SANTA AGOLLI 1102854
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CONTENTS
EXECUTIVE SUMMARY
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INTRODUCTION
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1. THE PROPOSAL 1.1 Louis Vuitton Overview 1.2 Louis Vuitton Cosmetics 1.3 Unique Selling Point 1.4 Ansoff Matrix
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2. MARKETING MIX 2.1 People 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.1.8 2.1.9 2.2 Product 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5
Demographics Spending Power The Aspirational Consumer The Existing Luxury Consumer The Midlife Women The Indie Women Consumer Evaluation Psychographic Profile Buying Attitude
12 13 14 15 16 17 18 19 20 21 22
Product Overview Product Evaluation Sourcing Strategy Sustainability and Manufacture Evaluation
23 24 29 30 33 34
2.3 Price 2.3.1 Price Band Chart 2.3.2 Pricing Strategy 2.3.3 Evaluation
36 37 38
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CONTENTS
2.4 Place 2.4.1 Distribution Strategy
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2.5 Position 2.5.1 Price Style Matrix 2.5.2 Competitor Evaluation 2.6 Promotion 2.6.1 Branding 2.6.2 Packaging 2.6.3 Marketing Strategy 2.6.4 Promotion Strategy 2.7 Persuasion 3. BUSINESS PLANNING 3.1 Sales Revenue 3.2 Expenditure 3.3 Capital Funding
45 46 47
4. SWOT ANALYSIS 4.1 Strengths 4.2 Weaknesses 4.3 Opportunities 4.4 Threats
80 81 82 83 84
5. CONCLUSIONS
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48 49 50 54 66 67 74 76 77 78
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EXECUTIVE SUMMARY This report was commissioned to put together a strategy for Louis Vuitton to venture into a cosmetics line. Currently the prestige cosmetics market is worth 34% of the total cosmetics market (Mintel, 2013). Recently it was stated that Chanel had overtaken Louis Vuitton because of the interest in the brands cosmetics (Forbes, 2013). This report puts together a strategy for Louis Vuitton to launch a cosmetics line in order to gain back the 0.5 % market share that they have lost. It will generate excitement for customers that a prestigious luxury brand is launching an accessible product. Louis Vuitton Cosmetics will increase Louis Vuitton’s product portfolio, this would engage the brand with new customers, it would be a way for them to take market share back and generate a large amount of revenue. 100% of all subjects asked about Louis Vuitton cosmetics in my interview and focus group agree that a launch of a Louis Vuitton cosmetics line is something that they would buy into, because they would be attracted by the brand name and the quality ingredients they expect Louis Vuitton to develop for the range. The distribution channels are kept selective to retain prestige however most global markets will be penetrated. It is recommended that : - They channel the clever use of personalised packaging as it will increase impulsive sales and the sharing of product images on social media. - To meet the consumer demands of advanced innovation, the cosmetics range will have to be scientifically advanced so that the products do well and hopefully win products awards which will further instil trust of quality in the customer. 4
INTRODUCTION This report was written to determine how Louis Vuitton Cosmetics will be run. Channels of marketing, competitor evaluation, distribution and pricing have all been developed and evaluated to produce a successful plan that develops the Louis Vuitton Cosmetics venture. Primary research in the form of a focus groups and interviews were carried out in order to gain first hand perspectives of what consumers thought of Louis Vuitton cosmetics, this provided honest opinions from future customers. Secondary sources were key in this report as they allowed me to access a level of statistics and knowledge that I would otherwise not have been able to find out through primary research. Through secondary research I can compare it to the findings of the primary research but looking at the market on a bigger global to see how consumers globally differ and affect the market. Through these methods and analysis, I can put together a report that leads a strategy that would best increase revenue and exposure for the Louis Vuitton Cosmetics brand. My main sources of information were the following : Mintel, The Bain Report, WGSN, LS:N and Warc. The limitations were: Word count, unable to gain access to deeper information when looking at the LVMH cosmetics centre and their innovation and production.
