Gucci: Product Positioning and Target Market Segmentation
Gucci is an Italian luxury brand of fashion and leather goods and is, as of 2017, Italy’s most valuable brand, reporting revenue of over £6 billion in that year. Gucci, in recent years, has undergone radical changes of both design, and marketing under new creative director, Alessandro Michele. Its leather products, which account for over 55% of the brand’s profits, range from more discreet items which bear little branding other than its signature red stripe or the double “G” logo, to bold embroidery and more ostentatious designs, aimed at the younger generation. Alessandro Michele is often credited with Gucci’s recent success, vastly outperforming the trend in the luxury good market, due to these new design choices which successfully captured the attention of millennials, a notoriously difficult demographic to reach for this market.
Demographically, Gucci’s clothing line is segmented using sex and age as criteria. Gucci has different lines of leather goods for male and female adults and children respectively. As far as economic segmentation goes, Gucci in general, does not consider catering for working or middle class incomes. This may be due to its status as a Veblen good, meaning that its high price only increases demand due to deemed quality and exclusivity from consumers. Because of this, Gucci is very conscious of the countries in which it locates its stores, both on an international and national scale. And so for geographic segmentation, it has historically based the majority of its outlets in Europe and North America. However, in recent times, Gucci has increased its presence in emerging economies, mainly Asia and in both the Middle and far East.
Gucci focuses its brand mostly on an upmarket audience, concentrating on wealthy extroverts who would wish to show off their apparel. Over the years, it has targeted the lifestyle of its customers, who are mainly seeking statement pieces over any kind of specific functionality. Behaviourally, Gucci depends on brand reputation and loyalty to distinguish it from competitors. As with most luxury fashion items, customers will expect to be able to have a lot of use out of their goods, and thus the quality of the goods will become a big factor as to whether customers will return or switch brands.
Gucci has built a reputation on producing high quality leather goods, made for longevity. This may help capture those who are not necessarily seeking goods because of the brand itself but because they will last. This in turn may help justify the high price to some of the more casual consumers. Gucci is also in the more moderately priced range in terms of high end fashion, as shown above in the positioning map. This places them in a position to attract the attention of people who want to experience these kinds of luxury goods, but still not alienating those in the lower income range of their target audience.
In addition, Gucci has also recognised that its most rapidly growing audience is the younger generation, with parent company Kering’s chairman and CEO Francois-Henri Pinault stating that around 50% of Gucci’s sales are coming from millennials. And so the company has focused its most recent advertising campaigns towards this demographic. For instance, it has recruited new celebrity models that would be more recognisable to younger audiences, such as Rhianna and Brad Pitt. It has also rolled out a large scale remodelling of over 140 stores to be more in suit with its clothing redesign. Its digital presence has also been cited as being very successful, with a website redesign and relaunch in 2017 being more image focused and featuring customer service options on each product page, keeping potential buyers more engaged and have sales staff readily accessible.
In terms of logistics, Gucci has forecasted continued growth of this scale, and to accommodate this, it is set to build a new 35,000 sq. ft. manufacturing facility in Italy, to produce leather goods and shoes. It has also implementing new policies that will generally appeal more to millennials such as a blanket ban on fur in its products.
In conclusion, although the brand hasn’t particularly shifted its segmentation process, it has however, shifted its targeting towards a younger customer base, depending on brand reputation to keep its older customers loyal. It has seen great success with both its increased presence online and through bold new design choices, positioning itself to keep the attention of this rapidly increasing demographic.
