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Executive Summary
The formula used by Gucci in the marketing of its luxury goods has remained unchanged for the better part of fifty years. The focus still remains on the customer and the loyalty he has towards the Gucci product. Because the luxury goods market falls well outside the normal boundaries of hierarchical needs, the product range find itself in the sector of non-economic influences. Gucci has come to terms with this in the very early stages of development, and has marketed the prestige and expensive way of life that Gucci has to offer.
The product design, quality and brand name has become synonymous with the elite, and will continue to do so because of the well maintained distribution of its products throughout the world.
The Gucci Company should primarily look at the market development and concentrate on new development within existing markets or possibly new markets that carry the status and appeal suitable to the Gucci brand. The Asian luxury goods market is a definite new market to consider, and definite growth can come from the new stores recently opened in Japan.
Cheap University Papers on Gucci
Together with the market development, market penetration can be concentrated on, and the Gucci stores should endeavour to concentrate on the newly rich. Already all Gucci stores are the ambience of high fashion, high price retailing. They are understated, refined, and luxurious and there is no hard selling as the buyer is accustomed to paying the prices requested. Gucci should emphasise the famous name it has to the newly rich customers, and endeavour to win over the loyalty at an early age.
Luxury goods have specific pressures that lead towards adaptation rather than standardization. These include customer needs, packaging, and communication in the market place as well as the different distribution channels available to the company.
The current product line up is seen to be well within the range of width and depth, as the fashion industry favours repetitiveness. Gucci seem to be using all promotional mixes to their advantage and continue to promote the product as awe-inspiring.
The use of advertising, publicity and direct selling are all key to the continued success.
Before any luxury goods item can be sold, the company has to identify with the needs of the consumer first. This remains true for any product as if there is no need for the product, then why purchase it.
Secondly, the life cycle of all products continues to play an important role in the global market.
Branding of the different products is of utmost importance as the brand almost guarantees the retail sales of the specific product. It is irrelevant that the product might be a luxury item or not.
As previously mentioned, all goods are sold according to market demand, and there are certain forces, which need to be taken into account when assessing the demand globally.
1.The Formula for Luxury Good's Marketing.
In 11 Guccio Gucci opened a small luggage and saddlery company in Florence, selling exclusive leather goods created and produced by the finest Florentine craftsmen.
This formula has held true as the company has kept one distinct and bonafide marketing tool throughout its existence. The term "exclusive".
The company, since it's inception and even after the fact that it has become a public entity, still holds a structuring by function philosophy. The success thereof remains the centralized control of the entire operation from the headquarters in Florence.
1.1 Motivational Needs
The Gucci Company relies heavily on the needs of different individuals. Since the Gucci Company is primarily in the marketing of luxury goods, it stands to reason that a key focus area remains that of the so-called "Esteem needs" of the individual.
These needs are reflected in a wide variety of luxury products within the Gucci stable. Luxury goods play heavily on the implication that the individual is a discerning buyer, a cut above the rest, and that using their products makes a statement about who they are and what status they hold in society.
1. Buying Criteria
The Gucci customer falls not into a category of Economic influence, but rather in a category of non-economic influences. Influences that Gucci rely on are prestige, security, friendship and social needs and other personal factors. A further dimension to the buying criteria is trust, which Gucci has firmly embodied since it began.
1. Segmentation
Because segmentation within the luxury goods market is extremely difficult to realise, the Gucci Empire has concentrated specifically on the "lifestyle" segmentation of its consumers. The term "lifestyle" is used in its widest sense to cover not only demographic characteristics, but also attitudes to life, beliefs and aspirations.
Because there are four main components to the lifestyle segment, Gucci now only has to market within these boundaries.
ɨ Activities
Gucci simply has to concentrate on the categories that their consumers do in the course of their lives. They would concentrate on the consumer's hobbies, preferred form of entertainment as well as sports interests and club memberships.
ɨ Interests
Interests are particularly linked to areas such as fashion, food and the media.
ɨ Opinions
Gucci looks at the innermost thoughts of their consumer. Thoughts such as social, political and cultural issues are brought into the fold.
ɨ Demographics
Lastly the elements such as age, education, income and occupation are looked at. Included in this segment may also be the life cycle stage and geographic location.
1.4 Classification of Gucci's goods
Primarily, Gucci would want its goods and products to be categorised in the speciality goods sector as the high risk, expensive, very infrequently purchased products in this category evoke the most rational response that Gucci could hope for. The psychological and emotive pull of a brand name like Gucci could still override objective assessment of information, leading to a biased, but happy decision for the consumer.
The products in this category need very specialist retailing that will provide a high level of augmented services, both before and after the sale. Limiting distribution to a small number of exclusive and well-monitored outlets not only protects the products from abuse, but also helps to enhance the products special image and the status of the buyer.
