About the Brand: History

Founded in 1921 by Guccio Gucci, Gucci is an Italian luxury brand. It is one of the
most influential luxury brands in the world. Initially, it started with fine leather-crafted
accessories – handbags, shoes (famous for loafers), knitwear, and silks with an
iconic unique pattern that can still be seen today. In 1999, a 42% stake of the Gucci
group was purchased for $3 billion by the French Pinault-Printemps-Redoute (PPR),
now known as Kering
Group. Gucci is a
company that is known
to preserve its heritage
while incorporating
modern styles in its
range. It has become
one of the world’s most
successful
manufacturers of high-
end leather goods,
clothing, and other
fashion products.

Gucci today offers various product categories – leather goods, shoes, ready-to-wear,
watches and jewelry, and beauty products. The unique selling proposition (USP) of
Gucci is its exquisite Italian craftsmanship, providing customers with high-quality
products and great attention to the design of its products.

Product-Related Attributes

According to Interbrand’s Best Top 100 Global Brands 2018, Gucci stands in the
39th position. The key attributes that define the brand are as follows:
 1. High Quality
2. Ground-breaking creativity
3. Customization
4. Innovation

Communication, Pricing, and Distribution

Gucci has always reinvented and challenged the status quo, and that is exactly what
it also tries to portray in its communication strategy. It identifies that for its long-term
success, the brand must engage with its clients across all of the brand’s touchpoints.
It has traditionally used print media, mainly for its communication, advertising mainly
in fashion magazines, each campaign showcasing a story for that season. With the
development in the digital space, Gucci is leveraging digital media for its
communication strategy, using social media extensively to engage with its audience.

Gucci follows a premium pricing policy for its products. It provides high quality to its
customers while maintaining the right balance between exclusivity and availability of
its products. The company distributes its offerings through its retail stores, e-
commerce channel, wholesalers, and other retailers.

BRAND EXPLORATORY

Customer Knowledge

Gucci has leveraged its heritage and traditions to translate high quality in every
aspect of its business. Gucci continues to stay relevant by having a modern touch to
it while maintaining its heritage. The brand associations for Gucci might be
“luxurious”, “contemporary”, “timeless”, “eclectic”, “romantic”, “influential”. Below is a
hypothetical Gucci Mental map.

The Brand Mantra of Gucci is to be the voice of self-expression.

Sources of Brand Equity

The brand’s name, Gucci, and the brand’s logo are the most essential sources of
brand equity. Its brand logo consisting of two capital Gs is not only aesthetically
appealing but is a representation of its history. The world-renowned logo represents
the initials of the man who started it all. Equity is contributed by the benefits that
Gucci provides to its consumers, namely, high quality, craftsmanship, exclusive
design, and customization. The brand also provides emotional benefits to the
consumer, giving them a sense of social approval and self-respect that is transferred
through its exclusivity and limited distribution. This adds to the brand equity of Gucci.
It provides a symbolic sense of pride to the consumer. Other key sources of Gucci
brand equity are Communication, Collaborations, Online Experience, and Social
Initiatives.

Communication. Gucci has adapted itself to the digital space, and has a strong
digital presence online, especially on social media, like Facebook, Twitter,
Instagram, etc.
Collaboration. Gucci also collaborates with renowned celebrities and influencers to
reach out to their target audience, to better connect with them. Some examples
include singer Rihanna and actress Blake Lively. This has enhanced their brand
visibility and this also allows Gucci to become a part of popular culture.

Online Experience. Gucci has transformed the way luxury brands develop
experiences for their consumers online. Just like the one-of-its-kind in-store
experience, Gucci’s online store experience is also very unique. The brand’s
collections are featured on their website and are curated to look as they would
appear on the runway. The brand has been able to bring life to its online store
experience.

Social Initiatives. Gucci launched a “Chime for Change” campaign to work towards
women’s empowerment. It was co-founded by Salma Hayek-Pinault, Frida Giannini
(both members of the Foundation’s Board of Directors), and Beyoncé Knowles-
Carter. It works towards access to education and health for women and justice for
girls and women around the world.

The Customer-Based Brand Equity Pyramid (CBBE)

Gucci has focused on each element of the

customer-based brand equity pyramid. The
figure below highlights the key aspects of
the Gucci CBBE pyramid.

RECOMMENDATIONS

Gucci has been able to create significant

brand equity for itself. Below are some recommendations for the brand.
Tackling Counterfeiting: A very prominent issue, many luxury brands face the
problem of counterfeit and fake products. These products are illegally sold online
and in street markets. The company can collaborate with websites and other luxury
brands to curb counterfeiting by taking suitable countermeasures against it. One of
the ways to curb counterfeiting is to educate consumers about it and how these
goods can be identified and authenticated should be communicated to them.