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1 THE PROPOSAL
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1.1 LOUIS VUITTON OVERVIEW
1. THE PROPOSAL
Louis Vuitton, the worlds most valuable brand provides luxury and elegance through its highly sought after products. It is the go to luxury brand for leather goods, handbags, trunks, shoes, watches, jewellery and accessories. Louis Vuitton has 500 stores in over 60 countries worldwide. The French fashion house is worth £17.3 billion as of November 2013. (Forbes 2013).The valuation means that Vuitton accounts for approximately one third of parent company LVMH’s market capitalisation, which is estimated at £49.7 billion. (Telegraph, 2012).
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1.2 LOUIS VUITTON COSMETICS
1. THE PROPOSAL
Prestige cosmetics brands make up a 35% share of the market (Mintel 2013). For Louis Vuitton to launch themselves in this market, the cosmetics will increase brand revenue and market share. It will be stocked in selected Louis Vuitton stores, luxury department stores and pop up shops. The cosmetics will consist of classic items but with a broad range of colours.
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1.3 UNIQUE SELLING POINT
1. THE PROPOSAL
The outside packaging is unique and made to look like a suitcase, it will have the customers name initialed onto every piece they purchase. The ingredients of the cosmetics are some of the most coveted and technologically effective giving consumers the true prestige product they would expect from Louis Vuitton. Customers will also benefit from the thoroughly trained make up professionals that will assist them in the stores.
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1.4 ANSOFF MATRIX Diversification will increase sales volume from new products and new markets. Louis Vuitton needs to compete with brands that have already diversified into cosmetics so they don’t lose market share. The risk of the brand extension will be reduced as LVMH as a company already have experience of the cosmetics industry through brands such as Dior, Benefit and Sephora.
1. THE PROPOSAL
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2.1 PEOPLE
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WOMEN Who are the most frequent users of lipstick are aged over
65
(Mintel, 2013)
2.1.1 DEMOGRAPHICS 2.1 PEOPLE
An increased female workforce is expected with unemployment rates amongst females decreasing 12.6% by 2018, resulting in 13.8 million in the work place (Mintel 2013). The same Mintel study found that 26% of women said that makeup helps them feel professional. A decline in the 15-24 age group, who are typically the innovators and more heavy users (Mintel, 2013) means that Louis Vuitton will have to fight to keep their custom.
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2.1.2 SPENDING POWER PURCHASING Luxury purchasing 2-3 times a year: 11% in the US, 6% in the UK, 9% in France, 10% in Spain & Italy, 11% in Germany and 10% in China (Mintel, 2013) 2.1 PEOPLE
ASPIRATIONAL The high proportion of young shoppers buying luxury, further suggests a great deal of aspirational purchasing by less wealthy customers. Regular shopping for luxury peaks in the youngest age group: 16-24 in Europe & 18- 24 in the US. 25-34 age group in the UK. (Mintel, 2013) SEEKING RESULTS Londoners more easily encouraged to trade up to expensive make-up products. Those with higher income
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2.1.3 THE ASPIRATIONAL CONSUMER They shop in Louis Vuitton because they want to be a part of the luxury lifestyle the brand portrays, while they may not be able to frequently splurge on a bag, cosmetics would be more affordable to them.
2.1 PEOPLE THE FACTS 52% of aspirational consumers are women. (CSRwire. com, 2013) Average age is 39. (CSRwire.com,2013) China is the top market for these consumers. (CSRwire. com,2013) Make up 36.4% of global population.(CSRwire. com,2013) WHAT THEY EXPECT A status symbol, high quality, affordable, luxury ingredients that perform.
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2.1.4 THE EXISTING LUXURY CONSUMER This is a key customer because they already shop in Louis Vuitton and are accustomed to the luxury lifestyle. This is the group that the aspirational customers desire to be.
2.1 PEOPLE THE FACTS Regular shopping for luxury goods peaks in 16-24 age group (Mintel, 2013) Shift away from logo emblazoned products (Jingdaily com,2013) This group is rising in Latin America (Mintel, 2013) This consumer see’s rapid growth in technology and smart phones (Warc, 2013) WHAT THEY EXPECT Prestige, excellent customer service, quality craftsmanship & advanced ingredients.
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2.1.5 THE MIDLIFE WOMAN This consumer is key for Louis Vuitton. The midlife woman aged between 45- 64 like to take care of themselves. They make up a large part of the market and demand anti ageing products.
