hbr Gucci Group
Business Opportunity Analysis
[Gucci Group N.V.(HBS 701037)]
Seoeui Hong 1316692
1) Map the competitive positions of the different players in the luxury good business along the “cost leadership” (Y-axis) and “product differentiation” (X-axis) strategy map. Where is Gucci’s position on this map in 1990, 1994, and 2000 respectively?
a. The luxury goods arena is a highly competitive industry in which companies must position themselves with both objective and subjective differentiating factors. The competition in this industry lies in the perceived extent of luxury status the purchaser will receive upon buying said luxury item. There are several players in the luxury goods arena that have all become household names across the world through their strategic positioning.
The competitive position mapping table below is based on two areas for assessing competitive advantage.
GUCCI
Competitors
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%.
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.
Differentiate
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 suit different situations.
Many competitors focus heavily on customer services experience as part of maintain their luxury branding efforts. However, LVMH focused more on leathers in the luxury products and other like liquor. Not many brands have a spread of
[Gucci Group N.V.(HBS 701037)]
Seoeui Hong 1316692
1) Map the competitive positions of the different players in the luxury good business along the “cost leadership” (Y-axis) and “product differentiation” (X-axis) strategy map. Where is Gucci’s position on this map in 1990, 1994, and 2000 respectively?
a. The luxury goods arena is a highly competitive industry in which companies must position themselves with both objective and subjective differentiating factors. The competition in this industry lies in the perceived extent of luxury status the purchaser will receive upon buying said luxury item. There are several players in the luxury goods arena that have all become household names across the world through their strategic positioning.
The competitive position mapping table below is based on two areas for assessing competitive advantage.
GUCCI
Competitors
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%.
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.
Differentiate
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 suit different situations.
Many competitors focus heavily on customer services experience as part of maintain their luxury branding efforts. However, LVMH focused more on leathers in the luxury products and other like liquor. Not many brands have a spread of