Competitive Advantage Pt 2

Question 1

Gucci repositioning strategy (Maurizio Gucci & Dawn Mello’s)

Answer 1

• raise prices
• cut distribution channels
• go back to classics

it failed because it did NOT increase brand awareness or WTP, just raised the cost

Question 2

Gucci repositioning strategy ( De Sole’s)

Answer 2

• product design: sell fashion
• cut prices ~30%
• double advertising spend

Succeed because lower pricing and more visibility encouraged repeat purchasing through further in-store traffic

Question 3

Gucci Manufacturing

Answer 3

Partnerships with core suppliers (cut fixed costs, flexibility to scale up or down)

Question 4

Gucci Distribution

Answer 4

Focus on DOS (directly operated stores), upgrade stores, reduce distribution channels (DFS)

Emphasized presence in large metro areas

Question 5

Paradox of Differentiation

Answer 5

Over differentiating can lead to a narrowing of your market segment and make it harder to grow (negative network externalities)

Question 6

Gucci’s future

Answer 6

Acquired YSL in an attempt to become a multi-brand enterprise

Question 7

Pro of multi-brand

Answer 7

the economy of scale and more room to spread fixed cost

Question 8

Con of multi-brand

Answer 8

diseconomies of scale (grow too large and cost per unit increases too much)

competing brands