The House of Gucci, better known simply as Gucci (Italian pronunciation: [ɡuttʃi]), is an Italian
fashion and leather goods label, part of the Gucci Group, which is owned by French company
Pinault-Printemps-Redoute (PPR). Gucci was founded by Guccio Gucci in Florence in 1921.
Gucci generated circa €2.2 billion worldwide of revenue in 2008 according to BusinessWeek
magazine and climbed to 41st position in the magazine's annual 2009 "Top Global 100 Brands"
chart created by Interbrand. Gucci is also the biggest-selling Italian brand. Gucci operates
about 278 directly operated stores worldwide (as of September 2009) and it wholesales its
products through franchisees and upscale department stores.
o 2.1 New management
3 Children's Line
4 Automobile culture
o 4.1 American Motors Corporation
o 4.2 General Motors
o 4.3 Ford Motor Company
7 See also
9 External links
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From modest beginnings at the end of the nineteenth century, the Gucci company became
one of the world’s most successful manufacturers of high-end leather goods, clothing, and other
fashion products. As an immigrant in Paris and then London, working in exclusive hotels, young
Guccio Gucci (1881–1953) was impressed with the luxurious luggage he saw sophisticated
guests bring with them. Upon returning to his birthplace of Florence, a city distinguished for
high-quality materials and skilled artisans, he established a shop in 1920 that sold fine leather
goods with classic styling. Although Gucci organized his workrooms for industrial methods of
production, he maintained traditional aspects of fabrication. Initially Gucci employed skilled
workers in basic Florentine leather crafts, attentive to finishing. With expansion, machine
stitching was a production method that supported construction.
Together with three of his sons, Aldo, Vasco, and Rodolfo, Gucci expanded the company to
include stores in Milan and Rome as well as additional shops in Florence. Gucci’s stores featured
such finely crafted leather accessories as handbags, shoes, and his iconic ornamented loafer as
well as silks and knitwear in a signature pattern. The Gucci loafer is the only shoe in the
collection of the Museum of Modern Art in New York.
The company made handbags of cotton canvas rather than leather during World War II as a
result of material shortages. The canvas, however, was distinguished by a signature double-G
symbol combined with prominent red and green bands. After the war, the Gucci crest, which
showed a shield and armored knight surrounded by a ribbon inscribed with the family name,
became synonymous with the city of Florence.
Aldo and Rodolfo Gucci further expanded the company’s horizons in 1953 by establishing
offices in New York City. Film stars and jet-set travelers to Italy during the 1950s and 1960s
brought their glamour to Florence, turning Gucci’s merchandise into international status
symbols. Movie stars posed in Gucci’s clothing, accessories, and footwear for lifestyle
magazines around the world, contributing to the company’s growing reputation.
Gucci’s distinctive lines made its products among the most frequently copied in the world in the
early 2000s. Pigskin, calf, and imported exotic animal skins were subjected to various methods
of fabrication. Waterproof canvas and satin were used for evening bags. Bamboo was first used
to make handbag handles by a process of heating and molding in 1947, and purses made with a
shoulder strap and snaffle-bit decoration were introduced in 1960. In 1964 Gucci’s lush butterfly
pattern was custom-created for silk foulards, followed by equally luxuriant floral patterns. The
original Gucci loafer was updated by a distinctive snaffle-bit ornament in 1966, while the ―Rolls-
Royce‖ luggage set was introduced in 1970. Watches, jewelry, ties, and eyewear were then
added to the company’s product lines. A particularly iconic touch, introduced in 1964, was the
use of the double-G logo for belt buckles and other accessory decorations.
The company prospered through the 1970s, but the 1980s were marked by internal family
disputes that brought Gucci to the brink of disaster. Rodolfo’s son Maurizio took over the
company’s direction after his father’s death in 1983, and dismissed his uncle Aldo—who
eventually served a prison term for tax evasion. Maurizio proved to be an unsuccessful president;
he was compelled to sell the family-owned company to Investcorp, a Bahrain-based company, in
1988. Maurizio disposed of his remaining stock in 1993. Tragically, Maurizio was murdered in
Milan in 1995, and his former wife, Patrizia Reggiani, was convicted of hiring his killers.
Meanwhile, the new investors promoted the American-educated Domenico De Sole from the
position of family attorney to president of Gucci America in 1994 and chief executive in 1995.
The company had previously brought in Dawn Mello in 1989 as editor and ready-to-wear
designer in order to reestablish its reputation. Well aware of Gucci’s tarnished image and the
value of its name brand, Mello hired Tom Ford in 1990 to design a ready-to-wear line. He was
promoted to the position of creative director in 1994. Before Mello returned to her post as
president of the American retailer Bergdorf Goodman, she initiated the return of Gucci’s
headquarters from the business center of Milan to Florence, where its craft traditions were
rooted. There she and Ford reduced the number of Gucci products from twenty thousand to a
more reasonable five thousand.
Tom Ford came to the foundering company with vision and style. Having the strong support of
Dominico De Sole, Ford wished to maintain a sense of the company’s history while updating
Gucci’s trademarks. In 1994 Ford became responsible for creative direction, and by 1996 he
directed all aspects of the company—including ready-to-wear clothing, visual merchandising,
packaging, interior design, and advertising. Ford and De Sole struggled to restore the former
reputation of Gucci, while redirecting the growing brand to a new level for the market of the late
There were seventy-six Gucci stores around the world in 1997, along with numerous licensing
agreements. Ford was instrumental in the process of decision-making with De Sole when the
Gucci Group acquired Yves Saint Laurent Rive Gauche, Bottega Veneta, Boucheron, Sergio
Rossi, and, in part-ownership with Stella McCartney, Alexander McQueen and Balenciaga. By
2001 Ford and De Sole shared the responsibility for major business decisions, while Ford
concurrently directed design at Yves Saint Laurent as well as at Gucci.
