CMGB 6101: Marketing Management

Lecturer:
Michael M. Dent

Group Members:
1) Chu Kok How (Freddy) CGA070039
2) Lim Shee Hau (Kenith) CGA070135
3) Lee Swee Chin (Shirley) CGA090045
4) Mok Ming Keat CGA090038

Strap Line: Choice of all!

CMGB 6101: Marketing Management

Case Study:
Gucci, Louis Vuitton, & Vertu
– Marketing Lessons from
some of the World’s Most
Exclusive Brands.
Vertu
Clip
Contents
 Introduction
 Corporate Background
 Branding Strategy
 Successful Branding
 Critique
 Conclusion
Introduction
• Luxury market from several sources are
estimated US$840 billion in 2004 and
estimated to reach the figure of US$1
trillion in 2010 (Source: Journal of
Brand Management Vol 16).

• Contributors to this increase:-

i) Improved economic factors
worldwide.
ii) Increasingly reached the
medium and lower classes.
What is Luxury Brand?

Jackson and Haid (2002): luxury

brands have a heightened status
that affords an opportunity for their
owners to charge premium prices.

Why consumer buy it?

1. The desire of emulating the lifestyle
of the richest or social class;

2. The superior quality of the product

and services;

3. The basis of self-rewards.

Corporate Background
Gucci
• Founded in Florence 1921

• 1950: first global store in New York, US

• 1979: Accessories Collection with 20,000

product lines & with over 1,000 stores;

• 1992: Loss of more than $40 million

• 1993: Gucci sold all the shares to

Investcorp (a Bahrain-based private
equity firm)

• 1993: Appointment of Domenico De Sole

& promotion of Tom Ford to Creative
Director
Corporate Background
Louis Vuitton (LV):
• Founded in Paris in 1853

• Specializing in trunks, leather goods,

ready-to-wear, shoes, watches,
jewelry, accessories, sunglasses, and
books

• George Vuitton toured and visited US

and selling the products to US

• 1914: First store had been opened in

US

• 1936: Gaston Louis-Vuitton took over

the business
Corporate Background Year Details

1901 Steamer Bag

LV’s Product Summary

1930 Keepall bag

1932 Noé bag & Speedy bag (Still under manufactured)

1985 Epi leather line;

1993 Taiga leather line;

1994 Collection of Voyager Avec;

1997 Pen collection;

1998 First pret-a-porter line of men & women clothing

1998 Monogram Vernis line

2001 Vuitton bags with graffiti featured designed

2002 Tambour watch

2005 Speedy watch

2008 Damier Graphite canvas

Corporate Background
Vertu
• Founded in UK in 2000

• Independently run and wholly owned

subsidiary of the Finnish mobile phone

• Vertu's president and COO is Perry

Oosting

• Worldwide offices: in Paris, New York,

Los Angeles, Hong Kong and
Singapore

• Concentration: most exclusive luxury

instruments for personal
communications
Background Summary

Company Gucci Louis Vuitton Vertu

Established 1921 1854 2000

Sector Fashion and Design Luxury Goods Luxury Communication

Products Men and Women’s Wear, Leather goods, ready-to- Signature Collection
Shoes, Jewellery, Watches, wear, shoes, watches, Stainless Steel Collection
Perfumes, Eyewear, Home jewellery, textiles, writing Duo Stainless Steel
goods, Luggage/Handbags, instruments & accessories. Bordeaux Stainless Steel
Baby Wear. Famous for its handbags.

Typical Locations Florence, Rome, Paris, New Paris, New York, Tokyo, Paris, New York, Hong
York, London, Palm Beach, Dubai, Las Vegas, Los Kong, Singapore, London.
Tokyo and Hong Kong. Angeles.
Branding
Strategy
 A brand is a name or trademark connected with a
product or producer.

 Brands can be differentiated on the basic of;

i) Number of different product or services dimensions:
- product form, features, conformance,
reliability, reparability, style, and design
ii) Service dimensions
- ordering ease, delivery, installation, customer
consulting, maintenance and repair

 Companies can gain a strong competitive

advantage through having better-trained people.
Branding
Strategy
 Companies can also achieve
competitive advantage through the
way they design their distribution
channels’ coverage, expertise, and
performance

 Image is the way the public perceives

the company or its product.

• Identity is the way a company

aims to identify or position itself or
its product.
Gucci Strategy

3 Phases of Brand Strategy by

Gucci

1) Gucci Brand Stabilisation Phase

(1995 – 1999)

2) Multi brand Acquisition Phase

(1999 – 2001)

3) Gucci Group Consolidation Phase

(2001 – 2004)
Phase 1: Brand stabilisation phase:
early 1995-October 1999

1) Re-established control of Gucci product

design and manufacture

2) Re-established control over Gucci product

distribution

3) Create a balanced product portfolio for a

luxury brand

4) Establish a luxury marketing

communications platform

5) Create a luxury brand consumption

experience

6) Tom Ford – the design direction and control

Phase 2: Multi-brand acquisition phase –
November 1999-July 2001

1) At this phase, Gucci had transformed from

their single brand status to become a multi-
brand luxury goods group;

2) The Gucci group to requisite skills to

advantage each category of acquisition and
intra-group synergies to provide positive
benefits for the group as a whole

Phase 3: Gucci group consolidation phase –

August 2001-April 2004

1) New Gucci group has been formed

2) To manage effectively portfolio of brands

which will each be unique in its brand image
and values, while leveraging the skills and
infrastructure of the enlarged Group.
Louis Vuitton (LV)
Strategy
 Modernise LV image
• Utilizing the talents of young designer & artists

