Louis Vuitton Pet Line Extension by xuejiao li

LOUIS VUITTON Line Extension of Louis Vuitton's Pet Products

M.A Final Project Xuejiao Li Spring 2017 Savannah College of Art and Design Luxury & Fashion Management

LOUIS VUITTON

Contents 2017

6 8 12 26 29 36 45 56 74 110 114 118 120 130

Abstract Introduction Louis Vuitton Pet Industry Pet Product Industry Customer Marketplace Trends Primary Research Strategy Calendar Marketing Data Summary Appendix References

LOUIS VUITTON

Abstract 2017

With the development of the society, people have humanized their pets for a long time, especially small animal. They treat pets as their children and they want to provide the best products and services for their pets. Some people spend a lot of money on luxury items, such as pet accessories and clothes. Louis Vuitton, as a top luxury brand, has some interesting products for pets, such as dog collars, leashes and carriers. The pet accessory industry’s continuous growth offers a good chance for Louis Vuitton to extend its pet product categories. In particular, improving the communication channels with LV pet product customers is an effective way to evoke consumers’ attention to new pet products. This article will introduce the background of Louis Vuitton and the pet and pet accessory industries and explore customers’ attitudes to pet products, especially luxury products. This article will also explain specific strategies for LV to promote this pet line extension, such as offering more categories, increasing communication channels and educating society’s right attitudes about LV’s brand image and lifestyle.

LOUIS VUITTON

Introduction 2017

In today’s society, more and more people begin to change their attitudes to work and life, especially millennials (those born from 1980 to 2000). These people cha se inward-focused value s, such a s freedom, happiness, passion, diversity, and sharing (Kleinschmit, 2015). As a result, there have been some changes in household structures, urbanization, and consuming behaviors, which have also resulted in growth in pet populations. All these factors indicate that the pet product market may be ripe for increased humanization (Eutomonitor, 2014) and that there are potential opportunities in the pet and pet accessory industries. Customers who are extreme humanizing pet owners see their pets as family members, a “fur-baby,” or even fashion statement. These owners are likely to buy luxury clothing, accessories and extreme services such as pet weddings or funerals. Pet owners are willing to spend a lot of money on pet products; they want to give their pets a luxury life and experience. There is a potential market for luxury brands to enter the pet accessory industry and satisfy those high-end, extreme humanizing pet owners. Some luxury brands, such as Hermes, Gucci, Burberry and Goyard, launched functional pet products like dog beds, collars, leashes, and clothes. However, they have few product categories, customers have to choose different brands to purchases all the luxury pet accessories. 10

Louis Vuitton wants to break into the luxury pet product market and be the exclusive high-end brand for affluent pet owners. So understanding what customers needs are important. This article will interview pet owners with different ages, purchasing abilities, lifestyles, and purchasing behaviors. I will also interview the manager of PetSmart, one of the largest pet products stores in the US, and relative employees. After the interview, there are some findings and conclusions listed in the article. Since products and services are becoming extreme humanizing in pet industry, pet owners are willing to spend a lot of money on pet products, small animals are the first choice for most people, and people still rank quality as the first factor to buy products, it obvious to see that there is a big potential market in the pet product industry, humanizing products and services are essential, brand should focus on small animal accessories, using social platforms to attract and communicate with customers is necessary, and keeping brand image and value is important. However, there are some risks and gaps that LV is facing, such as product category is limited, big communicating gap between company and customers, low exposure rate of pet products and animal groups’ pressure by purchasing stake in LV.

These problems can prevent LV to be the exclusive luxury brand for pet owners. Based on the research, I have the strategy plan for LV to expand new pet product lines and include different collections to take advantage of how pet owners humanize their pets, which will increase the total sales, benefit our stakeholders by increasing market share and improve society’s positive attitudes about LV’s brand image and lifestyle. LV will create a new pet products line, including pet apparel, bedding, and furniture, to satisfy our customers’ various needs; increase the product exposure rate by using social media platforms, PR events, and sponsorship of pet competitions; increase its competitive advantage among other luxury brand’s pet products; and improve the benefit of our stakeholders by increasing dividends and market share and educating society that LV use humanizing way to treat animals and what is a good way to take care your pets. This article will use marketing mix (product, price, placement and promotion) to explain how to solve risks and gaps, what products will LV launch in the future, how to engage with pet owners, especially affluent people, and what is the time calendar for each campaign. Here is the secondary research to overlook the LV and pet product market.

