Guccis Marketing Strategy

Guccis Marketing Strategy Critically contrast the key elements of Guccis marketing strategy to its closest competitor. Justify why you have chosen this company as Guccis closest competitor. Guccis focus on Heritage, craftsmanship and philanthropy: Prada a close competitor. With over 7,000 direct employees across the world, I believe we should all see ourselves as custodians of the Gucci brand—a brand that was here before all of us and one that will survive all of us. The long lasting values of the brand ultimately inform and guide every decision we make and they also inspire all of us along the way. -Patrizio di Marco: President and CEO, Gucci (Interbrand, 2009a) Renowned for its Italian craftsmanship, Gucci was founded in 1921 in Florence. ‘Over 90 years Gucci has built a heritage of exclusivity, attention over quality and style, the Made in Italy label, innovation and craftsmanship (PPR, 2010b, pp 46) and is one of the ‘worlds most desired luxury fashion brands (Nielsen Company, 2007). The Brand was highly successful in the 1950s as it became the status brand for Hollywood film stars and European royalty. However, by 1980s Gucci lost its appeal and significant losses were made in the business (Jackson and Haird, 2003). Domenico de Soles financial acumen and Tom Fords creativity transformed Gucci as a successful brand in the 1990s. In 1999 Pinault-Printemps-Redoute purchased the controlling stake and owned Gucci. With the departure of Tom Ford and De Sole, Frida Gianini took the control in 2005. Globalisation helps the evolving luxury market to expand. Factors like growing consumer expectations, clear brand positioning, pursuit for authenticity, exclusivity, differentiation contribute to intensify the competition between luxury brands with high ‘aspirational values (Baker and Sterenberg, 2003). Gucci is among the top 10 luxury brands considering brand value in the latest survey by Interbrand. In the array of luxury market Gucci competes with brands like Louis Vuitton, Chanel, Hermes, Prada, Burberry, Ferragamo, Dior, Dolce Gabbana, Versace, etc. Interbrand Leading Luxury Brands 2009 Rankings: The top 15 Luxury Brands. (Interbrand, 2009d) 2009 Rank 2008 Rank 2007 Rank Brand Country of Origin Sector 2008 Brand Value ($m) 2009 Brand Value ($m) Change in Brand Value in 2008 Change in Brand Valuein 2009 16 16 17 France Luxury 21,602 21,120 6% -2% 41 45 46 Italy Luxury 8,254 8,182 7% -1% 59 60 58 France Luxury 6,355 6,040 9% -5% 70 76 73 France Luxury 4,575 4,598 8% 1% 87 91 94 Italy Luxury 3,585 3,530 9% -2% 98 New United Kingdom Luxury 3,095 New* 99 New United States Luxury 3,094 New* Interbrand Best Global Brands rankings. (Interbrand, 2009d). In order to sustain in the competitive luxury market and define a clear brand positioning and maintain it, brands adopt innovative marketing strategies. The Marketing mix tools like the traditional 4 Ps: product, price, promotion and place along with recently added people, process and physical evidence propel the decisions in direction of the market success. Brands need to provide right product, at right price, in right place and at right promotion in order to match the consumer needs and demands. Louis Vuitton, Gucci, Hermes, Chanel, Prada are in close competition. In order to create an emotional attachment between brands and consumers, brands try to convey an image and personality that customer aspires to. Louis Vuitton has been a ‘byword for stylish elegance and sophistication (Louis vuitton, 2009). Gucci is perceived as smart, sexy, modern whereas Prada has an image of modern, trendy yet sophisticated. Chanel is very classic and elegant. Also, Chanel and Louis Vuitton were founded in France and Gucci and Prada in Italy. According to the Interbrand survey for Italys most valuable brands Gucci Ranked first (6,388 million euro) followed by Prada (2,775 million euro). Guccis pricing strategy in 1993 positioned itself below Hermes and Chanel and at par with Prada and Louis Vuitton (Kwak, 2001). Gucci and Pradas product lines include leather goods, ready-to-wear, jewellery, footwear, silks, timepieces, eyewear, skincare, home decor and fragrances. Louis Vuitton has the categories which Gucci has, although Louis Vuitton indulges even in writing instruments and textiles besides Chanel extends into sport accessories .Gucci products are sold in 283 directly operated stores at end of 2009 and in selected ‘departmental stores as well as specialist stores (PPR, 2010b). Intending to accelerate the growth of brand, Prada stated to double the number of directly operating stores in 2007. Considering Guccis 2009 revenue breakdown by geographical area, maximum revenue was from Asia- Pacific region while Europe which includes fashion forward London, Paris and Milan contribute almost equal to Japan. Breakdown