HFB206: Fashion Brand Management and Marketing - Gucci Case Study - Assessment Answer

Brand Management and Marketing Assignment

Assignment Task

Based on the current Premium/Luxury Brand landscape, choose an existing fashion, textile or accessory product or service and research the premium brand management and marketing aspects of the chosen company.

Assessment Instructions:

Using Secondary Research, explore the existing Luxury or Premium Brands that operate in an international context. These brands do not necessarily have to be specific to textile or fashion but could also represent experiences and or lifestyle products.

Select one brand and proceed to conduct discovery in the following areas:

• The Management practices and marketing mix strategy used
• Overview of the brand and their positioning strategy as a premium/luxury brand
• Innovative practices conducted (including sustainability) and
• The extent to which the above elements have contributed to the success of the brand

Gucci Case Study

Introduction

Moulding expensive products is a very costly and risky venture due to the substantial investment in marketing strategies and communication not forgetting the massive spending in research and development of goods to ensure quality. By producing unique products, the luxurious market offer appears more appealing in the market, and the brand can grow to international heights (Birnbaum &Murray, 2000). Gucci is one of the most prolific brand names leading in luxurious goods in the fashion industry. The company is well established and retails fashion accessories, shoes, and clothes for an affluent clientele. The Gucci brand has had to develop carefully planned strategic marketing initiatives and a viable marketing mix to compete with the dynamic needs of the changing generation who require the constant renewal of the company’s lure so as to promote customer brand loyalty (Waddell, 2004).

Management practices

Different management strategies are applicable in various contexts, and the governance styles in Gucci are very carefully planned and show a lot of accountability. Gucci being a publicly traded company, there is a need to avoid scandals by protecting the interests of the various stakeholders. According to Birnbaum &Murray (2000), effective management in Gucci is viewed as an art and a creative process requiring total cognitive and ethical skills. Managers are vested with the responsibility to oversee the proper functioning of all departments and one of their primary practices that they uphold id teamwork (Waddell, 2004). Gucci has a lot of products which range from clothing lines to accessories and perfumes and whose completion calls for competent management practices. For a finished product to exists. The product goes through a series of teams who give their opinions and recommend changes while others actively take part in its completion (Frisa, 2011). Team management is taken very seriously at Gucci, and this ensures that the various team members feel appreciated and are part of the company’s success no matter how little their contribution was. The culture of the business is one that values diversity and tries to neutralize the adverse effects of culture and individual beliefs (Frisa, 2011).

It was established in 1921 by Guccio Gucci. The global giant and multi-brand specialist has a robust exposure to the world market and deals with its customers through the direct operating store's scheme. The company has been in the ownership of the family since then and even if at some point they almost went bankrupt. One of the managers known as Tom Ford brought the company back to life by ensuring that the brand stayed creative and unique to enhance its sustainability. According to Birnbaum &Murray (2000), the overly competitive and demanding market of the expensive goods needs responsible and charismatic leaders who can support their designers. According to Frisa (2011), Gucci is successful since it holds an empire of creative artists who they ensure to keep by managing them correctly and also ensuring that they are properly motivated. The managers of the company believe in ethics and morality as a basis of conduct for the workers. They encourage innovation among the employees and train them on better ways to develop their skills and competence in various aspects of the company. The use of teamwork helps develop individual skills and expertise and also aids in creating synergy among the team players which is very crucial for performance.

Marketing mixes strategy

The choice of a marketing mix is a very critical decision, especially in such a risky venture. The managers have to be very tactful in the choices they make regarding the price, promotion, placement and product. This tactfulness is to ensure that they have the right products at the right price, people are aware that the product exists and are also aware of the benefits. They should have the perfect mix so as to promote the best customer loyalty. Gucci has a history of being synonymous with all its products and ensuring the quality of its products. The management ensures that the company maintains a keen sense of fashion trends and also ensures that their staff has all the resources they need to facilitate their creative capabilities and for the sake of providing motivation. When the company began, it dealt with the selling of leather products with a representation of elegance and style and which attracted a lot of affluent clients who included celebrities. According to Gutsche (2015), the company then went on to diversify their collection of clothes and fashion accessories so as to suit the needs of the various customer segments. The differentiation of all its products through unique image and quality is a major contributor to the large volumes of sales the company makes annually. The clothing designs are saturated with creative innovation and the strategic use of technology has led to more sophisticated and attractive designs. Their briefcase of goodies includes all kinds of elegant, fashionable and classy wear which meant for men and women of all genders. According to Gutsche (2015), when it comes to their shoe products, a lot of designs and artwork is involved, and the designers work in teams so as to ensure more efficiency and better products. The nature of the beautiful proficiency watches attracts a lot of customer loyalty, and you will see most of the prominent personality dressing these for major shows and functions. The brand also has some wonderfully and attractively designed handbags which signal elegance and a prestigious aura. The infant products are so comfortable and diverse to suit the various tastes and preferences of the different customers. The perfumes and makeup kits provided are the best in the market, and various reviews vote for how happy the users were with their products. The brand of expensive products also has a broad range of home living and décor which include various areas like the bedroom, kitchen, lighting, furniture and wall art. All these products are sold exclusively by a well competent and qualified marketing department that cares more about the customers than for the volume of sales. According to Gutsche (2015), this means that the brand aims at building customer loyalty and therefore sells only the best and also recommends the best to its diverse customer segments for purposes of sustainable brand positioning.

