LUXURY MARKET POSI TI ONI NG MATRI X GG GEO SPECI FI C GLOBAL REACH CLASSIC NEW

Luxury market posi ti oni ng matri x gg geo speci fi

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LUXURY MARKET POSI TI ONI NG MATRI X GG GEO SPECI FI C GLOBAL REACH CLASSIC NEW FASHION High Reasonable P r i c e Em porio Arm ani Prada LVMH Pierre Cardin Herm es Tiffany Vendom e Ferragam o Gucci Sergio Rossi Yves Saint Laurent YSL Couture Figure 3: Luxury Company Positioning Matrix 8 Gucci Group N.V. (A) by Mary Kwak. 2001. HBS Case 9-701-037. Harvard Business School Publishing 9 Gucci Group N.V. (A) by Mary Kwak. 2001. HBS Case 9-701-037. Harvard Business School Publishing
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Strategic Management – Gucci Case Analysis 7 The competitive position mapping table below was done based on five key areas that are recommended by Macmillan (2000) for assessing competitive advantage. Though it is done as Gucci versus rest of competition, specific examples have been provided from the data available in the case study. GUCCI Rest of Competition Cost-based Advantage Its recent remaking effort and its outsourced manufacturing model has helped to reduce cost and thereby price by 30%. It also minimizes fixed investment and helps to maintain its return on invested capital at 36% 10 The in-house manufacturing model adopted by Hermes, LVMH and many others have shown to increase the fixed investment and thereby resulting in lower return on invested capital and thereby reducing cost advantage and increasing the price Differentiated Product or Service It focuses heavily on the unique customer service experience to maintain its brand image. It also has different range of products including jewelry, watches, leather, apparels etc. The acquisition of YSL resulted in a new branding the ‘Saint Laurent woman’ and rebranding exercise resulted in ‘Gucci woman’. Two brands that suits different situation or clientele Many competitors focus heavily on customer services experience as part of maintaining their luxury branding efforts. However, LVMH focused more on leathers in the luxury products and others like liquor. As shown in figure 2, not many brands have a spread of luxury products and they mainly focus only on high margin leather products or watches only First mover Advantage In a 150 years old industry, Gucci has been around for 77 years. Though it had ups and downs, the recent strategy has put it back on growth track. If this track record continues it will overtake the leaders LVMH, Hermes and several other brands have been in the industry longer than Gucci and are well known to the consumer and are considered the pioneers with first mover advantage Time based advantage The revamp effort has reduced manufacturing time considerably in many product lines. A 35% reduction noticed in the leather bag manufacturing cycle – 104 days to 68 days. It also built 20-30% 11 additional Products like Kelly bag from Hermes had a long waiting list and became a fashion statement that worked to Hermes advantage given the product’s market image and success. However, the same may not apply to fast moving ‘ready-to- 10 Gucci Group N.V. (A) by Mary Kwak. 2001. HBS Case 9-701-037. Harvard Business School Publishing 11 Gucci Group N.V. (A) by Mary Kwak. 2001. HBS Case 9-701-037. Harvard Business School Publishing
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  • Spring '11
  • Micial
  • ........., Luxury good, LVMH, Gucci Group

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