Name: KARIM HAMZA ABDELREHIM ZIDAN SALEM
Student No. : Y1512.130109
Gucci market shrinking and the challenge
of interring new market
1-Excutive summary
Gucci, as other luxury goods producers and sellers, is facing different problems in its markets, not
only the compactions between them, but also with counterfeit industry that increasingly by time has
an advantage in using internet and social media over the original brands.
With wise marketing activity using redefining market segmentation, and expanding the market,
instead of opening store, by using internet effectively and entering new markets. Butting in mind the
differences in culture between markets, Gucci can have a better positioning for
1.1-Purpose of case study
Analyzing briefly the strengths that made Gucci a market leader and finding the current problems
such as shrinking the markets of luxury goods, and a call for redefining the way of making business
and helping for better positioning by finding a proper solutions with advices how to implement them
productively and effectively .
1.2-Over view of Gucci
Gucci is one of the top100 brands it’s an Italian fashion iconic company. It was founded by Guccio
gucci in Florence, 1921, it is now “as in its mission” a group leader in the luxury market at
worldwide level . Gucci, being one of the supreme and pioneer brands, it has to have a number of
factors as strengths helped it to maintain its current status. But as any company it have some
weaknesses and problems which by solving it its statues can be boosted and keep it successful .
2-Gucci Strengths:-
-strong brand image and international presence is the biggest strength of the company
-second not like some other luxury companies (Armani, Polo Ralph Lauren, and Versace ) whose
applying a mono brand strategy that is, to focus on one brand only and to add other business
segments , Gucci instead applied multi-brands strategy accomplished by diversification as it has
more than 10 brands, including Gucci, Yves Saint Laurent, YSL Beauté and Sergio Rossi.
-Other strength it has which is, the ability to control its distribution channels instead of having out of
the company suppliers and retailers which made it more close to its customers and work also as
defensive strategy in the chain value to keep the value added in its hand.
3-Current problems Gucci faces
As a luxury goods brands Gucci faces what luxury market face in general as a leader of market
beside its own problems related to financial issues or internal taken decisions that affecting its
market share and they way of doing business
3.1-General problem
3.1.1-Couenterfet
Faking luxury goods is trade brought $600 million annually that cost big companies not only money
but also hundred thousands of job
With the Internet the whole counterfeit industry has changed to be more easy and profitable
specially if we know that retail sales have grown since the rise of e-comers at an annual rate of 20
percent or more, and the volume of knockoff goods sold online will soon surpass those sold by
physical vendors. Although Rolex is the first in the list of goods counterfeited Gucci is not the last of
the list.
3.1.2- market is shrinking
China market was for some years the booster of many brands and as from 2008 and 2011 there
were grow in sale of luxury goods that was a reason induce big brands to open new stores, Gucci
alone has 70 store in china but after the crash happened sales has fallen, in 2014 with 11% in the
first quarter only in 2015 almost 8% . the fast booming in sales in china made big brands think only
on how they can catch the change in the new big market , but as it fast in going up it was fast in
going down , with Chinese customer started to change their behavior and in the same time a new
competitive domestic brands opened, buying foreigner brands from outside china and using online
instead of physical shopping all these reason was clear enough for luxury brands to know they
have fallen in big problem forced some of them to close some branches.
3.2- Gucci problem
Gucci has an unwise old strategy of growth that is it is opening more stores in existing market as If
its following the old industrial era when growth meant more production, this would cost a lot of
money but on one basket and when there is down sales it prevent a quick solutions since closing
stores not easy and have can harm firm reputation.
4- solutions
solution will concentrate and tackle the weakest point to the less weak one , and will start by Gucci
problem then the general problems afterwards. Avoiding the old strategy of Gucci in having more
stores it should think instead that when my goods is not sold I have to add value to induce the
customer to buy , this will solve also the market shrinking problems
In order to solve “Gucci problem” it has to :-
4.1-put a new strategy of using the social media
Any social media for luxury is not any longer and optional marketing consideration since the
definition of luxury consumers and luxury itself has changes, it is clear that social media marketing
made without a well-search approach is a risky business and wasting of recourses specially while
it’s a time for all who can be a factor into a downfall for a big brands , using unethical and faked
ways and products , for brands it a must to work on induce the consumer to visit you online sites
and pages as well as in- store. Proprietary & Confidential.
4.1.1-Gucci”s customer should feel a sense of brand ownership to increase loyalty can be handled
-Via user generated content and special intensives .