LOUIS VUITTON

Brand 2017

1.1 BACKGROUND The top luxury brand Louis Vuitton (LV) was established in the year 1854 and is headquartered in Paris, France. LV specializes in leather goods, ready-to-wear, shoes, watches, jewelry, accessories, sunglasses, and books. The target market ranges from young adults to seniors, both men and women ages 22 to 65 years old. In 1987, LVMH (Louis Vuitton-Moet Hennessy) bought LV with the ambition of providing the best service and products to global customers. The mission of the LVMH group is “to represent the most refined qualities of Western ‘Art de Vivre’ around the world” (Belime, 2010), which means “LVMH must continue to be synonymous with both elegance and creativity. The products, and the cultural values they embody, blend tradition and innovation, and kindle dream and fantasy” (LVMH annual report). LVMH is a famous group with more than 134,000 employees worldwide and a global leader in the manufacture and distribution of luxury goods. It is also a natural alliance between art and craftsmanship, dominated by creativity, virtuosity and quality.

LVMH is known as the world's largest conglomerate of luxury goods under various categories and brands; it has six business portfolios, which represent seventy luxury brands internationally. Wines and Spirits, Fashion and leather goods, Watches and jewelry, Perfume and cosmetics, Selective retailing and Newspapers (LVMH official website). The revenue of LVMH has grown every year owing 40 percent of their incomes from LV (UKessays, 2013). In 2016, Louis Vuitton was elected as #19 of the World’s Most Valuable Brands in Forbe’s lists with more than $10 billion sales and $27.3 billion brand value. LV sells its products through its own retail stores, official websites, and small boutiques in luxury department stores. In the mid 19th century, Louis Vuitton was a renowned trunks and luggage retailer; it expanded after financial success during the 20th century. As a result, LV entered the fashion industry (Holborow, 2012). After Louis Vuitton’s death in 1892, his son George Vuitton expanded the company and proposed outing the first "designer label" on a product (Tomshinsky, 2016).

The company strives to combine both innovation and tradition. The “Monogram canvas,”used since 1896, is the ultimate symbol of LV’s products. Customer can find this symbol in different types and series of product lines, such as Monogram Denim, Monogram Multicolore, Monogram Vernis, and Damier Canvas.

(2016 LVMH Annual Report)

1.2 CUSTOMERS

The strategies of LV are creating appeal to its target customers, which leads the customers' purchasing decisions. Since the company has created images that are in accordance social identity theory, Louis Vuitton's target market consists of individuals who have a higher income and higher social status. The products can also be bought for personal use or as a gift. Therefore, the clients are both sexes, aged 22-65 years old, and are graduate professionals with a sense of self-worth and high social status. These people have high annual incomes of $75,000 or higher. Thorstein Veblen, in his "conspicuous consumption", first suggests these people belong to “leisure class”; they are individuals who seek quality and value as well as social status. They pursue and desire elegance, the image of ego and individualism. They want to be classified as belonging to the upper social class. In fact, their purchase of Louis Vuitton is related with a concept of conspicuous consumption (Veblen 1988). Some people choose LV because of its usage and prestige. LV has a long history of leather products; people believe “when it is worn casually as a leather good that is held in high regard for ones appreciation for it’s reliability, it is more understated” (DLX, 2015). Some of the customers prefer limited edition or seasonal products to show their brand loyalty, fashion tastes and exclusivity.

1.3 LV AND ANIMALS

1999 PET ACCESSORY

2014 CAMPAIGN IN AFRICA

2016 "WILDLIFE WORLD" WITH BRITISH ARTISTS JAKE & DINOS CHAPMAN

1.4 COMPETITORS Louis Vuitton is not the only luxury brand that cares about extreme humanizing pet owners; there are some high-end brands that also focus on the pet accessory industry, especially dog products. Some companies provide functional dog products, such as collars, leashes and carriers. They expect their consumers use their products everyday. They believe it’s a good chance to show brand value and product quality. Gucci and Goyard, two top luxury brands, are the main competitors of LV since they have the same pet products as LV, productssuch as dog collars, leashes, and carriers. However, Gucci also provides dog beds, horse saddles and tack sets. Additionally, Goyard sells dog bowls. The bowls are placed in a trunk, allowing pet owners to bring their food bowls anytime, anywhere. Hermes is famous for its horse products from the beginning; it currently offers dog whistles, riding crops, and silk pet collars. Versace is different from other luxury brands; it offers a 22K gold leafed Borocco pet bowl, which costs $1,128.

S ome luxury brands focus on decorating functions; they want to make cute clothes for pets and show the owners’ fashion tastes. Roberto Cavalli has a line of pet clothes catering to “pooch couture.” The collection features a variety of elaborate satin bathrobes, silk shorts and velour tracksuits. R alph Lauren has pet raincoats, jackets, hoodies, coats, collars, leashes and crocodile leather carriers. In fact, dog clothing is not only decorative; some experts believe dog clothing is also based on clinical need. According to Baker (2013), wearing a tight T-shirt or other comfortable garment can reduce dog’s or cat’s anxiety and fear.

