Gucci Strategic Analysis
1. What are the characteristics and attractiveness of industry?
The characteristic of luxury goods industry
Gucci, Hermes and Louis Vuitton, all of these brands had been found more than 150 years ago. With the high amount of profit, as well as the sales growing 6% every year could make luxury goods industry one of the highest profitable market in the world. The industry has seven main product categories which are; leather goods, footwear, high-end apparel, silks, watches, jewelry and perfume. The target group of this industry is women in the upper income brackets between the ages of 30 and 50. However, in Asia, most customers are women between ages 21-25. In the past, most designer tried to focus on timeless designs that allowed them to sell the product time to time. Even if the products could not be sold out within a year, they could sell them again the following year. In doing these, they could lessen the over –production.
The attractiveness of luxury goods industry
In order to analyze the attractiveness of the industry, Porter’s five competitive forces are used to determine ability of the firm. These are the five forces; threat of new entrants, threat from substitution products, bargaining power of buyer and supplier and the existing rivalry in the market. * Threat of new entrants
The threat of new entrants in this market is in the medium level. As the barrier of entry is very high as the company must has high investment and capital to develop their technologies to cope with existing brands, and to enter the distribution channel. Some small companies do not have capabilities to implement operation management as good as the existing company. They have to put much effort to truly understand the nature of this industry. Also some countries have certain laws that might limit their distribution ability. * Threat from substitution products
There are very little of substitution products. Due to no substitution products that can really replace the
The characteristic of luxury goods industry
Gucci, Hermes and Louis Vuitton, all of these brands had been found more than 150 years ago. With the high amount of profit, as well as the sales growing 6% every year could make luxury goods industry one of the highest profitable market in the world. The industry has seven main product categories which are; leather goods, footwear, high-end apparel, silks, watches, jewelry and perfume. The target group of this industry is women in the upper income brackets between the ages of 30 and 50. However, in Asia, most customers are women between ages 21-25. In the past, most designer tried to focus on timeless designs that allowed them to sell the product time to time. Even if the products could not be sold out within a year, they could sell them again the following year. In doing these, they could lessen the over –production.
The attractiveness of luxury goods industry
In order to analyze the attractiveness of the industry, Porter’s five competitive forces are used to determine ability of the firm. These are the five forces; threat of new entrants, threat from substitution products, bargaining power of buyer and supplier and the existing rivalry in the market. * Threat of new entrants
The threat of new entrants in this market is in the medium level. As the barrier of entry is very high as the company must has high investment and capital to develop their technologies to cope with existing brands, and to enter the distribution channel. Some small companies do not have capabilities to implement operation management as good as the existing company. They have to put much effort to truly understand the nature of this industry. Also some countries have certain laws that might limit their distribution ability. * Threat from substitution products
There are very little of substitution products. Due to no substitution products that can really replace the