of 2009 revenue by product category Breakdown of 2009 revenue by geographical area(PPR- Gucci: Gucci Group ,2010a) Gucci Chanel Prada Louis Vuitton Year of establishment 1921 1909 1913 1854 Country of origin Italy France Italy France Known for Leather goods Fashion and perfumes Leather goods Leather goods and Luggage bags Current Designer Frida Giannini Karl Lagerfeld Miuccia Prada Marc Jacob Product categories Ready-to-wear, canvas and leather goods, bags, footwear, fine jewellery, fragrances, eyewear, watches, travel and business bags, home dà ©cor , etc. Ready-to-wear, fragrances, make-up skincare, eyewear, hats, leather goods, sports accessories, fine jewellery, etc. Ready-to-wear, Nylon bags, leather goods, footwear, Fine jewellery, eyewear, fragrances, travel and luggage bags, Prada phones, etc Ready-to-wear, leather goods, travel bags, footwear, bags, eyewear, watches, writing instruments, home goods, textiles, city guides ,etc. Ad campaign theme Forever now , Spring Summer 2010 Spring Summer 2010= First Spring and lookbook Spring Summer 2010 Store locations Africa, Asia, Australia, Europe, Middle East, North America, South America. Has 283 Directly operated stores. Asia, Europe, Middle East, North America, South America, Oceania. Asia, Middle East, Far east, Europe, North America, South America. Africa, Asia, Australia, Europe, Middle East, North America, South America. Comparison of brands on basic criteria. Louis Vuitton and Chanels brand image differentiates them from Italian brands like Gucci and Prada which target towards a similar target market which is modern and fashion conscious. Gucci and Prada indulge into similar product lines and pricing levels getting them into closer competition. In 1990s during revamping the brand image of Gucci an important decision made was to develop a strategy expressing Gucci has changed. ‘Brand communication plays a vital role in redrawing the image (Jackson and Shaw, 2006). During the recession competitor brands are trying to be more distinctive. Chairman and CEO Gucci, Patrizio di Marco and his team adopted the strategy to strengthen and fine tune its positioning in the luxury goods market by focusing on its heritage and craftsmanship stressing on balanced brand equity in marketing and communication (PPR, 2010b). It also included cost cutting, adjustments to pricing, global store designs concept and structure simplification. As per Interbrands report 2009b, among global luxury brands, Prada spends highest in marketing and advertising and continued to invest more in social and cultural initiatives, brand extensions and communication. Important factors that help in building brand image. (Moore and Britwistle, 2005) Image no.1 : Louis vuitton spring summer 2010 Image no.2: Prada Lookbook 2010. (The Fashion time Magazine, 2010) (AMO, 2010) Image no.3 : Chanel Spring Summer 2010 Image no.4 : Gucci Spring Summer 2010 ad Ad campaign. campaign. (Bang Jaslyn, 2010) (Gucci, 2010a) Advertising which is guided by current market scenario and competitive environment, helps in communicating and building brand image as it creates powerful image and message to gain customers attention (Jackson and Shaw, 2009, pp.161). Luxury brands communicate their values and aura to the consumers to prove experience through images that operate on aesthetic and expressionist level (Salzer-Mà ¶rling and Strannegard, 2004). Visually stimulating Guccis Spring summer 2010 campaign focuses on sensuality with modernity and Pradas Lookbook 2010 displays uniqueness and creativity. Guccis Ad campaign ‘Forever now launched in 2010 depicts the importance of connecting past and present. The campaign uses images from 1950s focuses on heritage and craftsmanship. Gucci focusing on tradition introduced an Artisan Corner an event where houses skilled artists will travel to Guccis VIP stores where the craftsmanship will be brought to customers sight. Similarly, Pradas film ad campaign 2010 titled ‘First Spring shot by Chinese artist in Shanghai depicts the tension between the straight and gay tensions of silent intimacy (James, 2010). However, the black and white effect of the video takes us into flashback and it depicts that anything is possible in timeless and dreamlike realm. Louis Vuittons ad campaign is inspired from new age traveller, while Chanels countryside rural chic look ad campaign displays beauty and elegance. Image no. 5 : Guccis ‘Forever now ad campaign 2010(Gucci ,2010b) Image no. 6: Pradas 2010 ad campaign ‘First Spring. (Fashioning.com, 2010) Prada attempts to spread a social message to reduce tensions between straight and gay people. Also, Prada signed PETAs campaign in 2007 to ban cruelty against animals and eliminate fur usage from fashion. Gucci and UNICEF partnership began in 2005, since then Gucci consistently support education and