The French conglomerate Pinault-Printemps-Redouté, however, gained ownership of 60 percent
of the Gucci Group’s stock in 2003. Women’s Wear Daily then announced the departure of both
Domenico De Sole and Tom Ford from the Gucci Group when their contracts expired in April
2004. The last spring collection under the direction of Ford and De Sole was a critical and
commercial success. Amid widespread speculation in the fashion press about Ford’s heir, the
company announced in March 2004 that he would be replaced by a team of younger designers
promoted from the ranks of the company’s staff.
In 2005, Frida Giannini was appointed as the creative director for women’s ready-to-wear and
accessories, previously joining Gucci in 2002. In 2006, she also became the creative director for
men's ready-to-wear and the entire Gucci label.
Gucci store at night
A turnaround of the company devised in the late 1980s made Gucci one of the world's most
influential fashion houses and a highly profitable business operation. In
October 1995 Gucci went public and had its first initial public offering on the AMEX and NYSE
for $22 per share. November 1997 also proved to be a successful year as Gucci acquired a watch
licensee, Severin-Montres, and renamed it Gucci Timepieces. The firm was named "European
Company of the Year 1998" by the European Business Press Federation for its economic and
financial performance, strategic vision as well as management quality. Gucci world offices and
headquarters are in Florence, Milan, Paris, London, Hong Kong, Japan, and New York. PPR
headquarters are in Paris.
 New management
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Gucci New Bag in 2011
Gucci clutch designed under creative direction of Tom Ford
In 1989, Maurizio managed to persuade Dawn Mello, whose revival of New York's Bergdorf
Goodman in the 1970s made her a star in the retail business, to join the newly formed Gucci
Group as Executive Vice President and Creative Director Worldwide. At the helm of Gucci
America was Domenico De Sole, a former lawyer who helped oversee Maurizio’s takeover of
ten 1987 and 1989. The last addition to the creative team, which already included designers from
Geoffrey Beene and Calvin Klein, was a young designer named Tom Ford.
Raised in Texas and New Mexico, he had been interested in fashion since his early teens but only
decided to pursue a career as a designer after dropping out of Parsons School of Design in 1986
as an architecture major. Dawn Mello hired Ford in 1990 at the urging of his partner, writer and
editor Richard Buckley.
In the early 1990s, Gucci underwent what is now recognized as the poorest time in the
company's history. Maurizio riled distributors, Investcorp shareholders, and executives at Gucci
America by drastically reining in on the sales of the Gucci Accessories Collection, which in the
United States alone generated $110 million in revenue every year. The company’s new
accessories failed to pick up the slack, and for the next three years the company experienced
heavy losses and teetered on the edge of bankruptcy. Maurizio was a charming man who
passionately loved his family's business, but after four years most of the company's senior
managers agreed that he was incapable of running the company. His management had had an
adverse effect on the desirability of the brand, product quality, and distribution control. He was
forced to sell his shares in the company to Investcorp in August 1993. Dawn Mello returned to
her job at Bergdorf Goodman less than a year after Maurizio’s departure, and the position of
creative director went to Tom Ford, then just 32 years old. Ford had worked for years under the
direction of Maurizio and Mello and wanted to take the company’s image in a new direction. De
Sole, who had been elevated to President and Chief Executive Officer ofGucci Group NV,
realized that if Gucci was to become a profitable company, it would require a new image, and so
he agreed to pursue Ford’s vision.
In early 1999 the luxury goods conglomerate LVMH, headed by Bernard Arnault, increased its
shareholdings in Gucci with a view to a takeover. Domenico De Sole was incensed by the news
and declined Arnault’s request for a spot on the board of directors, where he would have access
to Gucci’s confidential earnings reports, strategy meetings, and design concepts. De Sole reacted
by issuing new shares of stock in an effort to dilute the value of Arnault’s holdings. He also
approached French holding company Pinault-Printemps-Redoute (PPR) about the possibility of
forming a strategic alliance. Francois Pinault, the company’s founder, agreed to the idea and
purchased 37 million shares in the company, or a 40% stake. Arnault’s share was diluted to a
paltry 20%, and a legal battle ensued to challenge the legitimacy of the new Gucci-PPR
partnership, with the law firm of Skadden, Arps, Slate, Meagher & Flom representing Gucci.
Courts in the Netherlands ultimately upheld the PPR deal, as it did not violate that country's
business laws. The second largest shareholder is Crédit Lyonnais with 11%. As of September
2001 a settlement agreement was put into place between Gucci Group, LVMH, and PPR.
Following Ford's departure, Gucci Group retained three designers to continue the success of the
company's flagship label: John Ray, Alessandra Facchinetti and Frida Giannini, all of whom
had worked under Ford's creative direction. Facchinetti was elevated to Creative Director of
Womenswear in 2004 and designed for two seasons before leaving the company. Ray served as
Creative Director of Menswear for three years. 32-year-old Giannini, who had been responsible
for designing men's and women's accessories, currently serves as Creative Director for the entire
Frida Giannini, formerly Creative Director of accessories, is named sole Creative Director in
2006. In 2009, Patrizio di Marco replaces Mark Lee as CEO of Gucci.
 Children's Line
Gucci’s president and chief executive officer Patrizio di Marco revealed that Gucci is set to
launch a children’s line in June 2010. The line will initially be unveiled in Italy and to 40 stores
around the world. Frida Giannini serves as the creative director of the line. Giannini has been
applauded on her fresh, feminine take on contemporary fashion. Born in Rome in 1972 to an
architect father and art history professor mother she studied fashion design at Rome's Fashion
Academy. Once she completed her education she went on to apprentice at a small-scale fashion
house. In 1997 Giannini began a career at fashion house Fendi, where after just three seasons of
designing for ready-to-wear she was promoted to designer of leather goods. In 2002 she moved
to Gucci as director of handbags, and in 2004 was promoted to designer of all accessories. A
year later in 2005 the designer was promoted to creative director of women's ready-to-wear at
Gucci, in addition to her role as designer of accessories. In 2006 Giannini was named creative
director of the label when she became responsible for design of menswear. In addition to
clothing design, she has also developed retail concepts for Gucci stores, and creative control of
 Automobile culture
The interior of the AMC Hornet Sportabout with the Gucci package
 American Motors Corporation
Aldo Gucci expanded into new markets including an agreement with American Motors
Corporation (AMC). The 1972 and 1973 AMC Hornet compact "Sportabout" station wagon
became one of the first American cars to offer a special luxury trim package created by a famous
fashion designer. The Gucci cars sported boldly striped green, red, and buff upholstery and on
the door panels, as well as the designer's emblems and exterior color selections. American
Motors also offered a Pierre Cardin Edition of its Javelin automobile.
