INTERNATIONAL LUXURY BRAND ASSIGNMENT
NAME: MADIHA NOMAN STUDENT ID: SSM/DUBAI/MBA/2020
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TABLE OF CONTENTS LOUIS VUITTON...............................................................................................................................6 PRODUCT RANGE OF LOUIS VUITTON...............................................................................................7 BRAND LOGO.....................................................................................................................................7 BRAND SYMBOL.................................................................................................................................8 BRAND MANTRA................................................................................................................................8 LOUIS VUITTON BRAND SLOGANS.....................................................................................................8 GEOGRAPHIC SEGMENTATION.........................................................................................................10 DEMOGRAPHIC SEGMENTATION.....................................................................................................10 PSYCHOGRAPHIC SEGMENTATION...................................................................................................10 LOUIS VUITTON POP & POD’S...................................................................................................12 MARKETING MIX OF LOUIS VUITTON....................................................................................13 SECONDARY BRAND ASSOCIATION.........................................................................................15 FINANCIAL PERFORMANCE.......................................................................................................18 CONSUMER PERCEPTION OF LOUIS VUITTON....................................................................21 PORTER’S FIVE FORCES MODEL TO ANALYSIS MICRO ENVIRONMENTAL TRENDS.............................................................................................................................................21 PESTEL ANALYSIS OF LOUIS VUITTON...................................................................................24 COMPETITIVE ANALYSIS............................................................................................................27 SWOT ANALYSIS OF LOUIS VUITTON......................................................................................34 KEY BRAND CHALLENGES.........................................................................................................37 REVIEW OF LITERATURE...........................................................................................................39 STRATEGIC AND TACTICAL RECOMMENDATIONS............................................................41 CONCLUSION..................................................................................................................................45
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LOUIS VUITTON
BRAND VALUE INDUSTRY FOUNDED COUNTRY/TERRITORY CEO & CHAIRMAN SALES HEADQUARTERS
$47.2B Luxury 1854 France Michael Burke $15B Paris
Louis Vuitton Malletier, commonly known as Louis Vuitton (French pronunciation: [lwi vɥitɔ]ɔ ) or shortened to LV, is a French fashion house and luxury goods company founded in 1854 by Louis Vuitton. They currently have more than 460 retail stores in 50 countries operating to sell these Luxury goods of Louis Vuitton For six consecutive years (2006–2012), Louis Vuitton was named the world's most valuable luxury brand. Its 2012 valuation was US$25.9 billion. The 2013 valuation of the brand was US$28.4 billion with revenue of US$9.4 billion. The company operates in 50 countries with more than 460 stores worldwide.
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PRODUCT RANGE OF LOUIS VUITTON The label's LV monogram appears on most of its products, ranging from luxury trunks and leather goods to ready-to-wear, shoes, watches, jewellery, accessories, sunglasses, and books. Louis Vuitton is one of the world's leading international fashion houses; it sells its products through standalone boutiques, lease departments in high-end department stores, and through the e-commerce section of its website.
BRAND LOGO
BRAND SYMBOL SAMAUNG AUDIT REPORT Page
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BRAND MANTRA Innovative, Prestige, Desirable, Stylish, and Dream would be for me the essence of Louis Vuitton. Indeed, since its debut, the brand has succeeded to maintain its prestige over the years thanks to its Know-How, and its ability to sell dreams to people. Louis Vuitton has also succeeded to remain trendy thanks to its creativity, innovation, and partnerships (with celebrities for instance).
LOUIS VUITTON BRAND SLOGANS L V the truth Don’t turn around The crouch and Fitzelguard Christmas Experience The Truth – Live and love the truth A world of elegance inspiration, innovation Where will life take you? Real ladies don’t like fake Just doesn’t look good on me The power of dreams Show me your luggage and I ‘ll tell you who you are SAMAUNG AUDIT REPORT Page
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League of legends Probably fake Respect yourself It’s not just a fashion You can’t buy class Life’s a journey Class cannot be replicated We hate being fake We only deserve the best Haute joalliere
LOUIS VUITTON TARGET MARKET SAMAUNG AUDIT REPORT Page
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The first target of the brand is high-income level consumers, who are very wealthy, of both genders from 16 to 80 years old. Businessmen and women with great income are also targeted. They also use a psychographic segmentation, such as lifestyle and motives to identify another part of its target market: 1. for instance, the "fashionistas", people (especially young women) who are carefully following the fashion and the trend. The brand has collaborated with celebrities such as Kanye West in the design and launch of some products, such as shoes. 2. they also target people who need to show their social status, their success by purchasing luxury goods. Indeed, the brand doesn't sell only an up-range product, but also the psychological benefits like the prestige and the feeling of belonging to an exclusive group.
GEOGRAPHIC SEGMENTATION. Louis Vuitton's marketing strategy has been exceptional in expanding in countries with high density, such as China, India, Russia, and lately Brasil. When Louis Vuitton opened its first store in China, people asked: "Why have you come here? We don't understand luxury" The answer of Yves Carcelle CEO and Chairman of Louis Vuitton said: "No, you are sophisticated and one day soon you'll be the biggest superpower." I posted this phrase in an older post, and since then it has stayed with me. It was 18 years ago ca. when Louis Vuitton opened its first store in China and today China is close to being the biggest superpower. The Chinese were right, they didn't understand luxury, but Louis Vuitton was there to show them what luxury meant - The art of traveling, which means the Fine art of living.