-A consumer name in purchased goods delivered to his place, or his designated goods made for
specially for him(after being accepted by the company)
4.1.2-translate unique brands elements to social plat form
-By treating the web and social media as an extension of your brand since the customer already
view it like this-podcasting news about luxury goods , fashion –mode trends and podcasting defile
will induce consumer to keep in contact with you online)
4.1.3-identifying and expand audiences
-It’s not always the breadth is the most important in building audiences, especially in luxury goods
market narrowly targeting the audience that you know they will leverage social media in your behalf
is more efficient and productive way- grassroots principle has been used from different brands for
its benefits and low cost.
-While doing that Gucci should take in confederations that; it shouldn’t be average in many social
media and should be excellent in one and also should great individual strategies to target
consumers segments based on how they behave and response online
4.1.4-empower your consumers
-Make creative marketing initiatives that encourage consumers to generate content, photo uploads
as an example these photos can be sharing their good times and while celebrating using your
products –BURRY KISSES a project with Google is one good example
-Deepen the relationship by coming a bart of consumer idintity and statuse online, this will lead to
spreeding your brand on behafe of you and has same result of strong assets like word of mouth
4.1.5-manage consumer relation
-Set rules and guied lines before ingaging to cosial media and make all employees in the same
page
-Make your pages and site is the main sourse of breaking newes before press even if you can or
with but not after
-Show that someone is listinig by providing both happy and discontented and how you solved his
problems and made him/her happy again.
4.2-Targeting new market
Chine was for a while the best and fastest in growing for selling luxury goods, but after the down
sales occurred market the market has shrieked. New market is always the best solution in this
condition. Gulf countries, India and the middle east can be Gucci”s coming potential market and to
succeed on increasing sales on it should take in consideration the bellow:
4.2.1-Differents in culture
Gucci or other brands should take care when dealing with society’s values, as for the new
advertisement of Gucci guilty where celebrities nudity was used it can leased to instead of leading
the market in Gulf countries it can face a call of boycotting or at least will be linked to bad intention
to change society culture values.
- Benchmarking is a good way to ease and fasten entering the, those societies have a domestic
brands we can study their activities and offerings to get hint of how they are treating consumers and
been treated by consumer . Family values are more tide in east then the west and can be one of
values we can use in our offering
4.3- Counterfeiting(General problem ) as it is an increase global threat , there for it should be solved
globally. To successfully reduce the harmful effects of counterfeiting a company must commit to
forming a cross-functional team, at least at the advisory level, and to an aggressive, global anti-
counterfeiting initiative, for effectively solve this issue , the team must implement a strategy that
focuses on both distribution and promotional mechanisms associated with counterfeit goods, and a
full financial support must be facilitated and approved to the team since the returns in revenues,
profits, and long term brand value will certainly make the effort worthwhile
- Educate your customers (a company should use customer as an ally in minimizing sales of
counterfeit goods by work aggressively to show customers the risks of buying from unauthorized
sources, and by recruit them to join in the effort by reporting suspicious goods and sellers. web-
based tools for verifying the authenticity of goods and/or the legitimacy of sellers and by offering
such tools, a company must be sure to focus and amplify the benefits of buying original goods from
the brand’s sellers)
-Set priorities (Brand owners should identify which counterfeit goods are generating the largest
sales and target them and also the most profit generated goods in his company to protect it as
well).
-Be unique and hard target (some brands differentiate themselves by a mark in original product or
giving it a high-tech , innovative feature made it difficult to be copied ,at least for a while .
- Use the law to protect your brand (On 16 October 2013, Gucci won a trademark counterfeiting and
cyber squatting lawsuit, in US federal district court in Fort Lauderdale, Florida, against several
online business)
5-Conclusion
Gucci has many strengths that reasoned being luxury goods market leader for long time, but with
the market contentiously changes and sometime to unfavorable change, Gucci should face it with
redefining the way of making business and to have a strategies can increase the harmful effects of
counterfeiting industry .luxury brands neglected using internet and social media for a while but now
it is the time to understand that they have mistaken , social media is a market on its own and will
help opening fare markets instead of spending money on more store can some of them be empty ,
only needed stores should be opened instead and it should has a new added value to attract
different type of consumer
Recourses
https://www.washingtonpost.com/news/business/wp/2014/10/24/the-problem-that-gucci-and-abercrombie-have-in-common/
https://www.washingtonpost.com/business/economy/louis-vuitton-and-guccis-nightmares-come-true-wealthy-shoppers-dont-want-
flashy-logos-anymore/2015/06/15/e521733c-fd97-11e4-833c-a2de05b6b2a4_story.html
https://www.theguardian.com/media-network/2015/sep/10/luxury-brands-retailers-china-economic-slowdown
