Distribution Channel Report

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Starbucks Franchise in Bulgaria

- Joint Venture

In a joint venture the luxury brand has 51% stake & a local partner has 49%. The brand has stronger control of the operations. The brand must finance 51% start up investment and the knowledge about different markets can be provided. The brand absorbs part of the losses during first years of operations.

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- Licensing

Licensing is leasing protected entity (trademark or copyright)- brand name and logo to manufacture products. It extends a brand into new categories, reduces capital investment and introduces new customers to the brand. The company pays royalty to the brand.

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- Counter in Department Store

The location is in department store that is not clearly identified. The department store owns the product and pays to the staff.

[pic 9]Department store in Seoul

The channels differ in the degree of control, profitability and capital requirements.

Distribution channel followed by various luxury brands in the Indian Market under the following categories:

- Leather Goods

- Louis Vuitton

Louis Vuitton had come in India with a(51:49) joint venture with Genesis Luxury with four stores located in Delhi, Bangalore and two in Mumbai.

- Fashion

- Gucci India

Gucci came to India in a franchise model with Murjani Group later it was changedto a joint venture with investment banker with ratio of 51:49. There are 6 stores, 2 in Delhi, 1 in Gurgaon, 1 in Kolkata and 2 in Mumbai.

- Jewelry

- Cartier

Cartier entered India with a joint venture with Navratna Bharat Retail Pvt Ltd. It has one store in India located in Delhi.

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Automobile Category

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With a turnover of well over $1 trillion, and 10 million employees, the car industry is the world’s largest manufacturing business. While many car makers are doing well at present, the outlook is rather grim. With increasingly saturated markets in the rich countries of Western Europe, Japan and North America, where the industry has until now earned most of its money, many are turning to the emerging markets of the developing world. But not only demand for cars in these new markets is growing, for a while the supply of new cars has been growing faster still, pushing down prices and profits. In 1996 the total output capacity was 68 million vehicles, but the combined output of all car firms was just 50 million – 73% of capacity.

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Distribution infrastructure

The distribution infrastructure has to mirror the changing product and service strategy. Virtual showrooms have been set-up in order to give comprehensive product information to customers and support the process of configuring options. These showrooms are used at the same time to establish a relationship with potential customers and to attract new customer groups. Additional information services and service offerings are promoted via the Web in direct competition with car cybermediaries. · The establishment of closed user groups, building on the notion of online communities might help to isolate at least part of the service offerings from the immediate access of competitors. · The Web is used to set-up extranets for the exclusive dealers in order to support their activities. BMW, e.g. has set-up a virtual marketplace for used cars covering all cars that are available at BMW dealers

Jwellery Category

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Global Market

The jewellery industry seems poised for a glittering future. Annual global sales of €148 billion are expected to grow at a healthy clip of 5 to 6 percent each year, totalling €250 billion by 2020. Consumer appetite for jewellery, which was dampened by the global recession, now appears more voracious than ever.

Research indicates that five trends that shaped an adjacent industry. Over the past 30 years are becoming evident in the jewellery industry as well, and at a much faster pace: internationalization and consolidation, the growth of branded products, a reconfigured channel landscape, “hybrid” consumption, and fast fashion.

Indian Market

The Indian jewellery industry is transforming at a rapid pace especially in luxury jewellery retail market. The organized retail market is growing at 12% to 15% in India. With the changing mindset of Indians towards branded products, the luxury retail jewellery market is gaining momentum as well in the Indian markets. Jewellery is moving beyond the concept of investment as people have started buying light weight jewellery that can be used on regular basis. Hence, this has led to demand of diamond jewellery which is beautiful, light in weight and easy to wear.

Luxury brands in India

In last few years, India has been flooded with many national and international brands that foray into luxury jewellery. Entry of renowned brands like Tiffany & Co., The Gem Palace, Harry Winston, Dia. have made a new market mantra which suits the needs and wallets of the upper middle class and high net worth individuals. The companies dealing in diamonds are following a new strategy of blending their products with Indian customs and traditions which gives a boost to sales and brand promotion.

Indian jewellers shift to luxury jewellery

The foreign players are making their mark in the gems and jewellery industry and are simultaneously creating product-line that fits everyone pockets as well as their needs. Light weight jewellery is in great demand as they offer fancy shapes and pocket-friendly