Research Paper

Research paper on GUCCI

The market and market structure of Gucci

The market within which Gucci operates is very expansive. The fashion brand has many loyal customers not only in Europe but across the world. This fashion company specializes in making and marketing upscale handbags, jewelry, leather goods, ready-to-wear outfits, fragrances, cosmetics, watches, skin care products, and shoes. Gucci has established about 680 boutiques round the world (Moore, 2005). The company has also established wholesale operations in the form of high-end franchises and department stores through which its products are sold.

The segment that Gucci specializes in is high fashion. The company creates as well as defines various fashion concepts through intuition and charisma. In terms of positioning, focus is on brand personality. The main target customers include high-income earners, the middle-aged population, businessmen, and people of high status. During the 1990s, Gucci underwent transformation by extending beyond its traditional “mature” style by establishing a trendy brand (Jackson, 2002). In the years that followed, Gucci started building many new stores. This international expansion has enabled the company succeed in brand development.

In terms of revenue, Gucci continues to be the leading brand in the world. In 2009, the Gucci brand generated 66.8 percent of the world’s brand-related revenue (Andreeva, 2010). The remaining revenue proportion was shared among other brands such as Bottega Veneta and Yves Saint Laurent (Andreeva, 2010). In terms of revenue by region, 36.6 percent of Gucci’s revenues in 2009 came from Europe. The second greatest revenue earner for the company was the Asia Pacific region (excluding Japan), which generated 27.8 percent of the brand’s revenue in 2009 (Andreeva, 2010). Other significant revenue contributors included Japan and North America (Andreeva, 2010).

Gucci Company’s competitive behavior

            Gucci’s competitive behavior is unique and highly effective. This is perhaps the reason why the company has succeeded in being the leading fashion brand in the world today. The company directly operates all its stores. It also maintains control over all its distribution channels. At the same time, Gucci endeavors to generate strong chain value with various retailers and suppliers. In all these efforts, the underlying goal is to ensure that its strong brand image is never compromised.

            In efforts to expand its market coverage, Gucci has in recent years started investing heavily in emerging luxury markets in emerging economies in Asia, particularly China and India (Samli, 2013). In all areas where the brand has a market presence, the company makes efforts to create competitive advantage in as many business segments as possible. In these efforts, the need arises to not only expand the existing product line but also make more luxurious products.

            Moreover, to maintain the image of the brand, huge investments in brand promotions are a necessity in the fashion industry (Moffett, 2003). To maintain its leadership position, Gucci has had to set the pace in this realm by spending record amounts of money in advertisements (Han, 2010). This contributes to the broader strategic orientation whose emphasis is on brand concept, sophistication, product leadership, symbolic-expressive value, and image.

            Gucci has been focusing on not only spending a lot in advertisements but also making use of the best marketing skills. These skills have led to the creation of desirable lifestyle imagery. With proper use of marketing skills by the company’s marketing specialists, it has become easy for the products to become widely acceptable to millions of consumers around the world. Gucci opted to employ marketing professionals with the best skills in order to ensure that the capital-intensive marketing efforts generated positive outcomes for the company. Gucci made this strategic move against the backdrop of the financial woes and the serious threat of bankruptcy that the company faced during the 1990s.

            By engaging in this competitive behavior, Gucci has derived numerous benefits. In addition to becoming the global leader in fashion branding, Gucci has set the pace in the creation of strategies aimed at making huge profits, producing immense wealth, and creating strategies that yield monopoly rent (Tokatli, 2013). This dramatic transformation was occasioned by the company’s ability to pay special attention to the strategy of enhancing the reality of the Gucci brand. This enables the company to break through the geographical barrier by venturing into various foreign markets. For example, Gucci has succeeding in appropriating the place image of the city of Los Angeles (Tokatli, 2013). The brand managed to achieve success in Los Angeles without the company even establishing any physical presence there (Tokatli, 2013). This competitive behavior demonstrates that the goal of brand-making can be achieved even in situations where geographical constraints seem to pose a serious challenge.

            Nevertheless, the competitive behavior is shaped by not only the company’s strategic goals but also the challenges and threats arising in today’s dynamic global business environment. For instance, all over the world, ,the luxury market is facing the serious trouble of loss of sales on the middle class (Wu, 2010). Incidentally, the middle class also happens to be Gucci’s leading consumer segment. To counteract the negative effect of this problem, luxury brands such as Gucci are sparing no efforts to diversify into emerging markets such as the Middle East, China, and Russia.

References

Andreeva, A. (2010). Brand equity for fashion industry: In search of general principles and a valuation case for Louis Vuitton and Gucci. Russian Management Journal, Vol. 8, No. 4, pp. 128-174.

Han, Y. (2010). Signaling Status with Luxury Goods: The Role of Brand Prominence. Journal of Marketing, Vol. 74, No. 4, pp. 15-30.

Jackson, T. (2002). Gucci Group: The New family of Luxury Brands, A Case Study. International Journal of New Product Development and Innovation Management, Vol. 4, No. 2, pp. 161-172.

Moffett, M. (2003). Fashion Faux Pas: Gucci & LVMH. International Business Review, Vol. 45, No. 2, pp. 225–239.

Moore, C. (2005). The nature of parenting advantage in luxury fashion retailing – The case of Gucci group NV. International Journal of Retail & Distribution Management, Vol. 33, No. 4, pp. 256 – 270.

Samli, A. (2013). Marketing Strategy for Global Luxury Products. Routledge, London.

Tokatli, N. (2013). Doing a Gucci: the transformation of an Italian fashion firm into a global powerhouse in a ‘Los Angeles-izing’ world. Journal of Economic Geography, Vol. 13, No. 2, pp. 239-255.

Wu, Y. (2010). Study on Internet Direct Marketing for Luxuries in China. Trans-Tech Publications, Zurich.

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