Analysis of the Macro and Micro Environment of the Brand
The Brand Name
The brand name of Gucci is associated with such characteristics as innovation, inspiration, and luxury (Escarcha 2014). The strength of the brand name enables the company to charge higher prices for its products as consumers provide additional value to the brand image. Gucci also uses the parenting strategy of value added; thus, many introduced sub-products and lines run under its brand name. The below analysis of the company is performed on the basis of the primary and secondary research.
The company was founded in 1921 by Guccio Gucci. Initially, it marketed as a manufacturer and seller of leather goods in Florence (Guccio Gucci 2012). In the 1930s, the company successfully presented “bags, trunks, gloves, shoes and belts” (Guccio Gucci 2012). At the same time, Guccio Gucci developed the horse bit pattern; the designer was fascinated while observing the enormous aspiration of his clients-aristocrats for horse-riding (Guccio Gucci 2012). This pattern is shown in Figure 1 (Yoogi’s Closet 2016).
During the Fascist dictatorship in Italy, the company faced the issue of the insufficient supply of raw materials from abroad. For the coverage of existing demand, Gucci was forced to use materials, which were atypical for luxury goods: jute, linen, burnishing cane, and hemp (Guccio Gucci 2012). Notably, a Bamboo Bag from burnishing cane created at that time has become broadly recognized as one of Gucci’s iconic products. An example of such design is shown in Figure 2 (Royce-Greensill 2016). In the 1950s, the company’s image was complemented by an innovative “green-red-green web stripe derived from a traditional saddle girth” (Guccio Gucci 2012). An example of the use of this stripe is shown in Figure 3 (Royce-Greensill 2016).
In 1953, when Guccio Gucci left the company, his sons Ugo, Aldo, Vasco, and Rodolfo took the leading positions in the enterprise (Guccio Gucci 2012). The change in the leadership style enhanced a broad recognition of its timeless designs and elegance by the most prominent figures of the time: Jackie Kennedy, Liz Taylor, Peter Sellers, Samuel Beckett, and Grace Kelly (Guccio Gucci 2012). Gucci focused its efforts on meeting specific desires of the upper society; it developed a unique shoulder bag for Jackie Kennedy and a silk floral-print scarf for Grace Kelly (Vogue 2016).
In the 1960s, Gucci emphasized the improvement of its products and image. A renewed company’s logo in the form of interlocked double G is presented in Figure 4 (Yoogi’s Closet 2016). Moreover, Gucci expanded its presence in the global fashion arena by opening new stores in Paris, London, Palm Beach, Beverly Hills, Hong Kong, and Tokyo, in addition to the existing ones in New York and Milano (Guccio Gucci 2012).
In the 1970s, the enterprise introduced its first ready-to-wear collection that offered “GG printed shirts or GG buttoned fur-trim coats” (Guccio Gucci 2012). Gucci prioritised the combination of the high quality and availability of luxury details by using a greater variety of luxury materials, including young crocodile and “sterling silver snakehead buckles” (Guccio Gucci 2012). The further improvement of the company’s position in the fashion industry took place after the initiation of the first runway show in Florence in 1981 (Guccio Gucci 2012)
The next year, Gucci became the public limited company. The major part of its ownership (50% of its shares) was passed to Rodolfo Gucci’s son, Maurizio (Guccio Gucci 2012). In 1987, a Bahrain-based investment company, under the name Investcorp, became highly interested in owning the company and started buying up its shares (Guccio Gucci 2012). This process was completed by the eventual purchase of Gucci in the 1990s (Guccio Gucci 2012).
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In 1994, a newly appointed creative director, Tom Ford, “infused the luxury brand with a sense of daring and provocation” (Guccio Gucci 2012). This innovation was positively met by top celebrities, who admired the unique and glamour outlook provided by Gucci, for example, silk cutout jersey dresses complemented by details made of metallic hardware.
In 1995, the new CEO, Domenico De Solve, brought another fresh approach into the company by making Gucci a public company (Guccio Gucci 2012). Four years later, the enterprise entered a strategic alliance with Pinault – Printemps – Redoute; thus, a single brand company became a part of a multi-brand group (Guccio Gucci 2012).
