Introduction Gucci is one of the famous leather companies in the world.

It was established by an Italian named Guccio Gucci who was a worker in a hotel in London. In his London life he was inspired by English men’s luggage those who bring it with them where Gucci worked. After his return from the hotel work in London he established his own company which made leather product in an Italian style. His unique and stylish Italian products are then became very famous in Italy and the world. Gucci and his organization are rapidly recognized to the world because of his some products and its unique style (bottega). Within no time Gucci is the last word for leather products such as bags, gloves, shoes, belts etc. In 1960’s Gucci take on the duel G logo after the death of Guccio Gucci by his son. After that they were established their business into deferent parts of the world. They have branches in Paris, Japan, Hongkong and Palm Beach etc. Almost sixty years of business the company become public funded and Maurizio Gucci was in charge of the organization. Slowly the company is handed in to the hands of Investcorp those who owned the major shares of Gucci. In 1995, after Maurizio Gucci also disposed the last shares of Gucci family the Gucci is become completely one of the public funded companies in the world. Before that the company was introduced by the famous duo that Domenio de Sole and head designer Tom Ford. After few years the Gucci was unveiled through many changes. Finally the ice cream man Robert Polet is taken charge as the CEO of Gucci international. Under his reformation the company was transformed as one of the profitable and standard leather companies in the industry. He allow all the designers to work according to their style but to keep always the brand name and standard of the parent company. Now Gucci is the best and well known international brand of leather products.

Year of Acquisition
1999 1999 1999 2000 2000 2001 2001 2001

Fashion House / Brand Acquired
Yves Saint Laurent(YSL), former haute couture house YSL Beaute, YSL’s Subsidiary focused on cosmetic and perfume Sergio Rossi, Italian shoemaker Boucheron, French Jeweller Bedat & Co, a Swiss watch brand Balenciaga,Spanish former haute couture house Bottega Veneta, Italian high-end leather house The Gucci Group acquired stakes in the emerging fashion designer Alexander

McQueen(51%) and Stella McCartney(50%)

Source: Gucci Group: Freedom within the Framework, Article by Harvard Business School, 2011. Environmental factors which favours the Gucci group to accompany a good position in global market. There are some factors which helps the company to achieve a dominant position in the international market. They are internal and external factors. Internal factors

The appointment of chief executive officer De Sole and Creative Director Ford, had been helped the company to make huge transformation in 1995. The public funded status of Gucci group. Under the new CEO De Sole and Ford the company achieved many mile stones. The brand became very popular with its diversification in production and management. Highly satisfied consumers become the trade mark of the Gucci group by its high standard customer care services. It also helped the company to retain and maintain their customers.

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External factors •

The divest changes in the fashion concepts in the particular industry. Specially in the consumer side. The huge international industry was open to people to choose their own products according to their fashion concepts and trends. Fashion world became more accessible to all those who want. Customers have many options to purchase the products.

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Swot analysis Strengths

The service to the customers is direct through their deferent stores.

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Service by the distribution channels were maintained well. The diversity in the products and the style of service. The ability to afford deferent kind of customers in the deferent parts of the world. The multinational company were developed throughout the world of business. Brand name and popularity gave them a huge impact in the industry.

Weakness • • • • • The financial background of the company was weak. Profitable growth is not maintained in all the brands equally. In few cases the value of the products could be very high because of the brand name and quality of the products. In the co-operate business world the Gucci group were unstable with their unstable management system and strategy. The strategic division and their activities were not given a positive impact on the industry.

Threats • •

The duplicate products in the industry is lowered the business of Gucci group. The products from other companies and brands like Zara, Gap and others. Their extension of business in to deferent world could affect the Gucci group of business. The product maintaining strategy was unsatisfactory comparing to other brands. For an instant Zara refreshes their products in every three to four weeks but Gucci does it only five times yearly. This gave consumers more choices to select the products. Gucci is public funded completely.

Opportunities • •

Gucci can develop their business in to new places like India China and Brazil the newly developing countries in the world. They can utilise the chances of new revolution in the industry like e marketing and online buying. By innovations and entrepreneurship they can beat other brands in competitive advantage. They can develop their business by introducing new products in the industry.

