Indicator: Prof. Thomas Bradley
LOUIS VUITTON (CASE 24) Class 1 – Group 1 Phan Nguyen Phuong Anh – 295918 Nguyen Thu Oanh – 295910 Tran Thai Dan Thanh – 295925
CONTENT
PROBLEM STATEMENTS • Will the growth of brand Louis Vuitton be sustainable? • How does Louis Vuitton maintain its balance between brand value and company profitability?
INTRODUCTION
• Louis Vuitton Moet Hennessey (LVMH) - French multinational group
• Owning more than 60 prestigious brands around the world • Focusing in luxury industry • Group’s five generic fields: Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry, and Selective retailing
LVMH Group
LVMH Wine and Spirits
Moet & Chandon, Hennessy, Chateau d'Yquem, Mercier, Cheval des Andes,...
Fashion and Leather goods
Louis Vuitton, Loew, Kenzo, Givenchy, Marc Jacobs, Donna Karan New York, Fendi,..
Perfumes and Cosmetics
Parfums Christian Dior, Guerlain, Parfums Givenchy, Kenzo Parfums, Benefit Cosmetics, MAKE UP FOR EVER,...
Watches and Jewelry
TAG Heuer, Zenith, Hublot, Dior Watches, FRED, Chaumet, De Beers
Selective Retailing
DFS, Miami Cruiseline, Sephora, Le Bon Marche Rive Gauche, Samaritaine
ABOUT LOUIS
VUITTON
• Being owned by French group LVMH • Fashion-icon founded in 1854 in Paris by Louis Vuitton • Both traditional and creative • World leading luxury brand
Nicolas Bazire (Development & Acquisitions)
COMPANY OPERATION
Antonio Belloni
LVMH
(Group Managing Director) Bernard Rolley
Ed Brennen
(Operations)
(Travel Retail)
Jean-Jacques Guiony
Yves Carcelle
(Finance)
(Fashion & Leather Goods)
Bernard Arnault
Patrick Houel
(Chairman; CEO)
(Advisor to the Chairman)
Daniel Piette
Phillippe Pascal
(Investment Funds)
(Watches & Jewelry)
Pierre Gode
Pierre-yves Roussel
(Advisor to the Chairman)
(CEO Fashion Division) Mark Weber (Chairman & CEO Donna Karan, CEO LVMH Inc.) Chantal Gaemperie (Human Resources & Synergies)
COMPANY OPERATION
• Diverse product categories • Separated management • Offering customers more personal relationship and customized products
PRODUCTS Footwear
PRODUCTS Five basic priorities: • Be creative and innovate;
• Aim for product excellence; • Bolster the image of our brand with passionate determination;
• Act as entrepreneurs; • Strive to be the best in all we do.
SWOT ANALYSIS WEAKNESSES
STRENGTHS 1. Values built over a long time
1. Limited customers’ segment
2. High level of brand awareness
2. A few brands are responsible for most of LVMH revenue
3. Extremely diversified brand portfolio 4. Strong global presence 5. Diversified source of revenue 6. High control over the supply chain and value chain
3. Increase in debt burden
4. Products only available in its exclusive stores 5. Recent changes in the leader position of the group
7. Source of global talents THREATS
OPPORTUNITIES 1. Market Expansion (especially in BRIC countries)
1. Counterfeiting
2. Synergies between brands
3. Over-saturation of the luxury goods industry
3. Increasing in the disposable income
4. High competition in the market
4. Expanding in the concept of luxury
2. Grey market
5. Changes in the customers’ buying behavior in Asia 5. Adapting local and new trends for the local market 6. Economic slowdown
SCOPE • Largest market were in Europe and the United States • Fastest growing market is mainland China • Customization, and expanding in the fast-growing watches and jewelry
market
SCOPE The company focus on three major groups of customers: This refers to individuals - earning high and ultra-high net income – who aim at true luxury products Absolute This segmentation includes 10% of top income earners with exclusive buying experiences such as celebrities or businessmen and women Aspirational
Accessible
This refers to the accessible customers who intend to have the experience of being in the elite class through purchasing luxury goods
MARKET ANALYSIS
MARKET SEGMENTS The demographic marketing segmentation • Age: from young adults to seniors (22 – 65 years old) • Gender: both men and women • High social class • High income: $5,500 or above per month
• Self-worth and high social status
MARKET SEGMENTS The geographic marketing segmentation • Expanding in countries with high density (BRIC nations) • Having different characteristics and behaviors
Psychographic segmentation • Lifestyles and motives
• Trendsetters and fashionistas
PORTER’S FIVE FORCES Threats of new entrance Low
Bargaining power of suppliers
Intensity of Rivalry
Bargaining power of buyers
Moderate
Low
Low
Threats of substitutes Low
COMPETITION
COMPETITORS Two largest competitors
HERMES • Founded in 1837 • Prides itself on exclusive high-quality products and experienced craftsmanship • Produced several of the most expensive handbags • Renowned for its creation of unique customized products
GUCCI • Founded in 1921
• Mission: provide customers the excellent products and experience through high quality, craftsmanship, heritage, and innovation • Elegance, sophistication and desirability products • 2011: achieved 18% growth (€3.14 million) in revenue
COMPETITORS COMPARISON
MARKETING
MARKETING STRATEGIES Marketing mix 4Ps: • Product: • Products of distinguished quality and attention to details • Emphasizing on both tradition and innovation
• Price: • High price – Absolute value • No activity on bargaining, sale in value sets or odd prices • The principle of philosophy is “Every products of LV are Money”
MARKETING STRATEGIES • Place: • Limited distribution channels, own stores, series of high-end departmental stores • Absolute control over distribution channel
• Promotion: • No involvement in “mass advertising” • Advertising in high fashion magazines, billboard in major cities, television, and cinema • Using famous models, actresses and recognizable figures
MARKETING STRATEGIES • Print ad
MARKETING STRATEGIES • Celebrity endorsement
MARKETING STRATEGIES • Product placements
MARKETING STRATEGIES • Television commercial (LV’s first TV ad)
E-COMMERCE Mobile application • "Louis Vuitton Pass" • "AMBLE" • "100 LEGENDARY TRUNKS"
Social media network (Facebook, YouTube and Twitter) • Live fashion shows • Photos of new collections • Mon Monogram App
FINANCIAL STATEMENTS
BALANCE SHEET
BALANCE SHEET
BALANCE SHEET Assets • The proportion of fixed assets is quiet high regarding other companies (about 70% of the economic structure) • High weight in Non-current assets
• Current Assets are about 30% of economic structure
Liabilities and Equities • The proportion of debts is not so high • Equity is a high part of the total financial structure
INCOME STATEMENT
INCOME STATEMENT • LVMH’s total current assets, revenues, net income, and shareholder equity are increasing • Net income increased by 75% to €3 billion ($4.1 billion) • Brand value increased by 23% to €18.4 billion ($24.3 billion)
RECOMMENDATION Three periods of implementing the recommended strategy: (within 24 months) Introduction
New Release
Harvest
(0 - 6 months)
(6 months - 12 months)
(12 months - 24 months)
• Store redecoration • Limited product display • Introduce more privilege service for membership • Increase in price • Product development
• Introduce handbags with new design, without LV logo and monogram. • Premium price • Customized for special customers
• Review sales data and customers' reactions through market research • Evaluate current plan
CONCLUSION • The luxury retail industry is expected to grow in future time • Fashion industry requires businesses having strong cash flows, low levels of debt, and high profit margins • LVMH’s management focuses on value of the brands • Acquiring the company’s additional high quality brands in the
portfolio
THANK YOU FOR YOUR ATTENTION