DEMOGRAPHIC SEGMENTATION. Louis Vuitton targets both genders, men and women, from 16 to 80 years of age wealthy. Businessmen and women with high income and disposable income. SAMAUNG AUDIT REPORT Page
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PSYCHOGRAPHIC SEGMENTATION Louis Vuitton uses psychographic segmentation such as lifestyle and motives to further identify its target market. In countries such as China and Brazil people need to show their social status and wealth. Louis Vuitton appeals to these customers with status-related motives. Trendsetters and fashionistas are the next segment. For instance, Louis Vuitton collaborated with Kanye West to target the Hip Hop personalities. Lifestyle segmentation is Louis Vuitton's ultimate strategy. The slogan "The Art of Traveling" set new standards for a luxury lifestyle. Since traveling is an art, then owning a Louis Vuitton product makes you part of that art.
LOUIS VUITTON STP
SEGMENTATION
Rich working women having a taste for clean cuts n designs in bags and apparel.
TARGET
Premium segment urban men and women
POSITIONING
Elegant and modern apparels and accessories
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LOUIS VUITTON POP & POD’S POINT OF PARITY
POINT OF DIFFERENCE
High quality: the leather, canvas and other raw materials used for each product are precious (veal, velour, crocodile...)
Exclusivity: the brand sells its products only in its stores and houses, never do any discounts to keep this spirit
High price: entry price for an LV bag is around 600€
Tradition & innovation combination: the brand succeeds to keep its heritage spirits and at the same time, innovate to adapt to the trend
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High quality of service: one to one service for the VIP customers, many salespeople in the store to take care of customers, possibility to personalize products
Very Stylish: the products are trendy with sophisticated designs
- Fashionable / Trendy: Famous and talented Artistic director such as Marc Jacobs, and recently Nicolas Ghesquière
Everlasting: best-seller such as Speedy, Keepall, Steamer models
- Star Products: Speedy, Keepall, Steamer Monogram: has a strong story behind it and models everybody recognizes it when they see it
Know-How: thanks to its heritage. «Every L.V creation result from an intransigent research of quality and an exceptional handcraft »
MARKETING MIX OF LOUIS VUITTON The marketing mix is based on the 4P’s of marketing. The 4p will guide the way to convey the value of your product to your customer. An ideal marketing mix can be developed by using step two of the marketing process. The four P’s of marketing are
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PRICE
PRODUCT
4P's
PROMOTION
PLACE
Louis Vuitton is a prominent brand dealing with items related to the fashion industry. They have carved a name for themselves amongst the peers in the fashion industry by blending craftsmanship that is handmade with necessary but very least mechanization. This has resulted in maximized productivity along with qualitative products. The marketing mix of Louis Vuitton analyses the company /brand which covers 4P’s PRODUCT Louis Vuitton is a luxury brand that sells the finest products. It makes pure leather products and. pays utmost care to not let the designs and make of the product easily imitable. Louis Vuitton made handmade products not machine-made. The company hires the finest craftsmen and ensures that the product is unique. The company register all its designs and product to avoid limitation. To tackle the market of counterfeit goods the company has paid a lot of effort in the design itself, & therefore it is not easy to imitate its products. The portfolio of luxury goods that the company deals in includes items like leather goods that are made from hundred percent original leather and exclusive ready-to-wear clothesline that are designed with utmost care and are hundred percent original. The company is famous for its handbags and beautiful watches. The buyers also covet the glittering SAMAUNG AUDIT REPORT Page
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jewellery and designer shoes. Louis Vuitton also offers a range of eyeglasses, briefcases, scarves, belts, and wallets. In recent years, the company has hired new, young and talented designers to attract the young generation of buyers.
PRICE Louis Vuitton's contemporary design of the product helped the company to maintain a premium pricing policy. Louis Vuitton employs a policy of integrity pricing strategy throughout its distribution network. Therefore, it doesn’t believe in reducing the actual price of any of its products and doesn’t offer either sale periods or any sort of discount. Only the elite and upper-middle-class consumer can buy such a high-priced product. The company is said to have been following a policy of value-based pricing strategy. A Louis Vuitton product is a style statement and hence the customer is happy to pay the exorbitant prices. The perceived value of Louis Vuitton is very high, so the consumers feel that they are receiving the value even though the price paid is high.
