MM5003 MARKETING MANAGEMENT

ASSIGNMENT 1. GUCCI GROUP NV CASE

Created by:
Ardyana Hamidani Putri 29116502
Ariq Naufal 29116441
Mega Putri 29116394
Muhammad Afif 29116476
YP56-A

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND MANAGEMENT
INSTITUT TEKNOLOGI BANDUNG
2017
 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 doesnt 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 theres 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 groups
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 wont 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 products 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 persons 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. Thats 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. Its 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

Guccis 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, well analyze the luxury brands strategy of Gucci Group NV
through marketing mix analysis (4P).

Product Place
1. Highly fashionable and unique 1. Centering on directly-managed
products supervised by Tom Ford stores
2. Absolute value ensured by well- 2. Renovation of directly-managed
selected skilled craftsmen stores under the supervision of Tom
3. Narrowing down of licensed
Ford and other measures to reflect
products
the brand image
Price Promotion
1. High pricing based on absolute 1. Aggressive and focused investment
value above function in highly fashionable advertising,
2. High prices target the wealthy
such as runway, fashion magazine,
customers
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, Shinya, and Teruhiko Fukunaga (2012), Strategic Management and
Brand Management on the Luxury Brand GUCCI, Bulletin of WBS Research Center,
No. 43, pp. 97-108.