 General Motors
In 1979 and 1980, a Miami-based aftermarket company offered the Cadillac Seville by Gucci
edition. The exterior included a "facing double G" Gucci logo as a hood ornament and the c-
pillar covered vinyl roof. The interior had a headliner of the logo and headrests adorned with the
logo as well. The dashboard carried the "Gucci script" logo in bold lettering. Inside the trunk was
a full set of Gucci luggage.
 Ford Motor Company
A 1989 Gucci Series Lincoln Town Car was scheduled to be offered, per pricing guides, but
never came to fruition. Lincoln offered Emilio Pucci, Bill Blass, Gianni Versace, Hubert de
Givenchy, and Valentino designer editions during the 1970s and 1980s.
Gucci has had a partnership with UNICEF since 2005. Gucci stores worldwide donate a
percentage of the sales for special collections made specifically for UNICEF to go toward the
United Nations Children's Fund. The annual Gucci Campaign to Benefit UNICEF supports
education, healthcare, protection and clean water programs for orphans and children affected by
HIV/AIDS in sub-Saharan Africa. For the campaign in 2009, Michael Roberts promoted a
children's book, "Snowman in Africa" with proceeds going to UNICEF. In five years, Gucci
donated over $7 million to UNICEF. Gucci is the largest corporate donor to UNICEF's "Schools
for Africa" that was established in 2004 by UNICEF, the Nelson Mandela Foundation, and the
Hamburg Society. Its goal is to increase access to basic schooling for all, with a special emphasis
on children orphaned by HIV/AIDS and children living in extreme poverty.
In 1998 Guinness World Records cites the Gucci "Genius Jeans" as the most expensive pair of
jeans in existence. These jeans were distressed, ripped and covered with African beads and were
offered for sale for US$3,134 in Milan.
This record has since been surpassed
The Marketing Strategies of Gucci
SWOT Analysis for House of Gucci
Mar 6, 2009 Gwendolyn Cuizon
Gucci - Doctor Bob
The House of Gucci, or simply Gucci is one of the more established premium fashion brands in the
world. Its success depends largely on its effective marketing strategies.
The House of Gucci or simply Gucci is an Italian fashion icon company. Founded by Guccio
Gucci in Florence, 1906, it is now the most famous luxury brand in the world.
Gucci earned US $ 7 billion in revenues in 2006. It ranks 46th in Business Week’s Top 100
Brands. It now has 425 stores worldwide and a number of franchisees and high-end department
stores that carry its brands.
Gucci, being one of the premium brands, has to contend with a number of factors both internal
and external in order to maintain its current status. The following is the analysis on Gucci’s
strengths, weaknesses, opportunities and threats.
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SWOT Analysis of Gucci
The strength of Gucci is in its established, very strong brand image and international presence.
Gucci has also the ability to control its distribution channels. This is part of Gucci’s defensive
strategy in the chain value to capture the value added instead of giving it to the middlemen such
as suppliers and retailers.
The company has also increased the number of their Directly Operated Stores (DOS) as part of
the defensive strategy of taking more control of the distribution process. The 2003 figure showed
that DOS accounted for 61.3% of revenues compared to a much lower 32.5% in 1999.
Its aggressive strategy accomplished through diversification and communication is also another
of Gucci’s strengths. Gucci changed its strategy of carrying a single brand to branching out to a
multi brand group. This strategy is also adopted by other conglomerates such as Louis Vuitton
Some luxury companies use the strategy of focusing only on one brand and add other business
segments such as what Armani, Polo Ralph Lauren, and Versace did.
Top Three Outlet Malls in Florence, Italy for Bags & Shoes
The Death of a Fashion Icon — YSL
This strategy is done in order to allow the positioning of the brand in the industry to differ
depending on the number of brands and the number of business segments the company wants to
compete in. This is the idea behind focus (mono brand) versus diversification (multi-brand).
Gucci Group has more than 10 brands, including Gucci, Yves Saint Laurent, YSL Beauté and
The weaknesses of Gucci include instability in management and financial base. The instability of
its management can affect the group’s corporate strategy and vision.
The financial base is weak and alarming, with a long term debt increase from $17 million in
1998 to $143 million in 1999 and to $1.3 billion in 2003. Some brands in the Gucci group’s
portfolio are still not profitable, and there is a need to promote and market them aggressively.
Opportunities for Gucci abound especially in the emerging luxury markets in growing economies
from Asia such as India and China. People who come from these places who recently amassed
huge wealth due to the excellent performance of the economy would definitely want to try
luxurious brands such as Gucci.
There is opportunity in the consolidation of other brands too. The opportunity exists in creating
competitive advantage in different business segments. There are various business segments
Gucci can venture into should the need to expand and create more luxurious products arise.
The luxury goods carry premium products designed for very wealthy individuals. This
demanding market spares on expense to get the best product in terms of quality, style and design.
Price, therefore, is not a basis of competition in this kind of industry.
Competition largely exists on how potent and valuable the brand image has become. This is the
focus of Gucci’s thrusts. Its competitor Louis Vuitton may have made its mark in size with more
than 50 luxury brands in its belt and sales of 12.6 billion euros in 2004 alone but it is not exactly
the single dominant player in the market.
