Case study of business model analysis

Analysis of Texaco Company's Business Model

The concept of business model, which has been popular since the late 1990s, has always been discussed by entrepreneurs and venture capitalists. Undoubtedly, if an enterprise has a good business model, then its success is half guaranteed. For modern enterprises in a rapidly changing business environment, it is very important to maintain their ability of continuous change and innovation by introducing new business models.

Economists have given such an awkward definition of business model: it is a conceptual tool, which contains a series of elements and their relationships to clarify the business logic of a specific entity. It describes the value that the company can provide to customers, and the internal structure, partner network and relationship capital of the company to realize (create, sell and deliver) this value and generate sustainable profitable income. In a word, enterprises are required to make great efforts in value proposition, consumption target group, distribution channel and core competence.

In layman's terms, business model is the way or way for enterprises to make money. This annoying problem has been puzzling entrepreneurs from all walks of life.

Especially in the global financial turmoil, many enterprises are actively exploring new business models in order to protect their living places. Beijing Texaco Garment and Tie Co., Ltd. (hereinafter referred to as Texaco Company) took the lead in making a beneficial attempt and launched a set of business model with China characteristics, which not only consolidated the position of the industry, but also seized the opportunity in the crisis, seized the market, expanded channels and upgraded the brand before other enterprises, and made efforts to build the image of the first brand of Texaco China tie professional operator step by step.

"DESFONE" ambition is Texaco company located in the Theo center of Beijing Asian Games Village, which is a professional clothing enterprise integrating tie design, production and sales. Texaco regards "building the first brand of ties in China" as the company's vision and goal. At present, the company's specific operation is to unify the product brand, company brand and channel store name brand into "DESFONE" brand, which means that Texaco's channel terminals uniformly promote the "DESFONE" channel store name brand. Under this unified terminal image, the brand structure, category structure and variety structure of each terminal store are determined according to regional economic level, shopping mall positioning, shopping mall location, shopping mall counter area and other factors to meet the requirements of rapid channel expansion.

In the tie industry of China, Texaco took the lead in launching this business model, and was ahead of other enterprises in brand and channel expansion. Based on the analysis of the industry development status, the company's overall strategy and the company's business portfolio, this paper puts forward that long-term brand cultivation and rapid expansion of channels should be the basic measures to realize the company's strategic objectives, and analyzes the advanced nature and superiority of this business model.

As a whole, the tie industry in China is in the stage of development and growth. The production equipment of China's tie enterprises has reached the international leading level, and the product design has also changed from the initial takenism to independent development and design. With the continuous growth of market capacity and the continuous expansion of industry scale, domestic tie enterprises generally lack famous brands at home and abroad, and the added value of products is not high.

At the same time, tie enterprises are facing a very complicated domestic tie market. There are great differences in sales channels, demand categories, price elasticity and product quality. The main sales channels of domestic tie enterprises are generally department stores, supermarkets and wholesale markets, but the ground floor channel has not yet been formed. Demand categories are generally based on personal consumption, group purchase and customization of enterprises and institutions. Compared with the end individual customers, the price elasticity of high-end consumers is not great, and the price elasticity of low-end consumers is great, which is in the stage of price competition, and the real brand competition has not yet formed. For dealers, the price competition is fierce because of the serious homogenization of products.

In such a market environment, domestic tie brands have not formed enough influence to compete with foreign brands that have entered the domestic high-end tie market. At the same time, many enterprises either "borrow a boat to go out to sea" or "sell dog meat by hanging sheep's head" or "build the plank road in an open way", lacking a down-to-earth brand mentality. In this way, due to the international trade environment and overproduction of traditional industries, a number of traditional enterprises will inevitably be eliminated in the next 5-8 years. "In this great and magnificent reshuffle era, this is a historical opportunity to hold a group to keep out the cold, merge and expand, and break through." Texaco's strategic goal of building "the first brand of neckties in China" has great possibility and maneuverability, and rapidly expanding channels is the key to seize this opportunity.

Magic concentric diversification has always been Texaco's business philosophy: concentric diversification with ties as the core. Making tie products bigger and stronger is the basis of this business philosophy. On this basis, the diversification of brand structure, category structure and price system continues to extend, and the ultimate goal is to expand the market and achieve a breakthrough in terminal sales performance.

From the perspective of brand structure, in addition to the "DESFONE" brand, the company has also represented seven top tie brands in the world, such as Fendi, Givenchy, Mar Zorro and montana, occupying a large share of the domestic high-end tie market. 1999, the company launched Italian Nino Ferrer brand series tie and apparel products, and entered the domestic high-end tie and apparel market with Nino Ferrer brand to compete with international brands. In addition, Texaco brand products are mainly aimed at the mid-range consumer market of stable income groups, while Dianqi brand is mainly aimed at the public and fashion consumers. Texaco's brand is pyramid-shaped according to market positioning. This multi-level brand structure not only meets the different needs of different consumer groups in China market, but also lays the foundation for Texaco to occupy different markets.

