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POLITECNICO DI TORINOMASTER OF SCIENCE IN ENGINEERING AND MANAGEMENTMASTER’s DEGREE THESISTHE IMPACT OF ADVERTISING AND MARKETINGIN THE LUXURY BRAND INDUSTRYCandidateAcademic SupervisorNegar RahidehProf. Luigi BenfratelloAcademic year: 2019/20201

Acknowledgment:This precious journey could not be possible without countless love and endlesssupport of my parents, Pouran & Mansour, and my brother, Ali. I would like todedicate my thesis to them who taught me how to have persistence in order tochallenge myself, pursuing my dreams to come true and constantly motivatingme to work harder.I express my deep appreciation to my academic supervisor Professor LuigiBenfratello for his invaluable guidance throughout this path; and extend mysincere thanks to my family and friends.2

Abstract:This thesis provides a brief outline on the impact of advertising and marketingstrategies in the luxury brand industry, then it examines a novel sustainablemarketing strategy to be adopted. Moreover, empirical research was done onGUCCI’s activities and assessment of their novel sustainable marketing strategyamong its supply chain, operation process, policies and management. The casestudy determines successful marketing strategy dedicated to sustainable greenmarketing approach which is considered as a novel method to CSR policy(Corporate Sustainable & Responsibility).Keywords: Green Marketing Strategy, Luxury Brand Industry, Business Model,Sustainability, Gucci.3

Table of ContentsAcknowledgment .2Abstract .3Table of Contents 4List of Figures .7Chapter 1 .91. Introduction 9Chapter 2 .122. Research Methodology .122.1. Motivations .122.2. Objectives .132.3. Research Questions .14Chapter 3 173. Key Concepts .173.1. The World of Luxury 173.2. Luxury Product Consumption .183.3. Advertising and Marketing .213.4. Types of Advertising 223.5 The Economic Analysis of Luxury 233.5.1. The Economic Visions on Advertising 233.6. The Essentials of Luxury Strategy 283.7. Traditional Marketing in Luxury Brand Industry .293.7.1. Stretching Strategy .304

3.7.2. Evolution of Luxury Stretching .313.7.3. Types of Models in Stretching Strategy 313.8. Sustainable Green Marketing Strategy 33Chapter 4 .364. Case Study: Gucci .354.1. History 364.2. Gucci’s Novel Marketing Strategies .374.3. The Environmental Foundation of ‘Gucci Equilibrium’ 394.4. Gucci’s Fundamental Environmental Policies 404.4.1. Environmental Implementation .404.4.2. Carbon Neutral .404.4.3. Sustainable Raw Materials 424.4.4. Chemistry & Environment 434.4.5. Waste Management .444.4.6. System of Packaging .444.4.7. Fur Free Products .444.5. Gucci’s Green Sustainable Marketing Approach 454.5.1. Investigation of Gucci’s Environmental Impact 454.5.2. Environmental Report of Consumption .464.5.3. The Constructed Environment .474.5.4. The Relevance of Transportation and Emissions .484.6. Gucci’s Digital EP&L Platform .484.7. The Sustainable Methodology of EP&L .504.7.1 Summary of Valuation Methodology 515

4.8. The Main Motives of Expanding EP&L Marketing Tool 574.8.1 The Advantages of EP&L Tool .594.8.2 Gucci’s My EP&L App . 594.9. The Effective Gucci’s Green Marketing in 2020 .60Chapter 5 .635. Conclusion .63Reference List .686

LIST OF FIGURESFigure 1: summary of the process to boost the green marketing strategy – source: Gucci. 11Figure 2: realizing impact pathways – (source: gucci) . 16Figure 3: realizing dependecny pathways – (source:gucci) . 16Figure 4: social and personal influences in luxury consumption (vigneron and Johnson,1999) . 20Figure 5: prestige consumer behavior (vigneron and johnson,1999) . 20Figure 6: luxury brand architecture-poles and product roles (Kapferer and bastein,2009). 30Figure 7: pyramid model (kapferer and bastein,2009). 32Figure 8: galaxy model (kapferer and bastein,2009) . 33Figure 9: evaluation of sustainability luxury (torres and gardetti,2013) . 34Figure 10: Gucci's marketing strategy (source: gucci) . 38Figure 11: raw material sourcing milestones (source: gucci) . 43Figure 12: EP&l values (source: gucci) . 46Figure 13: environmental report of Gucci's consumption (source: gucci) . 47Figure 14: a brief procedures of ep&l (source: gucci) . 49Figure 15: the methodology of gucci's ep&l platform (source: gucci). 50Figure 16: impact pathway for air pollution (source: pwc) . 51Figure 17: impact pathway for GHG (source: pwc) . 52Figure 18: impact pathway for land use (source: pwc) . 52Figure 19:impact pathway for solid waste disposal (source: pwc) . 53Figure 20: impact pathway for water consumption (source: pwc) . 54Figure 21: impact pathway for water pollution (source: pwc) . 55Figure 22: environmental impact/valued results in ep&l-2018 (source: gucci) . 56Figure 23: worldwide imacting materials/valued results in ep&l-2018 (source: gucci) . 56Figure 24: aggregates gucci worldwide valued results - 2018 (source: gucci) . 57Figure 25: ep&l contribution of major groups of raw materials & quantity of consumption-2018 (source: gucci). 57Figure 26: the reason behind the ep&l marketing tool (source: gucci) . 587

