Gucci Case Brief

Gucci should run multiple-brands simultaneously

Gucci should make itself multiple-brands company to secure a market segment of middle and
upper classes. By incorporating YSL as a separate business subsidiary can serve the life style of
upper class segment and Gucci can serve the life style of middle class to keep the brand
exclusivity. It uses differentiated and cost-based advantage strategies incredibly well than other
competitors. It needs to separate the management as well to make brands efficient. It will lead
the company to the new heights. Brands will incur a lot of cost by separating everything, but
Gucci needs to cover up the cost by its earnings. Gucci needs to adopt the strategy of Toyota
running the Lexus.
Should Gucci carry multi-brand strategy or single-brand strategy?
The company is producing wide range of luxury products, but company is facing the problem of
“exclusivity”. People from different segments are buying products of Gucci and exclusivity is
being lost by Gucci. So, for that Gucci needs to incorporate exclusive brands that help Gucci to
secure more market share. But, there is conditions to be imposed on Gucci, it needs to separate
the management system, production system, and distribution as well. If Gucci will not run
different brands, it will lose the market share. Because LVMH is acquiring all luxury brands, it
keeps on increasing the market share. One day, we will be hearing the news that Gucci being
bought by LVMH.
Gucci uses differentiated strategy and positioned itself in a unique way in the market. Gucci is
considered as a luxury brand. By that way Gucci earns a lot of profit through unique products. If
any of its brand is making losses, Gucci is more than able to cover that brand losses. Gucci has
outsourced manufacturing facilities to reduce the fixed assets cost and making more return on
investment. Gucci is carrying different brands such as Yves Saint Laurent Couture, YSL Beaute,
and Sergio Rossi. All these brands should come under Gucci top management, but their
management should be separated to make these brands unique and exclusive to gain more
market share.
Gucci’s expansion in terms of brands will bring more revenue to the business and it will last
forever. If you take the example of Iphone and Nokia. Nokia used to make more phones than
iphone but always earns less than iphone. Gucci might stick in the growth trap, if it goes with the
single-brand strategy. It needs to have brands, which have unique market position and
exclusivity.
Gucci is public company, Shareholders will observe every decision being made by Gucci. They will
closely observe the management moves. They cannot take reckless decisions unlike other
companies being controlled by families, they can do whatever they want to do.