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Regent’s University London

FSM504 Fashion Branding

Giulia Stockmann

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Contents Page

Ø Questions 3

Ø Answer to question 1 4-6

Ø Answer to question 2 7-9

Ø References 10

Ø Appendices 11-14

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Assessment 1 – Gucci

Produce written responses to the two tasks below, which are centred on Gucci and the luxury fashion sector.

1) Explain the term brand DNA. Using models, theory and both secondary and primary research analyse how Gucci has leveraged its heritage over the years to create its current brand identity.

2) Undertake a PESTEL of the luxury goods sector and analyse two key issues, which you can argue Gucci should respond to in its future strategy. You are expected to apply the model and draw your recommendations from that.

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1) When it comes to ‘branding’ in the world of fashion the expression generally applies to any type of identity that attempts to communicate both, its meaning and values, to its customers. The significant objectives of a brand are ultimately to set itself apart from its competition and to stimulate the customers’ buying behaviour. In short, branding represents the process of someone or something being attached to a name and a corresponding reputation.

The term brand DNA, also known as brand identity, refers to an element of branding developed right after the creation of the brand’s main concept. Brand DNA consists of various attributes, which describe what the brand officially represents. This allows the customers to perceive and interpret the brand in a particular way when coming in contact with it. When referring to brand identity one distinguishes between brand image and brand personality. The brand personality generally signifies the thoughtfully selected, essential characteristics of a brand and how it views itself and wants to be perceived by its customers. In comparison to brand personality, brand image develops itself in the minds of others and focuses more on how a brand projects itself and how it is truly seen and interpreted by outsiders. It is therefore legitimate to state that brand personality is normally controlled and created by the brand itself whereas brand identity is rather unswayable and mainly depends on people’s perceptions and opinions. A brand’s personality is therefore a fundamental component with regard to accurate positioning in customers’ minds and should always be stable due to its impact on the dependant brand image. According to author Uche Okonkwo (2007) three features should always be considered in the process of brand DNA development: clear and reliable visual as well as verbal communication, consistency regarding the core brand personality and brand image perceived by the public, and a good understanding of other elements involved in branding strategy such as the concept and the positioning of the brand. When a brand aims to differentiate itself from its competitors it is crucial for the brand DNA to be reflected in all parts of the business strategy in order to maintain uniqueness, recognisability and resistance. When addressing the fashion market, one must however not forget to consider the many varying categories in the business. In comparison to conventional brands luxury brands, which are described as global brands that focus on exclusive fashion goods (Jackson & Shaw, 2008), tend to have a strong advantage when it comes to developing their brand DNA since customers automatically associate the term ‘luxury’ with significant words such as prestige, superiority, opulence, wealth, craftsmanship, originality, glamour, elegance and exclusivity. The ultimate word when describing luxury however is heritage, which animates luxury brands to create their very own point of difference, usually supported by talent, entrepreneurship and cleverness.

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The Florentine luxury brand Gucci was originally founded by Guccio Gucci in 1921. Prior to creating his brand, Guccio had worked at the Savoy Hotel in London where he encountered the wealthy and elegant lifestyle of the upper class on a daily basis performing his post as a porter. His exposal to luxury eventually inspired Guccio to return to his hometown Florence where he set himself the goal to produce an exclusive collection of handmade leather goods for the affluent clientele he had been serving in London. Amongst others, one of Guccio’s requirements for creating a successful luxury brand was the talent and handicraft of Florentine craftsmen. His deliberate choice of using manufacturing in Italy awarded the brand with an immediate reputation of elegance and sophistication combined with craftsmanship, which lead the sales figures to grow incessantly. The rising demand of riding gear in the circles of the Italian aristocracy initially stimulated Guccio to create his unique collection inspired by the equestrian sport, which consisted of bags, shoes, suitcases and accessories like gloves and belts. The designer then developed his famous ‘Horsebit’ icon, which soon became the symbol of the brand and represented Gucci’s sense of originality and exclusivity (figure 1).

In a time frame of fifty years Gucci became a strong, international luxury brand of high renown with expansions to North America, Asia and Europe. In 1970 Guccio’s two sons Rodolfo and Aldo gained their shares in the company, which highlighted Guccio’s appreciation of keeping the fashion house in the family business. The brand was though soon exposed to licencing issues and combined with poor strategic management Gucci eventually lost its focus and with it its reputation regarding fashion quality.

When Investcorp eventually acquired a stake in the company Domenico De Sole was made the new Chief Operating Officer who decided that changes were crucial and hence hired Tom Ford as head designer. From that point on Gucci was no longer a family-owned business. Ford’s knowledge regarding the luxury market and De Sole’s focus on sales increase, lead the brand back to becoming successful again. The duo then decided to create a multi-brand strategy by acquiring a number of brands and leading them under the name of the ‘Gucci Group’ which included Sergio Rossi, Boucheron, Stella McCartney, Balenciaga, Alexander McQueen and Bedat &Co. This step however resulted in Gucci’s loss making in sales due to insufficient attention and investment towards the core brand. Two years later PPR took over and CEO Robert Polet chose to focus on each brand individually. Polet attempted to revive Gucci’s old values and focused on the brand’s history and heritage by especially concentrating on its ‘Made-in-Italy’ factor. In addition to that, the Polet stated that a brand was to stay relevant, exciting and new in order to maintain their customer loyalty. He eventually opened Gucci’s first flagship store in Ginza, Tokyo, where the focus was on showing the most luxurious face of the brand (Lee, Gucci Case Study).