In the 2000s – 2010s, Gucci was considered “the most desirable luxury brand in the world” (Guccio Gucci 2012). This success was based on the brand with rich history and enviable reputation and high-quality craftsmanship, as well as the luxury image and exclusivity, combination of heritage and modernity (Guccio Gucci 2012). At the beginning of the 21st century, Gucci adopted an eco-friendly program that targeted the reduction of the company’s negative impact on nature. Moreover, the brand introduced a fashion collection for children (Guccio Gucci 2012).
In 2015, Alessandro Michele, who had worked at the company since 2002, became the new CEO (Vogue 2016). He directed the creation of the new autumn-winter ready-to-wear collection that combined contemporary and romantic styles, and could be characterized by historical references to Chine of the 18th century and European Renaissance (Guccio Gucci 2012). In Gucci’s collections, viewers can recognize unique prints, layers, ruffles, and frills (Royce-Greensill 2016). In the latest collections, heavily-branded bags were replaced by logo-less models. In such a manner, “logos became fashion’s anathema” (Royce-Greensill 2016). The logo of Gucci has been renewed, as well. The new one is demonstrated in Figure 5 (Royce-Greensill 2016). Alessandro Michele also changed the show presentation and, unlike previous runways, cast both male and female models in a single show (Indvik 2015).
The future directions of the company’s existence are determined by several strategies: fashionable and operating ones. Most probably, during the tenure of Alessandro Michele of office, all collections will combine different styles, textures, textiles, and epochs. This person is more interested in the presentation of the past and contemporary trends instead of creating some futuristic models. In the future, the company may switch to the development of unisex ready-to-wear closes. However, it will still target celebrities and prominent political figures and strive to support and strengthen its image in the fashion market. Logos are going to be underrepresented in Gucci’s models.
In the future, Gucci may increase its presence on the Internet. Marco Bizzarri, who took over control at Gucci in 2015, directed much effort to the improvement of e-commerce of the company and increased its online representation (European CEO 2016). Nowadays, the brand “ranks among the sector’s best in terms of digital competence” (European CEO 2016). Today, e-commerce is the third largest company’s market after China and the USA (European CEO 2016). The applied multichannel approach enables customers to use online and mobile platforms for viewing and purchasing Gucci models. It is expected that in the future, the e-commerce will provide the company with the major part of its profit.
Gucci Positioning Strategy
Positioning to Customer
Since the very beginning of its existence, the company has positioned itself as a manufacturer of unique and high-quality goods. In the course of time, it has improved its image to the reliable developer of luxury products for the middle and upper class, including prominent political figures and celebrities. Notably, Gucci has created a special strategy for keeping its current customers from the upper class. It can be seen in the development of the horse bit pattern or creation of a unique design for a bag for Jackie Kennedy and scarf for Grace Kelly. In such a manner, the company showed that it could execute specific orders of the most prominent political figures.
At the same time, Gucci positions itself as the brand manufacturer that is constantly developing new designs. It can be seen in changes in its fashion tendencies, as well as the introduction of a new logo. At the same time, its collections mostly combine traditional styles and elements. However, Gucci strives to keep up with the times. Currently, it makes emphasis on the e-commerce.
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Gucci has shown itself as a company that can successfully address economic and political challenges, which interfere with the presentation of new collections. Some unusual solutions, for example, a bamboo bag or the usage of artificial materials, became legends of the fashion world.
Positioning to Competitors and Competitor’s Analysis
Gucci’s positioning to competitors is shown in Figure 6 that was developed for the current work. This company is considered a luxury brand that markets products of a traditional look. Its closest competitor is Louis Vuitton (LV)
Unlike Gucci, LV makes emphasis on the timelessness and heritage in every element of its fashion. On the other hand, similarly to Gucci, it designs ready-to-wear clothes, accessories, craftsmanship, and handbags. However, it additionally offers pet’s essentials and books, as well as travel bags (Louis Vuitton Band n.d.). Celebrities, including Rihanna, Selena Gomez, and Sarah Jessica Parker, also appear with the products of LV (Pursebop 2016). However, the number of celebrities and representatives of the upper class, who wear LV products, is much lower than that of Gucci.
In spite of a strong presence in the market, this brand has experienced a dramatic decline in its value in the recent years (Ferdman 2013). This fact points to some significant troubles of the business. The first one is the insufficient level of innovation in the presented collections and logo. The LV logo has quickly established itself in the world fashion arena; however, today, “it appears to have run of its course” (Ferdman 2013). Therefore, the company’s handbags are considered an “accessible luxury for more money rather than exclusive luxury” (Ferdman 2013). Moreover, LV experienced a tremendous decline in demand in Asia and the Far East that was based on the slowdown of the economic development in the region and switch of the consumer attention to “more subtle luxury brands” (Ferdman 2013).