Stay Core to Its Strengths: Gucci may have diversified into other product
categories over the years, but it must stay true to its core strengths, providing luxury
leather goods such as handbags and footwear. Often brands can dilute their own
identity and fall into the line extension trap by venturing into too many categories.

Maintaining Exclusivity: Making products too accessible to customers reduces the

feeling of “exclusivity”, which is often endured by consumers consuming luxury
products. Thus, Gucci should be very selective of where it distributes its offerings
and must ensure that the feeling of exclusivity is maintained. Gucci’s journey to date
has been a roller coaster
ride. Yet, its management Points
Points of Difference
of Parity
has been able to keep the
brand alive and relevant in High Innovation
quality
the luxury market by staying
true to its roots, while Premium Heritage
Prices
improvising and innovating
along the way. Truly, Gucci Italian Social Media Usage
Fashion
is an Influential, innovative, House
and progressive brand.
Durabilit Community like engagement
y

5BrandingLessonsfromGucci
Italian fashion brand, Gucci, is regarded as the world’s biggest-selling and most

recognizable Italian brand. Founded in 1921 in Florence by Guccio Gucci, the brand

is widely known for its high-quality, luxury products, which include clothes, shoes,

handbags, sunglasses, and other accessories.

Creating products for women, men, and children, Gucci is today considered a brand

of luxury and innovation, rather than tradition or affordability and is today valued at

$6.4 billion.

Expand yourTarget Audience

Gucci’s primary target market has always been high-income, high-status, middle-

aged businessmen and women. However, in the late 1980s/early 1990s, the band

went on to incorporate a ‘trendy’ brand in addition to its more mature line, designed

to appeal to a younger audience.

The purpose of the campaign was to reignite international interest in this brand and

prevent it from becoming associated with one specific generation. As a result of the

campaign, Gucci went on to accelerate its international appeal and reach out to an
even wider audience. It is now regarded as a brand that has successfully matured

with aristocratic lines – instead of becoming boring.

Care aboutyourCustomers

Today, Gucci operates in 450 stores across the globe including franchise stores,

duty-free boutiques, leading department stores, and specialty stores. In addition to

repositioning its brand to appeal to a wider audience, Gucci also tailored its lines of

products to ensure they perfectly matched the tastes of their customers. To do this,

the brand performed in-depth market research about its client base to establish their

ambitions, tastes, and needs. As such, they were able to create products that

matched the exact needs of their clients.

AdoptaRangeof MarketingTechniques

Gucci is also unafraid to embrace technological changes and has been seen across

a range of marketing platforms including social media, online advertising, organic

search engine, and offline promotion. As any successful business will tell you, it has

never been more important to keep up with the ever-changing marketing

stratosphere while also remembering that traditional approaches remain effective.

FocusonBrandPositioning& Strategic Orientation

Gucci is also renowned for its very strong brand image that focuses on

sophistication, high-class, high-quality and innovation. As a product leader, it is a

strategically orientated brand that successfully appeals to its customers’ self-worth,

prestige, status, and image.

Code ofBusinessConduct

Finally, Gucci is committed to maintaining a consistent brand strategy that focuses

on exclusivity, appeal, prestige, and quality. Despite adopting modern marketing

techniques such as social media marketing and online marketing, the brand remains

committed to its values.

Case Study of GUCCI: Transformation of Luxury Branding

Guccio Gucci opened a small shop selling leather goods via del Parione in Florence
in 1923. He sold luggage imported from Germany and offered customers repair
services. As the luggage business prospered, he opened his workshop to produce
his design. The business in the 1920s created huge profit and success however in
the 1930’s Gucci began to face some challenges when the sanctions were imposed
on Mussolini. He faced a shortage of imported leather yet this challenge gave him
innovated idea of using new materials such as canvas and produced small leather
goods, wallets, and belts that are still a big part of the Gucci company.

Gucci became an internationally known luxury brand after World War II and over the
next two decades, the company flourished. In the1970s Gucci began to fall due to
internal conflict. Most of the conflict was between Aldo and Rodolfo Gucci, the
founder’s surviving sons over strategy and control of the company. Rodolfo Gucci
died in 1983 and left his 50% stake in the company to his son Maurizio. One year
later, Maurizio seized control over Gucci and was determined to transform Gucci into
a modern retail organization. But, Maurizio failed.

When Maurizio was in control of Gucci, his first move was to name Domenico as
president and managing director of Gucci America. He was a Harvard Law School
graduate and became the first professional manager to play a senior role at the
family-run company. De Sole was a smart businessman; he saw the need
to restructure the whole company. He fired 150 out of 900 employees and hired
highly experienced managers in the retail business. He expanded Gucci’s control
over distribution, reduced channels, and acquired all of Gucci’s North American
franchises in three years. On the other hand, Maurizio had a grand plan of his own,
creating a $1 billion company by limiting distribution to an exclusive clientele.