PLACE Louis Vuitton is very clear about its distribution policies. Their products are highly exclusive and are sold with the same mindset of providing exclusive accessibility. They have their personalized stores. They do not sell any of their product in departmental stores. They believe that their salespersons are highly trained and professional to tackle the customers in an intimate and warm environment. This marketing strategy help in the reduction of intermediary costs that the other brand face while selling through long channels of distribution. This also results in direct dealings with the customers that lead to efficient and friendly relations. All its stores are located at a very high profile and prime locations. The display of the stores is designed keeping in mind the latest trend. Louis Vuitton have hundreds of retail outlets, mostly located in the countries where tourist usually visited more than the others. Online purchase of Louis Vuitton products is possible only in the United States. SAMAUNG AUDIT REPORT Page
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PROMOTION Louis Vuitton has employed a promotional strategy for its products with the help of celebrity endorsements. Famous actors like Jennifer Lopez, Kate Moss, Scarlett Johansson, and Uma Thurman have been associated with the brand as its ambassadors. They have featured in the high-profile ad campaigns for this brand. Louis Vuitton has also taken an active part in sponsoring mega sporting events like motorsports and yachting. These events are attended by mostly the elite society and by associating with these events; the company has made a direct link with the target audience. Advertising is the main tool to create awareness about the product and keeping with its illusion of exclusivity the company has managed to make ads that are individual and fashionable. Although the company does not advertise on television but it does follow a policy of high-profile advertisement in newspapers and fashion magazines. These ads are all about exclusively handled images that leave a distinct mark on the public. This demographic strategy has created waves in the advertisement industry and helped in making the goods popular throughout the globe. Most of the advertisements revolve around celebrities and this is to create an emotional connection of the consumer. The customers believe that they are also a part of this exclusive group
SECONDARY BRAND ASSOCIATION The Louis Vuitton label was founded by Vuitton in 1854 on Rue Neuve des Capucines in Paris, France. Louis Vuitton started at $10,567 as a sales price. Louis Vuitton had observed that the HJ Cave Osilite trunk could be easily stacked. Place founded: Paris LVMH MoÍt Hennessy - Louis Vuitton SE is a French luxury good conglomerate, which controls about 60 subsidiaries that manage several wellknown and prestigious brands. The conglomerate was founded in 1987, but the brands it controls are often several decades or even centuries-old - the wine producer Château d'Yquem is dating back to 1593 and Le Clos des Lambrays is dating even back to 1365. The company has more than 160,000 employees all over the world and it is worth pointing out that 73% are women and LVMH has SAMAUNG AUDIT REPORT Page
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a rather young workforce with 12% of employees being under 25 and another 40% being between 25 and 34. LVMH operates in five different business segments: Wines and Spirits Fashion and Leather Goods Perfumes and Cosmetics Watches and Jewellery Selective and Retailing
(Source: LVMH Annual Report 2019)
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FINANCIAL PERFORMANCE LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, recorded revenue of €53.7 billion in 2019, up 15%. Organic revenue growth was 10%. Europe and the United States experienced good growth over the year, as did Asia, despite a difficult environment in Hong Kong in the second half of 2019. Revenue growth in the fourth quarter was 12% compared to the same period in 2018. Organic revenue growth was 8% for the quarter. Restated for the non-recurring effects of the VAT increase in Japan and the stock movements of distributors of cognac in the US, the Group’s organic growth was at a similar level in the third and fourth quarters. Profit from recurring operations amounted to €11.5 billion in 2019, up 15%, compared to an already high level in 2018. The operating margin reached a level of 21.4%. Group share of net profit amounted to €7.2 billion, up 13%. Bernard Arnault, Chairman and Chief Executive Officer of LVMH, said: “LVMH had another record year, both in terms of revenue and results.
When looking at the industry LVMH operates in - mostly the personal luxury goods industry - we see some stable trends and numbers which should make investors confident about the future. According to a study from Bain & Company, the sector could increase its revenue by about 6% annually for more than two decades. While the overall luxury market grew 5% to €1.2 trillion globally with LVMH as a major contributor. The company said in a press release that Europe and the US experienced good growth over the year, as did Asia, despite a difficult environment in Hong Kong in the second half of 2019.
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REVENUE BY BUSINESS GROUP:
In an uncertain geopolitical context, LVMH is well-equipped to continue its growth momentum across all business groups in 2020. The Group will pursue its strategy focused on developing its brands by continuing to build on strong innovation and investments as well as a constant quest for quality in their products and their distribution.
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Driven by the agility of its teams, its entrepreneurial spirit, the balance between its different businesses, and geographic diversity, LVMH enters 2020 with cautious confidence and once again, sets an objective of reinforcing its global leadership position in luxury goods.
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CONSUMER PERCEPTION OF LOUIS VUITTON "Louis Vuitton enjoys the best ratio between perceived exclusivity and entry price” Customers perceive the company’s products as high-value products; the customers are willing to pay the amount. Louis Vuitton pays special attention to the quality of the material, the designs, and the make of the products. Thus, the cost price of the products eventually goes very high. Since the target customers of the brand are elite and upper-middle-class customers, Louis Vuitton uses a premium pricing policy to price its products. The brand and its product are a style statement and hence customers easily pay the exorbitant prices.
PORTER’S FIVE FORCES MODEL TO ANALYSIS MICRO ENVIRONMENTAL TRENDS THREAT OF NEW ENTRANCES
BARGAINING POWER OF SUPPLIER
DEGREE OF RIVALRY
THREAT OF SUBSTITUES
BARGAINING POWER OF BUYER
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POWER OF SUPPLIERS For LVMH, relatively low. Because the company often purchases raw materials from suppliers on the basis of consignment. With this method, it reduces the loss marking and establishes economies of sale Example - LVMH has recently taken over Les Tanneries Roux, a leather supplier. With this move to acquire key suppliers, it will reduce the bargaining power of suppliers in terms of leather products. By limiting the capability to plan supplier’s contrary to each other. LVMH would be able to save costs on storage space and capable of making sure of the quality of products supplied.