The placement of the products in Gucci is carefully selected so as to ensure the efficiency of the distribution of its products. According to Frisa (2011), they tend to operate in the high-end market and thus have outlets set up in many locations that are closer to the customer and which present a more relaxing environment to customers. The firm has stores in the main parts of the world including Florence, Rome, Paris, New York, London, Palm Beach, Tokyo and Hong Kong. The sales force is adequately trained regarding customer relations and ensures that they channels of distribution have the right people to market the firm and improve customer loyalty by establishing long lasting bonds. These relationships estaset up by making the customer feel special and appreciated by the Gucci brand. The company’s channels of distribution are very selective and are only located in streets and locations with a high profile and which show exclusivity. According to Catmull & Wallace (2014), the placement is meant to make their products available to the high spenders who are commonly found in the high profile streets. The shops are well decorated, and the display for the window shopper is very appealing and just inviting. The settings are professionally designed, and the atmosphere within the shop is very comfortable for customers. This beautiful nature attracts customers to get into the stores and browse through the wide selection of goods. This attraction increases the chance of having significant sales volume. The sales personnel are well dressed in uniform colors of black to be easily identified by the customers in case of inquiries and promotions. Gucci has continued to penetrate the international markets through strategic management initiatives by the managers of the firm. To facilitate the penetration of new markets, any new retail shops have continued to be set up in high-profile places where the elegant and affluent are readily available. The company also sells their products through major departmental stores located in various parts of the world, in places where they have not built their own retails stores.

According to Catmull & Wallace (2014), the price of the product is mainly determined by the policy of premium pricing because of the superior nature of its products. By stating the prices high, the product is differentiated from other brands since the affluent associate price with quality. The high prices are translated as a symbol of status and prestige. The customers who are loyal to Gucci feel satisfied and distinguished to be using such a differentiated and high profile brand. Charging higher prices only makes the product more appealing to its target market of affluent and prestige loving customers. According to Catmull & Wallace (2014), the pricing is also naturally influenced by the high investment in modern technology, a significant amount of resources and a high level of skill which result in a higher cost of production thus the spending has to be reflected in the pricing. The company ensures that quality standards are met thus reducing costs would seem impossible. However, the company still offers discounts to its customers especially that shopping in the online domains so as to garner more profits. The company employs diversification and market targeting as strategies of sustainability ensuring to maintain reasonable prices.

Promotion for Gucci is not a struggle since they have the customer loyalty of various celebrities who promote their products everywhere they go (Hoffmann &Manie?re, 2013). The company holds a lot of beauty shows and functions to help people be aware of new products and also assist them to remember the existing ones. Once they use controversial channels of awareness. A good example is when they used a naked model to make known their new product known as opium, and as the debates went round and round in social media, they gained the popularity they intended.

Brand overview and analysis

According to Hill & Jones (2010), Gucci is a retail company which specializes in the sale of expensive goods meant for the affluent and well up consumers who prefer to be distinguished from the crowd by dressing and using unique products. For them, money is not a problem and their only concern is in their personal image which is likely to be enhanced by wearing elegant clothes and accessorizing them. Their operations are established wild full, and the group is continuing to venture into the emerging economies like Asia. They own directly owned stores to ensure they have complete control over their operations and also have a distinct online platform where large volumes of customers visit and make purchases.

The SWOT analysis of the brand presents some strength, weaknesses, opportunities and the factors that threaten its existence. Its advantages include the firm image among its customers and the high value of goodwill the group possesses (Hill & Jones, 2010). The company has full distribution channels with a vast network of suppliers and skilled sales force. The products it produces are very diverse and tend to suit the needs of many customer segments in the market. The group has established partnerships with agencies like UNICEF and UNO so as to facilitate their role in corporate social responsibility which further improves their brand image. The company has also had collaborations with famous companies like Ford and Fiat which have added the value of its goodwill.

The major weaknesses of the company include the fact that they have to invest heavily on customer satisfaction and the achievement of quality products. They risk brand dilution due to the great diversification of their products. The financial base has been dropping for the last years, and this has become a weakness since the freedom of spending on areas like innovation and quality designs is limited. The opportunities of the Gucci group exist in unexploited markets where there are limited luxury brands. The various customer segments present opportunities for the company to venture in since some of the affluent clientele have some unmet desires for fashion and class (Hoffmann &Manie?re,2013). There is a high potential for growth in Asia and which the brand should ensure they tap.

The threats to the company include the intense competition from brands like the Louis Vuitton, Hermes, Dior and Vertu which threaten the sustainability of the enterprise. The brand also faces a significant threat from the availability of primary substitutes in the market.

