Italian Manufacturers Move Relentlessly Upmarket

14 07 2008

The business model for Italian manufacturers has changed completely in recent years. The introduction of the Euro, the first time in history that a country has simultaneously devalued its currency and priced itself out of export markets, coincided with the emergence of China as the new workshop of the world. Ten years ago, when I moved to Italy, my brother and I used to marvel at the stylishness and sheer brio of the clothes and housewares on offer at a department store chain like UPIM. Now even iconic Italian products like Moka coffee pots and pasta makers come from overseas for the most part.

Italian manufacturers abandon mass market products

While many companies have taken the “if you can’t beat them, join them approach,” as elsewhere, a popular business strategy of Italian manufacturers is to move relentlessly upmarket. For example, Bialetti has completely redesigned its range of coffee pots to separate them from the cheap copies of their traditional products. It’s unclear, however, whether the mass-market Italian shopper is willing to pay 10 times the price of the copy for a mechanically and aesthetically superior product. Recent market data seems to suggest they are not. Indeed, many stores where I lived have stopped selling them because they are too expensive.

The famous television producer Brionvega, notwithstanding a recent bankruptcy and frequent ownership changes, has persisted in moving upmarket. Why buy a regular tv when you can get a €2150 individually numbered oggetto d’arte? With its optimistic production levels of 199 sets per product, the current management is making the high-end strategy of the previous manifestation of the company look down-market.

Save Xenon and Mirage!

Addio cari amici

Addio cari amici

In the latest example of this strategy, the famous bicycle component producer Campagnolo recently announced that it is abandonning the so-called “entry-level” market for road bike groups to concentrate on the high-end and professional markets. The step comes after the company previously abandoned the markets for city bike and mountain bike components, giving competitor Shimano a de facto monopoly in almost every sector of the business. The groups Xenon and Mirage – popular for giving a touch of Italian flair on cheaper racing bikes -are on the way out.

Instead of Xenon and Mirage, Campagnolo will introduce the Spinal Tap inspired ultra-expensive 11 speed Super Record system:

These go to eleven, it’s one faster innit?

The hope seems to be that cycling posers will pay big money for one more gear, permitting the company to make up for much lower volumes by concentrating on higher margin products. Vediamo.

 

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4 responses

14 07 2008
shimano105

Ciao, ciao Xenon & Mirage. Shimano is taking over.

16 09 2008
taze1

What will all the cheapo fake Italian companies like Bottecchia do without Xenon? (This is a good idea for a post…)

21 09 2008
Sturmey-Archer

Go for 3 speed hub gears!

22 09 2008
shakespearepolitics

I have a fondness for Miche myself…

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