PORTS Financial Performance, 2002-2006*
* Source: PORTS Design official website, http://www.portsdesign.com 36
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
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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
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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
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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
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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
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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
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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
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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
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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
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