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].
Sir i didnt understand about Economic environment could you please explain me further?
ReplyDelete-Junior Analyst
Economic environment is mainly concerned with the purchasing power of the consumers. The more money the consumers have money the more they can purchase their product.
ReplyDeleteOhhhh so thats the point now i got it thank you very much sir btw how is this competitors affecting company could you extend you words ?
ReplyDeleteThe competitors produce the same goods as the Gucci and the success of competitors directly creates impact on the performance of Gucci as consumers will buy more product of Gucci.
ReplyDeleteI did not understood about the way in which CSF affects the success of the company
ReplyDeleteThe critical success factor helps the company to fulfill its strategy and goal for the company. It also helps to achieve the objective of the company.
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