Positioning strategy

The Gucci group sets up their stores in communities exhibiting high standards of living since these are the main targets of their products. This positioning strategy ensures that the firm grasps the attention of the high profile customers and also guarantees the security of their clients. The brand has recently set up a store in London, and the modern outlook and design are very appealing (Mazzalovo, 2012). This has led to outdoing of the major company Louis Vuitton which was the most dominant in the state. The fresh look and modern designs of the various store make it more appealing to customers not to mention the uniqueness in quality. The strategic placement of the Gucci stores in New York, Hong Kong and other shows the careful planning of strategic positioning. While ensuring to maintain a diversity of products fit for the various markets the Gucci stores provide a unique architectural heritage which presents a combination of luxury and beauty. According to Verganti, (2009), the strategic positioning places the brand ahead of its competitors and ensures that prestige and luxury are presented in the image of their stores.

Innovative practices of the Gucci brand and sustainability

According to (In Gardetti & Muthu (2016), innovation rejuvenates a firm’s growth by providing better methods of making profits. A fashion industry in this era dies if it fails to innovate and diversify their operations. The Gucci management is very supportive of creative innovations and is always ready to provide resources for the research of a possible product. According to the Innovations In Sustainable Consumption (2013), at Gucci the creative innovators look for opportunities in aspects of better promotion, the design of products, the image of the stores and the enhancement of better customer service. All these are key drivers towards sustainability and which ensure that the group enjoys an excellent positioning in the market. Gucci is developing an empire of talented and sophisticated designers who will take the company to another level of creative innovations. In the past designs, Alexander McQueen created a slogan which read the next big thing and with it came a unique clothing line named red riding hood. In the past years, Gucci creators came up with a new species of shoes which are biodegradable to mean environmentally safe (Mazzalovo,2012). This innovation will help to sustain the environment.

The Gucci group focuses on the sustainability by upholding some initiatives which promote the welfare of the company’s employees and nature of operations. According to Hitt, Ireland & Hoskisson (2016), the business is guided by a vision and mission so as to align the employee goals with those of the firm. According to Verganti, (2009), in the year 2004, Gucci was among the pioneers of the corporate social responsibility certification initiative and advocated for better sustainable practices of the environment and society as a whole. When dealing with expensive furs and skins for use in the manufacture of better products, Gucci emphasizes on the extraction of raw materials from sustainable populations of animals. The group requires the suppliers of the raw materials to practice accepted standards of humane treatment and the careful analysis of sources. According to Hoffmann &Manie?re (2013), the firm has contributed over 10 million for UNICEF in an eight-year contract and continued to do so even today. The company is engaged in charitable works and also in acts of providing disaster relief to victims of catastrophes (Catmull & Wallace, 2014). The company has a particular liking for the respect of workers’ rights and proper remuneration which ensures that the workers are motivated enough to overcome the competitive financial offers that other companies may be providing. According to Waddell (2004), initiated a program known as the Chime for a change and with the support of prominent celebrities like Jennifer Lopez, Beyonce Knowles, and Harry Berry; they managed to change a lot of lives all over the world.

They are advocates of matters relating to women and the girl child education all over the world. The CSR upholds their public image and in the long run sustains customer loyalty (Hill & Jones, 2010).

Another move towards sustainability is the incorporation of business ethics in the operations of the firm. According to Hitt, Ireland & Hoskisson (2014), the firm has a set standard of uniform rules that govern the activities of the businesses and describe how the employees relate to one another. The rules are standard and therefore neutralize any negative effects of diversity which create discrimination in an organization, undermining the worker performance.

The Gucci group ensures that the staffs receive adequate training and that new employee gets orientation of the business operations. The firm has a policy of motivating employees and providing equal chances of growth for all. The employees are organized in groups so as to facilitate mass thinking of ideas which leads to innovation (Gutsche, 2015).

Among the sustainability policies are the strategies used in marketing like creating awareness through controversial means just to gain popularity. Such controversial means include a model who posed for a naked photo in one of their adverts, and although this raised a lot of debates, they achieved their goals by creating awareness to a broad audience (Catmull & Wallace, 2014). The use of online marketing also allows for the bigger target audience for the store.

Extent to which the elements have contributed to Gucci’s success

The scope of innovation in the firm is commendable. Being a luxury good company, the company aims at providing quality products so as to gain a competitive advantage. Change provides the company with better and economical methods of operations thus ensuring that the firm maximizes the revenues and minimizes the costs. The innovative minds help to make sure that the business is strategically positioned and that it suits the needs of their target markets. According to Catmull & Wallace (2014), the sustainability initiatives help to enhance the performance of the company since people now know what the company aims at achieving and they, therefore, work together to achieve the stipulated goals. By engaging in CSR, the firm has gained popularity through the improvement of the corporate image of the company. This common focus has led to the continuous growth of the enterprise.By respecting the rights of the employees and giving them enough motivation through initiatives like training and proper remuneration, the company maximizes their productivity (Gutsche, 2015).