Gucci Case

 Gucci Circumstance Essay

Group A

Anna Abrell, Lottie Batchelor, Ankita Choudhary, Yuou Du, Marianne Halmela, Martin Zirfas

Desk of Contents


"  Gucci's strategy!

"  The luxury goods sector!

"  Gucci SWOT analysis!

"  Strategic group research!

"  Future predictions

Is Gucci proficient at strategy?


"   When Tom Honda was in demand, the business was more design-focused & control was centralised - there was disputes among Tom & De Terrain regarding managerial control "   With the appointment of Robert Polet, control started to be decentralised every brand was given direct control over its label & hired relatively unidentified designers # very debatable move

"   PPR bought again the 20% stake that LVMH possessed, acquired additional makes and entered into franchising

"   Although some brands in the Gucci Group portfolio aren't very lucrative, they still have a high manufacturer equity, which usually contributes favorably towards the ideal advantage #  Although Gucci's strategy was controversial and risky during the time of its getting pregnant, it has motivated current businesses and helped the company be a little more profitable #  Gucci is good at approach

The Luxury Merchandise Sector


Apparel, household leather goods, sneakers, fragrance, makeup products, jewellery, wristwatches # Accessory spending to try out most progress, whilst enjoy & makeup consumption offers slowed (Bain & Firm, 2013)

Geographic scope

USA, Europe, Central & South America, Asia, Middle section East

Potential buyers

High-class & middle. category. Intelligent, individual individuals with good values & principles. Will be demanding, have high anticipations & a disposable frame of mind. (Okonkwo, 2007)


Kering, LVMH, Richemont Group, smaller sized niche brands (eg Goyard)


Specialized, often family-run production sites – but as well factories in Asia & Middle-East


Wines & Spriits

Potential entrants

Great luxury merchandise

Level of profitability

Revenues likely to grow fifty percent faster than global GROSS DOMESTIC PRODUCT

4-5% growth expectancy intended for 2013

5-6% annual normal growth expectancy through 2015 (Bain & Company, 2013)

Long-term success

Predicted being > 5x larger in 2025 than it was in 1995

Latest & likely future alterations

- Chinese suppliers to become maximum consumer of luxury products

- Middle section east & south-east Asia sales developing

- Significance of menswear to increase

- E-Tailers that promote luxury items to create own-brand luxury good offerings?

Elements that may be affected by

competitors, fresh entrants or perhaps

potential traders

- Significance of customer encounter

- Price tag management

- Talent within the company


The Luxury Goods Sector

Threat of new entrants


Bargaining benefits of


Moderate - high

- Large switching costs for

industry players

- Medium to low amount of

product differentiation

- Low supplier alternative


-- Low risk of forwards

integration into the industry

- High capital requirements

-- High demand-side benefits of

range & economies of size

Rivalry among existing



- High volume of


- Method

- High exit barriers

- Excessive rival familiarity

- Moderate price competition

Threat of substitutes


- Excessive offer of attractive priceperformance tradeoff

-- Low switching costs

Bargaining power of buyers


-- Medium company loyalty (more

brand dedication is at the particular

high end in the luxury sector)

- Substantial fixed costs

- Low switching costs

- Medium to excessive product


- Excessive importance of item


- Medium to low price


The Luxury Products Sector


"   Secure - There may be relatively tiny threat of new entrants "   Longitudinal – the industry is not as seriously affected by economic downturn "   Difficult supply-chain management since there is a trade-off to having lasting, specialised suppliers # they have higher discussing power

"   Substantial threat of substitutes

"   Buyers are faithful and do not include as much negotiating powers because they do inside the...