From the perspective of category structure, tie products are still the core products of the company. Before 2008, the proportion of tie products has been above 60%. Starting from 2009, the company will gradually adjust the proportion of each product category. There is no doubt that tie products are still the core products when adjusted to 50%; Scarves, leather goods and other accessories rose to 20%, and shirts and suits accounted for 30%. On the whole, the accessories with tie as the core account for 70% of the advantage, which is also a direction for Texaco's future development-to make men's personal accessories with tie as the main part bigger and stronger, such as belts, wallets, purses, tie clips, cufflinks and other accessories, and become the leading brand of high-end accessories.

From the price system, the pyramid brand structure, foreign famous brands are at the top of the pyramid, which is the highest-end price positioning, Nino Ferrete brand is the middle-end price positioning, Texaco brand is the mid-range price positioning, and Di 'anqi brand is the popular price positioning, which comprehensively covers different classes of consumer groups.

How to integrate such a large and complex concentric diversified management system and turn it into a superior force to promote the development of enterprises? In 2008, Texaco began to implement a set of most essential, effective and offensive business models, and seized the leading position in the industry before other enterprises.

Unified channel expansion is based on a concentric and diversified management system, and Texaco has begun to abandon complexity and simplify. As mentioned at the beginning, the product brand, company brand and channel store name brand will be unified under the name of "Defeng" and implemented in sales, which determines that its channel terminal store name "Defeng" will blossom everywhere. In different "DESFONE" tie and clothing franchise stores, multi-level brand structure, category structure and variety structure can be organically arranged and combined according to different regions, different shopping mall positioning and different shopping mall "counter" positions, so as to adapt to China, the most complex and diverse channel structure in the world and realize unlimited channel expansion.

Starting from 2009, Texaco will implement the strategy of coexistence of multiple channels. Top shopping malls, shopping centers, traditional department stores, supermarkets, hypermarkets, and even floor stores, high-end hotels, airports, and gift channels can all see the shadow of "DESFONE" ties and clothing franchise stores.

For example, according to the multi-level brand structure, brand ties such as Fendi, Givenchy and Nino Ferre will appear in the "DESFONE" stores in top shopping malls, while Dianqi brand ties may appear more in supermarkets and hypermarkets. In this way, through the combination of different levels of brands, "Defeng" tie clothing franchise stores can occupy different channels to the greatest extent.

In addition, from the diversification of category structure, this arrangement and combination is more free.

The free combination of this category structure determines that the forms of "Defeng" terminal stores are various, but large or small. For example, tie monopoly, you only need jewelry counters in shopping malls, because at present Texaco tie styles and design capabilities already have the strength of the first brand of ties in China; If there is a main counter suitable for the location and area of the mall, Texaco also has the ability to display all categories of various brands (such as ties, leather accessories, shirts, suits, etc.). ). In other words, Texaco can find the best form of "DESFONE" terminal store no matter what channel and how big the store is. Such channel expansion is almost unlimited.

Figure 2 shows the final channel terminal store form-Texaco Life Museum, which is also the direction of Texaco's efforts, that is, to become the first brand of professional tie operators in China. No matter where men want to buy ties or other accessories for men, they should first look at Desfone store, because there are various brands and products with different prices for them to choose from, which invisibly changes their life philosophy and consumption habits.

They believe that market expansion has become the necessity of the survival and development of enterprises, and the effective method of market expansion is channel expansion. This business model promoted by Texaco can expand channels infinitely and is suitable for any channel in China, which is the core competitiveness of this model.

In fact, there are many successful examples of this core business model promoted by GAP Texaco in China tie industry, and GAP is one of them. Of course, there are still some differences between the two. GAP's positioning is relatively narrow, advocating a casual attitude or lifestyle, and its series of brands are owned by GAP. "DESFONE" brand is a collection of foreign agent brands, acquired designer brands and own brands. The brand level is richer, and the product category combination is more diverse and free.

However, Texaco is not a simple copy of GAP business model, but an innovation based on China's national conditions. The advantages of this business model are very obvious. It is not only suitable for the complex and diverse structure of China channels, but also unifies the scattered brands and Texaco's market strategic role positioning products in Figure 4 under the name of "Texaco", which is more competitive and can spread the Texaco brand to the maximum extent.

Winning in the future It is not difficult to see from the chart that this business model promoted by Texaco cannot be separated from two elements, one is brand, and the other is channel. Brand plays a key role in the offensive strategy of Texaco channel expansion. Please see the Texaco brand portfolio matrix.

According to the above-mentioned brand combination matrix diagram, in order to adapt the product variety and its structure to the changes of market demand, Texaco plans four levels of brands into four quadrants in the diagram respectively. According to the market growth rate and relevant market share, determine the allocation of input resources. They believe that such brand positioning and brand distribution will not only help Texaco to establish a leading position in the industry, but also help brand incubation and brand collaboration, and ultimately increase sales. The terminal form is DESFONE tie clothing franchise store. In the process of realizing this business model, brands and channels complement each other and keep pace.

Xu Gehui, the famous host of Phoenix Satellite TV, once said: "A celebrity is a person who walks into a celebrity face to face program" when positioning the celebrity face to face program. Similarly, the purpose of Texaco's promotion of this business model is to hope that "all brands entering Texaco stores are famous brands". Texaco Company has positioned its strategic role in the tie market as a leader, and the dream of making Texaco Style the first brand of professional tie operators in China will be realized in the near future.