This paper deals with the Benetton’s approach to advertising and with the changes in the image of the company since its foundation in 1965 up to the 2000s. Links among the evolution in promotional, distributional and productive strategy are discussed.business strategy, image policy, franchising

Giovanni Favero

English

Research Papers in Economics

D S E
Working Paper 
ISSN: 1827/336X
Benetton: identifying an
image, imagining an 
identity
Giovanni Favero
Dipartimento Scienze Economiche
Department 
of Economics
Ca’ Foscari University of
Venice 
No. 06/WP/2006Working Papers  
Department of Economics  
Ca’ Foscari University of Venice  
No. 06/WP/2006 
ISSN 1827-336X 
The Working Paper Series 
is availble only on line 
(www.dse.unive.it/WP) 
For editorial correspondence, please 
contact: wp.dse@unive.it 
 
Department of Economics 
Ca’ Foscari University of Venice 
Cannaregio 873, Fondamenta San Giobbe 
30121 Venice Italy 
Fax: ++39 041 2349210 
 
 
 
 
 
 
 
 
Benetton: identifying an image, imagining an identity 
 
 
Giovanni Favero 
University of Venice 
 
 
 
 
 
Abstract 
This paper deals with the Benetton’s approach to advertising and with the changes in the image of the 
company since its foundation in 1965 up to the 2000s. Links among the evolution in promotional, 
distributional and productive strategy are discussed.  
 
The paper has been presented at the European Business History Association conference on Corporate 
images – Images of the corporation, held in Frankfurt, September 1-3, 2005. 
It will be submitted to the Paris-based journal Entreprise et histoire. 
 
 
Keywords  
business strategy, image policy, franchising 
 
JEL Codes 
N840, M370 
 
 
 
 
 
 
 
Address for correspondence: 
Giovanni Favero 
Department of Economics 
Ca’ Foscari University of Venice 
Cannaregio 873, Fondamenta S.Giobbe 
30121 Venezia - Italy 
Phone: (++39) 041 2349165 
Fax: (++39) 041 2349176 
e-mail: gfavero@unive.it  
 
 
This Working Paper (o QD se in inglese) is published under the auspices of the Department of Economics of the Ca’ Foscari University of 
Venice. Opinions expressed herein are those of the authors and not those of the Department. The Working Paper series (o QD se in 
inglese) is designed to divulge preliminary or incomplete work, circulated to favour discussion and comments. Citation of this paper should 
consider its provisional character. 
   2
 
 
 
 
 
 
 
 
 
Benetton: identifying an image, imagining an identity 
 
1.  Benetton’s story is well-known (Nardin 1987, Belussi 1989, 
Benetton-Lee 1990, Mantle 1998, Favero 2005). The company was born in 
1965 in Ponzano Veneto (in the Treviso province), from the artisan knitting 
workshop of the Benetton siblings. In the 1970s it expanded in the Italian 
market of sweaters and soon of casual apparel in general. In the 1980s sales 
extended all over Europe, to USA and Japan. Internationalization stirred up 
a logistic and managerial reorganization, while the company went floating 
in order to support investments. In the 1990s, unsuccessful attempts to 
enlarge product range were followed by family-led acquisitions in other 
sectors (Brunetti-Bortoluzzi 2004). 
This quick survey suggests a growth path involving important 
changes, affecting both company image and identity. This paper aims to 
investigate precisely the relationship between image and identity in 
Benetton’s evolution. The image of a company reflects its strategic 
approach to competition, market, and the wider social context. Still, its 
image inevitably affects also the ‘black box’ of its internal procedures and 
organization. It is possible to say that the language used in communication 
affects the way a company thinks its identity and adapts its structure to this. 
   3
2.  In the 1960s and the 1970s, Benetton’s promotional strategy 
was focused on shops, advertising huge expenditures being out of reach at 
the time.  
The first ‘My Market’ shop format was designed by Tobia Scarpa, 
son of the famous architect Carlo Scarpa. He suggested to eliminate the 
counter, arrange all the sweaters on shelters, and open the window towards 
the interior of the shop. This way, the same room could be used for 
stocking, selling and displaying merchandise (Heskett-Signorelli 1985). 
Most of the shops were not company-owned, but informally franchised to 
shopkeepers paying no royalties and granted no exclusive right. Independent 
agents recruited franchisees and collected their orders. The presence of 
several shops in the same urban area produced a positive iteration effect on 
final customers, and a dissuasive effect on competitors. The creation of a 
franchisee-shops network selling many-coloured classical-cut sweaters 
(serially weaved, sewed outside, and then dyed) can explain the competitive 
advantage the ‘Benetton formula’ enjoyed since the late 1960s.   
In the 1970s, the company started producing also jeans and velvet 
trousers, shirts and T-shirts, in order to allow customers to find a coordinate 
set of apparel inside its shops. With its combinable collections, Benetton 
helped developing Italian casual style. Product differentiation brought about 
target differentiation, and a multiplication of shop formats as ‘012’ for kids, 
‘Merceria’ for young customers’ mothers (Benetton-Lee 1990, 12), ‘Jean’s 
West’ for jeans, or ‘Tomato’ for penniless young people, and others. 
Benetton’s name never appeared on the sign of the shop, but only on single 
items (with the wool-knot logo that became famous in the 1980s). Low 
visibility allowed not to alarm competition, and marked off the company 
from shopkeepers commercial policies.  
Still, there was something more. In the 1970s Benetton actually 
aimed to conceal its expansion, in order to escape social and political 
tensions, prevent unions from meddling with its informal production and 
distribution network, and keep on moving as a little family business despite 
its growth. Luciano Benetton effectively summarizes the reasons for this   4
choice: «The pressures put on it by the Seventies made Benetton a 
chameleon. (…) A company so lucky it made profits in so troubled years, 
had to keep on purpose a low-profile line, and to camouflage itself in the 
environment. Therefore, we made few advertising campaigns, we carefully 
avoided showing off, and we escaped any political connection. (…) We took 
great care to be invisible. No interviews, no propagation of financial data – 
obviously, in observance of the laws. (…) The public could not perceive our 
actual dimension and circulation, both industrial and commercial» 
(Benetton-Lee 1990, 110).  
 