Porters five force analysis Every industry is very competitive by its own risk factors. So Gucci group also have rivals in the business. Here I wish to analyse it with porters five forces. Internal Rivalry The high value of a products lies in the expense which could made of. In that sense the brand name of every product is in its production cost and quality. The high customer desire on particular product is lies in the value they have in the society. People buy products not only for the usage but also for the prestige. Whenever that kind of customers were exist the companies like Gucci will remain in the industry. So the strength of every high branded company lies in their brand name. Entry condition The luxury industry existence is in the hand of people those who give more importance to prestige rather than the quality of the product. Only those companies should have a capital income and diverse ideas or innovation to attract the customers. And also the legacy of an organization could attract the people to their products. Substitutes Gucci is in international brand of luxury goods. People buy products mainly for their prestige. Gucci itself established many substitute products like watches, belts, jewelleries etc. to avoid rivals to overcome their platforms. Gucci is running above their opposites and people cannot find a substitute for luxury products made from Gucci group. Bargaining power of supplier Gucci group have a good brand name and their products stands as a social image to people. Thus the need of the products from people is high there is always bargaining power is lower from the supplier. It leads them to make a great market value in the international market. Obviously it leads to lower the supplier bargaining power. Bargaining power of buyer Bargaining power of customers of Gucci group is always low. Because the consumers buying products to increase their social status and prestige. So they don’t want to buy an ordinary product for an ordinary price. The customers itself wish to buy a product for a high price will increase the demand of the product of the particular company. Thus the bargaining power of the customer will lower as a result. TOWS MATRIX Tows matrix is method of analysing the strength, weaknesses and opportunities of an organization. Market expansion

The marketing strategy of a company is the key of that company’s marketing strength. Gucci group has developed a wide area of market in the entire world by their tremendous experience in the industry. They achieved it by the research, study of years. Their market strategy is to give good quality product for a very reasonable price. They can utilise this marketing demand to expand their business in to new platforms like India, China and Brazil. Advantages and disadvantages Market expansion may increase the business in a profitable way to the company. But it could always demand a big amount as an investment. So the profit will come in a long time only. Another advantage is that it will help to improve the brand name and demand of the products. It will open new gateway of business to the organization. Also it will increase the market value and as well as the market share of the company. Customer loyalty is another key from this step. It will become doubled. Related diversification Diversification is difficult strategy to put it across in action. But the result may make a huge impact. Product selection and strategic methods are important in this area. Advantages and disadvantages The innovation and introduction of new products attract the customers. It improves brand name and customer satisfaction. Customers will choose the brand other than going for the other brands. It will make to satisfy the customer and give the name of trust worthy company in the industry. This can also help to include more products in their portfolio. In some cases the risk of losing market value will make problem. The cost of developing a new product is high and the introduction of the product will lead to high price of the product. The risk of loose in the business always there because the new product and the introduction is always an experiment. It may be a success or a loss and it will also affect the brand name. The company should have the strength to accumulate the loss. Technology and Skills The technology is the back bone of an organization. Specially in the modern world. Every day new technologies were introducing in the world. In the success of a company the technology can do more. New methods of marketing like e-marketing, e-shoping etc will help to increase the business. Advantages and disadvantages The usage of internet and websites will help to reach the customers easily. The efficiency of the marketing will increase. E-shopping will be a convenient and easy method of business via internet. Consumers can buy product from home. The home delivery and eshopping service will increase the customer satisfaction and brand name.

Maintaining cost of online marketing is difficult and costly. It required daily updates of products and prices. New product introduction is occurred faster and in a daily basis. Also in online shopping many fraud works may possible. And the maintaining and training cost is very high. New products Innovation is always a key factor in the existence of a company in the lead position. The people always demand for new and fresh products. Everybody hates repetition. Gucci have introduced many new products as their mark in the industry. Everything is unique and luxurious. Advantages and disadvantages Introduction of new products always open new business. How much products were introduced as much as profit and brand name will increase. New product penetration and profit is directly proportional each other. Also the increase in the sales ratio will help to higher the brand name of the company in the global market. One of the advantage is always the product introduction is expensive. And it is not necessary that always it should be successful in the market. So the risk factor is high for new product. Another factor is the success always lies in the customers. The acceptance from the consumers is not always positive by many reasons. Stable Management Gucci is one of the stable organizations in the industry. In fact it was affected by some management crisis in its middle stages. It has good share value in the market. Advantages and disadvantages The company is achieved more stability in the past services of years. The strength and the current position of the company is the result of the good decision making and professionally trained staff. The structure of the management is in an effective and result making method. The cost of buying the shares from the shareholders is expensive. POSITION MAPPING FOR GUCCI VS COMPETITORS Comparing with other business groups have an excellent position mapping in the global industry. The study describes that the Gucci group has great influence on the brands like LVHM and Parade are considered as mid class in fashion technology, comparing to these two Hermes and Vendome are costly in their price, whereas, Emporio, Armani, Pierre Cardin, YSL and Ferragamo considered in the last position in this matrix. These brands are well known in the international market for their good quality products and technology. They are following the up to date fashion technology by changing the fashion concepts from classical to modern. In fact some of these franchise are limited their marketing strategy in the global

