Gucci target market 2019

Gucci Enviromental Analysis, consumer segmentation and market research

Executive Summary

The Research in this report will provide an insightful analysis in the current state of Gucci’s marketing environmental. As Gucci is a leading brand in the industry it is highly unlikely that other brand will prove to a be a threat to Gucci’s establishment in the market place. Environmentally friendly products are also playing a huge role in the market place are playing a significant role in the consumer decision making process. In addition, our consumer segment analysis shows that many people in the young bracket are buying Gucci products and driving the market. Furthermore, the consumer segmentation also showing that many consumers are willing to pay more money to purchase Gucci products as there is an increase in income in certain households. Ultimately, Gucci could use the research that we have done in order to improve their business and our recommendations can certainly help them do that.

It is also recommended that Gucci should focus on gaining more consumers in different age brackets in order to improve their business and brand. Gucci should also try creating backpacks made out of environmentally friendly products. Gucci should try and focus on gain consumers in the low consumer segment in order to widespread their business across different age brackets. More research can be done by Gucci in order to improve their business and take on different strategies to enhance their business.

Table of Contents Executive Summary 2 Introduction 3 Section 1 The marketplace and influencing factors 4 Section 2 Consumer Segmentation 12 Section 3 Assess the attractiveness of each cosnumer segment 13 Section 4 Recommendations for additional research 13 Conclusion 13 References 13 Reccomendations 15

Introduction

The Purpose of this reports is to conduct an Environmental analysis, Consumer segmentation and Market research on the Gucci Print Leather Backpack. This report illustrates the types of aspects in the current market in which the Gucci Print Leather backpack will sell, the environment, the consumer segments, and its attractiveness will be shown. As a group of marketing consultants, we have been approached by Gucci to create this report. Furthermore, recommendations are also provided in this report. The limitations of the report were the timeframe, as we could not get primary data and all our data is from secondary sources. The information will be presented in tables and data sources. The availability of the information was a challenge as most of the data was not related to our company. All the information presented is from secondary sources and was gathered from research.

Section 1 The marketplace and influencing factors

The Micro-Environment

The Gucci brand is an Italian based luxury company which provides a wide range of products such as Men’s and Woman’s clothes, shoes, backpacks, wallets, purses and many other accessories (Gucci, 2016). Currently Gucci offers many different types of backpacks as well as a huge number of backpacks for both Men and woman.

The tree diagram illustrates the scope of the industry in which Gucci operates in:

As shown by the tree diagram Gucci belongs to the fashion industry as it is defined by the style of clothing and accessories worn by a group of people or individuals (Steele,2019).

The Fashion industry is a multibillion-dollar industry which is dedicated to the marketing and selling of clothes (Steele,2019). The fashion industry consists of four levels which one is the production of raw materials, secondly the production of fashion industry, thirdly retail sales and various forms of advertising and promotion (Steele,2019). The fashion industry as a bright portrait which a worldwide revenue expected to rise from $481.2 billion in 2018 to $712.9 billion by 2022 (Orendorff 2019). There are many factors that are driving this growth which include expanding their global markets. Furthermore, increase in technological advances such online access and smartphones. Many middle classes having disposable incomes which allows them to make such purchases. The Fashion consumers will have more buying power, an estimate has been made that customer growth is projected to grow from 1.2 billion by 2020, furthermore majority of the customers are within the 16-24 and 25-34 age groups (Orendorff 2019). However, there are many threats to the fashion which include things such as the cost of raw materials. Cotton, silk, wool and leather are things which all need to be farmed. A NASA lead study shows that many of the worlds freshwater sources are being drained faster than they can be replenished (Marshall 2017). Additionally, rising labor costs is something that will have an effect on the industry. If the labor force is changed to a different area or country, this again will have a knock-on effect raising the prices across the globe (Marshall 2017).

In terms of our product the Gucci Print leather backpack, the statistics show that bags are still growing at aa stronger rate which will see a double-digit growth- 15% in 2018 which will dip into the single digits by 2022: 8.7% (Orendorff 2019). The projection makes it the strongest healthiest segment of ecommerce fashion, despite the numbers being the smallest. (Orendorff 2019). The features that Gucci’s competitors in common have is that most of the products offer the same range of designs and backpacks. The backpacks are all prices in the same range showing their true stylish nature which adds to an individual’s status.

Ultimately, it can be seen that many competitor companies in the fashion industry are owned by other brands which can be a subsidiary, business unit and division of a parent company.

Competitor Analysis

Louis Vuitton is the third most popular luxury brand and offers products that is similar to Gucci, however Gucci is ranked as the most popular luxury brand. Louis Vuitton is owned by LVHM which own other brands such as Givenchy, Marc Jacobs and Fendi. Louis Vuitton is a member of the Better cotton initiative, which aims to transform the cotton production by reducing it environmental impact (Gucci 2019).

Versace, just like Gucci, produces similar products which all have the same price range as that of Gucci and Louis Vuitton. Versace is owned by Michael Kors which produce backpack themselves.

The Product comparison that is shown below shows how both Louis Vuitton and Versace. Are placed in Gucci’s strategic group.

#

P

Our Brand + Sub-Brand

Strategic Group Competitor 1

Strategic Group Competitor 2

Brand + Sub-Brand

Gucci Print leather Backpack

Louis Vuitton JOSH signature damier

Versace Barocco Embossed Palazzo Backpack

Brand Positioning

A high luxury product that shows both status and wealth. This increases the way a person is perceived in public. Furthermore, it is also positioned as being the Trend in the fashion industry.