3.  At the end of the 1970s Benetton met its first difficulties in 
sales. This crisis made the entrepreneurs aware the company had reached a 
threshold in scale, and that a reorganization was needed in order to avoid a 
downsizing. Awareness came along tentatively, buying and then selling 
shops and plants, and trying to expand in Europe in order to make up for the 
saturation of Italian market. This learning phase was useful to define 
company identity according to its specific resources and the elements which 
had brought it to success. Indeed, it was only in the attempt to expand sales 
abroad that franchising was used on purpose to enter new markets, and 
became the driving element of a new strategy for growth.  
What strikes more is the radical change in the image policy. From 
the low-profile attitude of the 1970s, Benetton moved in the 1980s towards 
an explicit brand promotion and an increasing transparency, in view of 
listing on the stock exchange. Sales promotion abroad needed to use the 
Italian-style appeal of Benetton name; in Italy too, Benetton unified 
different existing shops under the Benetton, 012 and Jean’s West signs: too 
much differentiation threatened to frustrate brand-advertising efforts. 
Visibility was also a result of the choice to take family-business clothes off, 
and to turn Benetton into an international company with solid relationship 
with politics and finance. Thanks to its camouflage ability, in the 1970s the 
company had been able to enjoy State facilities without undergoing the 
limitations big businesses suffered. In the different political context of the   5
1980s, it became a respectable interlocutor for national institutions, 
politicians and bankers. 
In the second half of the 1980s, the success of commercial expansion 
in Europe urged an adjustment of international strategy. Western Europe 
had become Benetton’s real domestic market, and the 1987 annual report 
praised European unification but also stated that product ‘globality’ was a 
strategic asset, a value ‘for company management, and an inspiring idea for 
all protagonists and collaborators of Benetton Group’. 
To expand sales in Asia or in the Americas (and in other products), 
Benetton adopted a new step-by-step entry strategy, firstly licensing local 
producers to use its trade mark, then entering in joint venture with them, and 
establishing a local branch of the company only when the market had shown 
its development capacity. In this project, brand promotion was a basic point: 
advertising expenditures increased then more, in order to promote a 
coloured, multi-ethnical and global image of the company.  
Since 1983 advertising design had been entrusted to the Parisian 
agency Eldorado, employing the photographers Bruno Sutter and Oliviero 
Toscani. In the 1984 campaign ‘All the Colours of the World’ Toscani put 
together white and black young models wearing coloured clothes. He 
introduced then the ‘United Colors of Benetton’ slogan, explicitly 
identifying the company’s globalization strategy with the ideal of a 
peaceful, multi-ethnical world, which after the international political 
changes of the second half of the 1980s seemed at hand. In 1989 this slogan 
became the logo of the company, and Toscani was hired by Benetton, 
breaking the contract with Eldorado.  
In the following campaigns, any reference to the product 
disappeared, and advertising focused on topical social issues. Toscani’s 
‘shock’ campaigns disconcerted for the subject of images, such as the nun-
and-priest kiss, or for the timing of their publication, as for the war-
cemetery photo circulated on occasion of the Gulf-War outbreak. Toscani 
and Benetton claimed for the photographer and for the company the right to 
deal with the reality issues usually expunged from the fictitious world of   6
advertising. Indeed, polemics on the press came to emphasize the visibility 
of the company and its presumed social commitment (Falcinelli 1999; 
Pinson-Tibrewala 1996).  
 