Figure 27: the results of digital ep&l - 2018 (source: gucci) . 59Figure 28: a brief outline of potential improvements over time in green marketing strategey (source: gucci) . 60Figure 29: gucci's green marketing roadmap . 678

CHAPTER 1INTRODUCTIONA lot of luxury brand companies tend to have sustainable operations and proposeeco-friendly goods as a novel strategy which require transformation of theirmindset from traditional marketing strategy to innovative strategy. Moreover,they understood that sustainability in luxury marketing strategy involves a varietyof long-term process towards its supply chain, defining environmental policies,changing their CSR (Corporate Sustainable Responsibility) policies andimproving awareness to all generation of clients which lead to gain highdifferentiated products, effective economic values and superior profitability ratio.Indeed, marketing strategy face its development during 21st century, evolving bycorporate citizenship on sustainable luxury so it entails defining new values totheir clients and luxury brand companies. It leads to their substantial attentiontoward defining environmental strategy in the heart of their activities. However,some luxury brand companies may still face some problems of switching to thenovel marketing strategies including, old luxury clients have low awareness toenvironmental benefits since there are no compatible communications betweenluxury companies and clients’ layout toward environmental matters in the past.As well as, they have perceived that peculiar indication and terms in sustainablemarketing are recognized by expressing the effective green content as theinnovative item toward marketing strategy.In fact, Emerging green marketing strategies in the luxury brand industrydistinguish the impact on Millennials’ knowledge to the environmental-friendlysuperior goods, affecting their consumption behavior increasingly. It specifiesthat millennials are remarking luxury brand company’s renown, goods labels,product packaging to perceive if a modern luxury product is more desirable interms of eco-friendly and sustainability.Thus, in this thesis have aimed to assess the aspects of procedures in sustainablegreen marketing strategy in the case of Gucci as one of the best successful fashionluxury brand company in pursuing sustainable marketing strategy. Gucci boostsits houses toward enhancing and renovating their operating processes9

environmental friendly marketing strategy. Thereby, helping them to expand theirsales, brand values, superior profitability and differentiated goods continuously.At kering integrated report 2018, Francois-Henri Pinault, Chairman and CEO OFKering said “we are convinced that the Group’s responsible business approach isan integral part of our vision of modern luxury”.Indeed, by taking step in Gucci procedures into following innovative marketingstrategy, it provides its CSR policy (Corporate Sustainable & Responsibility)policy as the development commitment among its high attention to theenvironment according to their standards internationally. As well as, Gucci isengaged in implementation of sustainable culture eco-friendly, improvingawareness into their system. So, there are high intertwined relations between theimpacts of their actions and clients, suppliers, stakeholders, commercials andfinancial associations which entails a vast number of functions followedconsistent business management: agreements between regulations and innovativestandards, up-to-dated knowledge of environmental impact, decreasingenvironmental effects by protecting flora and fauna, responsibility and highawareness of its supply chain.Therefore, acquiring to those mentioned steps adopted toward the entire Gucci’soffices universally. So, Gucci’s group pursued sustainable marketing strategy“Gucci Equilibrium” and CSR management system by high emphasis on businessethics, considering human rights, planet conservation and integrity across its highquality and novel eco-friendly goods which are produced among innovativetechnology and raw materials.Moreover, Gucci defined an innovative digital tool, EP&L platform(Environmental Profit and Loss,) in order to investigate the environmentalimpacts of their process to the planet which can be bring tangible values to theirgroup and clients, leading to the high dependency of clients, environment andluxury brand. Thus, creating sustainable profit and satisfaction throughout themrequire a long-term sustainable marketing strategy which is aimed in my thesis toassess.In nutshell, as can been seen, there is a procedure of improving Gucci’s greenmarketing strategy:10

FIGURE 1: SUMMARY OF THE PROCESS TO BOOST THE GREEN MARKETING STRATEGY – SOURCE: GUCCI“While these steps are highly iterative processes. besides, it may be necessary to revisit earliersteps as development progresses”. (Source: Gucci)11

CHAPTER 2RESEARCH METHODOLOGY2.1. Motivations:As a matter of fact, marketing strategy has significant role in order to fosteringsales for luxury brands. Moreover, it can create a substantial relation betweenluxury notion, positive values economically, socially and environmentally.The new marketing strategy contains the ventures and advantages results whichare tracked to recognize their significance in achieving global sustainableexpansion. The complexity of managing luxury fashion brand needs consistencyto applying new marketing strategies to raise exclusivity namely, limited editiongoods, environmental friendly goods and so on.Basically, luxury related to extravagancy, wealth, and posing, usually hasremarked inconsistent with Corporate Social Responsibility (CSR), that isaffiliated with awareness, moral principle and mean value. In spite of that, a lotof luxury firms has attracted to gain sustainability by:1- Corporate Sustainable Responsibility (CSR) policies2- Eco

offices universally. So, Gucci’s group pursued sustainable marketing strategy “Gucci Equilibrium” and CSR management system by high emphasis on business ethics, considering human rights, planet conservation and integrity across its high quality and novel