Gucci case
description
Transcript of Gucci case
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♤ Potential Entrantsmainly new designers who start their own brand on their ownless significant
☢Industry RivalryHigh but not on price + quality and image perception +ability to attract talent
♢ Substitutesno real substitutes for the luxury goods, as it is not a necessary need.
♡Buyers- The super-rich - The middle-market customers, who selectively trade-up to higher levels of quality, taste and aspiration
♧SuppliersThe bargaining power of the suppliers depends on the segment
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And the best
positioned
player is…
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Gucci Case
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✈ 1990:-the poorest time in the company's history, came close to bankruptcy
-Maurizio Gucci was chairman
-the Gucci name had lost much of its mystique
- many Gucci products had flooded department stores and boutiques
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1994
- Gucci's image revision
- Domenico de Sole became COO. Tom Ford was creative director.
-Tom Ford received two prestigious awards for designing Gucci's ready-to-wear fashions and footwear.
-Sales growth has been strongest in the United States and Asia, where consumers followed American trends.
-The company soon recovered profitability and turned a $17million profit.
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☺2000 - No. 3 global luxury goods group
- Acquired YSL & Sergio Rossi
- group operating income rose 92 percent, to $133 million, on a 101 percent increase in revenue, to $615 million
- LVMH lost a battle for control of Gucci, after Gucci thwarted overtures by the LVMH owner Bernard Arnault and sold a controlling stake to the big French retail group controlled by the French investor Francois Pinault, a rival of Mr. Arnault
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Gucci unique competitive advantage
“the most dangerous thing in business is not making decisions. I learned from Maurizio Gucci- he couldn’t decide anything” - Domenico de Sole
$ Management- Flat structure- Impeccable execution of the strategy - Typical US incentives for employees
$ Manufacturing- Regain the confidence and assessing their quality- Incentive: offer to pay upfront future wages- Productivity- Former employees- Technology
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$ Marketing- Product mix + brand should be consistent + convey the right image + focus on quality + commercial considerations + new look + pipeline of new product
- Pricing reprice every single item (mainly downwards)
-Promotion + two Milan ready-to-wear show in 1995 + public personalities: Madonna, Tina Tuner, Nicole Kidman + massive global advertising campaign
- Distribution + control the distribution channel + Gucci closed or bought back all franchises and licensees + promoted directly operated stores (DOS) + redesigned simultaneously
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Sergio Rossi
&
Yves Saint Laurent
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This marked the turning point for Gucci
- from a single brand company towards a luxury goods conglomerate
- both on the multi product axis (leather, fashion, cosmetics, fragrances, watches and jewelery) and the multi brand axis (Gucci, Sergio Rossi, Bottega Veneta, YSL, Boucheron, Bedat, etc.)
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