 Focus on product quality

• Extensively laboratory tested – product can
withstand wear and tear.
• Blended mechanisation and handmade
craftsmanship
• Offer lifetime repair guarantee
• Leather is sourced from Northern Europe

 Operate a pricing integrity strategy – distribution

network
• To maintain the prestige image
• Never reduced in price
• No sales period
Louis Vuitton (LV)
Strategy
 Offer customised products – hand
luggage pieces

 Sponsor elite sporting events –

yachting and motorsport events.
• Matching the audience of
sponsorship property.
 Vertu Strategy
 Utilises craftsmanship, precision engineering,
high-end technology and a unique personal
service dimension

 Product launching associated with fashion

shows - Paris fashion week
• Aiming to create a fashion brand rather
than a technology brand

 Focus on Vertu Concierge Service

• provides specialised travel assistance
• 24 hours a day from anywhere in the world
• free for the first year, and charge £500 per
annum
• offers a customisation service
 Vertu Strategy
 Focussed their enormous attention on
store layout
• Developed a unique buying
experience by creating a “gallery-
like” feel to its retail environments

 Vertu available to purchase through

their website.

 Partnership or joint venture -to gain

greater market share
• Hong Kong - King Fook Jewellery
• U.K - Goldsmiths
Summary of Branding Strategies
No Details Gucci
1 Concentration area Fashion and design men and women’s
wear, shoes, jewellery, watches,
perfumes, eyewear, home goods,
luggage/handbags, baby wear
Louis Vuitton Vertu
Product quality: blended Utilises craftsmanship, precision
mechanisation and handmade engineering, high-end technology and
craftsmanship into their products a unique personal service dimension

2 Unique Brand/ Product Yes Yes Yes

image

3 Unique features Yes Yes Yes

4 High quality Yes Yes Yes
5 Outstanding Service Yes Yes Yes. First class personal service
combined with extensive product
knowledge

6 Distinct packaging Yes Yes Yes

7 Prestigious pricing Yes Yes. Operates a pricing integrity Yes
strategy amongst its entire
distribution network. never reduced
in price, and there are no sale
periods

8 Exclusive retail Yes Yes Yes. Unique buying experience by

environment creating a “gallery-like” feel to its retail
environments

9 Selective channel of Yes. Expensive high street location & Yes Yes
distribution purchase Gucci products online
Successful Branding
 The components of a luxury brand;
Successful Branding

 According to Professor Guenther

Mueller-Heumann (2007), brands,
in a way are a "silent salesmen“.

 A branding research firm dealing

with the strengths of a brand is,
Interbrand.

 What are the criteria to be included

in the best Global Brand?
Successful Branding
 The criteria;
i) There must be substantial publicly available
financial data

ii) The brand must have at least one - third of

revenues outside of its country-of- origin

iii) The brand must be a market-facing brand

iv) The Economic Value Added (EVA) must be

positive

v) The brand must not have a purely B2B

single audience with no wider public profile
and awareness
Successful Branding
 Research Methodology;
i) Financial Analysis
- All financial analysis is based on publicly
available company information.

ii) Role of Brand Analysis

- In-house market research is used to establish
individual brand scores against our industry benchmarks

iii) Brand Strength Score

- Brand is compared against common
factors of brand strength, such as: market
position, customer franchise, image, and support

iv) Brand Valuation Calculation

Successful Branding
Based on the 2008 Global Brand Report
(Interbrand);

 Gucci was ranked at No. 45, up one spot from

No. 46 in 2007.
• Increase of brand communication budget of 41.5% in 2007.
• Sales figures has increased 2.4% to €513m in Q1, 2008 (The
business fashion, 2008).

 Louis Vuitton ranked at No. 16, up one spot

from No. 17 in 2007.
• For the first time, the company advertised on television with a
travel theme (90 seconds).
• Multicolore Monogram bags, the fruit of a collaboration between
[fashion designer] Marc Jacobs and the contemporary artist
Takashi Murakami (Business Week, 2007
Successful Branding
 Vertu which is relatively new in the market
since its’ founded in year 2000.

 In Vertu, it is the company’s policy of not

revealing the sales figures.

 However, their expansion has reached the

Asian market and has presence in Singapore,
Taiwan and China.
Critique
Main Contributors

 Luxury buying behaviour

 Spending on luxury

 Demographics of the luxury

market

 Luxury market psychographics

(e.g., why people buy luxuries)

 Trends in luxury
LV,GUCCI & Vertu

 Product design, creativity

 Status

 Client Relationship Management

Consumers Evolution

 Psychology (Brain Washing)

 Attitude Change

 Interest

 Brand perception
Market Dynamic Change The luxury Landsca
consumers feel that:

 Style recognition

 Strong Identity

 High awareness, fashionable

 Enhanced emotional and symbolic

associations
DREAM
 Why?
• More affordable
- personal income rise
- more reasonable price

• “Luxury” changed from “CLASS” to

“MASS”
- youngster’s personal value change
 Review
• Old “Luxury”
- Attributes
- Qualities
- Features

• New “Luxury”
- Experience to have it
- Embodied the goods and services
they buy
- Democratic ideal (Just do it/ Changed/
different from others)
Challenge in Economic Slowdown

• High-net-worth Services
- customer satisfaction on after sales
services
- value added services

• Less luxurious product lines

- Price cuts diminishing brand’s exclusive
image
Conclusion
 A luxury branding needs to have
the following;
• Iconic/Product Designs
• History/Culture
• Marketing
• Premium Pricing
• Control on Product Manufacturing
• Control on Sales Area

 And most of all, a market to

market their luxury brand.
LV (First Tv
Ad)
Clip
Questions &
Answers ?