GUCCI Fashions come fashions go but a great

GUCCI Fashions come, fashions go but a great name is always in style Marketing Management March 2004 Group B 13 Masato Shirai Andrea Tellarini Vasilis Kykrilis Gabrielle Ng Matthias Kuhn

Luxury Goods Industry Mono-brand major players: ► Armani ► Hermes ► Chanel Multi-brand major players: ► LVMH (Fendi, Kenzo, Givenchy) ► Richemont (Cartier, Fendi, Lancel) ► Gucci (Sergio Rossi, Yves Saint Laurent)

GUCCI Product lines ACCESSORIES, RTW, SHOES FRAGRANCES & COSMETICS WATCHES ► Gucci ►Yves Saint Laurent ► Gucci ► Yves Saint Laurent ►Roger & Gallet ► Boucheron ► Sergio Rossi ►Boucheron ► Yven Saint Lauren ► Bottega Veneta ►Alexander Mc. Queen* ► Bedat ► Alexander Mc. Queen ►Stella Mc. Cartney* ► Stella Mc. Cartney ►Ermenegildo Zegna** ► Balenciaga ►Oscar de la Renta** ►Van Cleef & Arpels** ►Fendi** * Intra-Group license ** Third party license JEWELLERY ► Boucheron

Building the brand: challenges Product differentiation has shifted to brand differentiation Fashion names come and go quickly because the clothing, brand name are dated to a particular date and time Name should be related to the style and mind of the audience you refer to

GUCCI Naming strategy NAMING STRATEGIES GUCCIO GUCCI NIKE NAME OF THE DESIGNER MADE-UP NAME • Based on the reputation of the designer • It doesn’t depend on a particular designer • Best way to transcend the style of the moment • It takes many years and huge budgets to build it FULL NAME The brand is strongly identified with the designer (i. e. Ralph Lauren, Tommy Hilfiger) GUCCI SURNAME ONLY • Beyond the identification • Less risky To reduce the risk of losing the longevity of the brand GUCCI revised its branding strategy

Product Attributes TANGIBLE • High Quality • Materials • Unique Design • Service The attributes of successful fashion branding go far beyond the physical tangible aspects of product INTANGIBLE • Image • Status • Exclusiveness • Style There is only one word which brings all these attributes together in people’s mind: VALUE

Value is not measurable in absolute terms, but on CUSTOMER PERCEPTION PRODUCT AS EXTENSION OF PERSONALITY (Psychology) • Fit to personality • Behaviour • Lifestyle • Symbol of class exclusivity • Aspirations

GUCCI Brand positioning High GUCCI THE EX-CHAMP THE LEADER • A complacent former “Leader” that is • The most influential / talked about • Stale and boring, but still commands a loyal following • High market visibility and preference • Focus in on maintaining status quo • Stays relevant living off of its past glory MARKET SHARE THE UNDERDOG BURBERRY’S product proposition • Competes on price, promotion or some other functional dimensions • In danger of being acquired or eliminated Low HERMES brand in the market • Demonstrates market leadership and continuous innovation THE CHALLENGER • No clearly differentiated brand Low CHANEL • A niche brand ARMANI • Highly focused strategy in serving a well defined segment VALENTINO • Creative and adaptable • Utilizes gorilla marketing tactics SHARE GROWTH HELMUT LANG High

GUCCI Main Issues MULTI BRANDING STRATEGY • 22, 000 Items • Dilution of brand positioning as premium product • Tarnishing of brand’s reputation for luxury, status and high quality • Lower perceived value (customers are now more demanding). • Suffering the competition of specialized companies DISTRIBUTION STRATEGY • Thousands of licenses • Opening of many stores around the world STYLE • Range of price points caused by the lost of control • Non unique service • Not effective collections • Locked-in capital • Low flexibility in slow-down economy • Capacity utilization dilemma • Maturing and Boring • Narrow target market with low purchasing frequency (low growth category) • For Elderly People • Not fully met customer’s need

GUCCI re-branding strategy More brains, fewer shelves CHANGED STYLE Through provocative advertisments and flashy pants (Tom Ford, Domenico De Sole) NARROWED PRODUCT LINE BY 67% • From 22, 000 to 7, 260 items LIMITED THE DISTRIBUTION CHANNEL TO ITS OWN OUTLET SYMBOL OF MATURITY WITH ARISTOCRATIC LINES • Amplified the perception as a mundane highclass style (all ages) • Wide target market with high purchasing frequency (high growth category) MORE EMPHASIS ON THE CORE BUSINESS (leather goods & accessories) • Met customer’s need DIRECT CONTROL • Uniform image all around the world • Collections promptly reach customers • Customer’s perception of Gucci as unique and premium product • Better services to customers

GUCCI Re-created an emotional connection in the mind of their audience High GUCCI THE EX-CHAMP THE LEADER • A complacent former “Leader” that is • The most influential / talked about • Stale and boring, but still commands a loyal following • High market visibility and preference • Focus in on maintaining status quo • Stays relevant living off of its past glory MARKET SHARE THE UNDERDOG BURBERRY’S product proposition • Competes on price, promotion or some other functional dimensions • In danger of being acquired or eliminated Low HERMES brand in the market • Demonstrates market leadership and continuous innovation THE CHALLENGER • No clearly differentiated brand Low CHANEL • A niche brand ARMANI • Highly focused strategy in serving a well defined segment VALENTINO • Creative and adaptable • Utilizes gorilla marketing tactics SHARE GROWTH HELMUT LANG High