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After having lost control over their initial brand values and their mission to excite customers appreciative of exclusive, premium-quality fashion and their extraordinary level of craftsmanship and design, Gucci ultimately found their way back and regained their status as one of the most prestigious luxury brands on the market. In order to continue to inspire their clientele Gucci resumed to revive tradition and their heritage in combination with new, fresh product concepts. The brand rediscovered the importance of highly qualitative value of their products while concentrating on several designs true to their origin and legacy. Operating stores in exclusive locations such as Old Bond Street also added to Gucci’s reputation as one of the main luxury brands in the market. Former creative director Frida Giannini motivated Gucci to create their heritage collection including the floral inspired ‘Rinascimento’ pattern first created in the 1950s or the reinvention of Gucci’s celebrated Leopard print from the 1960s for their most traditional pieces, like the Bamboo or ‘Jackie’ bags. Another concept Gucci chose to demonstrate their understanding of heritage was the steady, elegant store design (figure 2) and the ‘Artisan Corner’ where a group of talented workers displayed their production skills for customers to experience the time, precision and craftsmanship regarding the manufacturing.

According to Patrizio di Marco, former Gucci Chief Executive, customers support and appreciate luxury brands that put their heritage first. The fact that Gucci never failed to value their ‘Made-in-Italy’ policy therefore created another point of difference in comparison to conventional brands. The expression ‘Made-in-Italy’ reminds of words like expertise in production, quality and beauty and Gucci sure achieved their position as one of the number one examples. The brand continued to ensure their customers of a standard of excellence regarding their manufacturing skills, which created an extraordinary reputation for Gucci since customers immediately associated ‘Made-in-Italy’ with a sense of glamour, culture and fashion expertise.

In conclusion, Gucci’s worshipping of their ‘Made-in-Italy’ policy and their preservation of heritage, originality, sophistication, incomparable craftsmanship and exclusivity in combination with their constant pursuit of innovativeness are ultimately the reason behind their strong brand identity.

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2) When attempting to lead a successful brand one must always consider the macro-environment. The difference between a business itself and the macro-environment is rather big as the macro-environmental issues cannot be controlled or influenced forcing the business to remain up-to-date with the global issues in order to adapt to the circumstances and prepare the brand. Each business therefore concentrates on regular world news checks by undertaking the PESTEL analysis, which examines the global political, economic, social, technological, environmental and legal issues. Due to the fact that the luxury market (worth 440 billion Euro) is less financially dependent and rather strong and self-supporting with regard to the fashion industry, it is less likely to be affected by political, economic and social issues in comparison to the mass market that is determined by the ever changing demographics of its customer, such as an irregular income or health problems for instance.

PEST Analysis – Political, Economic, Social and Technological factors

Polit ical: The general elections in the UK are starting on May 7th 2015 where new representatives of each party are voted which could impact the legislative process. The world is currently facing rather serious issues with the Islamic State which affects every country and state to a certain extent, the impact on the luxury market is however rather small as political issues do not influence the fashion market in a drastic way.

Economic: Economic issues such as inflation, deflation, or changes of federal taxes can impact the fashion industry quite drastically especially when it comes to export and import and the rise and fall of global currencies. The world is currently facing a strong Euro crisis with the currency growing weaker. The potential Greek exit of the Eurozone could lead to a downfall of more than one country’s economy, which would automatically harm the fashion business with regard to trading. Since the luxury market seems to be rather stable and financially independent however, brands like Gucci are less affected. Due to the fact that a luxury brand’s customer usually maintains a regular income and stability, and manufacturing mainly takes place in the country of origin rather than elsewhere problems with import and export usually do not arise.

Social: Social aspects such as a country’s number of inhabitants, their health, age, income, education and employment determine the amount of customers willing and to purchase luxury goods. The fashion market is dependent on MEDC’s rather than on LEDC’s. The new emerging markets should however not be forgotten either, as the power of the ‘Next 15’ seems to be growing. The ever-changing rate of employment is however crucial when it comes to remaining a successful business as

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customers’ financial independency allows more frequent and unconcerned shopping. The fact that graduating students seem to be struggling with finding employment due to a growing range of competition nowadays impacts the fashion market to a certain extent. Since the luxury goods sector is however more dependent on an older, financially secure clientele, the possibility of the market to collapse is rather small.

Technological: With technology developing on an almost daily basis, the fashion market, with the luxury goods sector in particular, is forced to ensure a constant technological advancement. New collections cannot simply rely on beautiful design and craftsmanship any longer, as customers tend to have higher expectations when it comes to clothing. It seems perfectly natural for water resistant watches to be controlled via a simple touchscreen where vacations can be booked, the weather can be checked or the heartbeat can be traced. The desire for clothing and accessories to do more than just dress their owner is ever growing as people are constantly exposed to developing technology and innovation, which makes the urge to see fresh ideas rise rapidly. Luxury brand Burberry set an example to their competition by being one of the first brands to include technology by enabling their customers to watch their chosen items on the runway when trying them on in store. This technological advancement was soon detected by other luxury brands, which then decided to develop new ideas as well. Technology therefore impacts the luxury goods sector immensely when trying to remain successful.