1.5 Branding
Since the classification of the Gucci range of products falls within the speciality goods sector, it is important to maintain this exclusive range with the branding that has seen it become one of the most sought after luxury goods items to date. From Gucci's perspective, the most important remains the building of defendable brand loyalty to the point where the trust, liking and preference for the brand overcomes any lingering price sensitivity. The benefits of the Gucci brand for the retailer, is that the product is well supported by marketing and advertising, therefore the retailer has some assurance that the product will sell.
1.6 Product design, Quality and Guarantees
The design of the various Gucci products remains one of the most important factors influencing the consumer's decision-making process. Design is an integral part of the product itself, affecting not only its overall aesthetic qualities but also its ergonomic properties and even its components and materials. All of these together can enhance the products visual appeal, something that Gucci do extremely well.
Quality, design, style and the corporate name and reputation are the key ingredients to the success of the Gucci brand throughout the world to date.
1.7 Conclusion
The formula used by Gucci in the marketing of its luxury goods has remained unchanged for the better part of fifty years. The focus still remains on the customer and the loyalty he has towards the Gucci product. Because the luxury goods market falls well outside the normal boundaries of hierarchical needs, the product range find itself in the sector of non-economic influences. Gucci has come to terms with this in the very early stages of development, and has marketed the prestige and expensive way of life that Gucci has to offer.
The product design, quality and brand name has become synonymous with the elite, and will continue to do so because of the well maintained distribution of its products throughout the world.
. Market Growth
Because the Gucci Company is looking at different growth markets for the future, it is imperative that they consider both its markets and its products. Gucci can continue to do what it has always done, but only better, or it can look at entirely new ventures.
.1 Market Penetration
A viable way for the Gucci Company to increase growth. The company can look at selling more luxury goods in its present market. Supporting tactics can include increased advertising or increased distribution outlets.
. Market Development
Gucci can continue to sell its range of luxury goods, but to an entirely new market. Currently Japan is seen as the country to which initial expansion projects must be directed towards. The popularity of luxury goods among the teenagers has significantly increased sales revenue since 14. Reasons for this are the revival of the Japanese economy together with the cult like status that the luxury goods branded apparel appear to achieve.
However new market development has risks, and the risk that Gucci is encountering is the ever-increasing threat of counterfeit products.
. Product Development
A simple strategy that calls for Gucci to develop new products to sell into their existing market. Gucci currently sell Handbags, small leather goods and luggage, shoes, ties, scarves, ready to wear collections, watches and a variety of personal items. To add to this list would seem extreme in the line of luxury items, as looking at anything further to this, would run the risk of losing the status appeal of the Gucci brand.
.4 Diversification
Gucci could develop entirely new products to sell to an entirely new market, however this remains risky as the company has achieved success in the luxury goods market within a certain geographical arena. To not rely on the success of the past eighty-two years and the strong position that the Gucci Company holds would be far too risky at the current stage.
.5 Conclusion
The Gucci Company should primarily look at the market development and concentrate on new development within existing markets or possibly new markets that carry the status and appeal suitable to the Gucci brand. The Asian luxury goods market is a definite new market to consider, and definite growth can come from the new stores recently opened in Japan.
Together with the market development, market penetration can be concentrated on, and the Gucci stores should endeavour to concentrate on the newly rich. Already all Gucci stores are the ambience of high fashion, high price retailing. They are understated, refined, and luxurious and there is no hard selling as the buyer is accustomed to paying the prices requested. Gucci should emphasise the famous name it has to the newly rich customers, and endeavour to win over the loyalty at an early age.
. Product Standardization
Because fashion as well as luxury goods are so personal, it would be very difficult to standardise the product in any way. The distinct disadvantage would be the premium pricing of the various items, as no buyer wants to know that after the exorbitant prices paid, someone has exactly the same product.
Secondly, in terms of standardization, only Coca Cola can truly lay claim to the standardization of their product, and even then, they have been forced to change some smaller detail in terms of the bottle or the fizziness thereof.
Luxury goods have specific pressures that lead towards adaptation rather than standardization.
.1 Customer Needs
Clothing might have to be adapted for local markets and the use of different colours and production in different sizes.
Although possibly all garments are produced centrally in Florence, they would still have to be dyed on demand to meet the colour requirements of different markets
. Packaging and Communication
Not only do aesthetic preferences prompt adaptation, but Gucci need to be practical as well. The focus on adaptation could be brand imagery, packaging or market communication. Package design might also have to be adapted for local languages.
. Marketing Communication
Marketing communication might have to be adapted to, to take into account the different buyer readiness stages of different markets.
.4 Distribution Channels
Another practical consideration is the sophistication and structure of the different distribution channels. Gucci distributes its products through directly operated stores, franchise stores, duty free boutiques and department stores. These different stores all need a certain amount of adaptation in the marketing of the merchandise.
Recommendations for Gucci at the current stage of operations regarding their product line assortment, promotions and advertising would be the following;
.5 Product Line Assortment
In terms of the product line, the width, depth and line length do not seem to be too tiresome as the consumer is still eagerly awaiting new product line ups for the coming seasons. Gucci need to continue to come up with novel ideas in their ready to wear range as well as stay at the forefront of the small leather goods and luggage scene.