It is a symbol of modern style. Creates an elegant, stylish and value for money product.

A luxury item that is affordable and enhances a individual’s high-class status.

Product Specifications

Place

Gucci Showroom

Louis Vuitton showroom

Versace showrooms, Boutiques and Luxury items store

Price

$2855

$2420

$1885

Promotion

Television advertising, newspapers, Holdings, celebrity ambassadors

Television advertising, newspaper ads, Celebrity ambassadors, fashion shows that show the backpack

Television advertising, newspapers, Holdings, celebrity ambassadors, Ad’s on Public Transport

Advantages & Disadvantages c/w our Brand and Sub-Brand

The advantages are that it has good reputation in the market, the number of stores and being easy to access the locations. Furthermore, there is premium packaging, and genuine soft to touch leather. Also, the backpack is waterproof.

The disadvantages are that it sacrifices necessaires. There are a more wastage of resources in creating high end luxury products.

The advantages are that it makes individuals classier and more elegant. There are easy number of locations to get access to. The backpacks have adjustable straps and are made with genuine leather. The fact that the backpack is also waterproof and fireproof.

The disadvantages are the price of the product, similar alternatives available in the market.

The advantages are it that it has a good reputation in the market. They use genuine leather. The backpack also a feature a gold-tone.

The disadvantages are that are not enough showrooms for Versace. The backpack does not offer any extra features. There Is no premium packaging and the backpack is not water-proof.

Other factors important to prospective buyers

Reviews from other people

What other individuals are using at that given moment

Price

Packaging

Brand Trustworthiness and familiarity

Reviews of the product

Recommendation from other sources

Social media. Influence on the buyer

Current financial conditions

Data was current as of (28th April 2019).

Sources; (Gucci 2019, Louis Vuitton 2019, Versace 2019).

Louis Vuitton objectives as a company are that to be creative and innovative, also to aim for product excellence. Their overall goal is to represent luxury life with elegance and creativity. They are already members of the better cotton initiative which aims to transform cotton production by reducing its environmental impact and improve livelihoods. Also, its Parent company LVHM, has set a target to reduce carbon emissions generated from its own operations by 25% (Rauturier 2018).

Versace’s objectives are similar as Louis Vuitton which involves being creative and innovative. As a brand Versace does to incest to environmentally friendly products as well as implement a sustainability program. Gucci has already invested in a 10-year sustainability plan (Gucci 2019). Hence, it can be seen that both Louis Vuitton and Gucci are moving towards more environmentally friendly products which shows their marketing strategy and where they are heading in the future. This is threating to Versace has they have not made a move to creating products that are more environmentally friendly. The Gucci Print leather backpack is the most expensive backpacks out of the other competitors however there is not much difference between the other products. As a brand Gucci is going to be more sustainable but they have not introduced those plans to their backpacks.

Other Micro-Environment Players

All of Gucci’ leather comes from a workshop in Florence. They work with Gucci in order to use their leather which allows for the manufacturing of all Gucci’s leather products. This can be seen in our Gucci Print- leather Backpack. All of the leather is sent out so that it can be manufactured into products. As the workshops in Florence are responsible for the manufacturing of leather for their products, any breakdown in relationship can cause problems for their manufacturing. Until they find a new leather source all the production will be halted. Without their leather workshops they will be lack of production, as well as many of their products will halted. Product supplies will also be halted. Additionally, there could be problems regarding the relationship between the supplier and the company. The use of this leather can be leveraged by adding it to provide better quality in the product and also use leather that will allow for the durability of the product. There is reduced costs as having a good relationship means that the suppliers and the company can work for a longer period and churn is kept to a low. Without having a good relationship with suppliers there will be a huge loss in profit.

The Macro-Environment: Other environmental factors influencing the company

Factor/Area

In what direction is the trend

Why is this trend happening?

What does this mean for our current strategy? How might we change our strategies in order to anticipate this Trend?

Economic

Income changes

Many homes have more income which means that they are able to spend more.

This means that consumers are willing to spend more on luxury brand products. Increase the Target Market as many Individuals are able to spend more money.

Rising Affluence

Many consumers may feel happy in buying luxury goods.

This means that more consumers are feeling are willing to spend more money on luxury items to find happiness. This trend represents that fact it makes them feel good about themselves and also impress people in society.

Natural

Shortage of Raw Materials

As a society we are using up all the raw materials that are available to us. (Steele,2019)

Promote the fact that the product is made of environmentally friendly products which Gucci is already doing

Cost of Energy

As we use all our natural resources the cost for them goes up. (Steele,2019)

Promote the fact that the product is made of environmentally friendly products which Gucci is already doing

Global Pollution level

It is rising which is causing problems such as climate change((Steele,2019)

Promote the fact that products are being created in ways that don’t affect the environment.

Demographic

Average Population Age

The average population age is increasing due to the baby boomers

Increase the target market of the backpack and target it at more individuals

Decline in size of household

The family sizes are declining due to divorce, having kids and deciding to marry later

Shift the focus from having kids and families by investing into luxury brand items so they can still enjoy themselves.

The risks that income changes may cause is that for some individuals they may not be able to afford these high-end luxury products. However, the opportunities it may cause it that they may save their money and then purchase the product. However, individuals who earn enough income can easily purchase this product. A strategy could be to increase the target the market and also create products that are more affordable to the working-class consumer. The risks that occur with rising affluence is that consumers may buy the product, but they don’t feel satisfied while buying the product. The opportunities it creates is that buy more of these high-end luxury items in the hope it provides them with happiness. A strategy that Gucci could use is how buying the product can cause a higher status in society.