2. Lecturer: Michael M. Dent Group Members: 1) Chu Kok How (Freddy)CGA070039 2) Lim Shee Hau (Kenith)CGA070135 3) Lee Swee Chin (Shirley)CGA090045 4) Mok Ming Keat CGA090038 CMGB 6101: Marketing Management Strap Line: Choice of all!

3. CMGB 6101: Marketing Management Case Study: Gucci, Louis Vuitton, & Vertu – Marketing Lessons from some of the World’s Most Exclusive Brands.

4. Vertu Clip

5.  Introduction  Corporate Background  Branding Strategy  Successful Branding  Critique  Conclusion Contents

6. Luxury market from several sources are estimated US$840 billion in 2004 and estimated to reach the figure of US$1 trillion in 2010 (Source: Journal of Brand Management Vol 16). Contributors to this increase:- i) Improved economic factors worldwide. ii) Increasingly reached the medium and lower classes. Introduction

7. Jackson and Haid (2002): luxury brands have a heightened status that affords an opportunity for their owners to charge premium prices. What is Luxury Brand? Why consumer buy it? 1. The desire of emulating the lifestyle of the richest or social class; 2. The superior quality of the product and services; 3. The basis of self-rewards.

8. Gucci Founded in Florence 1921 1950: first global store in New York, US 1979: Accessories Collection with 20,000 product lines & with over 1,000 stores; 1992: Loss of more than $40 million 1993: Gucci sold all the shares to Investcorp (a Bahrain-based private equity firm) 1993: Appointment of Domenico De Sole & promotion of Tom Ford to Creative Director Corporate Background

9. Louis Vuitton (LV): Founded in Paris in 1853 Specializing in trunks, leather goods, ready-to-wear, shoes, watches, jewelry, accessories, sunglasses, and books George Vuitton toured and visited US and selling the products to US 1914: First store had been opened in US 1936: Gaston Louis-Vuitton took over the business Corporate Background

10. LV’s Product Summary YearDetails 1901Steamer Bag 1930Keepall bag 1932 Noé bag & Speedy bag (Still under manufactured) 1985Epi leather line; 1993Taiga leather line; 1994Collection of Voyager Avec; 1997Pen collection; 1998 First pret-a-porter line of men & women clothing 1998Monogram Vernis line 2001Vuitton bags with graffiti featured designed 2002Tambour watch 2005Speedy watch 2008Damier Graphite canvas Corporate Background

11. Vertu Founded in UK in 2000 Independently run and wholly owned subsidiary of the Finnish mobile phone Vertu's president and COO is Perry Oosting Worldwide offices: in Paris, New York, Los Angeles, Hong Kong and Singapore Concentration: most exclusive luxury instruments for personal communications Corporate Background

12. Background Summary CompanyGucciLouis VuittonVertu Established192118542000 SectorFashion and DesignLuxury GoodsLuxury Communication ProductsMen and Women’s Wear, Shoes, Jewellery, Watches, Perfumes, Eyewear, Home goods, Luggage/Handbags, Baby Wear. Leather goods, ready-to- wear, shoes, watches, jewellery, textiles, writing instruments & accessories. Famous for its handbags. Signature Collection Stainless Steel Collection Duo Stainless Steel Bordeaux Stainless Steel Typical Locations Florence, Rome, Paris, New York, London, Palm Beach, Tokyo and Hong Kong. Paris, New York, Tokyo, Dubai, Las Vegas, Los Angeles. Paris, New York, Hong Kong, Singapore, London.

13. Branding Strategy  A brand is a name or trademark connected with a product or producer.  Brands can be differentiated on the basic of; i) Number of different product or services dimensions: - product form, features, conformance, reliability, reparability, style, and design ii) Service dimensions - ordering ease, delivery, installation, customer consulting, maintenance and repair  Companies can gain a strong competitive advantage through having better-trained people.

14.  Companies can also achieve competitive advantage through the way they design their distribution channels’ coverage, expertise, and performance  Image is the way the public perceives the company or its product. Identity is the way a company aims to identify or position itself or its product. Branding Strategy

15. Gucci Strategy 3 Phases of Brand Strategy by Gucci 1 ) Gucci Brand Stabilisation Phase (1995 – 1999) 2) Multi brand Acquisition Phase (1999 – 2001) 3) Gucci Group Consolidation Phase (2001 – 2004)

16. Phase 1: Brand stabilisation phase: early 1995-October 1999 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) Tom Ford – the design direction and control

17. Phase 2: Multi-brand acquisition phase – November 1999-July 2001 1) At this phase, Gucci had transformed from their single brand status to become a multi- brand luxury goods group; 2) The Gucci group to requisite skills to advantage each category of acquisition and intra-group synergies to provide positive benefits for the group as a whole Phase 3: Gucci group consolidation phase – August 2001-April 2004 1) New Gucci group has been formed 2) To manage effectively portfolio of brands which will each be unique in its brand image and values, while leveraging the skills and infrastructure of the enlarged Group.