The Gucci Company could however look at extending upwards the product line up of handbags and shoes, as the strength of the name will allow Gucci to create a new product with higher margins.
At current, Gucci has no products in their final stages of the life cycle, as the reason for this, as said by Gucci, is that fashion repeats itself. The only consideration would be to phase out products that have not done particularly well.
.6 Promotions
The Gucci Company needs to use the promotional aspect to inform, persuade and remind their market of the products that they have to offer. At their disposal are five basic forms of promotions
ɨ Personal Selling Gucci uses this method with great success, especially when the time comes for their four ready to wear annual shows held in Milan
ɨ Advertising The timing of their adverts within the media is carefully coordinated with the different product launches and international fashion calendars. For Gucci, advertising is placed mainly in top national and international fashion, lifestyle and business magazines. Secondly, he recent surge in direct selling has led to the existence of the catalogue, which Gucci uses to entice new customers and keep existing customers.
The company believes that by increasing the utilization rate of its catalogues helps to increase the sales of its products.
ɨ Sales Promotions Although not an effective way for the Gucci brand to be seen to be selling its products, it does however have distinct advantages. A benefit would be the uniformity within the store. By including a wide range of activities in a sales promotion, one being in store displays, the stores could consistently be the objects of desire for the competition and the consumer.
ɨ Public Relations Gucci encompasses a wide variety of communication efforts to contribute to generally favourable attitudes and opinions toward its organization. A team of public relations professionals are based in London, New York, Milan, Tokyo and Paris. All efforts are targeted at the fashion press, and are especially highlighted before ready to wear extravaganza's.
ɨ Publicity A special form of public relations that would involve news stories about the Gucci Company. The disadvantage however would be the negative publicity that could be received, but remain out of the company's control. An example would be the public response to fur at present.
.7 Conclusion
Luxury goods have specific pressures that lead towards adaptation rather than standardization. These include customer needs, packaging, and communication in the market place as well as the different distribution channels available to the company.
The current product line up is seen to be well within the range of width and depth, as the fashion industry favours repetitiveness. Gucci seem to be using all promotional mixes to their advantage and continue to promote the product as awe-inspiring.
The use of advertising, publicity and direct selling are all key to the continued success.
4. The Generalization of the Global Market
Although Gucci deals with luxury goods, certain generalizations can be made from their global marketing of their products and that of everyday consumer products.
Any product has a life cycle and the marketer has to identify this life cycle together with the needs of the consumer.
The anatomy of the product from its core to its potential ultimately remains the same whether in the luxury goods area, or in the area of consumer goods. Gucci is in the business of durable products, however some consumers have the need for non-durable products and service products. In effect, consumer goods could be FMCG products and would revolve heavily around non-durable products and services.
Consumer goods carry further classifications in that they can be further broken down into convenience goods and shopping goods, whereas Gucci concentrates more on the speciality goods arena.
The branding of all consumer goods remains just as important as with luxury goods. The only difference would be the process. It would not benefit Heinz Baked Beans to advertise in a glossy fashion magazine, but would instead advertise in newsprint and the price would be a determining factor. As mentioned before, the luxury goods market does not typically advertise price.
The retailer would benefit hugely from consumer goods branding as this in essence guarantees him support that the products will sell.
Packaging is typically very functional in the consumer goods arena, whereas Gucci relies on the label more than anything else.
Whether luxury goods or standard consumer goods, all goods sold are determined by market demand, and this demand is determined by the number of people, the ability to buy and their buying behaviour. The differences in culture, economic, political and legal forces must be considered in the global market.
ɨ Social and Culture a shared set of values that are possessed by each individual. Elements to look for are family, customs, education and language differences.
ɨ Economic Environment A country's infrastructure, its level of economic development and the competition are all elements that need to be taken into consideration in the global market.
ɨ Political and Legal forces Different countries have different trade barriers and agreements
4.1Conclusion
Before any luxury goods item can be sold, the company has to identify with the needs of the consumer first. This remains true for any product as if there is no need for the product, then why purchase it.
Secondly, the life cycle of all products continues to play an important role in the global market.
Branding of the different products is of utmost importance as the brand almost guarantees the retail sales of the specific product. It is irrelevant that the product might be a luxury item or not.
As previously mentioned, all goods are sold according to market demand, and there are certain forces, which need to be taken into account when assessing the demand globally.
Bibliography
Brassington, F. (000) Principles of Marketing. (nd Edition) Prentice Hall, Essex, England
Etzel, M. (17) Marketing. (11th Edition) Mcgraw Hill, United States of America
Lamb, C. (00) Marketing. ( nd Edition) Oxford University Press, Oxford, England
Piercy, N. (00) Market Led Strategic Change. (rd Edition) Butterworth Heinemann, Oxford, England
Terpstra, V. (000) International Marketing. (8th Edition) Thomson South Western, Ohio, United States of America
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