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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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