This is because in the luxury products market, companies can carry several brands and business
segments which could change their positions depending on the segments such as leather & shoes,
cosmetics, jewelry & watches, wine and spirits and others.
Competition is also effectively minimized by the intense rivalry of established luxury goods.
New firms would definitely find it next to impossible to penetrate such an exclusive market. The
cost of maintaining and promoting this image are also prohibitive.
Companies are forced to invest huge money in brand promotions in order to maintain their
image. Expenses such as advertising and marketing expenses, acquisition of competitors, control
of the distribution channel and other strategies take the bulk of company’s operating budget.
The barriers to exit in this industry are low which means that survival is for the fittest. If the
company cannot compete with other players in the industry then it has to fold or sell to other
bigger firms which make exit quite easy and quick.
In this industry, the barriers to entry are really high and the barriers to exit are low, therefore
only the select few can maintain their position in the market, while others could give up
altogether or are bought by bigger firms.
Also, luxury goods do not have direct substitutes like other ordinary goods but the threat could
come from imitation. Counterfeits often penetrate the market. This could take away a portion of
the sales that should go to luxury goods companies.
There is also the threat of substitutes to contend with. These are products that are considered
ordinary or the medium brands but can eventually expand their product lines to premium brands
in the future such as Zara and Gap.
Internal threat could also come from French holding company Pinault-Printemps-Redoute (PPR)
who currently owns 68% of Gucci’s stocks.
Riding high on their incredible financial success (a 35% growth in revenues over the last two years), Mark
Lee , chief executive officer for Gucci, is looking forward to establishing the 86-year-old luxury brand’s
presence in India. In Mumbai for the official launch of their store, at The Galleria in South Mumbai, Lee
spoke to Mint about the potential for luxury brands in this market and also shares the company’s future
strategy. Edited excerpts:
The Indian wedding, a time when families with the most modest means splurge. What is Gucci
doing to capture this market?
Mark Lee, Gucci, CEO
We are very aware of unique cultural phenomena. Gucci is a perfect
luxury brand in that sense with an incredible product authority, built up
for decades across a range of product categories. Leather goods are our
core business, accounting for more than 50% of the revenues of the
brand. Footwear and ready-to-wear are also important categories.
In leather goods, we have categories that range from handbags to
wallets to small leather goods... So we are an idea brand as a gift brand.
Jewellery is a new category, but one we believe in very strongly. There is
a focus in terms of real gold, real precious stones and diamonds.
Yes, we have started working on bolder pieces. But like all our products
categories, it is linked to our tradition.
Is Gucci planning to set up any manufacturing facilities in India?
No. Made-in-Italy is really a... part of our strategy. We are very interested and very active in terms of
developing new markets. So, we are moving in terms of entering new and exciting markets but it is very
important to us, and our strategy to enter with the same products... made in Italy. We are... fortunate to be
growing our revenues and we are growing our profits as well.
Our Ebitda (earnings before interest, tax, depreciation and amortization) from 2005 to 2006 moved from
26% to more than 29% as an incidence on sale and (is) growing faster than our revenue. So, we do not
have a need or desire to de-localize as a means of cost-saving or in terms of increasing profit.
Many luxury brands are stocking or manufacturing special products that start at smaller price
points to encourage consumers who have never bought luxury brands. Will Gucci do the same?
Not really. Within the breadth of products under the Gucci brand, we have a wide range of products. Within
leather goods, we have a tradition of... designing, making and producing wallets, all forms of small leather
accessories, whether it is the card case or key chain.
We don’t have anything that is specific to India in terms of lower prices or entry price points. In fact, the
opposite is true, we wanted to make sure that our first store, here in Mumbai, was a full-range store. So,
you find up to the most glamorous and the most expensive ready-to-wear evening dresses, coats, and items
in fur and leather with high price points right down to a wallet, a key case or a pair of sneakers.
How does one sell a $1,000 handbag?
(Laughs) The first point is to create the desire. The success we have enjoyed all these years always comes
first and foremost from the desire we create. No one needs luxury. The definition of luxury by nature is
something is an unnecessary pleasure.
Nobody needs a $1,000 handbag! We are creating desire, but it is a two-way street. The world today has an
unprecedented level of wealth. If you look at the current situation, the amount of countries that exist in the
arena of luxury goods is completely different from what it was 10 years ago.
Twelve years ago, Russia didn’t exist as a luxury market and today, it is becoming one of the most
important luxury markets in the world.
What is the potential for Indian women to buy and wear gowns?
We purposely wanted to make the first store a full-range store, including the full range of ready-to-wear. At
the store, you will find day wear, weekend wear and evening wear. Within the very first weeks, what we’ve
experienced in sales, we have very high penetration in ready-to-wear dresses and evening dresses.
We are catering to an elite segment and really, an international customer. Mumbai has really hot weather,
but downstairs we are selling coats and heavyweight things because the Gucci customer is a traveller, and
they may buy a coat not necessarily to wear here, but when they travel abroad.
India doesn’t have as many fashion glossies as developed markets do. What is your advertising
and marketing strategy going to be here?
Magazines will still continue to be an important base of our advertising strategy as it’s a great medium to
show the imagery of the brand and its very nice to have glossy, print advertising images. You have some
titles, which have been around for many years, and now you also have Vogue, definitely a big step for the
Indian market. Of course, events will always be important. Over time, we will study the different media
vehicles to see which formula works best.
A lot of luxury brands have signed up celebrity endorsers. Will Gucci do the same or will you
continue gifting products to celebrities who then sport them at social dos?
The history of the Gucci brand, fortunately, is that celebrities are attracted to Gucci. So, we’ve never had to
chase celebrities. We have had a long history of celebrities following the brand. Starting with royalty such as
Princess Grace, in the 1990s it was Madonna and still is today.