healthcare programmes for orphans and HIV/AIDS affected children. Gucci embraces philanthropy taking new initiatives and ad campaigns to support the partnership like specially designed accessories collection, White Tattoo Heart collection (2008) featuring Rihanna in its campaign, Book ‘ Snowman in Africa, fundraising event with Madonna, ‘Gucci for UNICEF Baboushka bag etc. Professor John Fernie said ‘Alliance between charity n business is the perfect way to build brand awareness and establish brand credibility and ultimately boost profits, (McDougall, 2006). As metioned on philanthrpohy section of Guccis official website, Gucci in collaboration with the Film Foundation h as made travelling screening movie of the restored movies to save the treasures in cinemas called ‘Cinema Visionaries. Proceeding in 2010, to increase online presence and reach online customers, brands are delving into digital communication. Brand affiliation is aided by the application of appropriate functionality tools (Okonkwo, 2007). Focusing on innovation Gucci launched lifestyle application for iPhone and iPod touch. Guccis application offers access to products, fashion shows, playlists, city guides, news, ability to compose own music etc. Prada launched Prada phones in collaboration with LG in 2007. The LG designed Prada phone incorporates features like video player, high pixel camera and MP3 player. Chanel also has application on iPhone which shows Chanels runway collections. Image No. 7: Gucci application for iPhone. Image No. 8: LG designed Prada Phone. (Gucci news, 2010) (Mossesgeld, 2007) Luxury atmosphere, aesthetics and appealing luxury stores reflect the brand personality and spread the brand message into the subconscious and psychological levels on a consumer mind (Okonkwo, 2007). Following the strategic concept of global store design by Creative Director Frida Giannini ,Gucci is renovating its stores to embrace the luxurious experience of shopping which complements the brands heritage and exclusivity. In October, 2009 Gucci launched a travelling sneaker store in New York which will later move to London and Tokyo in spring 2010. Similarly proving its exclusiveness, Prada took a radical approach towards the store architecture through Prada Epicenter which communicates a distinct identity into customers mind which is in quest for something new. Image no. 9: Gucci Sloane street, London Store renovated under the Global store design concept. (WallPaper, 2010) Image no.10: Prada Epicenter (Herzog de Muron,2003). [Accessed on 14 November 2009] With Economic downturn, it is highly important for brands to provide distinctive experience to consumers. Brands are striving to create a brand image congruent to the customers image (Aaker and Biehl, 1993) and meet customer needs and demands. Gucci has adopted the strategy to be true to its long lasting values and expand its presence, tune its brand image and positioning by emphasising on the rich 90 years history, heritage and core essence of the brand into its marketing and brand communication coinciding with ‘modernity and aspirational values (Gucci, 2010a). Brands like Prada are using tactful strategies focusing on parameters like timeless, authenticity, social values and culture. Louis Vuitton differentiates its customers through its brand image, brand values in terms of turnover and advertising. Chanel though is close to Gucci considering turnover it targets a more elegant, sophisticated target. Hence, Prada is the closest competitor to Gucci by comparing them on brand c ommunication like advertising, philanthropy and an attempt to standout in the terms of store designs. REFERANCES : Aaker, D. (1991), Managing Brand Equity, The Free Press, New York, NY. Aaker, D. and Biehl A. 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Unknown ( 2009) From Prada to Zara: is the global recession out of fashion. Strategic Direction, Vol. 25(3), pp 9-11. IMAGE REFERANCES : Image no.1 : The Fashion Time magazine (2010)Louis vuitton spring summer 2010- Louis Vuitton Spring/Summer 2010 ad campaigb :Lara Stone by Steven [Online Image]. Available from http://www.thefashiontime.com/2009/12/louis-vuitton-springsummer-2010-ad-campaign-lara-stone-by-steven-meisel/> [Accessed on 12th March 2010] Image no.2: AMO (2010) Prada Lookbook 2010- PRADA- The Spring/ Summer 2010 Lookbook [Online Image]. Available from http://www.prada.com/> [Accessed on 10th March 2010] Image no.3 : Jaslyn Bang (2010) Chanel Spring Summer 2010-Chanel Spring/Summer 2010 Ad campaign [Online Image].4th Jan 2010.Available from http://www.plussixfive.com/2010/01/04/chanel-springsummer-2010-ad-campaign/> [Accessed on 16th March 2010] Image no.4 : Gucci (2010a) Gucci Spring Summer 2010 ad campaign- Ad campaign Spring Summer 10 [Online Image]. 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