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Gucci Case Study

In: Business and Management

Submitted By cupcake2014
Words 292
Pages 2
It is difficult to find a precise definition of “luxury”, but it’s generally identified with high quality and price products in the fields of fashion, luggage, jewelry, cosmetics, fragrances, watches, and drinks. In the luxury goods business there are 35 companies that share 60% of the market, but only 6 of them have revenues in excess of $1 billion. Considering the definition explained before, the most important companies which belong to the market are: Louis Vuitton, Cartier, Gucci, Prada, Hermes, Bulgari, Tod’s, Celine, Jil Sander, Kenzo, Valentino, Lacroix, Donna Karan, TAG Heuer, Armani, Tiffany, Chanel, Ralph Lauren and Tommy Hilfiger. It is an interesting market because it is completely focused on the quality of the product from every point of view: the beauty and the design of the product, the refinement and affectation of raw materials, the meaning of the product (the style and the social status of the person to whom it belongs) and the values and emotions that it transfers. As a result, the company focus is mainly on differentiation rather than on cost, therefore these companies follow a differentiation strategy in order to obtain a differentiation advantage. This feature of the market is reflected on the companies’ results, for example looking at the return on sales ratios of Gucci (27% in 1999) in relation to ther company markets like Coca-Cola Company (10,6% in 2000), Amazon (6,8% in 2000) and Dell (8% in 1998). Considering the market in general, LVMH holds the first position followed by Vendôme that represents the leaders of the market. While Vendôme’s products portfolio regards watches, jewelry and writing instruments (with brands like Cartier, Vacheron Constantin and Mont Blanc), LVMH is especially concentrated on lather goods and fashion, drinks and perfumes and...

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