2.1 PEOPLE THE FACTS 720 million midlife women worldwide (Warc, 2013) The proportion of midlife women is highest in mature markets (WGSN, 2013) 55.5% of this group live in the Asia Pacific (Warc, 2013) Increasing ageing population (Mintel, 2013) WHAT THEY EXPECT Easy to obtain, durability and quality, cosmetics that provide strong results and convenience in applying the cosmetics.
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2.1.6 THE INDIE WOMAN This consumer is important because of their large disposable income, their desire to look good to seek a partner and to look presentable in the workplace.
2.1 PEOPLE THE FACTS Underserved consumer group with a large profit to be had.(WGSN, 2013) Indie women spend $1tn each year (WGSN, 2013) More disposable income than married women (WGSN, 2013) Heavily engaged online (WGSN, 2013) WHAT THEY EXPECT Engaging marketing, high quality, great shopping experience and functional products.
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2.1.7 CONSUMER EVALUATION The biggest demand from all consumers is to have quality ingredients and functionality. Louis Vuitton must provide this to attract consumers but also keep them. 2.1 PEOPLE
The experience of buying the cosmetics will be just as important as the ingredients. Customer service is key to ensure that customers return. All proposed consumers have a high spending power within luxury. Marketing will have to be tailored to appeal to each of these consumers differently.
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2.1.8 PSYCHOGRAPHIC PROFILE
2.1 PEOPLE Evaluation: The luxury shopper is targeted by the brands first and will generally pick be more brave in trying as they have the money to afford products. The aspirational shopper will buy after they see that the products are desired by the wealthy and they will then buy in order to copy the lifestyle. Much like the Midlife woman, the Indie woman tends not to buy into the brand but more into how effective the product is and will do research before buying. The midlife women picks up on the trends later after the products are shown in magazines or recommended by friends.
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2.1.9 BUYING ATTITUDE
Consumers can relate to Louis Vuitton cosmetics with positive emotions through the perception of ‘caring for oneself’.
2.1 PEOPLE
Consumers will be informed of the high quality of the makeup and the ingredients used in order to justify spending premium prices for Louis Vuitton Cosmetics.
Patronage can eliminate the competition. Louis Vuitton customer is very loyal to the brand and would be sure to buy the cosmetics as they have already developed a trusting relationship with the brand Evaluation: The functionality of the product will not disappoint which will lead to the consumer becoming emotionally attached as they will feel it improves their appearance. The customer will then feel as part of the brand and will develop loyalty to it. 22
2.2 PRODUCT
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2.2.1 PRODUCT OVERVIEW
THE FOUNDATION - Key part of collection. - Most popular among young consumers. - Anti-ageing and moisturising benefits.
THE POWDER FOUNDATION 2.2 PRODUCT
- Long lasting effects. - Mirror in the case. - Anti ageing and moisturising benefits.
THE CONCEALER - Heavy coverage. - To be sold alongside foundation to increase sales. - Anti-ageing and moisturising benefits.
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2.2.1 PRODUCT OVERVIEW
THE BLUSHER - Long lasting effects - Mirror in the case - Anti ageing and moisturising benefits.
THE MASCARA 2.2 PRODUCT
- Waterproof - Lengthening mascara - Moisturising
THE LIQUID EYELINER - Precision brush - Long lasting
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2.2.1 PRODUCT OVERVIEW
THE EYESHADOW PALETTE - 4 Colours can be chosen. - Comes with an applicator.
2.2 PRODUCT
THE LIQUID EYELINER - Soft Kohl - Smudge applicator
THE LIPSTICK - Available in matte and shine. - Moisturising with collagen benefits. - Long lasting.
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2.2.1 PRODUCT OVERVIEW
THE LIP GLOSS - Easy glide applicator - Matches all lipstick shades. - Moisturising with collagen benefits. - Long lasting.
2.2 PRODUCT
THE NAIL POLISH - Formula to help wear and durability. - Many shades available.
THE BRUSHES - Goats hair bristles.
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2.2.1 PRODUCT OVERVIEW
THE LIPSTICK Cost Price
Margin
Retail Price
£7.50
70%
£25
SPECIAL INGREDIENTS Ceramide DISTRIBUTION All stores, concessions and pop- up shops. 2.2 PRODUCT
See range plan pack for full colour range
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
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2.2.2 PRODUCT EVALUATION
2.2 PRODUCT
The range plan is a simple one to launch the cosmetics. It would not be appropriate for Louis Vuitton cosmetics to launch it with many products as this would increase risk. As the cosmetics become more exposed and coveted, more products can be launched and existing ones can be further improved with new innovative ingredients.
