Promotion Strategy of Gucci Brand on Chinese Market

Introduction

Luxury differs from necessities, which are desirable but dispensable. However, exclusivity is assessed by society and the desirability is dominated by the upper class. The global luxury market remains growing. A report in Mintel shows that the sales of international luxury goods increased to €299 billion in 2018 and a further 4.3% rise in 2019. Gucci created €1.3 billion in sales more than in 2018, with €9,628.4 million in revenue which rose by 16.2% in 2019. Branding has already become a marketing tool to build and enhance a brand. Branding takes the form of a name and symbol to be easily identified by consumers. Take Gucci for example, it is symbolized by the double “ G” logo which is well-liked by consumers. This report will critically analyse and evaluate Gucci's branding strategy in China by utilizing the PESTLE model and brand resonance model, focusing on its promotion strategy.

Environmental Analysis

Political

• China has a stable political environment.
• China lacks of political freedom.
• China is a large destination for foreign direct investment (FDI).
• The Chinese government strongly supports the development of e-commerce.

Economic

• China is the second-largest economic entity all over the world.
• China has the world’s largest purchasing power.
• There is a big gap between the rich and the poor.
• Chinese government reduces the standard corporate income tax rate.

Social

• China has the world’s largest population of approximately 1.438 billion.
• China is concentrating on eliminate poverty.
• There is a trend of ageing population.
• China has a collective culture.

Technological

• China has the world’s largest online population of around 840 million.
• China is focusing on the development of science and technology.
• Taobao is one of the largest e-commerce websites, with sales of about 3.1 trillion yuan.

Environmental

• Water and air pollution
• Resources waste
• Deforestation
• Climate change

Legal

• The law referring to the import tariffs has been relaxed.
• The regulation of “Daigou” which can be regarded as a business between Chinese buyers and overseas shoppers is more and more strict.

Gucci is known for its fashionable luxury products with good quality in high prices, which is a representation of Italian craftsmanship. It applies a selective targeting strategy in market positioning in the Chinese market, only targeting a limited group of customers. For obtaining the competitive advantages, Gucci positively engages with the various campaign all over the world and closely interact with customers, making it superior to other competitors.

Branding Theory

In general, a luxury brand is a symbol of good quality and high price. Kapferer argued that it is hard to define the luxury brand due to social, economic and cultural changes. For example, when a brand image becomes weak, it will not be described as a luxury brand anymore. However, Ko, Costello and Taylor propose that a luxury brand is a branded product or service with high quality, premium price, added value, good image and deep resonance with consumers, which could be noticed by consumers. What’s more, these five features are the elements of a luxury brand.

Resonance:

1. High brand awareness
2. Strong brand loyalty

Feelings:

1. A status symbol
2. Confidence and pride

Judgement:

1. Premium price
2. Be worthy

Imagery:

1. In black and white
2. Be concise and clean

Performance:

1. High quality
2. Be durable

Salience:

1. Luxury brand
2. High recall rate
3. High brand recognition

Resonance

Gucci is a famous luxury brand that has entered the market for a long time. It is easily recognized as long as see the symbolic logo, represents the quality and exclusivity of the brand.

Judgement

For a lot of consumers, it is unaffordable for them to buy luxury products in such a premium price. However, the person who desires the luxuries and has enough money would always purchase the products of Gucci. As a symbol of luxury, its products are easy to be identified.

Feelings

Generally, people would feel more confident when they own luxury products, either clothes or handbags. It seems like that owning a higher luxury product is equal to standing at a higher social status. This is a normal way of thinking for most people.

Performance

The trademark of Gucci makes customers sure that all the products are in high quality and have after-sales service. People can either shop offline to get a great shopping experience or shop online to make an autonomous purchase that products can be tried at home.

Imagery

The logo of Gucci shows the simplicity and concision of its design, emerging an elegant style of its products. The curved and interlaced letters perfectly fit the modern design. Besides, the logo contains the brand history and its refined craftsmanship.

Salience

Gucci has a high brand recall rate and brand recognition, making it become one of the most popular luxury brands in the fashion industry.

Competitive Branding Strategy

Gucci positions itself as a luxury brand and its products as refined craftsmanship, leading the tendency of fashion. It has high brand equity because of strong brand association and positive public opinions. Brand equity is referring to an added value that stems from branded products and services. It could be reflected in consumers’ perceptions towards a brand. It is considered as a crucial element of a brand due to the competitive advantages that it brings.

Gucci has been focusing on promotion strategy, making the brand accessible from social media platforms through advertisements. It cooperates with bloggers on Facebook, Instagram, and YouTube, promoting their new collections on social media. In addition, Gucci has its own app where the collections and cat-walk shows can be viewed.

For further enhance its brand equity, it would be effective to keep the close connection between brand history and modern design on social media such as Instagram and Weibo.

Future Trend

The influence of young consumers is growing, which would be the primary engine in the coming years. Young people promote sales and help the expansion of the luxury market to some extent. A report shows that millennials who were born between 1980 and 2000, take up 62% of Gucci’s sales this year. Millennials play an active role who are more likely to purchase items online with mobile phones in such a digital era. This is driving changes in approaches to sustainability, digitalization and personalization.

Digitalization supports and serves new business models, making it possible to rent from social media through a subscription model. Internet becomes a platform that assists the sharing models to grow, with consumers engaging better with the brand in fashion, especially the luxury brands. As one of the marketing strategies, they would release limited editions in small quantities, which is to make a sense of exclusivity. Take Supreme for example, which is a typical case in the fashion industry. Supreme is an American brand that sells skateboards and clothes. Supreme releases the new collection every week and uploads photos of products to social media like Instagram about three days before the release date. It gives customers enough time to select their favourites and draws public attention at the same time. Customers can purchase items either online or offline. It is possible for Gucci to adopt this method when releasing some particular collections, such as co-branding and in a festival. With the tendency of digitalization, the great influence of social media in retailing should be noticed.

Digitalization is regarded as additional support for the Chinese market to further develop the physical stores and also the brands which have no physical sales yet. It enhances the delivery process on both operational efficiency and customer service, enabling retailers to focus on micro-segmentation better. However, physical stores provide an actual shopping experience that cannot be realized online. As e-commerce grows, the online fit and sizing technology continues to develop and improve by applying 3D visualization, which greatly reduces the ratio of online returns. Gucci has already applied this technology into its App where consumers can try on the products by phone, while only some sneakers, sunglasses, hats and lipsticks can be tried on. It is essential for Gucci to improve the function of its App and the quality of the official website.

Conclusion

In conclusion, Gucci has successfully explored the Chinese market and adopted the promotion strategy to build its brand equity, making it superior to other competitors and closely connected with its customers. For further development, Gucci should improve the online marketing strategy and perfect its App.

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