Key Issues and Trends Digital Fashion Marketing-Gucci: Global Luxury Brand

Introduction: Gucci

Gucci, a well-known luxury brand is one of the brands which come under the Couture & Leather Division of the French company The KERING Group; its own group company (The Kering Group, 2016). Founded in 1921, by GUCCIO Gucci, son of an Italian merchant (Gucci, 2017). Now known as one of the premium brands of all time, it is part of a multi-brand conglomerate. The company has three divisions regarding its Product portfolio.

1. The Couture & Leather Goods Division
2. Watches & Jewellery Division
3. Sport & Lifestyle Division

The well-established brand like Gucci, Alexander McQueen, BOTTEGA VENETA, Balenciaga, and Yves Saint Laurent comes under the Couture & Leather Goods Division, whereas the famous watchmakers like Girard-PERREGAUX, Dodo and QEELIN, BOUCHERON and ULYSSE NARDIN comes under the Watches & Jewellery Division. The Sport & Lifestyle division includes brands like Puma and Volcom (Kering Group, 2016). In this paper, Gucci will be explicitly focused regarding its digital and online presence, fashion marketing activities, its brand architecture, and marketing strategies for various product categories and markets. Firstly, the analysis through SWOT analysis would give an in-depth insight into the core activities of Gucci; its strengths, weaknesses, and marketing strategies.

Online presence and recent digital fashion marketing activity

One of the established strengths for Gucci is its strong international presence through its brand image. It aids it enjoying its brand equity with its clients. Brands like Gucci are operated at premium prices. Thus, for selling products at premium prices, it needs to have a substantial brand presence and brand equity. As of May 2017, Forbes has ranked Gucci at number 47 at the globe’s most valuable brands with a brand worth about $12.7 Billion (Forbes.com, 2017).

Gucci’s aggressive marketing and communication strategy is also one of its core strengths. Moreover, the shift from being a single brand to becoming a part of a multi-brand conglomerate is also one of the strengthening points which are also being made by its competitors like Prada and Louis VUITTON as well. This strategy has aided Gucci in diversifying its brands into various brands like YSL BEAUTE and Saint Laurent and others (The Kering Group, 2016).

Step 1: SWOT Analysis of Gucci

SWOT Analysis is a perfect tool first broadly to analyze all the aspects of the company; it is branding and marketing strategy (Carr & Newell, 2014).

·         Strengths of Gucci

Gucci’s supply chain strategy shows that it does not incorporate intermediaries in its chain and caters perfectly with capturing of its value-adding activities. It is evident from its strategy of taking control of its supply chain, thus making sure of its premium quality of the product. Furthermore, the company has also added a number of Directly Operated Stores as part of its supply chain strategy for taking control of its distribution processes (The Kering Group, 2016).

Gucci is also involved in focusing on partnerships for the cause of corporate social responsibility. Its partnership with UNICEF is an example of it. It has also enjoyed added value to its brand by working as partners with various automobile companies like Ford and Fiat. One of the undeniable strengths of Gucci is its quality products (Thornycroft, 2017). The company is one of the most valuable and highest quality producing brands which focus significantly on their quality. There are very few other brands that compete with Gucci on this level of quality products and luxury (Zargani, 2017).

Gucci has a robust international presence. Its website shows different option at its starting as per the international audience. It has customized website for its customers in Asia, Middle East, Oceania, Europe, and the USA. It is further differentiated separately for China, Japan, and Saudi Arabia, UAE, and other countries (Conlon, 2017). It also offers its website in the local languages like Chinese’s, Japanese, French, etc. It has currently also shown significant interest in the Indian market and launched many selling points there as well (Gucci, 2017). Another significant aspect of Gucci is that it keeps innovating and changing its product line and store layouts. TI does not wait for events to happen for changing or introducing things, it keeps it moving, making it all always look fresh and new (The Kering Group, 2016).

·         Weaknesses of Gucci

The critical and known weakness of Gucci is its unstable management. The continuous change in the upper management causes pronounced and significant changes in the company policy, vision, making it difficult for its associated parties, employees, and customers to get along with it. Furthermore, the company also has a fragile financial base. The company has been very much remained more dependent on debt financing in the past. The long-term debt value has kept on increasing with the passage of time (Dill, 2013). There is a significant portion of the brands under the Gucci Group which is still not profitable and needs attendance in marketing and promotion of itself. One major con of the luxury brand is that it has to put in much investment in its business for making it work and extend its business activities (Barmash, 2016).