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2.2.3 SOURCING STRATEGY COSMETICS VALLEY
2.2 PRODUCT
Located in France, Cosmetics Valley is the heart of cosmetics development and manufacturing. Within Cosmetics Valley, HĂŠlios is the new research and development centre for LVMH brands, home to 250 researchers form Christian Dior, Guerlain, Givenchy and Fresh. Louis Vuitton will use this to develop their products using fresh grown raw materials and state of the art technology. (Telegraph, 2013)
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2.2.3 SOURCING STRATEGY
2.2 PRODUCT
BRIEFING
DEVELOPMENT
Brief is given to the LVMH lab to create a product that is anti ageing, scientifically advanced, professional, luxury and provides flawless coverage
Finest ingredients picked from the LVMH Helios gardens and development begins. (6 months)
Four Preconditions for the products are set. (LVMH.com, 2013) - A benefit perceived by the customer - An action measured by the laboratories A result confirmed by a dermatologist.
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Quality management maintained throughout
TESTING
Clinical tests on 50100 volunteers. (1 month)
RAW MATERIALS Raw materials are ordered on a large scale ready for production. At the same time the packaging is made. (1 month)
PRODUCTION & PACKAGING
Goods packaged and scale of production is gradually stepped up to 300 kg, then 500 kg then to 1 ton (LVMH, 2013). (4 months)
The cosmetic evaluation centre and the marketing department verify the exact resemblance (sensoriality, texture, appearance, colour etc.) Between this first industrially produced batch and the formula resulting from the development phase. (LVMH.com 2013)
DISTRIBUTION
Products sent to distribution and sorted ready to ship. (2 days)
SHIPPING
Products are globally shipped to stores. (2 days -5 weeks depending on country and customs)
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2.2.4 SUSTAINABILITY & ETHICAL MANUFACTURE SOURCING Raw materials will be responsibly sourced with material traceability and compliance. (LVMH, 2013) DEVELOPMENT
2.2 PRODUCT
Louis Vuitton cosmetics will not test it’s products on animals at any point of the development process. However animal testing is a mandatory requirement in China and all products must be tested on animals prior to entering the market. PACKAGING Louis Vuitton designs packaging that prevents the waste of raw materials and generates smaller waste volumes (LVMH.com). Louis Vuitton packaging will me made with recycled materials and will be printed with inks that do not contain heavy metals.
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2.2.5 EVALUATION RANGE PLAN The range plan includes everything Louis Vuitton needs to successfully launch cosmetics. The staple collection is big enough to provide the consumers needs allowing for a large array of colours. SOURCING STRATEGY 2.2 PRODUCT
As LVMH have their own research and production centre in France this will cut costs on having to out source parts of the production chain to other manufacturers. It allows for all of the process to be finely monitored and quality assured throughout. SUSTAINABILITY While Louis Vuitton is very sustainable in its packaging, there are opportunities for it to be even more sustainable in the future by introducing refillable packaging for the very loyal customers.
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2.3 PRICE
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2.3.1 PRICE BAND CHART Brushes £49
£39
£29 Nail Polish
£19
Lip Gloss £23 Lipstick £25 Lip Liner £19 Pencil Eyeliner
£19
Liquid Eyeliner
2.3 PRICE £25
Eye Shadow Palette
£45
Mascara £25 Blusher
£31
Powder Foundation
£39
Concealer
£27
Foundation
£39 50
45
40
35
30
25
20
15
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2.3.2 PRICING STRATEGY PRICE SKIMMING
2.3 PRICE
Charging at the highest level to create a prestige image for the cosmetics. It is high in terms of cosmetics but sticks to the Louis Vuitton pricing strategy. It is also used when introducing a new product to make it seem exclusive. Goods sold at higher prices means less needs to be sold to break even (Wisegeek, 2013). Louis Vuitton Cosmetics will operate on a 70% margin. CREATING A VEBLEN GOOD A high price and price increasing will reflect the high status and exclusivity of the goods which will make the cosmetics more preferable. (Critical assessments 1993). The ‘snob effect’ shows that for customers who want to use exclusive products, price is quality. (Economics of Information, 1981)
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2.3.3 EVALUATION Eventually Louis Vuitton can benefit from economies of scale when the product becomes more demanded and more items have to be made. This will result in a lower cost price and therefore a bigger margin. 2.3 PRICE
Odd pricing is the method used to make customers think the product is slightly cheaper. This is more likely to draw in the aspirational consumers who are more price conscious. But it is still highly priced to show exclusivity. The prices are roughly the same as that of other designer brand cosmetics. This means they can stay competitively priced but offer an injection of something new in the market.