Maurizio positioned Gucci next to Chanel and Hermes. Maurizio did what any
businessman would do to bring up the company again. He raised the price, reduce
and control distribution, and bought back franchises to reduce overexposure. Despite
his grand plan, Maurizio lacked business and analytical skills to rebuild the company.
The prices were too high. The price points of the products were competing against
Chanel or Hermes; however, customers valued less. Gucci’s reputation was severely
destroyed and it was hard for the customers to see it as a luxury brand. Maurizio
missed one critical aspect which was the customer’s perception.

Invest Corp, a Bahrain-based investment group that was backing Gucci financially,
thought it was time for Maurizio to step down from his position. Maurizio’s
repositioning was not working. The sales were dropping even more and the direction
of the company was unclear. Not only Gucci but also the entire industry was
suffering from the economic crisis. There was no return to Invest Corp and for them
to continue supporting Gucci; they needed to force Maurizio out. By 1999, luxury
goods were a $60 billion industry, with sales growing 6% per year. It was time for
Gucci to climb up the ladder again. It was the right moment in the luxury industry for
Domenico De Sole as COO and Tom Ford as creative director to reinvent Gucci.

De Sole focus on upgrading Gucci’s the production and delivery system, while Tom
Ford took charge of design. They were the perfect combination. Both leaders had the
personal drive to save the company. Their first challenge was taking many parts of
Gucci into a united company. Under Invest crop’s guidelines, the seven Gucci
operating companies finally combined for the first time. In 1995, Domenico De Sole
was named CEO of the entire Gucci group. Now, Gucci’s marketing, pricing, product
design, distribution, manufacture was intertwined system to represent one brand -
Gucci.

Remaking of the brand under the control of De Dole and Ford started with identifying
the right direction for Gucci. They decided that focusing on fashion was important for
Gucci to change its customer perception. They changed their products from classic
to fashion-conscious. Tom Ford relaunched leather goods, shoes, and a ready-to-
wear collection with a sexy and glamorous edge. Gucci’s target customer was shifted
from classic, older, wealthy, and somewhat conservative to fashion-conscious
customers. The new customer was modern, youthful, urban and age did not matter.
The new customers have less brand loyalty than old targeted customers however
they replace everything they have every season to follow the trend. It was a good
customers base to have.

The new leaders reviewed its pricing structure. De Sole and the leather goods
merchandiser personally repriced every single item in the collection, lowering the
prices on average by 30%. This pricing point positioned Gucci next to Prada and
Louis Vuitton. This strategy was to represent good value to the customer and to
broaden the customer base. Compared to Maurizio, the new leaders took customers’
perceptions into account when rebuilding the brand. Gucci became a customer-
centric company.

Marketing was an important element for Gucci to show the world how Gucci had
changed. If the price was considered the short-term, marketing is the long-term
strategy to attract customers. Gucci nearly doubled its advertising budget to $11.6
million in 1994. Gucci’s advertising was created in-house and focused on redrawing
the image of the company. Gucci’s advertisement transferred from product-oriented
advertisements to brand-associated advertisements to capture the image of the
world that the new customers want to be part of. Gucci’s advertisements became
famous and provocative under Ford’s inspiration showing a new level of creativity in
artistic expression and commercial impact. Another critical marketing strategy for
Gucci was to “make Tom Ford a star”. Tom Ford happened to fit the new image of
Gucci at that time which was edgy, sexy, feminine, and trendy. He got a great
physical appearance, handsome, and, was the star behind the new Gucci. Tom
Ford’s lifestyle was exactly cohered with Gucci’s new image and Ford became the
iconic symbol for Gucci.

The image was important for Gucci, but the product was also important in rebuilding
Gucci. They needed to focus on the quality craftsmanship of the products. The
company’s supplier relationships had been severely damaged due to Gucci’s inability
to pay. De Sole and Tom picked Tuscany as their “DNA” of the company due to its
high artistic capacity and small independent factories. That was their competitive
advantage against Prada and Louis Vuitton. The leaders personally revisited their
entire manufacturing factory to choose the best and cut of the rest. De Sole started a
new program for the factories, which provided selected supplies with technical and
financial support. Doing so, De Sole created royal factories with an increase in
manufacturing capacity. The new program enabled Gucci to share its risks and
mistakes with the manufacturing factories as well as flexible manufacturing
capabilities. This was an important transition for Gucci because since they change
their product lines from classic to fashion-forward, they needed seasonal and shorter
production runs. Gucci also used a variety of methods to maintain quality throughout
its network. Gucci bought all of the leather used in its products and did 50% of the
cutting so that they can control the quality of the products that are sold to the
customers. Gucci’s production volume increased 277% and it was a huge success
for Gucci.