On a local scale, long before we arrived in India we have been dressing some of your most famous and
beautiful actresses such as Aishwarya Rai some of her red carpet occasions for some of her red carpet
occasions. There is that aspect which is ongoing, but it is not contractual.
Where does India fit into the larger scheme of things at Gucci?
India will no doubt in the future, in five, 10, 15 years—it is a question of time and remains to be seen—
become one of the important countries in the word for luxury and for the Gucci brand. We are at the official
beginning of our adventure in India. We have two more stores coming up soon in New Delhi—one before the
end of the year and another when the (DLF) Emporio Mall finally opens in the first half of 2008. We will also
be looking at other cities such as Bangalore.
The illustrious name of Gucci began as a mark on leather goods produced in Florentine workshops for the
young Guccio Gucci. Inspired by the grandiose luggage transported by wealthy guests to the Ritz Hotel in
London, where Gucci worked in the kitchens, the young Italian returned to his native country where he
began making leather luggage.
The characteristic double-G motif printed on the canvas was introduced after World War II due to a
shortage of leather. Its bold red and green bands on suitcases, bags, satchels, wallets, and purses have
become one of the most copied trademarks in the world, along with France's Louis Vuitton. The Florence-
based company grew to international proportions in the postwar period, expanding its range to include
clothing, fragrances, household items such as decanters and glasses painted with the distinctive red and
green bands, scarves, and a slew of other accessories. It was this indiscriminate expansion that
ultimately proved to be detrimental to the name of Gucci for, as Yves Saint Laurent's director Pierre Bergé
once said, "A name is like a cigarette—the more you puff on it the less you have left."
Added to this overexposure was the proliferation of Gucci imitations which reputedly cost the company a
fortune in legal fees, along with infamous conflicts between the volatile members of the Gucci clan. All
were detrimental to the high profile image the company needed to maintain. There were, however, many
Gucci items that became status symbols in their own right—such as the Gucci loafer with its
unmistakeable gilt snaffle trim which, according to the New York Times was what carried the company to
fortune. Biographer Gerald McKnight notes in his book Gucci: A House Divided, (New York, 1987) that
the loafer even became the subject of well-worn jokes in the 1970s when the name Gucci became as well
known as household items such as the Hoover and cellophane tape.
Having lost a great deal of the prestigious aura that is a vital element to the success of a luxury brand, the
house of Gucci suffered bad press during the 1980s, as journalists hungered after stories of bitter rivalry
between family members and their legal battles. It was an American woman, Dawn Mello, who restored
the luxurious image of Gucci when, in 1989, she was appointed executive vice-president and creative
director of the company. Under her control, the existing Gucci lines were edited and refined, and fewer,
more select new items introduced.
Mello provided a clever combination of just the right balance of historical relevance and a real sense of
modernity which restored Gucci to its former glory as a "must have" name. She was helped by designer
Tom Ford who came to Gucci in 1990. Three years later, in 1993, the Gucci clog was a sell-out item
among the fashion cognoscenti and became the most copied shoe style of the season. Gucci was once
again established as a purveyor of luxury goods but also as a serious contender in the high fashion
stakes. This same year, the firm was acquired by Investcorp, and the following year relocated its
headquarters from Milan to Florence. Mello however, left to rejoin Bergdorf Gordman in New York, and
Ford was named Gucci's creative director.
Ford proved a good fit for Gucci, his collections took the house back to its must-have status. Along the
way came corporate intrigue, when rival Prada suddenly acquired a chunk of Gucci in 1998, only to turn
around and sell to archrival LVMH in 1999. The events sparked a takeover attempt, with Gucci narrowly
escaping due to white knight François Pinault, whose Pinault Printemps Redoute bought in to Gucci.
Pinault and Gucci CEO Domenico de Sole soon gave LVMH a run for its money in the bid to become the
world's largest luxury firm. Though LVMH was ahead, Gucci was a force to be reckoned with and pursued
the same targets as LVMH, such as Fendi in 1999. LVMH, partnered with Prada, prevailed; with Prada
eventually selling its stake to LVMH. Gucci itself then went on a buying spree, acquiring stakes in
Boucheron, Sergio Rossi, and Bottega Veneta.
By the end of the 20th century, Gucci had become a global competitor and flexed its muscle with the
acquisition of Yves Saint Laurent and Balenciaga. Tom Ford, widely considered Europe's top designer by
this time, took the design reins at YSL in addition to his Gucci responsibilities, and the Balenciaga buy
brought hot new designer, Nicolas Ghesquiére into the fold. Alexander McQuuen, who had defected from
LVMH, and Stella McCartney, another sensation, had also joined Gucci. With four of the fashion world's
most acclaimed designers under its roof, Gucci was sure to take the catwalk by storm.
While conducting research for Gucci cap, watches we often study only a part of the total population
under study. This 'part' is called the 'sample' and the process by which we draw sample is called
sampling for new products of Gucci. All the elements or events under study in any research are called
the population or universe. This question of sample size is crucial for the research students for Gucci
accessories. Generally researchers collect the sample large enough to make reasonable interpretations.
Yet, large sample size is not enough to prove that a sample is representative of the population. The size
of the sample should be determined keeping in view the following factors: degree of accuracy required,
time available for completion of the study, manpower available, finances available, and subject matter
Sampling error in Gucci accessories may be defined as the degree to which sample attributes differ from
population characteristics on certain measures. If we study the entire population then there is no
sampling error at all. But we also know that it is impossible to study the entire population over a fixed
period of time and we are bound to resort to sampling. Larger the size of sample lesser will be the
sampling error. Broadly, Gucci sampling can be done in two ways: probability and non-probability ways
of sampling. In random sampling the selection of sampling is done is such a way that each event in the
population gets equal chance of selection. Random sampling is a systematic and most scientific means
of studying the population. Gucci products makers are the creative people who are involved in the
finding the new methodologies and various basic aspects to think out of box thing. People today have
enormous number of choices and wants the best product that suites the social status and standard of
living. Sometimes cheap Gucci products are designed keeping in mind the requirement of the
consumers. The best possible thing is that various fashion designers design the Gucci accessories and
use fashion shows and window display methodologies.
