Successful Brand Leadership-Gucci Free Essay Example

The House of Gucci, better known simply as Gucci, is an Italian fashion and leather goods label, part of he Gucci Group, which is owned by French company Pinault-Printemps-Redoute (PPR). Gucci was founded by Guccio Gucci inFlorence in 1921. Gucci generated circa €2. 2 billion worldwide of revenue in 2008 according to BusinessWeek magazine and climbed to 41st position in the magazine’s annual 2009 “Top Global 100 Brands” chart created byInterbrand. Gucci is also the biggest-selling Italian brand in the world. Gucci operates about 278 directly operated stores worl Company History:

Like many other high-fashion companies, Gucci began as a small, family-owned saddlery and leather goods store.

Guccio Gucci was the son of an Italian merchant from the country’s northern manufacturing region. As a young man, he travelled to Paris and London, where he gained an appreciation of cosmopolitan culture, sophistication, and aesthetics. Gucci opened his first boutique in the family’s native Florence in 1921 and quickly built a reputation for quality, hiring the best craftsmen he could find to work in his atelier.

In 1938, Gucci expanded and a boutique was opened in Rome.

Guccio was responsible for designing many of the company’s most notable products. In 1947, Gucci introduced the bamboo handle handbag, which is still a company mainstay. During the 1950s, Gucci also developed the trademark striped webbing, which was derived from the saddle girth, and the suede moccasin with a metal bit. After Guccio’s death in 1953, Aldo (his son) helped lead the company to a position of international prominence, opening the company’s first boutiques in London, Paris and New York.

As the Gucci expanded overseas, board meetings about the company’s future often ended with tempers flaring and luggage and purses flying.

Gucci targeted the Far East for further expansion in the late 1960s, opening stores in Hong Kong and Tokyo. At that time, the company also developed its famous GG logo (Guccio Gucci’s initials), the Flora silk scarf (worn prominently by Hollywood actress Grace Kelly), and the Jackie O shoulder bag, made famous by Jackie Kennedy, the wife of U. S. President John F. Kennedy. Gucci remained one of the premier luxury goods establishments in the world until the late 1970s, when a series of disastrous business decisions and family quarrels brought the company to the verge of bankruptcy.

At the time, brothers Aldo and Rodolfo controlled equal 50% shares of the company, though Aldo felt that his brother contributed less to the company than he and his sons did. In 1979, Aldo developed the Gucci Accessories Collection, or GAC, intended to bolster the sales for the Gucci Parfums sector, which his sons controlled. GAC consisted of small accessories, such as cosmetic bags, lighters, and pens, which were priced at considerably lower points than the other items in the company’s accessories catalogue. Aldo relegated control of Parfums to his son Roberto in an effort to weaken Rodolfo’s control of the overall operations of the company.

Read also: Sales and Collection Cycle

Gucci Group is one of the world’s leading multi-brand luxury goods companies. The Group creates and distributes high quality luxury goods including ready-to-wear, handbags, luggage, small leather goods, shoes, timepieces, jewellery, ties and scarves. Also, under license from global industry leader, eyewear and fragrances, cosmetics and skin care products. This vast product range and the sharing of specific expertise among the various brands are one of the Group’s greatest assets and a source of organic growth. Theoretical background: I would like to mention the marketing mix in the case of Gucci. The term “marketing mix” was coined in 1953 by Neil Borden. ” (http://en. wikipedia. org/wiki/Marketing_mix) The marketing mix includes variables such as price, product, promotion and place. Price “The price is the amount a customer pays for the product. The business may increase or decrease the price of product if other stores have the same product. ” (http://en. wikipedia. org/wiki/Marketing_mix) Gucci products are very expensive so they have to spend a lot of money on producing them. They don’t skimp on the raw materials what the product made from. The customer gets the quality on their money.

This is very important if Gucci wants to preserve their customers in the long term. “Gucci stays with made-in-Italy strategy. Riding high on their incredible financial success (a 35% growth in revenues over the last two years), Mark Lee , chief executive officer for Gucci, is looking forward to establishing the 86-year-old luxury brand’s presence in India. Gucci is a perfect luxury brand in that sense with an incredible product authority, built up for decades across a range of product categories. Leather goods are our core business, accounting for more than 50% of the revenues of the brand. (http://www. livemint. com/2007/10/14235919/gucci-to-stay-with-madeinita. html) As every people know there are a lot of same brands like Gucci such as Louis Vuitton, Dior, Burberry etc. These brands do not decrease the price of the Gucci products because the “rich” people can buy all of them so it is not necessary to decrease prices. Pricing factor in the case of Gucci can be manufacturing cost, which contains direct materials cost, direct labour cost and manufacturing overhead. “Direct materials are the raw materials that become a part of the finished product.

The direct labour cost is the cost of workers who can be easily identified with the unit of production. Types of labour who are considered to be part of the direct labour cost are the assembly workers on an assembly line. Manufacturing overhead is any manufacturing cost that is neither direct materials cost nor direct labour cost. Manufacturing overhead includes all charges that provide support to manufacturing. ” (http://en. wikipedia. org/wiki/Manufacturing_cost) “Lots of the premium vendors and factories are located right in Italy, and this proximity gives Gucci a great cost advantage.

