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Marketing Strategy of GUCCI in UK

Every organization wants to increase their sales and enhance its customer satisfaction. In this article we will focus on the Marketing Strategy of GUCCI in UK.  To increase organizational sales and attract a large number of customers towards the organization there is no alternative to marketing. Marketing helps the organization to identify the customer needs and wants and try to offer the best products to satisfy their customer need (Kotler, P. and Armstrong, G. 2018).

Marketing Strategy of GUCCI in UK

The main job of the marketing department of the organization is to analyze the internal and external environment, product design, and promotional strategy as well as provide better customer services (Kotler, P. Et al., 2012).  In this assignment, the researcher is appointed as a marketing officer and needs to do some marketing environmental scan for the clothing industry. The researcher chooses Gucci as an organization and they want to start their business in the UK. In the following part, the researcher discusses the Gucci overview, PESTEL, SWOT, marketing mix and market segmentation of Gucci. After this analysis researcher also give some recommendation that Gucci can follow to achieve market leadership in the UK clothing industry.

Organizational Overview Gucci

Gucci is a very popular and prestigious brand in the luxury clothing industry. Gucci is established its business in 1921 and the founder of their company was Guccio Gucci. From 1921 Gucci is well known for its superior quality products among the elite group. Gucci is selling all kinds of clothing for males, females, older people, children, etc. Gucci is also selling designer shoes, accessories, and handbags which is very expensive and elegant (Gucci.com, 2019). In terms of marketing strategy, Gucci is following the differentiation strategy most of its products are unique in design and quality. The main competitors of Gucci are Louis Vuitton, Chanel, Tommy Hilfiger, and Prada.

Marketing Strategy of GUCCI in UK

Macro Environmental Factors that affect the Gucci Business in the UK market

Gucci is a popular brand in the clothing industry for their luxury items. Gucci has a very good brand image in the market place. They started their business in 1921 and from that time they were successfully managing their business (Baker, 2014). Recently, the researcher is appointed as a marketing assistant and prepares this report for Gucci because they want to expand their business in the UK. In this below researcher is going to do the PESTEL analysis of UK for Gucci so they can make the effective decisions-

PESTEL Analysis

Organizations are using the PESTEL analysis tool because it gives valuable information about the external environment. PESTEL analysis helps companies to know what kind of challenges they might face operating their business in a particular are. Gucci is a very famous brand and currently, they want to expand their business in UK because of this they want to aware of the macro-environmental factors of the UK (Graham, 2018).

Political Environment

The political environment of a country influences the Gucci profitability level because this Gucci needs to know the political environment of the UK before making any decision. Elements of the political environment are- taxation of a country, political instability, governmental legislation, corruption, etc (Kotler, P. and Armstrong, G. 2018)

The political environment of Gucci is stable and the rate of corruption is also very low in the UK. The most important thing in the UK is its rule of law and democratic system. Gucci can enjoy a very good political environment in the UK because the UK government always helps business organizations.

But if we see the recent political environment UK political environment is quite unstable because of the BREXIT issue but still, UK is a good place for a business especially the luxury brand like Gucci. In terms of Tax, this is quite high is the UK so Gucci needs to compromise these things with their profitability.

Economic Environment

Gucci should consider the economic environment of UK and these are- market structures, interest rates, inflation rates, foreign exchange rates, GDP and employment rate, etc.  UK economy is open so any company can come and start their business (Kotler, P. and Armstrong, G. 2018). Gucci is selling clothing, luxury products, and accessories, etc. UK economy is growing and the rate of inflation is also very low in UK which means UK is a good place for business a company like Gucci.

The bank interest rate in UK is quite low because the Government helps the business organization always in UK. The low-interest-rate indicates Gucci can easily borrow money when they required and they have to pay very low interest.

Most of the UK people are working in different sectors that mean the employment rate is quite high which indicates a good market for Gucci.

Social Environment

Some of the social environmental factors such as- culture, religion, social class, people’s attitudes, social values that influence Gucci’s business. Most of the population in UK is very serious about their social class, social status. Gucci will enjoy a good market in UK because most British people use luxury products. Most of the UK customers are educated and working in a corporate world which also indicates a good sign for Gucci’s business (Kotler, P. Et al., 2012).

Technological Environment

Technology brings a revolutionary change in the business world without technology not a single organization can do their activities effectively (Kotler, P. Et al., 2012). Gucci selling luxury products in the stores and online. Gucci also needs to use technology to sell its products online, do advertise, product innovation, etc. In UK they can enjoy almost all kinds of modern technological facilities.

Environmental Environment

Gucci must obey all the environmental laws introduced by the UK government if they want to do their business. Most of the UK consumers are also very conscious they avoid those firms that are involved in environmental pollution or doing harmful things for the environment.