Gucci makes descried decision regarding what, where, when, how much, by what means concerning an
inquiry or a research study constitute a research design for the Gucci products. The arrangement of
conditions for collection analysis of data in a manner that aims to combine relevance to the research
purpose with economy. So, the agenda from writing hypothesis to the final analysis of data is research
design. The Gucci products defined the major products that suited the consumer in an affordable price.
Gucci conduct research studies to portray accurately the characteristic of a particular situation or group
or individual. We sometimes conduct research studies to determine the frequency with which
something occurs or with which it is associated with something else. Studies having this purpose are
known as Gucci diagnostic studies.
SWOT Analysis of
Strengths : -
1. Strong Brand Name
2. Strong Presence in International Market
3. Diversification Strategy with a large Portfolio of Brands
4. More control over Distribution Channel
Weakness : –
1. Unstable Management/Interest Conflict between family members can arise
2. Weak Profitability from other brands than GUCCI
3. Weak Financial Base (Decline in Margins, High Debt…)
Opportunities : –
1. Enter High Potential Markets in Asia, Particularly India and China.
2. Consolidation of other Brands(Build Competitive Advantage in different business segments)
Threats : –
1. Take over by PPR who owns a 68% stake in capital of GUCCI
2. Threats of Competitors from medium Brands that have the potential to move to Premium
Brands in Future Example – ZARA & GAP
Unique Selling Proposition : –
1. Product’s Quality, Style & Design.
2. Direct Operational Stores(DOS) : Exclusivity of the product is Enhanced.
Popularity: 11% [?]
The House of Gucci, better known simply as Gucci (Italian pronunciation: [ˈɡuttʃi]), is an Italian fashion
and leather goods label, part of the Gucci Group, which is owned by French company Pinault-Printemps-
Redoute (PPR). Gucci was founded by Guccio Gucci in Florence in 1921.
Gucci generated circa €2.2 billion worldwide of revenue in 2008 according to BusinessWeek magazine and
climbed to 41st position in the magazine's annual 2009 "Top Global 100 Brands" chart created by
Interbrand. Gucci is also the biggest-selling Italian brand. Gucci operates about 278 directly operated
stores worldwide (as of September 2009) and it wholesales its products through franchisees and upscale
Gucci was founded in 1921 by Guccio Gucci. In 1938, Gucci expanded and a boutique was opened in Rome.
Guccio was responsible for designing many of the company's products. In 1947, Gucci introduced the
Bamboo handle handbag, which is still a company mainstay. During the 1950s, Gucci also developed the
trademark striped webbing, which was derived from the saddle girth, and the suede moccasin with a metal
His wife Aida Calvelli had a large family, though only the sons—Vasco, Aldo, Ugo, and Rodolfo—would play a
role in leading the company. After Guccio's death in 1953, Aldo helped lead the company to a position of
International prominence, opening the company’s first boutique in New York. Rodolfo initially tried to start
an acting career as a matinee idol but soon returned to help direct the company. Even in Gucci’s fledgling
years, the family was notorious for its ferocious infighting. Disputes regarding inheritances,
stock holdings, and day-to-day operations of the stores often divided the family and led to alliances. Gucci
expanded overseas, board meetings about the company’s future often ended with tempers flaring and
luggage and purses flying. Gucci targeted the Far East for further expansion in the late
1960s, opening stores in Hong Kong and Tokyo. At that time, the company also developed its famous GG
logo (Guccio Gucci's initials), the Flora silk scarf (worn prominently by Hollywood actress Grace Kelly[citation
needed]), and the Jackie O shoulder bag, made famous by Jackie Kennedy, the wife of U.S.
President John F. Kennedy.
With the assistance of Tom Ford and Domenico de Sole, GUCCI became one of the great successes of the
sector. In 1921, Guccio Gucci founded a company in Florence, for the manufacture of luggage and saddles of
high-quality. In 1938, he opened a shop in Rome, then in New York in 1951 and following that in Paris, Palm
Beach, Tokyo and Hong Kong. In 1987, the brand had to face disputes between the GUCCI heirs and a
buyback by Investcorp which resold it in 1997. In 1990, Tom Ford became the creative director for the
women's ready-to-wear clothes section, then in 1994, he became the artistic director. In 1999, Gucci
formed a strategic alliance with PPR and became a multi-brand group. The Gucci Group consists of GUCCI,
YSL, Alexander Mc Queen, Stella Mc Cartney and Balenciaga. Luxury fashion houses have shown a
significant growth since the Eighties. However, in order to maintain a share of the dream associated with the
purchase of a luxury item, the latter cannot be mass produced. Moreover, the house must respect the
integrity of its quality, its distribution network, and innovation in its products. It must therefore combine
growth and development to maintain the luxury character of the brand.
International Marketing Global Luxury Goods Prepared by: Tamás Halasy July 7, 2003 MBA 1 2002/2003
Word count: 2,389 Table of contents TABLE OF CONTENTS2 GUCCI'S MARKETING FORMULA3 MARKETING
COMMUNICATIONS3 Advertising4 Direct Marketing4 PR4 IMAGE4 GROWTH MARKETS5 STANDARDIZATION
OF THE MARKETING OF LUXURY GOODS6 GENERALIZATIONS RELATING TO THE GLOBAL LUXURY GOODS
INDUSTRY7 SOURCES8 Gucci Gucci is a global retailer of luxury, high quality fashion items: handbags, small
leather goods and luggage, shoes, ties and scarves, RTW, watches and other personal items such as key
chains, money clips, pens, etc.
The strength of Gucci is in its established, very strong brand image and international presence. Gucci has
also the ability to control its distribution channels. This is part of Gucci’s defensive strategy in the chain
value to capture the value added instead of giving it to the middlemen such as suppliers and retailers.