The long history in Italy with an Italian last name means it is hard for Gucci to move the main productions to lower cost country such as China. “Made in Italy” is actually a cost disadvantage in the longer run for reducing cost. In addition, being a public trading company, Gucci’s ability to take risks is low. ” (http://www. dailydozencreative. com/weblog/? p=108) Product “It is a tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units.

Intangible products are service based like the tourism industry & the hotel industry or codes-based products like cell phone load and credits. ” (http://en. wikipedia. org/wiki/Marketing_mix) “Product includes features like size, shape, design, quality, brand name, packaging and service. Gucci is a luxurious brand and it produces expensive and high quality goods. its iconic Made In Italy style has become synonymous with elegance, sophistication and desirability. Made in Italy is an integral part of the essence of Gucci and goes beyond being a mere slogan.

It is a cultural approach, a know-how that took generations to build, and a genuine mission that has allowed Gucci to become one of the world’s most desirable luxury fashion brands. Today, Gucci’s Made In Italy production coupled with a strong social responsibility towards its employees ensures that 100% of its leather goods, shoes and ready to wear are still produced in its Florence workshops, employing over 45,000 people in Italy alone, in addition to Gucci’s own employees. Details about Gucci can be reviewed at the website of Gucci. ” (http://www. gucci. om/uk/worldofgucci/articles/made-in-italy#1) Gucci targets people who well to and cares about the quality. They have very special packaging methods what makes the product more decorative and it attracts the people to buy Gucci products. “Gone are the plastic laminated surfaces so common in fashion bags and paper. They are replaced with the subtle luminosity of beater dyed paper with the de-bossed GG logo made famous in the 1960s. Cotton ribbons replace polyester and the paper itself is sourced only from certified forests. The Forest Stewardship Council can certify that no paper that is used by Gucci comes from an endangered forest.

The fresh approach to recycling will include in future the use of other biodegradable materials, such as corn, bamboo and cotton. “ (http://www. gucci. com/uk/worldofgucci/articles/eco-friendly-packaging). Gucci has fragrances which also a high price category. Gucci products also targets the elder people not the youth and teenagers because the appearance of the products are elite, elegant. The brand is reliable and trusted for a long time that’s why people buy it, they know what will get for their money. “Being the trendsetter, Gucci aims to be the first to use resources from designers to fabrics and even retail locations.

This enables Gucci to charge a premium over the copycat competitors. Brand recognition leads to diversified product categories that in turn are being cross-marketing leading back to the brand name. This creates a snowball effect adding perceived value and benefit advantage. ” (http://www. dailydozencreative. com/weblog/? p=108) Place “Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet. ” (http://en. wikipedia. rg/wiki/Marketing_mix) “Gucci operates about 278 directly operated stores worldwide (as of September 2009) and it wholesales its products through franchisees and upscale department stores. ” (http://en. wikipedia. org/wiki/Gucci) Stores are located in exclusive area of a city where the other luxurious brands can be found and where the tourists easily alight on it.

In my opinion place is not just physical store of a brand but it is creative image in the mind of customers. Gucci has online store called “online boutique” where can the customers easily buy the products from all over the world. Access to the online boutique is permitted exclusively to the Customers, as defined below, who reside for example in the United Kingdom. For the purpose of the present Terms and Conditions, by Customer, we refer exclusively to the consumer, in any case to a person that purchases the products for non professional or business purposes. “ (http://www. gucci. com/uk/assistance/assistance) To create the same look and feel all over the world, Gucci closed or bought back all franchises and licensees, including airport duty-free shops, and shops in large department stores.

Gucci has the same look, design and layout in all over the world. To be in a Gucci store and buy things there give people a special feelings they feel that they are the part of the so to say Gucci world. Promotion „It represents all of the communications that a marketeer may use in the marketplace. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. “ (http://hu. wikipedia. org/wiki/Marketingmix) Furthermore, Gucci advertise in various kind of way such as Internet, with mobile phone apps, in the magazines, on posters, in the media etc. Advertising is a form of communication used to persuade an audience (viewers, readers or listeners) to take some action with respect to products, ideas, or services. ” (http://en. wikipedia. org/wiki/Advertising) Word of mouth is any obviously a direct communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Therefore, Gucci is already in public awareness so they reach effectiveness without introducing hard advertisement methods.

In this part I am going to introduce the swot analysis of Gucci. „Gucci, being one of the premium brands, has to contend with a number of factors both internal and external in order to maintain its current status. The following is the analysis of Gucci’s strengths, weaknesses, opportunities and threats. „ (http://www. suite101. com/content/the-marketing-strategies-of-gucci-a100826) Firstly, about strengths: Gucci has strong brand name, strong presence in the international market, diversification strategy with a large portfolio of brands.

Secondly, about weaknesses: weak financial base and weak profitability from other brands than Gucci. About it’s opportunities: Gucci entered high potential growth market in Asia (India and China) and consolidation of other brands. Lastly, about threats: threat of competition from medium brands that have the potential to move towards premium brands in the future and the number of fake pruducts which are present all over the world. Conclusion All in all, Gucci is a strong brand and it is still a leader brand all over the world although there has been a financial crisis in the across the world.

Gucci always corresponds to the current trend in the world and always stay in customer’s mind. The product design, quality and brand name has become synonymous with the elite, and will continue to do so because of the well maintained distribution of its products throughout the world. The Gucci Company should primarily look at the market development and concentrate on new development within existing markets or possibly new markets that carry the status and appeal suitable to the Gucci brand.