GUCCIGUCCIFashions come, fashions go but a great name is always in Fashions come, fashions go but a great name is always in

stylestyle

Marketing ManagementMarketing Management

March 2004March 2004

Group B 13Group B 13Masato ShiraiMasato Shirai

Andrea TellariniAndrea TellariniVasilis KykrilisVasilis Kykrilis

Gabrielle NgGabrielle NgMatthias KuhnMatthias Kuhn

Luxury Goods IndustryLuxury Goods Industry

Mono-brand major players:Mono-brand major players:► ArmaniArmani► HermesHermes► Chanel Chanel

Multi-brand major players:Multi-brand major players:► LVMH LVMH (Fendi, Kenzo, Givenchy)(Fendi, Kenzo, Givenchy)

► Richemont Richemont (Cartier, Fendi, Lancel)(Cartier, Fendi, Lancel)

► Gucci Gucci (Sergio Rossi, Yves Saint Laurent)(Sergio Rossi, Yves Saint Laurent)

GUCCIGUCCI Product lines Product lines

ACCESSORIES, RTW, SHOES

►Yves Saint Laurent

►Roger & Gallet

►Boucheron

►Alexander McQueen*

►Stella McCartney*

►Ermenegildo Zegna**

►Oscar de la Renta**

►Van Cleef & Arpels**

►Fendi**

FRAGRANCES & COSMETICS

► Gucci

► Boucheron

► Yven Saint Lauren

► Bedat

WATCHES

► Boucheron

JEWELLERY

► GucciGucci

► Yves Saint LaurentYves Saint Laurent

► Sergio RossiSergio Rossi

► Bottega VenetaBottega Veneta

► Alexander McQueenAlexander McQueen

► Stella McCartneyStella McCartney

► BalenciagaBalenciaga

* Intra-Group license

** Third party license

Building the brand: Building the brand: challengeschallenges

Product differentiation has shifted to Product differentiation has shifted to brand differentiationbrand differentiation

Fashion names come and go quicklycome and go quickly because the clothing, brand and name are dated

to a particular date and time

Name should be related to the style and mindstyle and mind of the audience you

refer to

GUCCIGUCCINaming strategyNaming strategy

NAMING STRATEGIES

NAME OF THE DESIGNER

• Based on the reputation of the designer

• Best way to transcend the style of the moment

MADE-UP NAME

FULL NAME SURNAME ONLY

The brand is strongly identified with the designer (i.e. Ralph Lauren, Tommy Hilfiger)

• Beyond the identification

• Less risky

• It doesn’t depend on a particular designer

• It takes many years and huge budgets to build it

To reduce the risk of losing the longevity of the brand GUCCI revised its branding strategy

NIKE

GUCCIOGUCCI

GUCCI

Product AttributesProduct Attributes

TANGIBLETANGIBLE

INTANGIBLEINTANGIBLE

• High Quality

• Unique Design

• Materials

• Service

The attributes of successful fashion branding go far beyond the physical

tangible aspects of product

• Image

• Status

• Exclusiveness

• Style

There is only one word which brings all these attributes together in people’s mind:

VALUEVALUE

ValueValueValue is not measurable in absolute terms, but on

CUSTOMER PERCEPTIONCUSTOMER PERCEPTION

PRODUCT AS EXTENSION OF PRODUCT AS EXTENSION OF PERSONALITYPERSONALITY (Psychology)

• Fit to personality

• Lifestyle

• Aspirations

• Behaviour

• Symbol of class exclusivity

GUCCIGUCCI Brand positioningBrand positioning

THE EX-CHAMPTHE EX-CHAMP

• A complacent former “Leader” that is living off of its past glory

• Stale and boring, but still commands a loyal following

• Focus in on maintaining status

quo

THE LEADERTHE LEADER

• The most influential / talked about brand in the market

• High market visibility and preference

• Demonstrates market leadership and continuous innovation

• Stays relevantTHE UNDERDOGTHE UNDERDOG

• No clearly differentiated brand and product proposition

• Competes on price, promotion or some other functional dimensions

• In danger of being acquired or eliminated

THE CHALLENGERTHE CHALLENGER

• A niche brand

• Highly focused strategy in serving a well defined segment

• Creative and adaptable

• Utilizes gorilla marketing tactics

SHARE GROWTH

MARKET SHARE

Low High

Low

High

GUCCIGUCCI CHANEL

HERMES

VALENTINO

HELMUT LANG

ARMANI

BURBERRY’S

GUCCI Main IssuesGUCCI Main IssuesMULTI BRANDING STRATEGYMULTI BRANDING STRATEGY

• 22,000 Items

DISTRIBUTION STRATEGYDISTRIBUTION STRATEGY

• Thousands of licenses

• Opening of many stores around the world

• Dilution of brand positioning as premium product

• Tarnishing of brand’s reputation for luxury, status and high quality

• Lower perceived value (customers are now more demanding).

• Suffering the competition of specialized companies

• Range of price points caused by the lost of control• Non unique service• Not effective collections• Locked-in capital• Low flexibility in slow-down economy• Capacity utilization dilemma

STYLESTYLE

• Maturing and Boring

• For Elderly People

• Narrow target market with low purchasing frequency (low growth category)

• Not fully met customer’s need

GUCCIGUCCI re-branding strategy re-branding strategy More brains, fewer shelvesMore brains, fewer shelves

NARROWED PRODUCT LINE BY NARROWED PRODUCT LINE BY 67%67%

• From 22,000 to 7,260 items

MORE EMPHASIS ON THE CORE MORE EMPHASIS ON THE CORE BUSINESSBUSINESS (leather goods & accessories)

• Met customer’s need

LIMITED THE DISTRIBUTION LIMITED THE DISTRIBUTION CHANNEL TO ITS OWN OUTLETCHANNEL TO ITS OWN OUTLET

DIRECT CONTROLDIRECT CONTROL

• Uniform image all around the world

• Collections promptly reach customers

• Customer’s perception of Gucci as unique and premium product

• Better services to customers

CHANGED STYLECHANGED STYLE

Through provocative advertisments and

flashy pants (Tom Ford, Domenico De

Sole)

SYMBOL OF MATURITY WITH SYMBOL OF MATURITY WITH ARISTOCRATIC LINESARISTOCRATIC LINES

• Amplified the perception as a mundane high-class style (all ages)

• Wide target market with high purchasing frequency (high growth category)

GUCCIGUCCI Re-created an emotional connection in the mind of their Re-created an emotional connection in the mind of their

audience audience

THE EX-CHAMPTHE EX-CHAMP

• A complacent former “Leader” that is living off of its past glory

• Stale and boring, but still commands a loyal following

• Focus in on maintaining status

quo

THE LEADERTHE LEADER

• The most influential / talked about brand in the market

• High market visibility and preference

• Demonstrates market leadership and continuous innovation

• Stays relevantTHE UNDERDOGTHE UNDERDOG

• No clearly differentiated brand and product proposition

• Competes on price, promotion or some other functional dimensions

• In danger of being acquired or eliminated

THE CHALLENGERTHE CHALLENGER

• A niche brand

• Highly focused strategy in serving a well defined segment

• Creative and adaptable

• Utilizes gorilla marketing tactics

SHARE GROWTH

MARKET SHARE

Low High

Low

High

GUCCIGUCCI CHANEL

HERMES

VALENTINO

HELMUT LANG

ARMANI

BURBERRY’S