RIVALRY BETWEEN COMPETITORS IN THE MARKET Relatively high Oligopoly with 2 other main players: PPR and Richemont. But given the high margins and the customer's perception about the price, the competition is not on price, but on quality and image perception, as well as on the ability to attract the right designers with the right abilities. The barriers to entry are very high. LVMH has built the intangible image and the perception built around the brand
THREAT OF NEW ENTRANTS TO THE MARKET Few new entrants’ threats which LVMH can focus on evaluating how much of a threat of new entrants are for LVMH. New entrants made up mainly of new designers of new owned brands in the industry, they are normally successful, and would be quickly acquired by the more famous brand of the industry to provide the facilities and needed infrastructure for growth.
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In return, if the new entrant remained independent, this would represent a threat to the company, by capturing volatile middle-market customers. BUT these customers go after the established name and perception, which makes the threat of new entrants less significant. Also, the barrier to entry is high, customer loyalty for LVMH among time, product service, and quality are undeniable whereby a new entrant cannot be compatible for a short period.
THREATS OF SUBSTITUTE PRODUCTS AND SERVICES Relatively High Many other luxury products such as Prada, Dior, Hermes, and Armani. Main competitors: PPR (having Gucci, Yves Saint Laurent .) and Richemont (Cartier, Montblanc) Counterfeit issues: LVMH has to emphasize the company core competency, uniqueness of product and service and to attract and retain capable employees to have a better value chain and distribution to reach the final users Louis Vuitton and their "Toile Monogramme), substitutes find it hard to earn in the market when the loyal customers are well-knowledge on the differences.
BARGAINING POWER OF BUYERS Low Targeted customers are smaller in terms of market size. 2 types of customers: Fortunate ( High net worth individuals) and Middle-market customers. LVMH faces competition from new entrants and existing competitors such as Gucci and Bulgari (Rugman 2005). The presence of close substitutes due to cheap products and imitations threatens its operations (Pradas 2008). As the market leader, the company’s supplier bargaining power is high. SAMAUNG AUDIT REPORT Page
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The company is a market leader and this is its competitive advantage as well. As such, buyers have little influence on the prices of the company’s products (Nagasawa 2008). The luxury industry is competitive and new entrants must have enough capital. Therefore, potential entrants have less influence on the market.
PESTEL ANALYSIS OF LOUIS VUITTON PESTLE Analysis of Louis Vuitton analyses the brand on its business tactics. Louis Vuitton PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand. PESTLE analysis is a framework that is imperative for companies such as Louis Vuitton, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
POLITICAL
ECONOMIC LEGAL
PESTEL SOCIAL ENVIORNMENT
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TECHNOLOGY
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POLITICAL FACTORS Most of the countries where Louis Vuitton has its presence doing well on the political stability index, but United Kingdom is an exception to it due to its decision of exiting the European Union which creates uncertainty and political stability in the U.K. This has serious long-term repercussions on Louis Vuitton another factor is the high import duties on Louis Vuitton products. Nations like china charged high import duties which creates a significant price difference from other nations. Due to this price difference, the customer tends to buy LV products from the countries to have the lowprice advantage. Louis Vuitton placed itself in the countries that attract more tourists to generate high revenues.
ECONOMIC FACTORS Many countries impose high luxury tax on a brand like Louis Vuitton. This in a result creates a significant price difference in different countries. This economic slowdown can cause a Lipstick effect which states that during a recession phase customer will tend to buy luxury products that are less expensive rather than buying highly expensive products. Louis Vuitton should invest in Asian countries where the labour is pretty cheap and thus it helps them to reduce the cost of its manufacturing and thus it helps them earn a Hugh profit.
SOCIAL FACTORS Louis Vuitton has a big advantage in terms of brand perceived value. Since the company has its root in Europe (i.e. it was originated in France) people tend to buy European products more compared to product produce in Asian or South American nations. Also, people want to try new, exclusive brands .so they usually shift from the established brands to newer ones to have more diversity in fashion which helps the European giants to have the advantage over the other brands. This is also a need for proper market segmentation. Louis Vuitton is a highly expensive brand unable to cater to the nation where major people belong to middle or lower-middle-class society.
TECHNOLOGICAL FACTORS SAMAUNG AUDIT REPORT Page
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Apart from selling on their in-house e-commerce portal and website Louis Vuitton does have their account to major social media sites to post new items attract their valuable customers. The consumer also posts the pictures of the purchased items on their social media pages with feedback and reviews. Doing this helps Louis Vuitton to keep engage their prospective customers. On the other hand, the customer demands include unique and crafted by artisans therefore the technology involving in manufacturing is not completely possible due to its exclusive handmade style.
LEGAL FACTORS Although, big businesses need to focus on many legal laws while working in multiple nations, but the most important legal factor for any luxury brand will be “Counterfeiting”. Counterfeiting remains a challenge throughout the globe for Louis Vuitton. According to the data from the Anti-Counterfeiting group, more than 10% of the sales in the U.K. are lost due to counterfeiting every year. To tackle this problem, the “Anti-Counterfeiting Trade Agreement” was signed but is yet to be implemented. Also, the protection of Intellectual Property Rights plays an important role in deciding which country to invest in. It is a bit riskier for Louis Vuitton to operate in countries like India as it ranks very lowly on the Intellectual Property Index of 45 nations compiled by the U.S. Chamber of Commerce. Also, the company needs to have a detailed analysis of the Business Laws, Employment laws of the country it wants to invest in; whether the laws match with its business model or not.
