Define Problem

The main problem of this research is that Gucci made losses in excess of US$ 40 million and faced
bankruptcy, in 1994. The cause of this problem is that the internal family feuds over ownership and
rewards, happened. The family managers also exploited the brand with a non-discriminating distribution
and product licensing strategy. There were also too many product lines (up to 20,000 product lines),
such as alcohol, playing cards, and toilet paper, that must have caused huge production costs that lead
to the excess losses of the company.

Research Design
Research design is the outline of how a research is conducted. The research we conducted is based on
our data collection. The data collected is secondary data from articles and official websites regarding
Gucci to back up our analysis to help restructure the company.

Solution of the problem

1. Gucci Brand Stabilisation
Management developed formidable expertise in product development, supply chain control, brand
communication and luxury fashion retailing.
2. Multi-brand Acquisition
PPR (Pinault-Printemps Redoute) made a significant investment that facilitated this transformation,
which signalled their emergence as the Gucci Group.
3. Gucci Group Consolidation
The company sought to exploit “group resources – management; production and logistics; distribution –
to build these brands, which over time can contribute meaningfully to the Gucci Group returns”

External Situation Analysis

External analysis is concerned about the influenced from the environment factors that would be help or
harm the success of the business and can be seen the opportunities and threads. Before restructure, The
Gucci Group doesn’t have a uniqueness as a multi-luxury brand conglomerate compare with the four
leading companies. Based on the case, Gucci Group need to be aware of the competitors in the same
aspects, like Louis Vuitton, Prada, Chanel, etc. The threat can derive from the new comer on the luxury
fashion retailing like Rebecca Minkoff, Michael Korz, etc., and substitutes products due to there is similar
luxury brand product. Similarly, in recognition of the huge significance of distinctive brand identifiers
(such as the double G emblem or inter-locking C for Chanel), iconic products and recognisable symbols.
The parenting advantage provided by the Gucci Group to its subsidiary companies inextricably linked to
their core competency in luxury fashion brand building and the availability of corporate resources. The
over-arching luxury brand strategy has been to control product design and quality, global distribution
and communications and consistently maintain the image of the brand to maximise the long terms
growth and profitability. To expand the business Gucci Group supposed to look forward to seeing
another opportunities, like developing a luxury fashion brand framework. Derived from the findings of
the Gucci Group there’s a propose model for the luxury fashion brand to create the opportunities:
1. Marketing: fashion shows, store window displays, public relation activities, product packaging, and
todays we can use social media to influence the customer.
2. Endorsements: looking for brand ambassador that will attract potential customer.
3. Product integrity
4. Iconic products/design: differentiate with other products.
5. Flagships stores & store brand concept
6. Premium pricing: a defining and non-negotiable dimension of luxury fashion brand positioning.
7. Culture/heritage
Besides that, Gucci also must be able to complete various primary and support activities of each brands
consolidated to develop and sustain a competitive advantage. The Gucci Group activities required are
the six key dimensions that defined their brand stabilization strategy, which are:
1. Re-established control of Gucci product design and manufacture
2. Re-established control over Gucci product distribution
3. Create a balanced product portfolio for a luxury brand
4. Establish a luxury marketing communications platform
5. Create a luxury brand consumption experience
6. Hiring Tom Ford as a creative director – to design direction and control

Internal Situation Analysis

Internal situation analysis is the thorough knowledge and understanding of the strengths and
weaknesses within the industry. Strengths are positive factors, which can be tangible or intangible, and
are within the control of the industry. Weaknesses are factors that can hold back the industry to achieve
their goals. The strengths of the Gucci group that has the parenting advantage are as following.
1. The Gucci group has a clearly defined strategy with respect to the management of a luxury goods
brand. Therefore, they will have some alternatives plan in case the unexpected happenings occur.
2. The Gucci group has encouraged synergies in terms of intra-group supply and resource utilisation.
For example, Gucci supplies leather goods to Yves Saint Laurent. It is to prevent the short of
supplies that can retain the production processes in the industry.
3. The Gucci group provides central support to each brand with respect to communications, image,
and finance. Therefore they can maintain the group’s brand image in the society.
4. The Gucci group real estate experts provide store development activity, such as Yves Saint Laurent
in the USA and Japan, while Bottega Veneta flagships in Milan, Paris, and London. Therefore, the
brand will be known worldwide.
5. The administration and information systems in the Gucci group is centrally controlled. It is to
control the activity of the subsidiaries in order to maintain their performances.
6. The raw materials and media procurement for all brands of the Gucci group is a centralised
function. Therefore, there won’t be any short of supplies of the raw materials and any
contradictions between the subsidiaries about the group.
7. The Gucci group has engaged heavily in corporate development through the acquisition of other
businesses.
The weakness of the Gucci group that we managed to analyse is that the designer, Tom Ford, becomes
inextricably linked to the brand. Therefore, there must be a limitation of the product’s development in
design that can cause the lack of innovation of the brand.