With the increase in brand diversification of its brands, it is a risk that the company can get threatened by brand dilution. Another major weakness which is because of the market of luxury brands is that it has to keep innovating and changing and diversifying things. Yet, if not done right, can be a weakness for the company. It is much critiqued that these luxury brands face flak in advertising. It means that it usually uses sexuality in its advertising and exploits the sexuality of female models (Feng, 2017). However, it is also proved by the Gucci’s marketing strategy that “Sex sells.”The company is very well-known and having an international brand presence faces trade infringements and copyright controversies and problems in many countries (Hays, 2017). Gucci has not been able to control its counterfeiting (Bain, 2016)

·         Opportunities for Gucci

There are significant opportunities for Gucci to make its international presence more strong, especially in the Asian Market. In India and China, it can work on expanding and giving strong marketing and promotional strategies a chance to get its rewards. Even in the economies that are developing having a considerable portion of its population in its upper middle class would opt for showing its newly cultivated wealth through luxury brands like Gucci (Feng, 2017). Gucci can also look for consolidation of its brands which are not profitable, and combine them to get the competitive edge. Furthermore, the company can venture into new areas of luxury products for expanding its business segments as well as for expansion of its market (Sarsby, 2016)

Emerging markets like India and China should be given special consideration while looking for expansion. Here, for the emerging markets, the company Gucci should focus on getting the competitive advantage of introducing its product base (Inside Retail Asia, 2012). Gucci can further focus on young generation products and promote its products keeping in minds the needs and preferences of the young generation. It is because of the reason that today’s youth is more brand conscious than ever, and it likes to Spent more than save. Moreover, getting the income range to afford such brands, the younger generation is no career-oriented than ever (Warc.com, 2012).

Any of the competitors of Gucci has not entered into the lingerie business, giving the opportunity to Gucci. Another exciting aspect of the luxury market is that it does not suffer in the recession like other industries (Schicchi, 2010).

·         Threats for Gucci

The market for luxury products does not depend on price. It is a market in which very high-quality products are designed for premium prices. This market does not mind paying higher for the expense of getting the best of all regarding style, design, and quality. Competition, therefore, does not reside by price (Fox, 2012). The competition in this market is by how valuable and potent is the brand image. It is the focus of one of the threats for Gucci. The competitors of Gucci have made a mark with their value and multi-brand size. Like, Louis Vuitton who has more than fifty brands under its brand name (Thornycroft, 2017). Moreover, it is not the only brand with such value and size in the landscape. Moreover, with this immense rivalry among the luxury brands for higher value and market capture, it is imperative for the brands like Gucci to put in much investment in the promotions and advertising of the company and brand to continue in brand promotions against its competitors. Most of the operating budgets of the company are gathered among activities like capturing of its competitor’s brands, controlling of distribution channels, and advertising and promotional expenses (Bartiromo, 2012). The company has a very low barrier to exit the market, which means that the company needs to maintain its position to stay in the market. IF the company Gucci is not able to compete in any market or brand, then it has to give in and sell, fold or exit the market for its competitions. Counterfeit products have been a tremendous problem and threat for Gucci taking away a considerable portion of its sales through the aisles of its copied products and design. Gucci has many substitutes available in the market which can become a threat to the company’s product line (Zargani, 2017).

Selection of just one Product Category Potential Country Market

Step 2: Country Market Selection

1.      Large and growing market

Gucci has tapped into this market by entering the market of China. In 1997, Gucci open-end its first stores in China in Shanghai and Beijing. Today, there are more than 50 branches in China, which are operated by Gucci. China now contributes to a quarter of the luxury sales of Gucci as compared to its 5% contribution in 1997. However, it has been witnessed that the growth in revenue for Gucci is slowing down in this market (Barmash, 2016). The analysts and the management of Gucci blame it on the countless consumers, who is no longer grabbing every brand product just for the sake of their significant logos (Fox, 2012), whereas they are now more sophisticated in their approach of selecting luxury products. Gucci has, however, decided to cater to this sophisticated market of China (Agnew, 2017).

2.      Different culture

In India, Gucci has been gone through testing its global branding strategy (Giannini’, 2011). Following its competitors, Gucci also created an exclusive Indian line (Inside Retail Asia, 2012). The Bamboo Bag launched in 2012 with its metal plaque made for the market of India, and the Emily collection is all examples of this exclusive Indian line. It is done to make the Gucci brand image and products more relevant to the Indian consumers (Schicchi, 2010).