The company has also increased the number of their Directly Operated Stores (DOS) as part of the
defensive strategy of taking more control of the distribution process. The 2003 figure showed that DOS
accounted for 61.3% of revenues compared to a much lower 32.5% in 1999.
Its aggressive strategy accomplished through diversification and communication is also another of Gucci’s
strengths. Gucci changed its strategy of carrying a single brand to branching out to a multi brand group.
This strategy is also adopted by other conglomerates such as Louis Vuitton and Prada.
Some luxury companies use the strategy of focusing only on one brand and add other business segments
such as what Armani, Polo Ralph Lauren, and Versace did.
This strategy is done in order to allow the positioning of the brand in the industry to differ depending on the
number of brands and the number of business segments the company wants to compete in. This is the idea
behind focus (mono brand) versus diversification (multi-brand). Gucci Group has more than 10 brands,
including Gucci, Yves Saint Laurent, YSL Beauté and Sergio Rossi.
The weaknesses of Gucci include instability in management and financial base. The instability of its
management can affect the group’s corporate strategy and vision.
The financial base is weak and alarming, with a long term debt increase from $17 million in 1998 to $143
million in 1999 and to $1.3 billion in 2003. Some brands in the Gucci group’s portfolio are still not profitable,
and there is a need to promote and market them aggressively.
Opportunities for Gucci abound especially in the emerging luxury markets in growing economies from Asia
such as India and China. People who come from these places who recently amassed huge wealth due to the
excellent performance of the economy would definitely want to try luxurious brands such as Gucci.
There is opportunity in the consolidation of other brands too. The opportunity exists in creating competitive
advantage in different business segments. There are various business segments Gucci can venture into
should the need to expand and create more luxurious products arise.
The luxury goods carry premium products designed for very wealthy individuals. This demanding market
spares on expense to get the best product in terms of quality, style and design. Price, therefore, is not a
basis of competition in this kind of industry.
Competition largely exists on how potent and valuable the brand image has become. This is the focus of
Gucci’s thrusts. Its competitor Louis Vuitton may have made its mark in size with more than 50 luxury
brands in its belt and sales of 12.6 billion euros in 2004 alone but it is not exactly the single dominant player
in the market.
This is because in the luxury products market, companies can carry several brands and business segments
which could change their positions depending on the segments such as leather & shoes, cosmetics, jewelry
& watches, wine and spirits and others.
Competition is also effectively minimized by the intense rivalry of established luxury goods. New firms would
definitely find it next to impossible to penetrate such an exclusive market. The cost of maintaining and
promoting this image are also prohibitive.
Companies are forced to invest huge money in brand promotions in order to maintain their image. Expenses
such as advertising and marketing expenses, acquisition of competitors, control of the distribution channel
and other strategies take the bulk of company’s operating budget.
The barriers to exit in this industry are low which means that survival is for the fittest. If the company
cannot compete with other players in the industry then it has to fold or sell to other bigger firms which make
exit quite easy and quick.
In this industry, the barriers to entry are really high and the barriers to exit are low, therefore only the
select few can maintain their position in the market, while others could give up altogether or are bought by
Also, luxury goods do not have direct substitutes like other ordinary goods but the threat could come from
imitation. Counterfeits often penetrate the market. This could take away a portion of the sales that should
go to luxury goods companies.
There is also the threat of substitutes to contend with. These are products that are considered ordinary or
the medium brands but can eventually expand their product lines to premium brands in the future such as
Zara and Gap.
Internal threat could also come from French holding company Pinault-Printemps-Redoute (PPR) who
currently owns 68% of Gucci’s stocks.
You are invited to participate in our survey [Gucci
Luxury Products Market Survey]. In this survey,
approximately  people will be asked to
complete a survey that asks questions about [your
preference on Gucci Products]. It will take
approximately [15-20] minutes to complete the
Your participation in this study is completely
voluntary. There are no foreseeable risks
associated with this project. However, if you feel
uncomfortable answering any questions, you can
withdraw from the survey at any point. It is very
important for us to learn your opinions.
Your survey responses will be strictly confidential
and data from this research will be reported only in
the aggregate. Your information will be coded and
will remain confidential. If you have questions at
any time about the survey or the procedures, you
may contact [Mr. Quan Tang] by email at the email
address specified below.
Thank you very much for your time and support.
Please start with the survey now by clicking on the
Continue button below.
What is your Gender?
What's your age?
What's your civil status?
What's your highest education?
What's your current occupation?
What's your annual family income?
Do you have other sources of income, e.g. stock investment,
Are any family members working offshore?
I was not aware it
Only generally aware
Have investigate or researched it
Have demand on it
Have purchased it
If any, where did you see or look about Gucci Brand?
Talking to someone else
sponsoring a sport or an event
Have not seen it
Did you have any Gucci brand goods before?
Ready to wear
Overall, what would be your most important factors in purchase luxury
goods such as Gucci?
Recognized brand name
Good sales representative/dealer/owner
Broad selection of products
Do not know
Other than the product itself, which of the following would most
influence you when deciding to buy luxury goods such as Gucci?
Commentary by the internet/web site
Among all the luxury goods, which of these best describes Gucci?
It is my first choice
It is one of several brands I would consider
It is one I might consider
I never consider it
Do you think prices of Gucci products reasonable in high-end luxury
neither unreasonable nor reasonable
Assuming the Gucci product is priced comparably to others major
luxury brands, would you say it is a……
very poor value
somewhat poor value
fairly good value
very good value
How likely are you to buy Gucci luxury goods in future?
Which of the following attributes will mostly entice you to buy the
Gucci luxury goods?
Good brand reputation
Fairly price value
Just what I need
If any, where do you like to buy Gucci Goods?
Airport tax-free shop
If any, what Gucci products would you like to buy based on the
reference of following price list?
-- Select --
If any, how much would you like to expense on Gucci luxury goods
once a time?
not to buy
5, 001- 10,000
10, 001 – 50,000
After experience from this survey, would like to recommend Gucci to
your relative, friends and associates?
