Gucci Group, N.V. Case Essay

1719 Words Mar 4th, 2014 7 Pages
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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All of these moves have been the result of successful strategic positioning by Prada management, which has resulted in the continual growth and expansion of the company. While Prada has historically been small, yet growing quickly, LVMH has been much larger and more stable over its life. Out of the three middle tier brands, LVMH is most likely best positioned for success because two factors: the large number of established luxury brands they own, and the diversity of their portfolio, which is well balances across leather goods/fashion apparel, champagnes/wines/spirits, selective retailing, and fragrances/cosmetics. This diversification was a result of the synergistic efforts implemented in the late 1990s by Bernard Arnault. He thought the company could better position itself by taking advantage of their size to reduce costs and improve profitability. Furthermore, he placed a huge emphasis on controlling product quality, which has led to a continual positive brand-name association. Lastly, LVMH has used the popularity of their Louis Vuitton brand, which has historically accounted for around 50% of their products, to convince department stores to allow distribution of some of their lesser-known brands. This has resulted in an increase in sales for both the Louis Vuitton brand and for the lesser-known brands, which may have not been purchased if they had not been placed in stores

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