ENVIRONMENTAL FACTORS Protection of the environment is an important factor to consider in this industry. Many firms that sell leather goods have a huge negative impact on the environment. According to PTE (2015), turning the skin of animals into leather goods involve high energy consumption and the use of hazardous chemicals. Louis Vuitton should work meticulously to bring sustainable processes in its operation as people also like to associate with brands that are more concerned for the society and environment.
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To conclude, the above Louis Vuitton PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
COMPETITIVE ANALYSIS POINT OF PARITY & POINT OF DIFFERENCE
POINT OF PARITY
LOUIS VUITTON High quality: the leather, canvas and other raw materials used for each product are precious (veal, velour, crocodile...) High price: entry price for an LV bag is around 600₏ High quality of service: one to one service for the VIP customers, many salespeople in the store to take care of customers, possibility to personalize products Fashionable / Trendy: Famous and talented Artistic director such as Marc Jacobs, and recently Nicolas Ghesquière SAMAUNG AUDIT REPORT Page
HERMES High quality: use of precious and fine raw materials.
High price: all Hermes products are very expensive
High quality of service: the SPA service consists of allowing customers to give back their old product to get a 25 |
« lifting » operation. Star Products: Speedy, Keepall, Steamer models
Star Products: Kelly, Birkin models
POINT OF DIFFERENCE
LOUIS VUITTON
HERMES
Exclusivity: the brand sells its products only in its stores and houses, never do any Premium quality for each component discounts to keep this spirit of the bag (from the smallest to the principal) contrary to other houses Tradition & innovation combination: the Premium price: bags cost from 5000 to 200 brand succeeds to keep its heritage spirits 000€, much more expensive than Louis and at the same time, innovate to adapt to Vuitton the trend
Very Stylish: the products are trendy with sophisticated designs
- Exclusivity, rarity: the brand restricts deliberately the number of its production. For instance, to get a Birkin bag, some customers have to wait 2 years before getting it. Moreover, when a product becomes too popular, the company stops the production.
Everlasting: best-seller such as Speedy, Keepall, Steamer models
- Family business: Hermes belongs today to the 6th generation of the family. It allows the family to better control the image of the
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brand. They are trying to keep the original values of its founder. Monogram: has a strong story behind it and everybody recognizes it when they see it
Know-How: thanks to its heritage. «Every L.V creation result from an intransigent research of quality and an exceptional handcraft »
- Tradition: is an important value for the brand
Craft-men Know-How: Some products, such as the Birkin bags are 100% hand made, and could take 2 weeks to be created. Hand-craft also has huge value for Hermes.
The fashion industry is a highly competitive and dynamic one, and Louis Vuitton though being a market leader is not immune to this threat. In each region of its global market, Louis Vuitton faces significant competition from other strong brands like Gucci and Hermès. Such a high level of competition in the market place no doubt poses as a threat to the company and its market share.
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PERCEPTUAL MAPPING OF COMPETITIVE BRANDS The main competitors of Louis Vuitton are considered to be Hermes International SA and Gucci. The reason for this selection is because according to Top 100 Global Brands in 2020, both Hermes and Gucci along with Louis Vuitton are listed as the top three luxury Brands
HERMES
Hermès International S.A., Hermes of Paris, or simply Hermès is a French manufacturer of quality goods established in 1837, today specializing in leather, lifestyle accessories, perfumery, luxury goods, and ready-to-wear.
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Over the years, Hermes has focused on the super-rich and premium luxury segment of the market, being less accessible than Louis Vuitton and Gucci. It´s also renowned for its creation of unique customized products for consumers who want exclusiveness and tailored items (as Hermès slogan says: “Make us dream”), even though its extra high cost as consequence. Besides exclusiveness as a competitive advantage, Hermès reinforces French origin by having Paris written in its logo, delivering to the consumer all the benefits of a French house brand, such as glamour and sophistication. Although LV is also French, this attribute isn´t explored as much as Hermès does. Hermès usage of orange as the main color and the lack of monogram all over the product make the brand look less serious and show-off than LV and Gucci. Furthermore, availability is more restricted than Louis Vuitton and Gucci, especially in emerging markets. This contributes for enhance exclusiveness, but Hermès isn´t reaching a potential market as LV and Gucci do.
GUCCI
The Italian brand is also known for its quality, heritage, and premium positioning. All Gucci’s products are made in Italy and this iconic Made in Italy style has become a symbol of elegance, sophistication, and desirability which has enabled Gucci to become one of the world’s most desirable luxury fashion brands. Distribution works as a competitive advantage, having more than 370 direct stores as a strategy to control its distribution process. On top of SAMAUNG AUDIT REPORT Page
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that, is present in the main premium department stores in the world. Furthermore, Gucci is known for vast product ranges, whilst LV is mainly recognized by bags and Hermès by Birkin bags and scarps (although all brands are diversified). Price is less expensive than Hermès and Gucci work with sales discounts, whilst LV doesn´t. This makes the brand more accessible, reducing its exclusiveness. Another issue is the intense usage of monogram, as LV, what can make the brand considered tacky by many consumers. Regarding revenue, though has shown a steady increase in recent times, its profit margins have not been able to keep pace with the margins of its competitors such as LVMH which reflects a higher margin.
