Sunday, August 3, 2014

Instructional blog for Market Analysis of Gucci perufume

 Definition of Market Audit:
·         Market audit is a systematic process for identifying company’s strengths and weakness that can relate to its external opportunities and threats. The market audit in other words, helps the management to select the position in environment.

                            Importance of Market audit:

§  Analyze about  the business/marketing environment
§  Assess about potential opportunities and threats
§  To amend on the weakness of company
§  Identify and build upon the strength of the company
§  Help  to grab the opportunities prior to its competitors

                              Market analysis of Gucci:
 Gucci was founded by the craftsman’s son Guccio Gucci in 1920. Gucci created classic products like luggage, ties and shoes in 1950. Gucci now produces various ranges of products like Perfumes, cosmetics, shoes and its trademark leather fashions.


Fig 1 showing step-by-step process analysis

Macro Analysis of Gucci:
The company mainly has no control over the macro environment. The macro analysis consists of Political, Economical, Social and Technological.

§  PESTLE ANALYSIS OF GUCCI:

·         Political:  The first factor that will affect Gucci is Political. The Political factors include Tax, Laws and Regulations which affects Gucci. The low imposition of tax rate by the Government encourages Gucci to be more stable in market. The increase in tax rate on contrary, will affect Gucci adversely that will cause a rise in the cost rate and ultimately the price for perfume also will increase. The organizations must stick to the rules and regulations while manufacturing their product. For instance, Gucci needs to indicate the durability of product in the outer packaging itself. A failure to do so will cause a downfall in its brand image and most importantly, the business might even be sued.

·         Economical: The economic factor mainly focuses on the purchasing power of the consumers. The greater the demand for product the more is Gucci likely to increase its sales revenue for their products. At the mean time, the less demand by the consumers for the product will damage the reputation of Gucci. The interest rate is one of the economic factors that will affect Gucci. The increment in interest rate will affect Gucci adversely, as the company cannot take loan and will affect on company strategic plans. The lower the interest rate the more the purchasing of goods of the greater value on credit which will be a positive factor for Gucci.

·         Social:  There are varieties of perfumes in market so the consumer choice while choosing the perfume is more complex. The consumer choices mainly cannot be determined without culture. For instance, someone from the family member uses perfume of Gucci then more likely it is going to transfer towards the other generations as well. The social factor is the personal characteristics of consumers which include consumer’s age, occupation, personality and lifestyle. Since, the consumers are rational their choices of perfume brand will also be different.

·         Technological:  The important consideration for Gucci is Technological factor. The innovation in technology helps to gain more publicity for Gucci. This will result in a strong brand image and loyalty upon the consumers in the market. The improvement in technology will reduce the cost of production for producing the perfume for Gucci which helps the business to increase its revenue.

·         Legal:  The legal factor consists of employment regulations and health and safety regulations. The consumer protection must be provided while the consumers purchase the products through Internets or phones. The employees of Gucci must be treated fairly in terms of wage and even the working conditions should be safe.

·         Environmental: The main environmental factor is the scarcity of resources and the effect that fragrances create upon the human being. Firstly, the resources are scarce and Gucci must be able to produce more number of outputs by using fewer resources. The fragrances can be irritants and skin allegiances. The fragrances restrict the lung function in men as well. Gucci must analyze the effect that their products may have upon the consumers.

MICRO ANALYSIS OF GUCCI:
The micro analysis consists of internal environment within a company. These internal environments include suppliers, company’s internal environment, customers, intermediaries, competitors and public.

v  Suppliers: Suppliers provides the resources that are essential for making Perfume for Gucci. A failure to provide the resources at the right time by suppliers will damage the reputation of the company. The use of Just-In-Time management system for Gucci reduces the extra storage costs for products and even for suppliers they can provide the resources at right time. If the suppliers delay about two days for product, the customers will be dissatisfied which will cause a downfall for Gucci.

v  Company’s Internal Environment: The functional areas that consists of top management, finance and manufacturing. Each department have their own set of roles like finance department checks the cash position of business, manufacturing department produces the product and top management assists in strategic planning and the primary objective of company. Gucci must run systematically in order to achieve success in the business.

v  Intermediaries: These are a group of people who assist in selling of Perfume, the promotion of company and distributing the products to its final buyers. The intermediaries in other words, are the channels through which company can gain publicity and ultimately can attract more consumers in a market.

v  Customers: The customers are the group of people who purchase the product of Gucci. Every customer wants the product to be well designed and attractive as well. The other factor that customers will seek in their product is quality of the product. The customers want satisfaction whenever they purchase the product and a company must be able to put the customers first for the success of Gucci.

v  Competitors: They are rivals to Gucci as they produce similar products and services to Gucci. Gucci must be concerned with every move of their competitors in order to survive in a market. For instance, the research and development team of competitors has new innovation in their products then Gucci must also react quickly to its competitors to develop the strong image of their products on customers.