market and some others are try to make the mark in the business very passionate. These aggressive will resulted to the positive impact on the Gucci group’s position in the international market. Here, Gucci group has directly operating shops and also running departmental stores, duty free shops and many other selling points worldwide to expand their business. Factors illustrating the global position of Gucci group Advantage on production cost Gucci’s global marketing tactics help them to reduce the production. When others have producing goods in their home based places Gucci has a good outsourcing business strategy. It helps them to decrease the production cost by 30% comparing to others. It is resulted in the over whole price fluctuation. And also can lowered the investment and maintenance cost. So Gucci group can save 36% in return. Other companies are producing goods in their own production and spending much money to send over-seas. Apparently it will increase the price of the product and difficult to lower the ratio in the global market. Differentiated product or service Over the years Gucci has proved their customer handling methods are excellent than others. They are the pioneer companies which realised the importance of the good customer service and introduced in the beginning stages. They not only selling their luxury products like watches, jewelleries, hand bags etc. but also keeping good rapport with the consumers. Their management always keen to focus their attention on this area should be noticed. But the other side is little bit weak on the customer service and maintaining the customers on them, because they are focused their attention in profit rather than good service. First Mover Advantage There always an advantage for seniority. So Gucci group is in this field from a very long time. The experience they have learned from the ups and downs is negotiable. It gave them strength to overcome the other groups in the industry. They have developed the skill of surviving in any circumstances and they were proved it. The other group doesn’t have much experience in this. Their experience is little considering Gucci group. It gives Gucci group an advantage on others. Advantage on technology Gucci group has been realised the importance of modern technological advantage in market and already advancing by introduction of e-marketing, online shopping etc. Put and advantage on other groups by excellent customer satisfaction and product quality and standard of brand name.

The others were ignored the importance of technology and losing every bit of customers. Few customers are their giving more importance to quality and buy products from the outlets rather shopping from the internet. Importance of 4p’s The 4 p’s are stand for product, price, place and promotion. These are important factors in marketing. Marketing mix is process of action takes place consciously by few steps included the right product in the right place at the right time with the right promotional style. Product The fashion trend is changing rapidly. Youngsters are main looking for new fashion products every aspects of life style. Gucci group are changed their fashion concepts from traditional to modern, sexiest and ready to wear fashion. This will attracted more youths those who consider fashion goods for consume, dispose and buy new again. Thus Gucci is succeeded to introducing new products in the old existing consumers again and again. Pricing Gucci is succeeded to give the quality products for a lower price. This strategy is make them advantage on other group of companies in the competitive market. Place Gucci have showrooms in deferent parts of the world especially with the products designed for the younger generation. Also they are aiming people for their product via websites and e- commerce. Youngsters are using more advanced options in their life style. Promotion Gucci always focused on the brand name. Because they well known about the people and market hype. People buy luxury products for their social status and luxury life. So Gucci never used to lower their price. They are always keeping their brand name and brand value in a standard rate. Boston consulting group matrix Bruce Henderson one of the famous business man classified the business units in to question mark, star, cash cow and dead dog in relative market share and market growth. It used to compare the organization with its competitors. According to the matrix cash generation is directly proportional to relative market share. Question mark As usual on the beginning of all companies Gucci group also faced problems. The question is arises that is Gucci can survive the question mark. But they are re written a history in luxury product industry. They have got only a large capital amount and a small amount