All three brands target a similar segment of customers who seek status and quality but each brand differentiates itself with the core values and the promotion tactics. Louis Vuitton unlike the other two brands has a very exclusive distribution channel which is to protect the brand image and identity. It only sells selected products online, whereby most of their products are only available in their brick-and-mortar stores. Also, Louis Vuitton has never believed in giving discounts or sales. This serves as a form of assurance that the value of a LV product will always remain close to market value. Furthermore, it maintains the exclusivity of each product to maintain customer satisfaction. On top of that, Louis Vuitton has always been doing print advertisements on magazines such as Vogue to reach their target market more efficiently, it was only recently that they started advertising on TV but very limited to maintain its exclusivity.
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SWOT ANALYSIS OF LOUIS VUITTON A SWOT analysis is an incredibly simple, yet powerful tool to help you develop your business strategy, whether you’re building a start-up or guiding an existing company. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examples include who is on your team, your patents and intellectual property, and your location. Opportunities and threats are external—things that are going on outside your company, in the larger market. You can take advantage of opportunities and protect against threats, but you can’t change them. Examples include competitors, prices of raw materials, and customer shopping trends.
STRENGTHS
STRONG BRAND WITH GLOBAL PRESENCE SOUND FINANCIAL POSITION SUPERIOR CRAFTSMANSHIP EXCLUSIVE PRODUCTS
WEAKNESS
OPPORTUNITIES
REVAMPING BRAND IMAGE AND RETAINING AN INSATIABLE LUST FOR INNOVATION CAPTURE EMERGING MARKETS INVESTING IN DIGITAL CAPABILITIES
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LIMITED CUSTOMER BASE CONFINED RETAIL MARKET
THREATS
COUNTERFEIT PRODUCTS ERODING BRAND IMAGE SLOWING ECONOMIC GROWTH INTENSE COMPETITION ADVERSE FOREIGN CURRENCY MOVEMENTS
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STRENGTH IN SWOT ANALYSIS Strengths are defined as what each business does best in its range of operations which can give it an upper hand over its competitors. The following are the strengths of Louis Vuitton:
Strong association to quality: In the luxury segment customers are always fussy about the quality of products that they use and are willing to pay a premium for them. Louis Vuitton products have always been the benchmark in quality and design for hand luggage. The strong association with quality is LV’s biggest strength.
Brand recognition: The Louis Vuitton monogram is high on recognition and thus people prefer to carry LV monogrammed luggage since it is associated with status and class in society.
Top Celebrity endorsements: Louis Vuitton has always been powered by the biggest names in show business who have endorsed the brand and carried it in public appearances. Some of their top endorsers include Scarlett Johansson, Uma Thurman, Angelina Jolie, and Muhammad Ali.
Wide network: Louis Vuitton has around 1, 21,289 employees globally making it one of the world’s top employers in companies dealing with luxury goods. The company sells its products through its chain of stores, high-end retail chains, and its website. The brand is sold in more than 50 countries across 460 outlets.
Exclusive Merchandise: Louis Vuitton is known for its personalized luggage options which are monogrammed to indicate their label. Their exclusive brands will guarantee that your luggage stands apart from the crowd and is not carried by anyone else.
Top Designers: The design team in Louis Vuitton comprises of top designers of the world. Some of the names include Helmut Lang, Azzedine Alaïa, Sybilla, Manolo Blahnik, Vivienne Westwood, Isaac Mizrahi, Stephen Sprouse, and Romeo Gigli.
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WEAKNESS IN SWOT ANALYSIS Weaknesses are used to refer to areas where the business or the brand needs improvement. Some of the key weaknesses of Louis Vuitton are:
Excessive centralization: Louis Vuitton is known to be a tough employer and their focus on exclusivity makes them patent or copyright most of their designs and they rely on centralized decision making which brings down the morale.
Lack of sensitivity to foreign cultures: Louis Vuitton is French in styling and design and the brand is much closer to accepting other designs and is also not sensitive to trends in foreign countries.
Over-Reliance on Japanese Market: Japan is one of Louis Vuitton's biggest markets and more than 85 % percent of Japanese women own an LV product. This has reduced the ability of the company to look at other markets.
Exorbitant Pricing: Louis Vuitton is a luxury brand and a basic offering from the company costs about 1500 USD. This makes it impossible for the masses to purchase an LV bag or suitcase and thus the company targets a niche market.
OPPORTUNITIES IN SWOT ANALYSIS Opportunities refer to those avenues in the environment that surrounds the business on which it can capitalize to increase its returns. Some of the opportunities include:
Growing market potential: The global market for luxury goods is estimated at around 42 billion dollars with a growth rate of 4 percent per annum. This could be a huge opportunity for luxury merchandise companies.
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Increase in the number of working women: The need for status symbols is growing at the workplace as more women enter there. This creates a significant opportunity for Louis Vuitton in their prime segment which is formal luggage options.
Rise in per capita income: Most countries across the world have seen a significant increase in per capita income with the result that disposable income is indicating a sharp increase as well. This is expected to create a surge in demand for non-essential items and luxury goods.
THREAT IN SWOT ANALYSIS Threats are those factors in the environment that can be detrimental to the growth of the business. Some of the threats include:
Counterfeiting: The biggest threat that luxury goods face today is that of counterfeit products in the market. The presence of counterfeits not just gives the brand a negative image but also dilutes the market share.