Legal Environment

UK is very strict about its laws and regulation if Gucci wants to do its operation in the UK it must follow all the laws and regulations of the UK government.

SWOT Analysis of Gucci

SWOT analysis is an important tool that an organization uses to analyze its competitive position in the market place. Gucci wants to start their operation in the United Kingdom but before do that they need to do their SWOT analysis to identify their strengths, weaknesses, opportunity, and threats (Dyson, R. G. 2004). This SWOT analysis can help Gucci to make their business decisions. In the following table researcher done the SWOT analysis of Gucci –

Strengths Weakness
A number of distribution outlets with strong distribution networks;

High brand image in the luxury market segment;

Gucci low-cost structure helps them to manufacture their products at a low price;

Gucci is very good in new product innovation (Forden,2000)

Most of the employees working in Gucci are very efficient;

Financial performance of Gucci is very strong;

The product automation system allows Gucci to manufacture their product effectively(Gucci overview);

Different range of product in their product lines;

Gucci has a strong presence in social media they have a large number of followers on their social page (Forden, 2000)

Most of the property used by the Gucci is rented and they have to pay the rent regularly (Gucci overview);

Research and development team of Gucci is comparatively weak;

Employees turnover in Gucci is very high;

The liquidity position of Gucci is a bit weaker.

 

 

Opportunity Threats
Because of information technology, Gucci can increase their online sales volume;

Gucci can expand its business in different foreign market;

Most of the people are more conscious about the luxury brand.

There are many players who are selling luxury products;

There are many substitutes products available in the market place;

Competition is increasing.

Market Segmentation of GUCCI

Dividing the market into different parts is called the segmentation. According to (Procter, 2012), segmentation means splitting the markets into smaller segments on the basis of demographic, psychographic, behavioral and geographic areas.

Four types of market segmentation are-

  • Geographic segmentation
  • Demographic segmentation
  • Psychographic segmentation
  • Behavioral segmentation

(Kotler, P. Et al., 2012)

In below researcher discuss how Gucci can segment their market in UK market-

Demographic Segmentation

Segment the market on the basis of sex, age group, education, religion, income. In UK they can follow the demographic segmentation to attract more customers in Gucci product such as- –

Gender

Gucci can segment their product lines on the basis of people’s gender. They manufacture luxury clothing and accessories for both men and women.

Age

Gucci can manufacture clothing products for all age groups from newborn babies to old people. But their main customer group in UK should be age between 25 to 50 years, professional people. Because that age group people love to spends their money on clothing.

Income: Gucci’s target customers are those people who are earning a lot of money because those people spend money on luxury products.

In another way, Gucci offers products for both male and female members who want to spend money to impress other people and high-class rich people. Gucci only produces its items for high-class people they never manufacture products for the economy or middle-class people (Gucci.com, 2019).

Psychographic Segmentation

Gucci can segment their market people’s social class, a lifestyle which is discussed in below-

Social class

Gucci is well known for its luxury products and excellent quality. Most of the people buy Gucci items just to maintain their social class. In UK upper-class people spends a big amount of money on their clothing and luxury product so Gucci can select that segment in UK market.

Lifestyle

Gucci designed their products for those people who love fashion and luxury products. In UK there are many customers who spend huge money on a luxury lifestyle. The main target group of customers of Gucci is football players, film stars, musicians and big businessmen (Gucci.com, 2019).

Geographic Segmentation

Segmenting the market depending on the geographic region such as- city, state, country, etc.

Gucci has its physical stores only in a couple of places in USA and European countries where consumer buying behavior is high and people are looking for high quality and luxury products (Gucci.com, 2019).

Behavioral Segmentation:

Brand image, customer loyalty towards the brand, user rate and market responsiveness towards the power is the element of behavioral segmentation (Kotler, P. et al., 2014). Gucci already creates a unique position in the market place for its unique quality and high brand image. Most of their customers are highly loyal because their buying experience is very good.

Targeting

Most of the organizations are using three approaches to set their target market which are-

  • Undifferentiated approach
  • Concentrated approach
  • Multi-segment (Boshoff et al., 2002)

The target group of customers of Gucci is both male and female because they are selling products for all in their stores. They sell almost all age group clothing but after done research, it is identified that their target group for UK market should be 25 to 50 years professional people because those people spend money on their lifestyle. Usually, Gucci item is expensive so their target group is basically the upper-class rich people like- sportsperson, celebrity, and businessman.

Positioning

Positioning means creating a unique position in the mind of their target customers (Kotler, P. 2012) Gucci already has a unique and high brand image in the luxury market segment.  They are well known for their finest quality, retail environment, luxury pricing, and their effective distribution channels. Most of the Gucci stores are well decorated.