The name Gucci conjures a vibe of exclusivity and prestige, an Italian brand of quality. As one of the
world’s leading purveyors of personal luxury goods, Gucci stands for more than just fine quality
shoes or suits. The Gucci Group is now a multi-brand conglomerate, with a collection of high fashion
brands like Balenciaga, Stella McCartney, Boucheron, YSL, YSL Beauté, Bottega Veneta, Bédat &
Co., and Sergio Rossi under its finely crafted umbrella.
In 2002, Gucci did over €1.4 billion in business with 174 directly operated and 31 franchised stores,
selling its brand of leather goods, shoes, ready-to-wear, ties and scarves, jewelry, eye wear and
perfume. Its watches alone number at more than a dozen distinct models and are coveted items,
generating millions in revenue.
The beginnings of the Gucci empire can be traced back to Florence, Italy, in 1921, when a man
mellifluously named Guccio Gucci opened an exclusive leather and luggage shop to cater to a highbrow
clientele. Early on, Gucci understood the importance of building a reputation for his brand and did so by
stamping an identifier on many of his special edition creations, such as the brand’s trademark striped
webbing. His products were a hit and quickly became status symbols synonymous with luxury.
After Gucci died in the early fifties, his sons Aldo and Rodolfo took the reins and lead the Gucci brand to
iconic status. Fashionable celebrities such as Grace Kelly and Audrey Hepburn were counted among
avid collectors. The Guccis took note of this popularity and expanded aggressively, opening stores in
glamorous locations such as London, Paris and Palm Beach.
For all the glamour Gucci represented externally, a great deal of internal dissonance grew within the
family. Aldo and Rodolfo each had two sons who began a tug of war over the company in the eighties,
pulling the brand in different directions like customers at a factory sale. Aldo's son Paolo wanted more
control over product development and got into a feud with his uncle Rodolfo, who managed the Italian
side of the business. Paolo then decided to launch a brand under his full name, but the rest of the family
stood in his way. To get revenge, Paolo exposed his father's personal tax evasion to the US authorities.
Aldo, who had built the Gucci brand, was sent to jail. At his trial, a crestfallen Aldo tearfully forgave his
son for his betrayal, but Paolo was exiled from the business and spent the rest of his life broke on a farm
If that wasn’t enough drama, yet more scandal surrounded the Guccis in the mid-1990s. Apparently
Maurizio, the only son of Rodolfo, inherited the largest stake in the firm and used this to edge his
cousins out of the business. He joined forces with a London-based investment firm called Investcorp to
buy the other family members out and share fifty-fifty control with the investment firm. However mirroring
history, his cousins informed the Italian police that Maurizio had shady tax issues -- he forged his
father's signature to avoid inheritance tax. Maurizio fled to Switzerland to avoid arrest. Maurizio returned
to take control of the company after solving his legal problems, but eventually Investcorp decided to buy
him out, and the Guccis lost complete control while Investcorp made billions.
While the internal melee was bad enough, equally damaging were careless decisions made about
product distribution, which negatively reflected on the brand’s reputation. An ineffective distribution
strategy expanded the reach to thousands of retailers, detracting from the brand’s essence of
exclusivity. Eventually, retailers were selected more judiciously and the brand’s cachet returned. But all
this back and forth took its toll; the brand went from headlines to sidelines, perceived as an old standard
in the fashion world.
However, smart leadership in recent years has driven the Gucci brand to more visibility and success
than ever before. The two men responsible for this resurrection are Creative Director Tom Ford and
President/CEO Domenico De Sole.
Born in Austin, Texas, Tom Ford was educated at New York University and Parsons School of Design
and began his professional design career in 1986 working for American designer Cathy Hardwick.
Rapidly scaling the rungs of the fashion business, he became Design Director at Perry Ellis just two
years later. In 1990, Ford joined Gucci as the company's Women’s Wear Designer, rising to Design
Director in 1992. He gradually absorbed the position of Creative Director of Yves Saint Laurent Rive
Gauche and YSL Beauté, before finally becoming Creative Director of the entire Gucci Group.
Responsible for the design of all product lines from clothing to perfumes and for the group's corporate
image, advertising campaigns and store design, it is Ford’s clean, elegant aesthetic that placed this
once staid fashion brand back on the backs of the wealthy. Known today as one of the world’s leading
visionaries in fashion, Ford has accumulated a great number of accolades on his rise to the top. He’s a
three-time winner of the prestigious Council of Fashion Designers of America for International Designer
of the Year and has won scores of other prestigious awards for his work with the Gucci brands.
Italian born attorney Domenico De Sole is the other half of this dynamic duo. As President and Chief
Executive Officer of the Gucci Group and Chairman of the Group's Management Board, De Sole
oversaw the acquisition process in forming the Gucci Group. He began his relationship with Gucci in
1984 as Chief Executive Officer of Gucci America, Inc. Ten years later, he moved to Italy as the Group's
Chief Operating Officer and was appointed to his current position the following year. By integrating
elaborate advertising and communication campaigns with a marketing strategy that placed the focus on
Gucci's core leather products and ready-to-wear, De Sole brought much needed attention back to the
quality of the brand while streamlining the back-end of the business and expanding the network of
directly operated stores. He has gotten his own share of accolades for his efforts; The European
Business Press Federation recognized Gucci's business achievements in 1998, selecting it as European
Company of the Year from among 4,000 other companies.
Strong leadership and an image revamp literally breathed life back into the Gucci brand. Even so, the
rocky economic climate of the past few years has made for a bumpy ride for the luxury goods market.
The Gucci Group was among those who took a hit, reporting far fewer profits than in the past few years.
Despite the numbers, analysts still cite Gucci as one of the stocks with greatest upside potential, giving
it plenty of space on the runway.
The price range of Gucci perfumes is 4m 2500-5000 Rs