Managing multinational customization: The forte of Louis Vuitton is their ability to create exclusive merchandise and this means that they would also need to customize for individual cultures. Their team which mostly comprises of European designers will find this a huge challenge.
KEY BRAND CHALLENGES 1. KEEPING CONTROL OF ITS MULTINATIONAL BUSINESS The biggest challenge that Louis Vuitton will face is keeping up with multinational business. When tackling different cultures, giving them what they want and need can take a toll on the company’s financial standings. Each country will have its price point that the local economy can support. For example, consumers in the United States may not be able to afford the price that LV has set in England.
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2. COUNTERFEITING PROBLEM Another challenge that Louis Vuitton is continually battling is counterfeiting. The fight against counterfeiting is a long-term element of Louis Vuitton’s worldwide sustainability strategy. Preserving the creativity and the rights of designers, artists and brands is vital to their long-term survival. One of the biggest threats to that survival today is counterfeiting, whose effects go far beyond buying a cheap bag on a street in a faraway city while on holiday. By educating their consumers and letting them know little details to look for to assure that they are purchasing a real Louis Vuitton, which in turn means, relying on the current consumers to not purchase counterfeit products and trust that consumers will return to the store to purchase a real LV product.
3. CHANGE IN CUSTOMER PREFERENCES Japan had been known for a group-oriented culture in which there was a real pressure to possess luxury status-driven brands. Japanese consumers were becoming less inclined to tolerate high prices that had formerly created desirability. Although young Japanese women would still be eager to save money for the “IT” brands, they had become more aware of the value of money. The lower-priced accessories and smaller leather items such as wallets, travellers’ bags had reported a huge increase in sales in recent past years. 4. MARKET DILUTION Louis Vuitton had been an enduring status symbol in Japan, it had to face a major challenge which was brand dilution as it moved into offering new products lines. As a leader of the sector, the challenge was to continue growing in the Japanese market and still preserve the exclusivity and great quality the brand had always offered.
5. OVERDEPENDENCE ON THE JAPANESE MARKET SAMAUNG AUDIT REPORT Page
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Louis Vuitton was the first multinational luxury house to open its shop in shops in Japan without the help of a Japanese distributor. Louis Vuitton took advantage of the Japanese high demand for fashion. Japan had remained a source of creative ideas and trends. In a sense, japan represented a fantastic laboratory to test new selling products and inaugurate innovative Louis Vuitton stores. Also due to the high number of middle-class, Louis Vuitton became over-dependent on the Japanese market.
6. ECONOMIC CRISIS As the global economic downturn took its toll on wealthy buyers, the growth of luxury brands slowed and the sales decline sharply. Consumers tend to prioritized necessities over luxury stuff. Due to travel restrictions during pandemics, LVMH suffer a major loss in their tourism sale. As a top luxury and exclusive brand, its prices remain high and it never offers any promotional sale in such a situation thus suffer a big loss. LVMH had temporarily closed stores and halted its manufacturing process as the coronavirus pandemic spread from its key Chinese market to Europe to the overall world.
REVIEW OF LITERATURE
1. Based on data published in Luxury Import Brand Marker in Japan 2008 (Yano Research Institute Ltd. 2008), Louis Vuitton held the top spot for net sales of single brands for FY2007 with sales of around 165.0 billion yen-approximately 2.7 times that of third-place Hermes, about 3.1 times fourth-place Tiffany and around 2.5 times Coach, which had rapidly advanced to second. Moreover, in per-store sales for major luxury brands, Louis Vuitton raked in approximately 3.0 billion yen-three to more than ten times that of its main competitors-demonstrating Louis Vuitton's tremendous presence in numbers alone (refer to Kojima Fashion Marketing Inc., SPAC REPORT) . SAMAUNG AUDIT REPORT Page
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2. Louis Vuitton is no stranger to the art of collaboration it's interwoven into the brand's core DNA. Louis Vuitton boasts an impressive list of partnerships, and the brands recently launched new collection under the creative direction of men's designer Virgil Abloh is just another cool Collab to add to the list. Introducing: LV x NBA. "THIS COLLECTION CELEBRATES THE CULTURAL CONTRIBUTION OF BASKETBALL AND ITS DIVERSE CHARACTERS, AND THE IDEA OF RELATABILITY AS A FORCE OF UNITY." - VIRGIL ABLOH 3. According to Mademoiselle review 2020, the Louis Vuitton Never full seemed like the best bet. It’s a coated canvas, so incredibly durable. It’s a classic style that’s been around for years, so something I’m unlikely to tire of. It comes in a few different sizes, so I could opt for the one which best suited my needs. And finally, I liked the idea of splurging on a well-made piece that I could use for years and years to come, that would have so many fond memories attached to it. 4. According to Ada Ivanova designer and entrepreneur who specializes in technology.,(2020) in the world of luxury bags, Louis Vuitton is the Mercedes – classy, esteemed, and instantly recognizable. There are dozens of other luxury labels, but Louis Vuitton is a league of its own
5. Louis Vuitton handbags are fabulous at maintaining their value. The styles are timeless, the designs are iconic and the quality impeccable, making them an ever-popular choice. So, if ever you were to consider selling your beloved Louis, you can be sure there will always be a market for second-hand Louis Vuitton’s. (Jane Jeffreys, 2019)
6. Cooperation with well-known designers and the introduction of limited editions bring Louis Vuitton a lot of income. Stephen Sprouse in cooperation with Marc Jacobs designed a limited line of Vuitton bags, which on the traditional monogram had 'Louis Vuitton' inscriptions printed sometimes with the name of the handbag model, e.g. Keepall or Speedy. These inscriptions looked like careless graffiti in neon colors. SAMAUNG AUDIT REPORT Page
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Some models of handbags are specially made to order and do not have the LV monogram in the background of the graffiti (Barton, 2009).