Segmentation, Targeting and Positioning

1. SEGMENTATION
a) DEMOGRAPHIC
i) Gender
Gucci product can reach all gender because Gucci have any several product for men and
women, such as jacket & coat for man and women, suits for man, dress for woman and many
more.
ii) Age
Gucci product can reach all ages because have any several product for the new born baby till
the oldster, such as clothes for new born baby, suits for man, leather jacket for the oldster and
many more.
 iii) Income
Gucci product is on the high income segment because Gucci is luxury brand. Luxury brand have
a heightened status that affords an opportunity for their owners to charge premium prices.
This is due to the fact that high-income consumers tend to give luxurious goods such as luxury
product
b) PSYCHOGRAPHIC
i) Social Class
Gucci product is on the upper class include upper uppers and lower uppers. Upper-upper
class when they give large sums to charity own more than one house and send their
children to the finest schools. Lower-upper class when they are active in social and affairs
and buy expensive house, brand and cars.
ii) Life Style
Lifestyle is a person’s pattern of living as expressed in his or her psychographics, It involves
measuring consumers major activities, interest and opinions. On Gucci costumers, lifestyle
they have is people who like shopping, fashionable and care products that they uses.
c) GEOGRAPHIC
i) Countries City Culture
Because of Gucci an exclusive product and has a high price, so Gucci should be placed in
developed countries and major cities like New York, Paris, Hong Kong, Singapore etc. But Gucci
also do not forget about the major cities in developing countries such as Jakarta and Bangkok,
in that city there still have a high-income consumer that could be the target market of Gucci
Product.
d) BEHAVIORS
i) Loyalty
There are two ways to grow a business. First is to acquire new costumer and second is to
retain the existing costumers. The more loyal costumer, the more customer base will
increase. That’s one more kind of behavior which market target. The strategies for brand
loyal customers are very different from that used for acquiring new costumers
2. TARGETING
Targeting is defined as process of evaluation and focus power pull segment offer the most suitable
for a group of regions or countries which have must significant response. Gucci must select and
specify one more target market segment to be served. It is necessary for the assessment of external
opportunities (poll power segment) and business strength (internal) to take advantage of any market
opportunities that exist.
Gucci product can reach all gender and all ages. It’s happens because Gucci have several product.
Gucci is luxury brand so only people with high income can buy it and only upper class include upper
uppers and lower upper class. Gucci product suitable for people who like shopping, fashionable and
care products that they uses. So Gucci should be placed in developed countries and major cities like
New York, Paris, Hong Kong, Singapore etc. But Gucci also do not forget about the major cities in
developing countries such as Jakarta and Bangkok, in that city there still have a high-income
consumer that could be the target market of Gucci Product.

3. POSITIONING
Gucci must have positioning concept to survive in the competition, competitor and success in
the marketplace. Positioning concept attempts to sell the benefits of the product or service to a
potential buyer. In business positioning becomes an important reason for customers to buy the
product.
Gucci product have several advantage such as unique brand image and features, exclusive retail
environment, premium pricing, excellent channels of distribution, distinct packaging and exclusive
store design and layout. This advantage is the value of the Gucci.
Marketing Strategy of Gucci in term of: Value Proposition and Marketing Mix
1. Value Proposition of Gucci Group

Product Customer

Benefits

Experience Wants

Features

Value Proposition Canvas

Gucci’s Product Customer Wants

 Unique brand image and features  Prestige
 Exclusive retail environment  Timeless
 Premium pricing  Iconic/Recognisable
 Excellent channels of distribution
 Distinct packaging
 Exclusive store design and layout

Gucci provide the experience of their ‘luxury brand strategy’ through their unique product
image and features, their outstanding service, their exclusive retail environment, their pricing, their
channels of distribution and complete with their distinct packaging. All the values associated with their
unique and luxury brand images.
2. Marketing Mix Analysis (4P) of Gucci Group

In this section, we’ll analyze the luxury brand’s strategy of Gucci Group NV through marketing
mix analysis (4P).

Product Place
1. Highly fashionable and unique products 1. Centering on directly-managed stores
supervised by Tom Ford 2. Renovation of directly-managed stores
2. Absolute value ensured by well-selected under the supervision of Tom Ford and
skilled craftsmen other measures to reflect the brand image
3. Narrowing down of licensed products
Price Promotion
1. High pricing based on absolute value above 1. Aggressive and focused investment in highly
function fashionable advertising, such as runway,
2. High prices target the wealthy customers fashion magazine, etc
3. Sought high but fair prices 2. Utilized publicity with Tom Ford as an icon
(face of the brand)

References
Moore, M. Christopher, and Grete Birtwistle, The Nature of Parenting Advantage in Luxury Fashion
Retailing – The Case of Gucci Group NV, Division of Marketing, Glasgow Caledonian University, Glasgow,
Scotland, UK, pp. 1-15.
Nagasawa, Shinʼya, and Teruhiko Fukunaga (2012), Strategic Management and Brand Management on
the Luxury Brand “GUCCI,” Bulletin of WBS Research Center, No. 43, pp. 97-108.