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2.4 PLACE
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2.4.1 DISTRIBUTION STRATEGY
2.4 PLACE
The challenge for Louis Vuitton will be to increase its success but retain it’s exclusivity. Louis Vuitton Cosmetics will manage all of their own global distribution and in department stores it will be a ‘concession’ which means they have control of the counter along with it’s staff and product. This way they can better manage the flow of goods hitting the shelves, avoid the brand being harmed by discounts and do not have to rely on distributors therefore can retain more profit.
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2.4.1 FLAGSHIP STORES The cosmetics will be stocked in the existing Louis Vuitton stores that are a flagship. These stores will have the space to set up a concession and will be in countries where Louis Vuitton performs well. The cosmetics will also be stocked in key locations but the store may not be a labelled ‘flagship’ store. Nonetheless these stores are in areas where there will be a demand and the store is big enough.
2.4 PLACE EUROPE
ASIA
Cannes Geneva London Paris Rome
China Hong Kong Hyogo Kuwait Moscow Macau New Delhi Singapore Taiwan Tokyo
NORTH AMERICA Las Vegas New York San Francisco SOUTH AMERICA
AUSTRALIA
Sao Paulo
Sydney
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2.4.1 DEPARTMENT STORES
Department store distribution will be very select and the cosmetics will only be stocked in 6 globally. These 6 were chosen because of their renowned prestige. All of them stock high end designer brands and cosmetics. ENGLAND
2.4 PLACE FRANCE
AMERICA
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2.4.1 POP UP SHOP The pop up shops will appear for a limited time of one month as this is enough time for excitement to be created, customers will also be more likely to make impulse purchases. They will arise in areas of the world where the flagship stores are not big enough or the department stores are not prestigious. AREAS OF FOCUS European countries such as France, Germany, Switzerland and Eastern Europe will be targeted as distribution there is limited. Pop up stores will also be effective in South America and Africa where there is set to be a big cosmetics growth (Bain, 2013) 2.4 PLACE
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EVALUATION
2.4 PLACE
By maintaining selective distribution networks Louis Vuitton cosmetics can maintain the brand image and ensure a luxury shopping experience. The cosmetics will not be distributed online as it will make them too available when they need to retain exclusivity.
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2.5 POSITION
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2.5.1 PRICE/STYLE MATRIX
2.5 POSITION
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2.5.2 COMPETITOR EVALUATION
2.5 POSITION
Louis Vuitton is positioned amongst the luxury designer cosmetics brands but more classic than its competitors. Louis Vuitton is also positioned in the same price range as it’s luxury competitors, this is an ideal position as it penetrates a new market and can increase with demand.
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2.6
PROMOTION
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2.6.1 BRANDING
Elegant, fashionable & luxurious
PERSONALITY Who is the Louis Vuitton Cosmetics customer?
Image, quality, innovation, style and heritage
VALUES What the consumer believes in
Confident, superior, glamorous and desirable 2.6 PROMOTION Status in joining an exclusive club
Timeless, French, chic, quality, symbolic, expensive & exclusive
EMOTIONAL BENEFITS How will Louis Vuitton Cosmetics make them feel? PHYSICAL BENEFITS What it gives the customer ATTRIBUTES What are the key ingredients for the brand?
Unique packaging and innovative cosmetics from a luxury brand
POSITIONING What are the USP’s?
Stylish, exceptionally performing, quality luxury cosmetics
ESSENCE
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2.6.2 PACKAGING OUTSIDE BOX
The suitcase style packaging is reminiscent of Louis Vuitton’s heritage with luggage. Each item will come in this packaging and will be personalised with the customers initials.