3.      Changing consumer behavior

Even with the immense increase in 2011 in the revenues from Asia Pacific region by Gucci (Thornycroft, 2017), it has still struggled to understand the behavior of its Asian customers, specifically in the times of economic slowdown (Warc.com, 2012). Furthermore, the counterfeiting products in Asian markets are also happening to be a more significant problem.

Comprehensive digital marketing strategy & country market 

Step 3: Product category choice

1. New Work: OPHIDIA
2. Handbags
3. Totes
4. Shoulder bags
5. Backpacks
6. Pockets
7. MINIBAGS & Evening Bags

·         Asia Pacific Market-Handbags

The Asia Pacific Market has shown revenue of 26% of the total Revenue of KERING Group as shown in its financial figures (Morningstar.com, 2017). It is the second highest revenue portion; Europe has the most substantial portion of sales with 31%. The company’s Brand house, KERING Group, has witnessed significant growth in luxury products with 7.7% increment in revenue and 13.3% increment in operating income (The Kering Group, 2016).

It is evident that the company has been using its history, tradition, and roots for the building of its brand equity. Gucci feels it is necessary and very crucial for them to share their history for the enhancement of their brand quality and the portraying of the Made in Italy image. It is reflected in its strategy of recreating of an outstanding product which would bring back memories and add depth to their product line (Schicchi, 2010). Gucci here used upscale positioning strategy for their competitive edge, and of course, it was crucial to keep the luxury and the exclusive feeling center of attention for its customer (Inside Retail , 2014).

It was done by the recreation of the very iconic bamboo bag through which it reinforced its brand equity and kept its brand image intact (EXtravaganzi, 2010). It was a massive success in recreating of its iconic bag and enforcement of a message of consistency without any leveraging technique. The Bamboo bag is one of the “IT Bags” designed by Gucci ( (Heikkila, 2011).

The extension of the Gucci brand in the new emerging markets is aligned with the statement by the CEO of PPR. He described the emerging markets of Latin America, China and India as the new population and discussed that these are young people who like to consume and like to be associated with brands (Barmash, 2016). Gucci is one of the brands which come under the Couture & Leather Division of the French company The KERING Group, a branded house. The company has three divisions regarding its Product portfolio Watches & Jewellery Division is a successful product category (Kering, 2017).

·         Company’s Brand Architecture

With being in a branded house, the brand has the potential to use the brand extension to introduce new products in the market. Gucci has a very well-established strategy of using band extension for transferring the brand equity. However, it has not been the case in the past. Before Ford, the company was suffering from internal turmoil, family disputes, confused brand image, brand dilution, brand leveraging, and low prices (Margolis, 2006). It shows that Gucci has learned from its past and has stuck with creating of brand depth than brand breadth.

Adding too many brand extensions and diluting the brand name can again cause the brand about Gucci to lose its brand image and lose clarity in its customer’s eyes.  For a specific analysis of the marketing strategy and potential opportunities in the specific market for Gucci, we are selecting the Asian Market & Handbags Product Category.  For the Asian Market, the website of Gucci has specific websites in China, Japan, and Korean customers. However, there has not been any for the Indian Consumers (Arsa, 2010).

As we are focusing on the Handbags category, we can see that the Gucci categorize its handbags (China) in following categories (Mower, 2006). It is the reason that Gucci has remained intact with its product portfolio selling Perfumes, clothing and accessories, leather goods including handbags, etc. However, it has been witnessed in the past that a prestigious brand like Gucci can have more brand extension than Gucci has practiced and gained success. It is seen that Gucci has used its brand extensions for other products like FIAT 500 which it has thought would align with its brand image and not tarnish it. Even with increased dipping in other areas of products, it still has been successful in cultivating a brand image typical for all the products; being a luxury product seller (Anon., 2017). These are the strategies which show how Gucci has kept its brand architecture and brand equity intact and not tarnished it by diluting it (Perez, 2017).

Recommendation for Gucci

Gucci should continue to maintain its authenticity and attraction for the Indian and Chinese’s markets. The key to having the perfect global branding strategy for the Asian market would be to balance the customization of Indian and standardization by Gucci. As done in India, Gucci can also make a China-specific line for becoming relevant to the Chinese customers. However, it is necessary that even with customization; Gucci should not lose its right touch and Italian identity.

Conclusion

Gucci with its colossal brand name in apparel and accessories industry should focus on making more customized, yet standardized products for its Asia Specific Regions. With having great potential in this market, Gucci can take advantage of its brand equity and extension to create a presence which is welcomed by these new regions and markets.

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