Before the control of De Sole and Ford, Gucci was everywhere. The GG logo
whether it was real or knockoff, was everywhere. De Sole massively reduced a huge
amount of distribution channels and emphasized strengthening the network of
directly operated stores. Gucci began to renovate its directly operated stores to
attract new and younger customers to come into the stores. Gucci’s directly operated
stores were accounted for 66% of sales and other stores such as 60 franchised
stores, 54 duty-free outlets, and 301 department stores accounted for the rest of the
sales. Distribution means a representation of the product to customers because that
becomes the shopping experience. Gucci had total control over the entire distribution
channel that was available for the customers, which in other words, controlled the
image of how customers perceive the brand.
A turnaround of the company advised by De Sole and Ford made Gucci one of the
world’s most influential fashion houses and a highly profitable business operation. To
compete with LVMH, they first bought two luxury companies – Yves Saint Laurent
(also YSL beauty) and Sergio Rossi to create a luxury house. Gucci is in transition to
build a “luxury house” to directly compete with LVMH, the dominant force in luxury
goods marketing and retailing worldwide. As of 2011, Gucci Group now also owns
Boucheron, Bottega Veneta, Bédat & Co, Alexander McQueen, Stella McCartney,
and Balenciaga.

PPR is a French multinational holding company specializing in retail shops and

luxury brands that gained ownership of 60 percent of the Gucci Group’s stock in
2003. In 2004, Tom Ford and Domenico De Sole parted with the Gucci group when
they failed to agree with PPR over artistic control of the company. It is said that the
last spring collection under the direction of Ford and De Sole was a critical and
commercial success for Gucci. However, this was a huge drawback for the Gucci
group because Tom Ford was once the iconic symbol of Gucci. In 2005, Frida
Giannini was appointed as the creative director for women’s ready-to-wear and
accessories and in 2006, she also became the creative director for men’s ready-to-
wear and the entire Gucci label.

Gucci considered almost every aspect of the business in terms of pricing, marketing,
product, manufacture, and distribution. De Sole and Ford made the right decisions
for the company and it was a tremendous success. The two most important elements
that Ford and De Sole did were, they integrated different departments (design,
marketing, distribution, etc.) to reach one goal rather than having different
departments operating separately. Second, they built the brand image. Marketing
and advertisements were promoting image than product, which was taking a different
approach than other competitors.

In Gucci’s marketing plan, there were many risks involved with making Tom Ford a
star of the company. Some questions to consider when developing their “star-
designer strategy” – “what happens when there is no more Tom Ford in the
company? And “was Ford given too much power and publicity?”. Tom Ford became
a huge star of the company and consequently was given too much power. In 2004,
parting from Gucci due to internal conflicts with PPR, Gucci faced a challenge by
losing its iconic star of Gucci Group. In 2005, he announced the creation of the Tom
Ford brand. Eventually, making another competition for Gucci Group to consider.

Without Tom Ford, Gucci will always have a big hole in its brand image. Among the
“fashion people” Gucci lost a lot of respect after Tom Ford departed the company.
After Tom Ford Left the company, Gucci announced three designers to lead the
design team. Alessandra Facchinetti took full responsibility for Gucci’s womenswear;
John Ray took over menswear and Frida Giannini became creative director of
accessories. Even though each one of the designers made significant contributions
to Gucci, replacing Tom Ford was not easy. Alessandra Facchinetti quit after two
seasons and was replaced by Frida Giannini in-house accessories designer. In
2006, Frida Giannini became the creative director for the entire Gucci label. Her
early designs, which were a repudiation of her predecessor Tom Ford’s raw sexiness
—earned her low grades from fashion critics. However, she’s fared well so far; her
collections have enjoyed commercial success, although she has yet to shake up the
sartorial climate on a Ford-esque scale.

In recent years, as fashion houses have become global brands; there is considerably
more pressure on designers to function as all-points creative directors. Creative
designers became so important to the brand image of luxury companies. It is hard to
acknowledge the brand as separate from the designer. “Star designer strategy”
almost became the norm of most luxury brands such as John Galliano at Dior,
Alexander McQueen at Givenchy, Karl Lagerfeld at Chanel, and more. This
marketing strategy gave instant success to the company by boosting sales and
rebuilding the reputation of many luxury brands like Gucci. Tom Ford took a crucial
role in transforming Gucci to grow enormously in terms of brand image, sales, and
production after its downfall. He also created a higher entry to barriers for the luxury
industry by selling not only the product but also the brand image.

Star-designer strategy is risky since it is hard for the companies to forecast the effect
on the brand image after the absence of star-designer. The designer’s uniqueness
and identity are extremely strong in recent years in the fashion industry, it can give a
negative effect on the brand image and may struggle with the brand identity without
the designers. It is hard to conclude if the star-designer strategy is successful in the
long-term or not however, luxury companies need to have the ability to stay within
their design philosophy of providing fashion and brand image to their clientele no
matter who is its head designer.

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