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It is such a small measure yet very impactful. Kind of like the stamping of their traditional bags; which are becoming more covetable than their over the top 'show bags', purely because of that personal touch. -HRH Sheikha Raya Al- Khalifa, 31
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2.6 PROMOTION
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2.6.2 PACKAGING COSMETICS PACKAGING
“
“
It needs to be quite simple but still show its Louis Vuitton.
2.6 PROMOTION
-Helen Loizides 45
All product packaging consists of gold plastic. The brown plastic wrap and the 3D LV logo is featured on every product, this allows the product to still be branded but not too ostentatiously.
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2.6.2 PACKAGING PURCHASE PACKAGING
2.6 PROMOTION
Once a customer is paying, the products will be packaged using a Louis Vuitton cosmetics paper bag. Branded ribbon will also be used and tied around the handle of the bag in a bow.
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2.6.2 PACKAGING EVALUATION
2.6 PROMOTION
The packaging can be used as a marketing strategy and a USP for the cosmetics. The personalisation is key and it will be a selling factor. It can also encourage people to buy into the brand because they want to own one of the mini suitcases.
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2.6.3 MARKETING STRATEGY SOCIAL MEDIA
2.6 PROMOTION
Twitter has 100 million daily active users online (Socialmediatoday.com, 2013). With 2.79 million followers Louis Vuitton appeals to a mass audience through the network.
The following that Louis Vuitton has on Facebook is their largest on social media, accumulating a following of over 16 million, this will expose news further. 54
2.6.3 MARKETING STRATEGY INSTAGRAM
2.6 PROMOTION
The prime focus that will be placed on the Louis Vuitton instagram is the use of the #LouisVuittonCosmetics hashtag. Buyers of the cosmetics can upload their personalised cosmetics packaging onto Instagram which will increase exposure of the Louis Vuitton Cosmetics range
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2.6.3 MARKETING STRATEGY SOCIAL MEDIA EVALUATION
2.6 PROMOTION
Social media is an integral part of the marketing and launch of the cosmetics. It will be a cost effective way of introducing the cosmetics to millions of people globally. Louis Vuitton cosmetics in itself would not have enough power to gain a large enough following on it’s own so it would be better to keep it connected to the existing page, exposed to it’s existing customers.
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2.6.3 MARKETING STRATEGY ONLINE MAGAZINE ADVERTISING
2.6 PROMOTION
Online advertising will be on Elle.com. The website provides banners on its home page and an every page viewers click on. It is visited by 3 million readers a year (Ellemediakit.com, 2013)
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2.6.3 MARKETING STRATEGY EMAIL MARKETING
2.6 PROMOTION
The email newsletter will be sent to the female consumers that are signed up to the Louis Vuitton database. One email will be sent every two weeks with information about the cosmetics and video tutorials to accompany the product shown.
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2.6.3 MARKETING STRATEGY IPHONE APP
2.6 PROMOTION
This app will allow customers to scan the cosmetics from a publication, online source or scan directly from their hand. The app will then allow them to see information about the product, view the tutorial videos and browse other products.
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2.6.3 MARKETING STRATEGY DIGITAL MARKETING EVALUATION 2.6 PROMOTION Digital marketing is extremely important for Louis Vuitton as digital media forms are quickly overtaking traditional forms of information consumption (BusinessZone, 2013) but it also means that results can be tracked and monitored and response rates can be measured.
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2.6.3 MARKETING STRATEGY MAGAZINE PLACEMENT
2.6 PROMOTION
Evaluation: The cosmetics need to be in beauty editorials as this way they will be seen by all readers of several magazines, this will increase exposure.
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2.6.3 MARKETING STRATEGY GIFTING This is a practice many brands use, gifting products to celebrities, normally ensure that the said celebrity will post it on social media or wear it. Whereas gifting to wealthy people encourages brand loyalty and creates a customer who is likely to recommend to friends.
2.6 PROMOTION
HOTEL ROOM GIFTING Hotel room gifting is a way for Louis Vuitton to gift cosmetics to high net worth individuals. The gifts will be in the top tier, most expensive rooms of selected Ritz hotels.
Evaluation: This customer values customer service and will appreciate it. Louis Vuitton can create a relationship with them
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2.6.3 MARKETING STRATEGY CELEBRITY GIFTING Gifting to celebrities with personalised packaging can encourage them to upload the photo on their social media. This way the cosmetics will be exposed to thousands of followers.