v  Public: Those groups of people who indirectly shows interest on company’s ability to achieve its objective. The public will hope that the company will contribute to the society by engaging in corporate social responsibility. There has been growing trend of CSR activities as it develops brand loyalty upon the consumers.
TOWS ANALYSIS:

              

            TOWS MATRIX

       STRENGHTHS
·         Better service quality
·         Well organized distribution channels
·         Reasonable pricing
·         Well established brand name





         WEAKNESS:
·         Weak financial background
·         Market skimming strategy for some products
·         Mismanagement of company

            OPPORTUNITIES
·         Expansion of perfume market
·         The new revolution in industry which includes e-marketing
·         The new innovative idea by Research & Development
·         The introduction of new perfume products
      

        OS
·         Making full use of scarce resources
·         Removing competitors by the take-over of business

          OW
·         Providing  the job training for staffs
·         Developing different management system

           THREATS
·         The duplication of product
·          The extension of business by competitors
·         The better service quality of competitors
·         Gucci is solely based on the public funds

       TS:
·         The suing of companies that duplicate product of Gucci
·         Providing better service quality than the competitors

          TW:
·         The development of product for the Research and development
The TOWS analysis is the process of accessing the company’s strength and weakness on basis of opportunities and threats in the market. As shown in the figure above OS represents opportunities and strengths of the company. The resources are scarce so Gucci must be able to utilize the scarce resources to its full potential which will help to meet the needs and wants of the consumers. The other opportunity that can be turned into strength of Gucci is by eliminating the competitors by taking over their perfume business.
The next factor consists of OW which is opportunities and weakness of Gucci. Gucci can provide the training for the employees so that there will be more improvement in the product design and quality of the perfume as well. The training can be given either on basis of on the job training or off the job training for the employees. Gucci in addition, can adopt the different management system by asking staff to give their opinions about the changes in strategy of business that will help to improve the position of Gucci in market.
The next factor is TS which includes threats and strengths of company. The duplication of the product must be sued by Gucci so that their brand image will not be misused by other small markets. Gucci can provide better services in their products in comparison to its competitors so that it can remain stable in market in long run.
The last factor is TW which means threat and weakness of Gucci. The innovative products must be produced by R &D department of Gucci so that it can add new value for their products like introduction of new fragrances of perfume in market.
Critical Success Factors:
Gucci needs to be able to manage all the critical success factors effectively to achieve a huge success. The critical success factor includes:
·         Consistency in the brand image and strategy:   Gucci has maintained a strong brand image in the market and its long-term strategy as well. The company must be able to maintain its brand image in order to remain stable in market.
·         Maintaining the distributional channels:  The quality of service that Gucci provides for distributional channels is well mannered which will gain customer trust and loyalty.
·         The innovation and developing of new products:  The R&D department of Gucci has innovated the new fragrances of perfume in market which has attracted more publicity of brand Gucci in market worldwide.
·         The management of gross profit margin:  The company’s financial condition has been low due to the more costs incurred while producing perfume. Gucci must manage to produce perfume at the low cost by improving their technology which will raise the sales revenue of their company.
·         Using media to develop brand awareness in market:  Gucci can promote their product in order to establish brand image of their product in market. The consumers can be well aware about the products of Gucci in market after the promotional campaign.
sRefrences:
Christopher, M., Payne, A. and Ballantyne, D. (2002), Relationship Marketing: Creating
Stakeholder Value, 2nd ed., Oxford.
Essays, U. (2014). A PESTEL analysis of the cosmetics industry. [online] Ukessays.com. Available at: http://www.ukessays.com/essays/economics/a-pestel-analysis-of-the-cosmetics-industry-economics-essay.php [Accessed 4 Aug. 2014].
Fragrancex.com, (2014). History and background of Gucci. [online] Available at: http://www.fragrancex.com/products/_bid_gucci-am-cid_perfume-am-lid_g__brand_history.html [Accessed 4 Aug. 2014].
Outofthebottleperfums.blogspot.com, (2011). Out Of The Bottle...all about perfums...: Cultural and Social Forces Affecting Perfumes Purchase. [online] Available at: http://outofthebottleperfums.blogspot.com/2011/11/cultural-and-social-forces-affecting.html [Accessed 4 Aug. 2014].
Positivehealth.com, (2014). Positive Health Online | Article - Fragrance: A Growing Health and Environmental Hazard. [online] Available at: http://www.positivehealth.com/article/environmental/fragrance-a-growing-health-and-environmental-hazard [Accessed 4 Aug. 2014].
Scribd.com, (2014). STRATEGIC MARKETING - A CASE STUDY OF GUCCI GROUP MARKETING STRATEGIES. [online] Available at: http://www.scribd.com/doc/119183335/STRATEGIC-MARKETING-A-CASE-STUDY-OF-GUCCI-GROUP-MARKETING-STRATEGIES [Accessed 4 Aug. 2014].