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on 13 December 2014

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Transcript of Gucci

Gucci Background Information
Gucci on Forbes
Executive Summary
The Four P's
Gucci's Mission

Market Analysis by Chase Nicolai
Gucci's Current Executive Roles
Creative Director
Patrizio di Marco
Frida Giannini

Gucci is primarily a luxury leather goods brand that specializes in leather bags, luggage and shoes. They have many other products such as ready-to-wear items, watches, and other accessories.
Target Market
Gucci seeks to capture the hearts of affluent buyers seeking social status, individuality, and quality. The market mainly consists of women or trendy individuals who can afford their products. Typically above the age of 25. Opportunity to expand target market in countries experiencing wealth creation.
KER Stock
Mission Statement:
“that the price is forgotten long after the quality remains”
Gucci truly believes in their products. The buyer pays a premium price, but in turn their quality makes it worth it.
Strategic Goals
• Remain creative
• Attract new customers who have recently entered the market
• Create loyal, returning customers
• Continue to create products with superior quality
• Capture additional market share from competitors
• Promote brand effectively

Gucci's High-End Market Share in Perspective
SWOT Analysis
Strong Brand Name

Significant management turnover
Counterfeits / cheaper substitutions

• Very high quality goods

• Recognizable branding (ex. Bamboo handle or Gucci print)

• High prices creates class

• Iconic brand dating from 1921

• Over 3000 products

• Customization

• “Made in Italy”

• 474 stores worldwide

• Largest flagship store in New York

• Stores on every continent but Antarctica

• Very clean, modern layouts

• Collaborating with car brands

• Promoting their brand through charitable efforts

• Small portions of purchases are donated to charitable causes

• Print ads in magazines

• Photos taken by paparazzi

• Promotions through celebrities

• Product priced at flat numbers

• Priced competitively amongst other luxury goods brands

• Outlets offer products at lower prices

• Quality and design > price

Pricing Scale
Gucci Flagship New York
• Founded in 1921 in Florence, Italy

• Founded by Guccio Gucci

• Purchased by parent company Kering in 1999

Located in Trump Tower
Francois Pinault
Kering's Simplified Organizational Chart
as of December 2013
Kering's Luxury Goods Division
Gucci's Key Figures
Kering's Luxury Goods Division
Future of Gucci
• Preeminent luxury brand

• Plan to stay true to the original vision

• Marco Bizzarri appointed as CEO beginning January 1, 2015

• Looking for new creative direction

• Increase market share in 2015

market share based on product
Kering's company breakdown
total company revenue
total company recurring operating income
luxury department revenue
luxury department recurring operating income
International market presence

Large number of directly operated stores

Diverse product line

Product personalization
Threat of competition from medium brands that have potential to move towards premium brands in the future (ex. Zara)
currently exchanged on Euronext
Fouder and current CEO/Chairman of Kering
Florence, Italy
Distribution Channels
+ Products sold exclusively in:
474 directly operated boutiques
Small number of franchises
Selected department and speciality stores
High levels of debt
Needs future design innovation to stay relevant
diverse product line might cause brand dillusion
Control over distribution channels
Gucci's advertising schedule
Advertising push during Holiday season
Seasonal product releases
Print and web advertising budget spread evenly to preserve consistent sales levels
+ Exclusive distribution model to limit intermediaries
+ Handbags are "Made in Italy"
In house at Gucci's Florence workshop
Combat lower cost alternatives with their own entry-level subdivision (ex. T by Alexander Wang)
Enter high potential growth markets in Asia, particularly India and China
Stylish, new design to attract millennials with discreationary income
Continue growth of logo-less items to attract consumers looking for quality as opposed to image
Continued stagnant sales from China expansion
Highly competitve luxury goods segment
Change in focus from parent company
Supply Chain
+ Timepieces are produced in Switzerland
+ Eye wear is manufactured by Salvio group
Based in Padua, Italy
+ Proctor and Gamble develops a line of fragerances for Gucci
Competitor Analysis
Competitor Analysis
Gucci owns a 9% market share in the high-end goods department
Louis Vuitton is Gucci largest and most important competitor
Owns a 9.2% market share
Similar in terms of price and quality
Gucci is hoping to close the gap on Louis Vuitton in 2015
Gucci's products are targeted to different markets and they are all unique. They have different products to offer to diverse markets
Examples of products Gucci offers:
Skin care
Make up
Ready to wear
Segmentation Cont.
These product lines are targeted to different markets and it helps the company expand even more. People mostly know Gucci for their handbags, shoes and fragrance. Gucci's product mix helps them penetrate markets that they are not known for. Gucci geographically segment themselves in areas of large population with a high standard of living.
Product Life Cycle
Product sales are stagnant. Gucci's Q4 sales fell 1.6 percent. I believe this puts Gucci in the decline stage. Their product creativity has been exhaust and people are tired see this same old products. Gucci will need to reevaluate in order to reverse this process.
Kering stock showing a slow decline in price since the summer of 2013
Product Life Cycle
Full transcript