2.6 PROMOTION
Evaluation: These influencers have a strong following on instagram and will help Louis Vuitton in exposing the cosmetics through more than magazines, people want their lifestyles so will buy into their cosmetics as they are affordable.
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2.6.3 MARKETING STRATEGY BRANDED LONDON TAXI’S This shows the ad campaign to thousands of Londoners. Females who ride in the taxi will also be given a free cosmetics sample.
2.6 PROMOTION
Evaluation: This is an effective method of advertising and has worked for other brands such as Chanel and Burberry. This form of advertising can anchor the brand into the minds of Londoners.
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2.6.3 MARKETING STRATEGY WINNING AWARDS Louis Vuitton Cosmetics should strive to win magazine beauty awards . These awards come from reputable fashion magazines.
2.6 PROMOTION
Evaluation: This will increase their appeal, exposure and trust of the product. Focus group discussion showed that all of them would be more likely to buy a product if it had won an award.
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2.6.4 PROMOTION SUMMARY
2.6 PROMOTION
The marketing strategy is extremely key for the launch of Louis Vuitton cosmetics as it is a new venture for the brand and must be correctly exposed. It would not be appropriate to advertise it too widely as this can disturb the prestige of the brand and make it too mainstream. The product packaging and social media will work together because 100% of questionnaire results showed that customers would share their personalised box on social media.
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2.7 PERSUASION
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2.7 PERSUASION PRICE Focus group are happy with the pricing put forward to them and would make a purchase . 2.7 PERSUASION
The price Louis Vuitton Cosmetics are in line with other competitor brands. It is a very affordable way for aspirational customers to buy into a luxury heritage brand with historical provenance at a price that is a fraction of a Louis Vuitton handbag.
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2.7 PERSUASION PEOPLE
ASPIRATIONAL CONSUMER
Persuaded by the heritage and luxury brand story. They want to be a part of the brand. Also persuaded by fun packaging.
EXISTING LUXURY CONSUMER
Persuaded by their existing brand loyalty and are attracted to the innovative ingredients.
2.7 PERSUASION
INDIE WOMEN
Persuaded by digital marketing and social media advertising which they regularly see. Persuaded by tutorial videos.
MIDLIFE WOMEN
Persuaded by the anti ageing effects of the products and trust the Louis Vuitton brand name.
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2.7 PERSUASION PRODUCT
2.7 PERSUASION
Innovative and advanced ingredients used to make the finest, long lasting and effective products. Customers will see the results and become loyal.
The packaging personalisation will encourage purchasing due to it being unique and will appeal to customers emotional sentiments as it is personal.
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2.7 PERSUASION PLACE DEPARTMENT STORE This will place the cosmetics in a luxury environment surrounded by other well known luxury brands. They can also benefit from customer reward points like in stores such as Harrods.
2.7 PERSUASION
FLAGSHIP STORE The entire Louis Vuitton luxury experience can be offered, the environment is quieter that a department store and flagship stores are global. Customer can browse other Louis Vuitton products such as bags. POP UP STORE Creates excitement, buzz and anticipation for customer. Caters to the countries and cities that will not have the cosmetics stocked in department stores or flagship stores.
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2.7 PERSUASION POSITION
2.7 PERSUASION
Strong brand positioning as the brand name is globally established. A product with a unique USP in ingredient innovation and packaging that is fashion forward yet classic in brand heritage. Pricing is affordable and not as expensive as some competitor product.
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2.7 PERSUASION PROMOTION Will be shared a lot on instagram affiliating consumers with a luxury brand. They will be further exposed and persuaded if a celebrity posts a photo of their personalised packaging. 2.7 PERSUASION
Digital marketing will appeal to many as it is straight to their phone and they can read it quickly and easily. iPhone app is practical and customers are still connecting with the brand even if they are not in store. Winning awards will build up trust and prove the cosmetics are effective in what they do.
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3
BUSINESS PLANNING
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3.1 SALES REVENUE Sales will be generated by the following:
Global market penetration
3. BUSINESS PLANNING
Strong operating profit of 70% Strong marketing and promotions campaign
Existing Louis Vuitton customer loyalty.