4.  The inflation of Benetton’s image in the first 1990s was also 
enhanced by the success of the Formula 1 stable the company acquired in 
1984, which in 1994 and 1995 won the World Championship (Mantle 
1998). The company also owned basket, rugby, volley and water-polo 
teams. In 1992 Luciano Benetton stood as candidate for and was elected to 
Parliament, with a move allowing him an insider knowledge of economic 
policy decisions in those troubled years for Italy, and putting again his 
company in the limelight.  
Indeed, troubles were not only for policy makers: in the 1990s 
Benetton’s market position was challenged by international retailers such as 
The Gap and Zara. Company reacted by adjusting the dimensions of shops 
to the need of a total-look offer including licensed apparel and accessories, 
from spectacles to cosmetics. Average shop area increased from 50 to 200 
square meters, and new megastores were opened in big cities all over the 
world. The megastore project forced the company to buy valuable real estate 
in order to fill strategic commercial positions; still, in perspective also 
megastores were to be franchised to independent shop owners.  
Even facing retailers’ competition, Benetton went on acting as an 
exclusive wholesaler for its franchisees. This strategy allowed more 
flexibility and shifted on shopkeepers most of market risks. The growing 
conflict between sales expansion and profits was then solved this way in 
favour of profitability (Camuffo-Romano-Vinelli 2001). 
Still, the relationship between the company and its franchisee 
shopkeepers allowed them some room for autonomy and resistance, as in 
every network organization (Powell 1990). In 1984, Benetton was planning 
to build up a communication system collecting both orders and payments 
from franchisees’ sales records. This project failed because of the (mostly   7
passive) resistance shopkeepers and agents offered to what they saw as a 
threat to their autonomy (Rullani-Zanfei 1988).  
Even if they succeeded in defending their managing independence, 
shopkeepers were never allowed to meddle in company’s brand policy. 
When sales slumped in European markets in the first 1990s, shopkeepers 
(who could not return unsold goods) blamed Toscani’s ‘shock’ campaigns 
for alienating customers, going so far as to sue the company for that, but lost 
the case. It is interesting to confront this episode with the completely 
different outcome of the 2001 conflict on the ‘death row’ campaign. On this 
occasion, the department store chain Sears, Roebuck & Co. rescinded the 
distribution agreement with Benetton it had entered into in 1998. Toscani 
resigned in 2002.  
The case pointed out some implications of commercial relationship 
the company seem not to have perceived. In its relationship with big 
retailers, Benetton did not enjoy the same position of strength which 
allowed it to impose its promotional choices to franchisee shopkeepers. 
Brand policy could not leave out of consideration the eventual reaction of 
different commercial partners. Not only money, but also power concerns 
persuaded Benetton not to change its approach to distribution, even if its 
‘flexible formula’ (Benetton 1994) in last years turned out to be very rigid, 
when compared with international competitors’ quick-response ability based 
on the control of their chain shops (Edmonson 2003, Barela 2003). 
   8
Works cited 
 
M.J. Barela, ‘Executive insights: United Colors of Benetton. From sweaters 
to success: an examination of the triumphs and controversies of a 
multinational clothing company’, Journal of International 
Marketing, 11 (4), 2003, 113-128. 
F. Belussi, ‘Benetton: a case study of corporate strategy for innovation in 
traditional sectors’, in M. Dogson (ed.), Technology strategy and the 
firm: management and public policy, London: Longman 1989. 
L. Benetton, A. Lee, Io e i miei fratelli: la storia del nostro successo, 
Milano: Sperling & Kupfer 1990. 
L. Benetton, ‘Franchising: how brain power works’, in P. Stobart (ed), 
Brand Power, London: MacMillan 1994. 
Benetton Group, 1987 Annual Report. 
G. Brunetti, P. Bortoluzzi, Benetton: da United Colors a Edizione Holding, 
Milano: Isedi 2004. 
A. Camuffo, P. Romano, A. Vinelli, ‘Back to the future: Benetton 
transforms its global network’, MIT Sloan Management Review, 43 
(1), 2001, 46-52. 
G. Edmondson, ‘Has Benetton stopped unraveling?’, Business Week, 3839, 
June 30, 2003, 76. 
L. Falcinelli, Pubblicità paradiso: la company image del Gruppo Benetton, 
Milano - Perugia: Lupetti - Università per stranieri di Perugia 1999. 
G. Favero, Benetton: i colori del successo, Milano: Egea 2005. 
J. Heskett, S. Signorelli, ‘Benetton’, Harvard Business School Case n. 0-
685-020, Cambridge, MA: Harvard Business School 1985. 
J. Mantle, Benetton: the Family, the Business, and the Brand, London: 
1998. 
G. Nardin, La Benetton: strategia e struttura di un’impresa di successo, 
Roma: Edizioni Lavoro 1987.   9
C. Pinson, V. Tibrewala, ‘United Colors of Benetton’, in J.K. Johansson 
(ed.), Global marketing: foreign entry, local marketing, and global 
management, New York> McGraw-Hill/Irwin 1996, 556-567. 
W.W. Powell, ‘Neither market nor hierarchy: network forms of 
organization’, Research in Organizational Behavior, 12, 1990, 295-
336. 
E. Rullani, A. Zanfei, ‘Networks between manufacturing and demand: cases 
from textile and clothing (Benetton, Miroglio, GFT)’, in C. Antonelli 
(ed.), New information technology and industrial change: the Italian 
case, Dordrecht: Kluwer Academic 1988, 57-95. 
 

Benetton: identifying an image, imagining an identity

http://www.unive.it/media/allegato/DIP/Economia/Working_papers/Working_papers_2006/WP_DSE_Favero_06_06.pdf

Benetton: identifying an image, imagining an identity

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics