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 ► Yves Saint Laurent ► Roger & Gallet ► Boucheron ► Alexander McQueen* ► Stella McCartney* ► Ermenegildo Zegna** ► Oscar de la Renta** ► Van Cleef & Arpels** ► Fendi** FRAGRANCES & COSMETICS ► Gucci ► Boucheron ► Yven Saint Lauren ► Bedat WATCHES ► Boucheron JEWELLERY ► Gucci ► Yves Saint Laurent ► Sergio Rossi ► Bottega Veneta ► Alexander McQueen ► Stella McCartney ► Balenciaga * Intra-Group license ** Third party license

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

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

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

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

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

GUCCI Main Issues MULTI BRANDING STRATEGY 22,000 Items DISTRIBUTION STRATEGY Thousands of licenses Opening of many stores around the world 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 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 STYLE Maturing and Boring For Elderly People Narrow target market with low purchasing frequency (low growth category) Not fully met customer’s need

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

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