When looking at Gucci, the Italian luxury brand should certainly take the technological and social aspects of the PESTEL into account with regard to their future strategy. The brand is known for keeping their heritage and originality alive by re-including former popular designs and patterns and giving them a new twist to match the current market, which helps to maintain their initial brand identity and values. The fashion house must however not forget to incorporate new, technologically equipped pieces into their collections in order to be able to compete with their opponents. The brand has to therefore find the ideal balance between being innovative and forward thinking and remaining the exclusive and quality-driven brand they set out to be in order to keep their loyal customers and potentially create a larger target market. In other words: focusing on product and market development. This leads to the social factor of the Pestel. Ageing are currently becoming more powerful in society: not only has the political area recently benefited from many strong female characters. Fashion brands, such as Céline or Saint Laurent, have been using more mature women for their campaigns as well, which shows that the global market has made notice of the growing power and influence of women above their 40s. New Creative Director Alessandro Michele attempts to incorporate a fresher and younger Gucci collection to possibly enlarge their target market. He should however focus on older women as representatives of the brand as well. The current Gucci campaign (figure 3) features young, aesthetically beautiful

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models in their exclusive collection, it would be advisory however not to exclude the ‘more mature’ generation and create an image which shows that Gucci’s new, possibly technologically advanced designs speak to women at all ages who desire to look elegant, sophisticated and powerful.

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References

Ø Cox, C. (2013) Luxury Fashion: A Global History Of Heritage Brands. Bloomsbury Publishing Plc.

Ø Giannini, F. & Grand, K. & Arnell, P. & Jebreal, R. & Breward, C. (2011) Gucci: The Making Of. Rizzoli.

Ø Gucci. Gucci World. (Online) Available From www.gucci.com Ø Jackson, T. & Shaw, D. (2009) Mastering Fashion Marketing.

Palgrave Macmillan. Ø Jackson, T. (2015) Gucci: Case Study. Regent’s University London. Ø Jackson, T. (2014) Consumer Trends. Stylus. (Online) Available From

www.stylus.com/wlwfdk Ø Khan, M. (March, 2015) The Telegraph. Finance: Economics. Grexit

Would Be ‘Beginning Of The End’. (Online) Available From http://www.telegraph.co.uk/finance/economics/11469742/Athens-bids-to-soothe-fears-of-accidental-Greek-exit-from-the-euro.html

Ø Kharif, O. (March 2015) The Business Of Fashion. News & Analysis: Wearable Drones Invade SXSW As Fashion Meets Technology. Bloomberg. (Online) Available From http://www.businessoffashion.com/2015/03/wearable-drones-invade-sxsw-fashion-meets-technology.html

Ø Maxted, A. (March, 2015) The Telegraph. Women: Life. Older Women Are In The Spotlight. (Online) Available From http://www.telegraph.co.uk/women/womens-life/11468502/Older-women-are-in-the-spotlight-but-the-battle-for-equality-is-not-over.html?placement=CB1

Ø Mintel. (August, 2014) Luxury Goods Retailing. International: Kering Luxury. (Online) Available From www.mintel.com. Regent’s University London

Ø Okonkwo, U. (2007) Luxury Fashion Branding: Trends, Tactics, Techniques. Palgrave Macmillan.

Ø Philipps Erb, K. (October, 2014) Forbes. Taxes: IRS Announces 2015 Tax Brackets, Standard Deduction Amounts And More. (Online) Available From http://www.forbes.com/sites/kellyphillipserb/2014/10/30/irs-announces-2015-tax-brackets-standard-deduction-amounts-and-more/

Ø The Guardian. (2015) Economy. Markets. Companies: The Eurozone Crisis (Online) Available From http://www.theguardian.com/business/debt-crisis

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Appendices

Figure 1: Horsebit icons

 

Figure 2: Store design

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Figure 3: Current advertising campaign

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Figure 4: Current Gucci collection

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SWOT Analysis

Strengths

- Strong brand awareness - 1 to 1 customer service in boutiques (with ‘VIP treatment’ where

customers book appointments with press office where they can see new collections etc.)

- High quality products & unique designs - Strong brand identity and equity - Generate 77% of Kering’s annual revenue - Directly operated stores

Weaknesses

- Limited target market due to high pricing strategy - Risk of counterfeit - Competition e.g. Louis Vuitton, Prada, Hermès, Dolce & Gabbana - Technologically not as advanced as other luxury brands - Dependent on financial investments to maintain brand DNA

Opportunities

- Co-operations with emerging markets (Next 15) - New collections to target different clientele (market/product

development) - Advancements regarding technology in-store and in/on product

Threats

- Large competitive market e.g. technologically advanced luxury brand Burberry

- Counterfeit - Potential method/product obsolesce

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