share value. But they focused on their individual crafts man ship and unique design of products. By that they are concurred the kingdom of luxury goods production. Star Gucci group is shining as a star in the industry. The highly skilled and trained staffs made it to happen. The staffs over the few decades help them to make an advantage on their competitors. Their brand name and logo help them to expand the business in a wider platform. Cash cow Gucci is a well-known company for luxury brand products in leather. And they have wide range of products in every variety. This diversification in the products introduced gradually to overcome the brand value competition. Also company is established in deferent nations with deferent branches all over the world. After facing many struggles the company achieved a great position in the international market. The great CEO like duo Ford and De sole and their strategic marketing criteria help them to grow like huge branched tree in the industry. Gucci was achieved the market growth from $200 million to $ 1 billion in 1999. Dead dog Gucci is an organization with diversification in volatile fashion goods market. They made mark with their unique product quality and standards. Also they are up to date the technological aspects like e- shopping, and web application etc. At the moment they are established their new market opportunities to the modern Asian countries those have great a demand on fashion goods. Mc Kinsey’s 7 S Mc Kinsey’s 7 S help to study about the strategic, systematic and structural changes made in the company over the past years. Strategy Strategic steps focused on few strong strategies they are growth in revenue and profitability, brand name and maintaining the good will help the organization to be strong in the market. The design, new show rooms, unique luxury products to new market, introduction of advanced technologies in production are their few strategic functions. They never failed to keep the supply chain in a fast and smooth moving way with flexible product delivery and stock maintenance without any laps in any high demand situation. System Customer handling methods are the key strategic function in Gucci group because they are well aware of the importance of the customer satisfaction in business. They are giving high focus on Customer Relation Management to achieve the loyalty from all the consumers. Sending information about offers, new shop openings, new product launch etc.

via email, card sending, broachers etc. are their few strategic options to maintain their existing customers. Staff Employees are the basements of every organization. In a business include CRM and many customer maniac strategies staff s plays an important role in the business. Especially the HR department staffs. They have the key of maintaining the organization in a flexible and smoother way. So Gucci developed the criteria to elect the staff in discriminative way without considering their age, race sex, religion, nation, physical or mental ability, sexual performance or marital status. Structure Gucci believed the independency of every person and his/her/their freedom to show themselves and their talents or skills. Also Gucci have developed a well structure to maintain the staff and also the consumers and business too. All these without affect their brand name market value and without losing their loyal customers. SAF analysis

Marketing Strategy Market penetration

SAF Sustainability and acceptance



Reason luxurious


company Gucci cannot make an impact on the market with a low production. Low

feasible in making a good Diversification Suitable and acceptance profit. The new product may

success or not in the market. Technology Accepted So it has low feasibility. If the investment is higher it is not feasible and low

suitable because every staff could not use the technology in a same wavelength.

Price value

Suitable, feasible


and The highly accepted brand name shows the advantage on the price value for the unique products and loyalty of the consumers.

Recommendations for Gucci growth strategy It is a truth that to make history hard work is necessary. But to become miserable is very simple as it is sounds. To maintain the brand name, uniqueness in product design, loyalty from the customers and to keep a flexible structure in an organization etc. are very crucial and also expensive. And to changing the strategic functions rapidly is necessary to keep the organization in a leading position. Nowadays fashion industry is volatile in their technology and design and also the demand for that is high. So it is hard to maintain. 1. By using the brand name it is recommended that establish the business in to the new platforms such india, china, brazil and other fast growing economic countries. 2. Introduce new products in an unknown market with mix of their culture. Remember to keep the brand name and high quality goods. 3. Investments in the new economic countries will double the business. Made new factories, branches will also make opportunities to the domestic people it will help to reach the brand name more quickly to the people. 4. Also management functions should be in control. Growth in the economic side should not affect the management structure and functions. References

1. Clowe









Communications 3e, Pearson, Prentice Hall 2. Honey, P & Mumford, A, (1982). The Manual of Learning Styles. Maidenhead, UK, Peter Honey Publications 3. Thomas F. Hawk, Amit J. Shah (2007) "Using Learning Style Instruments to Enhance Student Learning" Decision Sciences Journal of Innovative Education 4. Nahapiet, J. and Goshal, S. (1998). Social Capital, Intellectual Capital and the Organizational Advantage. Academy of Management Review, 5. Chen, S., (2004) Strategic Management of E-business, J Wiley & Sons. 6. De wit B and Mayer, R (2004) strategic process, content, and context international perspective, 3rd edition. 7. Drucker, peter (1954) the practice of management. Websites:,

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