GSBS6505-MARKETING RESEARCH

Do Gucci Catalogs Stack Up in Direct Marketing?

A few catalog marketers have made attempts to break away from the traditional modes of catalog marketing. Gucci is one such company which employs innovative marketing techniques. Gucci’sunorthodox style emerged in 1985 when the Gucci autumn/winter catalog took a new distribution route in the U.S. — for the first time Gucci catalogs were made available in bookstores.

Gucci fell on bad times in the early 1980s, but revitalized itself by the 1990s primarily by the leadership of Maurizio Gucci, the owner and original designer for the company. Despite the killing of Maurizio Gucci by his wife in March of 1995, Gucci continued to expand its presence both globally, and in the United States. They have opened many stores over the past several years and have over 200 worldwide. They have also increased their revenue to $2.3 billion in 2002. A great deal of their strategy involved creating a unified image for Gucci worldwide and discontinuingproducts that did not fit that image. Gucci’s CEO, Domenico De Sole, personally traveled the globe to visit Gucci’s stores and closed several that did not present Gucci’s products effectively. Part of revitalizing Gucci’s image has been with a catalog of very high standard. According to a companyspokesperson, “the amount that Gucci spends on catalogs is unheard of in the industry.”

Described as a product in itself, the Gucci catalog was predicted to generate interest that went beyond the typical catalog. It was said to even have an editorial appeal. Released in early September, the Gucci catalog came with a cover price of $5. Five thousand copies of the catalog were given to Crown Publishers for distribution, and Gucci began courting other booksellers such as Rizzoli, Endicott, Waldenbooks, and B. Dalton. Containing 96 color pages, the book was produced in-house at a very high budget.

Apart from bookstores, the Gucci catalog was also available in Gucci stores and was mailed out free

of charge to 50,000 of Gucci’s best customers. The merchandise shown in the catalog was available

in the stores, by mail, or by telephone. Furthermore, this strategy allowed Gucci to determine

1

where the customer got his/her catalog. The order forms in each catalog were coded to indicate whether the catalog was distributed through bookstores, the Gucci stores, or through the mail.

While this campaign was not as successful as Gucci would have liked, the company did not give up on the idea of developing a new approach to generate growth and sales. In particular, Gucci hoped to gain a competitive advantage by capitalizing on the latest high technology development for direct marketers—automated voice response.

Automated voice response (AVR), also known as audiotex, combines computer intelligence with telephone accessibility—a phenomenon with tremendous marketing applications. Recently, this technique has leapt to even greater heights with the introduction of interactive 900 numbers. Unlike an 800 number, where the marketer pays the cost, the cost of the 900 number call is passed on to the consumer. This is done by billing the caller on their monthly phone bill, and the marketer receives any money that is left after the telephone company deducts its charge.

The marketing department at Gucci thought that it might use AVR technology to build catalogreadership. They felt confident that they could do this by working under the assumption that “...themore time people spend poring over the pages of a catalog, the more likely they are to findsomething in there that they can’t live without.” In order to gain readership, a catalog readershipgame, which required a touch-tone phone would be employed. On the cover of the catalog, the reader would be informed that there were lucky numbers scattered throughout the catalog. When lucky numbers were found, the person should dial the game phone number (which could be an 800 or 900 number) and punch in the lucky numbers, along with their personal identification code (PIN). The person should try to find as many lucky numbers as possible, since the more lucky numbers a person has, the greater the discount on purchases they make from the catalog. This game, therefore, not only benefited Gucci by stimulating readership (due to the consumer’s increasedscrutiny of the catalog for lucky numbers); but also served as an inducement for the customer to make a catalog purchase.

Unfortunately, while the marketing department felt that they had a winning strategy, top management was not so sure. Before authorizing the implementation of this plan, top management wanted a marketing researcher to assess if the plan was a viable one. Devise a report by analysing the data collected from the survey compiled (below). Based on your marketing research report, management would decide whether or not to give marketing the green light.

2

Management Decision Problem

Can a catalog readership game, implemented through AVR technology, be used to build readership for the Gucci Catalog?

Marketing Research Problem

Broad

Specific

1. What criteria are used by consumers in deciding whether or not they prefer the game?

2. What criteria are used by consumers in deciding whether they would play the game?

3. What are the characteristics (demographic and psychological) of consumers who exhibit

   positive preferences and/or intentions toward the game?

4. What is the effect of the game on the Gucci image?

5. What factors cause consumers to examine and order from Gucci catalogs as opposed to

   other catalogs and retailers?

Analysis

1. Develop a profile of the characteristics of consumers who participated in the survey.

2. Determine if there are any differences in responses to a) attitudes toward promotional games in catalogs, and b) responses to the demonstration catalog between those who receive Gucci catalogs, those who receive other catalogs and those who receive no

   catalogs.

3. Determine if playing games to win is more important than playing games for enjoyment.

4. Determine which factors related to the promotional game (Q14) predict how likely

   someone is to participate in the promotional game (Q15).

5. Determine which perceptions of Gucci are more significant to consumers (Q12).

6. Determine if there is a difference in likelihood of buying something from a catalog that has

   a game in it (Q6b) between a) males and females.

7. Determine if attitudes related to promotional games (Q6) are significant in explaining if a

   respondent feels that promotional games in catalogs are a) fun (Q5a); and b) worth

   consumers time (Q5d).

8. Determine whether the likelihood of someone participating in the promotional game is

   high.

9. Determine the reliability of the scale used to measure opinion about playing games in

   catalogs (Q6).

10. Determine if there are any underlying dimensions in the attitudes towards company

    catalogs (Q7) and the new Gucci promotional game (Q14).

Determine the potential effectiveness of a readership game, through the examination of customer preferences and intentions towards the game.

3

The Report

Use the data file provided on Blackboard, to analyse data and prepare a Marketing Research report for Gucci Management.

The marketing research report is to be written in report format and must include the sections shown below:

•    Title page

•    Table of contents

•    Executive summary

o This should summarize the key elements of the report and should always be on a separate page. Keep your points concise and give an overview of the entire reporto It is written for non-technical people who don’t have time to read the main report

o It should contain:
 A brief statement of the problem Background information
 Summary of Analysis
 Summary of main conclusions
 Recommendations

o Should be written after the rest of the report has been completed.o Make sure you address the research questions.

 Background (brief summary from the case) and MDP

o A summary of the background
o You need to justify the need for the researcho State the MDP and MRP

 Research design and procedures (brief summary based on survey)

o Look at the survey, decide what research design was usedo Is it qualitative / quantitative?
o Exploratory/descriptive/causal?
o Sample Size

 Sample Profile
o Describe the sample on which the data is based using frequencies and descriptive

statistics Data Analysis

o For each objective you will need to choose the most appropriate test, and for each test you must:

•    State the purpose of the test, why it was chosen, and the results obtained (including appropriate statistics, e.g. test statistic, p-value)

•    Provide a statistical interpretation

•    Provide a non-statistical interpretation for management

•    Include the relevant output for each test in the appendix

4

 Conclusions and Recommendations (for Gucci Management)

o Link interpretations of the findings back to the problem being addressed.o Should be closely related to your research questions.
o Recommendations are based on the results and the conclusions – make

recommendations to the decision makers.
o Again, recommendations should be made in reference to the research problem.o Limitations of the research

 Reference list (APA) Appendices