Case, Gucci Group N.V. (A)
1. Map competitive positioning of different players in the luxury goods arena and state who is best positioned and why?
The luxury goods arena is a highly competitive industry in which companies must position themselves with both objective and subjective differentiating factors. Although humans are usually rational buyers when it comes to commodities and the necessities of life, much of this logic is thrown out when purchasing high-end luxury goods. While high quality is a necessary component of luxury goods, it is the brand’s image that a customer is really purchasing. Taking this into consideration, the true competition in this industry lies not in the technical differences in products offered, but in the
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Because this case focuses on Gucci, we will conduct a more in-depth analysis of Gucci’s competitive advantage and strategic positioning using SWOT analysis, which identifies a company’s strengths, weaknesses, opportunities, and threats. Throughout its life Gucci has developed many sustainable strengths, such as strong worldwide brand recognition, ownership of many different highly regarded luxury brands, and a strong value chain. While all of the heavy-hitters in the luxury goods arena focus on their value chain with regard to quality manufacturing and a large investment, Gucci has sustained much competitive advantage through control of their distribution channels. While many brands sell their products through a wide variety of locations, Gucci primarily sells its products through directly operated stores, which allows them to control their brand image, pricing, and the overall shopping experience of Gucci products. Moreover, while most luxury brands are sold solely through physical retail stores, Gucci has positioned itself well for the young and “hip” demographic by selling their products through their own website. On the contrary, two of Gucci’s weaknesses concerns instability resulting from owning multiple different brands, not all of which will always be profitable, and the large investment they must make in marketing and advertising in order to sustain its brand image. Concerning