The target market of this company comprises individuals from the middle-upper and upper classes, celebrities, and prominent political figures. These people value the unique and stylish appearance, which can be supplemented by Gucci’s products of high quality. They have the ability to pay for such luxury. The company’s current customers include both males and females of medium and older ages, as well as children. In such a manner, a customer portrait is the following: a woman of 20-50 years old from the upper class, who has a fashionable look and visits various fashionable events.
Gucci is internationally recognized as a prestigious company that offers high-quality goods for the top segment. The brand is respected for its reliability and unique approach to the design of goods, elegance, ability to address unusual needs of top clients, use of artificial materials, which have been apparent during the whole history of the company. The brand is easily recognized for its famous horse bit pattern, double G logo, and green-red-green stripes.
The Marketing Communication Strategy
Gucci has a rather strong marketing communication strategy. Top celebrities often advertise its products. Their images together with Gucci are broadly presented in the mass media and on the Internet. Moreover, its products and information about new collections can be found in modern printed and fashionable online magazines, for example, Harper’s Bazaar, i-D, and Marie Clair. This year, Gucci dominated on the covers of fashion magazines in January, February, and March (Fernandez 2016).
The company interacts with the world also through charity. Gucci has contributed more than $20 million to a number of UNICEF’s initiatives directed at assisting the most disadvantaged children in Africa get education (U.S. Fund for UNICEF 2016)
Gucci SWOT Analysis
The company’s major strength is its strong position in the market based on the long-lasting history of its unique and high-quality brand.
- Gucci clearly recognizes modern trends and follows them, just like in the case of e-commerce.
- It has developed effective distribution channels all over the world.
- Gucci creates elegant collections based on traditional motives, which are not influenced by the recent changes in fashionable trends. Thus, its products have been up-to-date for a long time.
- The company failed to follow top-modern tendencies or adopt futuristic solutions.
- The presentation of the great variety of products requires sufficient funds on the design and manufacturing.
- Because of using traditional motives, Gucci’s products remain in trend for a long period of time. This fact lowers the good’s risk of being outdated and non-demanded.
- The use of e-commerce technologies enables the company to be available to final customers at any time and location. The fashion became closer to the broad audience.
- The introduction of a great variety of products creates a risk of the brand dilution.
- The necessity to support the existing brand image requires sufficient financial resources.
- The non-orientation on the creation of futuristic designs causes the loss of opportunity to become the major trendsetter in the world.
Gucci PESTEL analysis
Gucci is highly influenced by governmental policies of states, in which it operates. Its sales depend on the local tax, laws, and regulations concerning raw materials, ready-to-wear clothes, labour conditions, and minimal wages of workers. The management should take into consideration additional expenses caused by political initiatives while charging prices in a particular region.
The economic factor reflects the purchasing power of consumers. In the periods of the economic downfall, the number of clients who can afford to purchase luxury products decreases. The lowering of demand may have a negative influence on the brand image and reputation.
Social factors are related to the existing perceptions in the society. In some locations, people may be more interested in the latest fashion trends, while in other locations, customers prefer traditional styles and look. Among other social factors, there are the consumer age, lifestyle, and economic class. For example, most probably, a representative of the upper class that has a pro-active approach to life and sports will not be interested in Gucci’s products.
The technological innovation enables the company to use new materials and manufacturing techniques, as well as decrease the price of its products. At the same time, it stipulates the trade (for example, e-commerce) and spreading the information about the latest fashionable trends via the Internet (through the online press and social media).
The manufacture of products can be influenced by various environmental regulations. Thus, Gucci should focus its efforts on lowering the negative impact on nature.
In conclusion, Gucci is the Italian fashion brand that markets exclusive, elegant, and high-quality ready-to-wear clothes, craftsmanship, and bags for the upper-middle and upper segment, including prominent political figures and celebrities, in different locations all over the world. The company has a long history of the successful development that dates back to 1921. It is easily recognized by its logo, horse bit pattern, and green-red-green stripes. Gucci’s collections are characterized by traditional elements and combination of various styles. They can be found in online and offline stores. Nowadays it focuses on the luxury market and outstrips its closest competitor, Louis Vuitton. Gucci’s operational performance is highly influenced by political, economic, environmental, technological, and social factors.