Winning awards to build up trust.
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3.2 EXPENDITURE Sales will be generated by the following:
Product development Product manufacturing Product Shipping 3. BUSINESS PLANNING
Marketing Pop up shops Department store fee’s Staff fee’s Concession fittings Gifting of cosmetics and hotel placement Shrinkage (theft, tester replacement)
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3.3 CAPITAL FUNDING Louis Vuitton Cosmetics will be internally funded by the LVMH group. The company shows it is financially viable.
In 2012, LVMH perfume and cosmetics had a revenue of €6 billion (LVMH financial report, 2013) 3. BUSINESS PLANNING
LVMH had a group revenue of €28.1 billion (LVMH financial report, 2013) Free cash flow of €2.5 billion (LVMH financial report, 2013) LVMH will invest 5% of their free cash flow which will give Louis Vuitton Cosmetics €125 million (£149,572,500). This will be enough money to globally launch Louis Vuitton Cosmetics.
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3.4 EVALUATION
3. BUSINESS PLANNING
The marketing and PR will be done in house so it will not have to be out sourced, saving the company money. The internal funding Louis Vuitton Cosmetics will be internal. LVMH can afford to do this. The investment is taken from the free cash flow, the free cash flow is what this allows a company to pursue opportunities that enhance shareholder value. Costs will be significantly less when it comes to research and development as LVMH already own the laboratory. This lower overheads.
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SWOT ANALYSIS
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4. STRENGTHS
Strong worldwide reputation with signature style Worldwide channels of distribution Loyal, core customer base. 4. SWOT
Strong existing social media following and customer data base. Existing LVMH cosmetics research laboratory. Advanced ingredients that will be competitive with existing products. Shoppers will be enticed by the personalised packaging.
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4. WEAKNESSES Cosmetics consumers already loyal to their current products, it would have to take bold innovation to make them change. 4. SWOT
Shareholders of LVMH will have to agree to the funding. Very strong competition from existing brands such as Chanel and Dior that have majority market share (Mintel, 2013) and have won numerous awards. Risky to move away from Louis Vuitton’s core RTW and leather goods products.
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4. OPPORTUNITIES New fashion forward trends can be launched after about a year of market penetration.
4. SWOT
Cosmetics range can help bring back market share lost to other brands. Cosmetic will create more revenue for the brand. Winning awards will establish Louis Vuitton Cosmetics as a reputable cosmetics brand and will create consumer trust, loyalty and more importantly will increase exposure.
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4. THREATS Intense competition, existing competitors may increase their marketing or product range as they will feel threatened. Changes in import or export laws.
4. SWOT
The law in China states cosmetics goods have to be tested on animals in order to be stocked there. This may upset some customers. Space has to be created in department stores which may prove difficult. Must meet the demands of department stores sales targets. Marketing cannot become too mainstream but still has to appeal to a mass target.
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CONCLUSIONS
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5. CONCLUSIONS
PRODUCT The product consists of classic cosmetics in key colours. This is a safe and low risk strategy for Louis Vuitton Cosmetics to start up as it minimises risk by not launching too much. The product range can be widened after a year to create new interest. PRICE 5. CONCLUSIONS
The price set is one that customers would be happy with, it is in line with other competitors while still allowing Louis Vuitton to operate on a 70% margin. The pricing will raise slowly in line with inflation, Louis Vuitton will eventually produce higher quantities and will benefit from lower cost prices, meaning they will be set to make more profit. PLACE The distribution cannot be too widespread to start off with as markets need to be tested. Pop up shops ensure that many countries will have a chance to buy the range. Online distribution can be explored as the products gain loyalty.
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5. CONCLUSIONS POSITION The position of the brand is where it should be as it launches. As the cosmetics line grows and product range is expanded it will become more trend focused whilst still having its classic range. This will keep customers interested in new products and ranges. 5. CONCLUSIONS
PROMOTION Promotion cannot be too widespread. The marketing selected has been done by competitors and is also on par with Louis Vuitton guidelines. Magazine advertising and gifting will constantly run but other marketing tools such as taxi’s will only be used for one off promotions. Word of mouth will be the biggest marketing tool so product has to be perfect. Instagram use will also be a big driver as customers post photo’s of their personalised packaging.
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