Gucci offers the best quality products for its customers with its outstanding features and excellent customer service. Though their price is expensive still most of the upper-class people love to do their shopping from Gucci. Gucci is a big brand among celebrities and high business class people.

Marketing Mix of GUCCI

Product

Gucci is providing the best quality products for its customers from their beginning and their top management always try their best to develop their quality and offer the best products for their customers. Gucci is popular for their luxury leather items, designer clothes and accessories and this product are extremely popular in the market place.  All the products offered by Gucci are unique in terms of design and quality and this is the reason for their high sales and high brand image.  Gucci uses advanced technology in its products which makes its product more attractive and sophisticated (Forden, S. G. 2000).

Gucci sells fashionable clothing for males and females which are elegant, classic and high fashion. Gucci is popular in the market place because of its different range and large collection. Gucci bags are very stylish and elegant and their clothing and shoes are very comfortable.

Price

Gucci follows the premium pricing policy almost all of their products price is very high due to their superior quality. Gucci is known as a prestigious brand in the market place and most of the Gucci customers are willingly pay to the high prices because of the product uniqueness. Gucci is popular in the elite group of society because of their high brand image. Most of their product is designed for wealthy people in society. Gucci never compromises their product quality or customer service quality because of this they cannot able to offer products at a cheap price.

Place

Most of the Gucci stores are situated in big cities and expensive and high profile streets. All of their stores are well designed most of their stores’ interior design is exclusive. Most of the customers find a nice environment when they go to do their shopping in Gucci. Salesperson of Gucci has worn a black dress and provide excellent services to their customers. Gucci has its outlets in New York, Rome, and Paris (Forden, S. G. 2000). Gucci also sells its products online and its sales are growing day by day. Most of the Gucci customers elite groups of society.

Promotion

To create a unique position in the market place and to attract more elite customers towards Gucci they invest a huge amount of money in their advertising. Gucci advertises its products in almost all the expensive and leading fashion magazines (Forden, S. G. 2000). Gucci also advertises their products online and on the television. They use an experimental marketing strategy to maintain a better relationship with their loyal customers.  Gucci always involves high profile celebrities in their advertisements.

Recommendation

Gucci is very famous for its high brand image and excellent product quality and its target group of customers is the high-income level of people. Gucci is trying its best to maximize its profit level and achieve market leadership in the luxury clothing industry. Gucci wants to expand its business in the United Kingdom’s market because the UK is a good place for the business. In the above part of these tasks, the researcher discusses the micro, macro environment of Gucci. On the basis of this information, the researcher found some limitations of Gucci’s business. The researcher gives some suggestions for Gucci which can help them to gain popularity in the UK market as well as market leadership in this luxury market industry –

  • Gucci used the rented property for their products because of this they have to pay the rent regularly which increases their operating expenses. Gucci should buy the property by taking a bank loan;
  • Employee turnover is quite high Gucci management should look at these factors and try to offer the best salary packages and work environment to their employees so they stay long term in Gucci;
  • Gucci needs to invest money in their research and development team because R&D team helps the organization to innovate new product in the market place;
  • Gucci should more invest in their marketing department to advertise their product in online;
  • Gucci also need to open more physical stores in different parts of the world;
  • Gucci should start their business in the emerging country as well because those place most of the rich people spends huge money on their clothing and stylish accessories.

Conclusion

In terms of Brand image, Gucci has a very high brand in the market place. The main reason Gucci is popular in the luxury market because of its stylish product and excellent services. Gucci should more focus on its promotional strategy to attract more customers. Most of their products are very expensive if they want they can produce some less expensive product lines as well which helps them to increase their sales volume. Finally, the researcher wants to say to start a business in the UK is always a good option for Gucci because there are many customers who spend huge money on their clothing.

References

  • Baker, M. J. (2014), ‘Marketing strategy and management’, 2nd edition, McMillan international publications
  • Bianchino, G et al., (1987), ‘The origins of high fashion and knitwear’, vol.1, Milan
  • Graham, H. (2018), ‘Marketing strategy and competitive positioning’, 3rd edition, Pearson education international
  • Dyson, R. G. (2004), ‘Strategic development and SWOT analysis at the University of Warwick’, European journal of operational research, vol. 152, no.3
  • Forden, S. G. (2000), ‘The house of Gucci: a sensational story of murder, madness, glamour, and greed’ 1st edition, New York
  • Kotler, P. and Armstrong, G. (2018), ‘Principles of marketing’ 12th edition, Pearson education international
  • Hague et al., (2013), ‘Market research in practice’, how to get greater insight from your market, Kogan Page, London
  • Kotler, P. Et al., (2012), ‘Marketing management’ 14th edition, Pearson education international

Written by

Md. Shadequr Rahaman

Email: [email protected]

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