STRATEGIC AND TACTICAL RECOMMENDATIONS TACTICAL RECOMMENDATIONS GAPS
DERIVATIONS FROM BRAND PURPOSE
POSSIBLE RECOMMENDATIONS
WEAK BREADTH OF THE BRAND AWARENESS
Athough abstract, the slogan “LV THE TRUTH” can still be easily interpreted and understood in a way most relevant to individual consumers.
Clear bold tagline or slogan
IMAGERY PROBLEMS
The letters “LV” in the slogan gives a creative and trendy spin to the brand, while the phrase “THE TRUTH” reminds consumers not to be overly ostentatious and to be true to themselves.
Highlight LV’s dedication to creativity and promote newer fresh design’s
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LACK OF BRAND RESONANCE WITH USERS
The phrase “THE TRUTH” in the slogan conveys the genuineness and high quality of lv products, to encourage a stronger relationship between lv and the concept of quality.
Focus on anticounterfeit campaigns and develop campaigns to differentiate between authentic goods and knock offs
STRATEGIC RECOMMENDATION GAPS
DERIVATIONS FROM BRAND PURPOSE
POSSIBLE RECOMMENDATION S
JOURNEYS CAMPAIGN
The interpretation of LV as live or love reminds consumers to live life to the fullest and pursue their purpose in life while bringing an LV bag along for their journey
Create a less abstract and clearer message on the importance of personal journeys
LACK OF ADDRESSIN G FUTURE TRENDS
LV the truth is a fresh and creative spin on the positioning of LV as a traditional and classic luxury brand and will appeal to both
Leverage on their existing distinguishable brand elements and align it to a new cause or campaign to come up with an afresh look for Louis Vuitton that will reinforce their brand
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the younger and old consumers PARADOX OF “HIGH SALES VERSUS EXCLUSIVIY
The phrase “The truth” relates to consumer knowledge of the genuineness and exceptional quality of LV products
Commit to an emphasis on sheer quality, design, and romance of the product.
WEAK POD
LV The truth is a creative way to promote LV’s differentiating factors such as quality, personal journeys, and sophistication
Hold more arts events and creative printed advertisements with artistic motifs
From the above discussion we can see the major challenges Louis Vuitton is facing are Counterfeiting, Design innovation, Clear message or tagline and customer service issues.
COUNTERFEITING
The copying of designs has highly impact on the image of louis Vuitton. It creates negative impact on consumers as well as they paid high price for SAMAUNG AUDIT REPORT Page
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the brand and this counterfeiting of design and its logo made them think before buying especially status concise peoples as it might impact on their image in front of others as the LV products are now seen at local market in form of copies. LV is already taken legal action to counterpart this but its high time to take serious actions against these fraudulent to save their image and exclusivity and to overcome the customer fear and retain their trust in brand.
DESIGN INNOVATION IN PRODUCT Heritage luxury brands, many with a history that goes back a century or more, have their back against the wall when it comes to innovation. They cling to that heritage and fear innovation threatens it. The rapidly changing consumer marketplace and how the very idea of “luxury” is evolving, changes young consumer perception as well. LV from the year it born follow the same design patterns on its product yet the consumers have access to new brands having more designs and innovation so it is suggested to innovate the product and as LV is a famous luxury brand it doesn’t need to have same monogram in its design as people can easily recognize it by its logo.
CUSTOMER SERVICE
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It is observed from louis Vuitton own website as well as other review sites that the review of the product associated with the brand is not so good. The customers look up for this brand due to its quality and sustainability for longer period of time but currently it is apparent that many people are disappointed with their after-sell service and the deliver goods in quality so it is recommended to work on their customer service and quality of product as the customers perceive brand of high quality and that’s why they are ready to pay high amounts for it.
LOUIS VUITTON SOCIAL MEDIA PRESENCE Luxury brand often concern about losing their exclusivity when it comes to going online. Louis Vuitton is presence on digital platform but with some changes it can further enhance customers experience and engagement.LV does not retail its products on third party websites. If they will sell a limited amount of their products, it can increase an outreach to consumers while maintaining exclusivity and maintain brand positioning. To increase consumer engagement more interactive strategy should be adopt and should encourage consumer feedback on the product to further innovate it.
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CONCLUSION Louis Vuitton is the top luxury Brand which is known for its exclusivity in design, high pricing and quality. In this report we analysis its brand position (internal and external trends), brand elements, financial analysis, marketing mix, micro and macro environment covering pestle and swot analysis, competitive analysis, brand key challenges, review of literature and suggested the strategic and tactical recommendation to overcome the challenges. Counterfeiting is a major challenge faced by Louis Vuitton which is not only effective its sales but also create a negative impact on consumer perception towards the brand, it is highly recommended to strategies policies against it and take a serious action against it to retain brand image among consumers.
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