18.  Modernise LV image Utilizing the talents of young designer & artists  Focus on product quality Extensively laboratory tested – product can withstand wear and tear. Blended mechanisation and handmade craftsmanship Offer lifetime repair guarantee Leather is sourced from Northern Europe  Operate a pricing integrity strategy – distribution network To maintain the prestige image Never reduced in price No sales period Louis Vuitton (LV) Strategy

19.  Offer customised products – hand luggage pieces  Sponsor elite sporting events – yachting and motorsport events. Matching the audience of sponsorship property. Louis Vuitton (LV) Strategy

20.  Utilises craftsmanship, precision engineering, high-end technology and a unique personal service dimension  Product launching associated with fashion shows - Paris fashion week Aiming to create a fashion brand rather than a technology brand  Focus on Vertu Concierge Service provides specialised travel assistance 24 hours a day from anywhere in the world free for the first year, and charge £500 per annum offers a customisation service Vertu Strategy

21.  Focussed their enormous attention on store layout Developed a unique buying experience by creating a “gallery- like” feel to its retail environments  Vertu available to purchase through their website.  Partnership or joint venture -to gain greater market share Hong Kong - King Fook Jewellery U.K - Goldsmiths Vertu Strategy

22. Summary of Branding Strategies NoDetailsGucciLouis VuittonVertu 1Concentration areaFashion and design men and women’s wear, shoes, jewellery, watches, perfumes, eyewear, home goods, luggage/handbags, baby wear Product quality: blended mechanisation and handmade craftsmanship into their products Utilises craftsmanship, precision engineering, high-end technology and a unique personal service dimension 2Unique Brand/ Product image Yes 3Unique featuresYes 4High qualityYes 5Outstanding ServiceYes Yes. First class personal service combined with extensive product knowledge 6Distinct packagingYes 7Prestigious pricingYesYes. Operates a pricing integrity strategy amongst its entire distribution network. never reduced in price, and there are no sale periods Yes 8Exclusive retail environment Yes Yes. Unique buying experience by creating a “gallery-like” feel to its retail environments 9Selective channel of distribution Yes. Expensive high street location & purchase Gucci products online Yes

23.  The components of a luxury brand; Successful Branding

24.  According to Professor Guenther Mueller-Heumann (2007), brands, in a way are a "silent salesmen“.  A branding research firm dealing with the strengths of a brand is, Interbrand.  What are the criteria to be included in the best Global Brand? Successful Branding

25.  The criteria; i) There must be substantial publicly available financial data ii) The brand must have at least one - third of revenues outside of its country-of- origin iii) The brand must be a market-facing brand iv) The Economic Value Added (EVA) must be positive v) The brand must not have a purely B2B single audience with no wider public profile and awareness Successful Branding

26.  Research Methodology; i) Financial Analysis - All financial analysis is based on publicly available company information. ii) Role of Brand Analysis - In-house market research is used to establish individual brand scores against our industry benchmarks iii) Brand Strength Score - Brand is compared against common factors of brand strength, such as: market position, customer franchise, image, and support iv) Brand Valuation Calculation

27. Successful Branding Based on the 2008 Global Brand Report (Interbrand);  Gucci was ranked at No. 45, up one spot from No. 46 in 2007. Increase of brand communication budget of 41.5% in 2007. Sales figures has increased 2.4% to €513m in Q1, 2008 (The business fashion, 2008).  Louis Vuitton ranked at No. 16, up one spot from No. 17 in 2007. For the first time, the company advertised on television with a travel theme (90 seconds). Multicolore Monogram bags, the fruit of a collaboration between [fashion designer] Marc Jacobs and the contemporary artist Takashi Murakami (Business Week, 2007

28. Successful Branding  Vertu which is relatively new in the market since its’ founded in year 2000.  In Vertu, it is the company’s policy of not revealing the sales figures.  However, their expansion has reached the Asian market and has presence in Singapore, Taiwan and China.

29. Critique Main Contributors  Luxury buying behaviour  Spending on luxury  Demographics of the luxury market  Luxury market psychographics (e.g., why people buy luxuries)  Trends in luxury

30. LV,GUCCI & Vertu  Product design, creativity  Status  Client Relationship Management

31. Consumers Evolution  Psychology (Brain Washing)  Attitude Change  Interest  Brand perception

32. Market Dynamic Change The luxury Landscape, consumers feel that:  Style recognition  Strong Identity  High awareness, fashionable  Enhanced emotional and symbolic associations

33. DREAM

34. Why? More affordable - personal income rise - more reasonable price “Luxury” changed from “CLASS” to “MASS” - youngster’s personal value change

35. Review Old “Luxury” - Attributes - Qualities - Features New “Luxury” - Experience to have it - Embodied the goods and services they buy - Democratic ideal (Just do it/ Changed/ different from others)

36. Challenge in Economic Slowdown High-net-worth Services - customer satisfaction on after sales services - value added services Less luxurious product lines - Price cuts diminishing brand’s exclusive image

37.  A luxury branding needs to have the following; Iconic/Product Designs History/Culture Marketing Premium Pricing Control on Product Manufacturing Control on Sales Area  And most of all, a market to market their luxury brand. Conclusion

38. LV (First Tv Ad) Clip

39. Questions & Answers ?