Dog whistles, horse riding crop, and silk pet collars $595-$5,346

Dog collars, leashes, and carriers, and beds; horse saddles and tack set $275-$2,600 Dog collars, leashes, carriers, and bowls $415-$2,290

Satin bathrobes, silk shorts and velour tracksuits $110-$1,200

22K gold leafed Borocco Pet Bowl $1,128

Raincoats, jackets, hoodies, coats, collars, leashes and crocodile leather carriers $40-$195 21

LV encourages customers to travel with their pets, so it provides a series of pet products and advertisement campaigns with dogs. The pet products include dog collars, leashes, and carriers, and the prices range from $315 to $2940. People buy LV pet accessories for the following reasons. First, they want to indicate their social status and wealth. They have the purchasing power to give their pets the best products in the world; even functional dog leash could cost them $380. 22

S e c o n d , t h e y a re e x t re m e humanizing pet owners treating their pets as real babies. They give pets organic foods, the most comfortable living spaces, the best healthcare services and the most expensive products. They donâ&#x20AC;&#x2122;t care about money; all they want is to offer a luxury lifestyle for their pets. Some old people donâ&#x20AC;&#x2122;t have children around. They have time and money to take care of pets.

1.5 LV PET PRODUCT CUSTOMERS

Third, LV consumers, especially Millennials, treat pets as a fashion statement. These people love their pets, and they also want to show their fashion taste, so they decorate their dogs and put photos on some social platforms. They want to use pets to express, or “show off,” their attitudes to life and fashion trends. They enjoy the time that the public considers their pets as superstars or celebrities. Last, these people trust LV’s brand value and product quality. They believe LV can represent the highest skill and quality of leather products. The brand Louis Vuitton equals luxury and highest quality products.

GLORIA

Age: 66 Location: Los Angeles, CA Occupation: Retired Income: $200,000 Marital status: Widow Preferred bands: Louis Vuitton, Hermes, and Fendi Homeownership: Lives alone Pets: Cat x 2; Dog x 2 L ifestyle: Reading , traveling , cooking , gardening, spending a lot of time with pets and taking good care of them 24

WILSON Age: 28 Location: Miami, FL Occupation: Model Income: $100,000 Marital status: Single Preferred bands: Louis Vuitton, Gucci, Thom Browne Homeownership: Lives with girlfriend Pets: Max, 4 yrs, golden retriever dog Lifestyle: travelling, playing with Max

LOUIS VUITTON

Pet Industry 2017

People love animals; they buy or adopt animals and treat them as family members. Fish, birds, cats, dogs, and pigs are the most popular animals that people choose as their pets. Overall, “developing markets show a low pet to human ratio, combined with rapid growth in the overall number of pets, while developed markets show high levels of pet ownership, but with a decline in the overall number of pets” (Briefing, 2014). According to ASPCA’s Pet Statistics, experts estimate that 70-80 million dogs and 74-96 million cats are owned in the United States. Approximately 37-47% of all households have a dog, and 30-37% have a cat (ASPCA, 2016). What’s more, the pet population is increasing, especially small animals. The dog and cat population is projected to grow 2% between 2016 and 2021, and small dogs are expected to make up 44% of the total dog population by 2021 – up from only 42% in 2015 (Euromonitor, 2016). The “2017-2018 APPA National Pet Owners Survey” estimates the total number of pets owned in the US as follows: birds: 20.3m, horses: 7.6m, freshwater fish: 139.3m, reptiles: 9.4m, other small animals: 14m. The actual sale within the US market in 2016 of live animal purchases was $2.1 billion. The pet industry includes food, supplies, OTC medicine, vet care, live animal purchases, and pet services. Since the pet population is growing, the pet industry is also increasing correspondingly. In 2016, $66.75 billion was spent on the pet industry in the U.S. Some experts estimate that in 2017, the total sales of pet market could be $69.36 billion (APPA report). For instance, sales on food could be $29.69 billion; supplies, OTC medicine, and pet products could reach to $14.93 billion; vet care $16.62 billion; and other services $6.11 billion (APPA report). By 2019, the industry is expected to hit $91.72 billion in sales.

Total Number of Pets Owned in the U.S 2017-2018 Saltwater Fish 5%

Rep;le 2%

Other Small Animal 4% Bird 5%

Cat 24%

74-96 million

Freshwater Fish 35%

Dog 23% Horse 2%

70-80 million

Number of U.S. Households that Own a Pet 2017-2018 Rep<le 3% Saltwater Fish 2%

Horse 2%

Source: 2016 APPA

Other Small Animal 5%

Freshwater Fish 9%

Dog 42%

Bird 5%

Cat 32%

LOUIS VUITTON

Pet Product Industry 2017

2.1 GLOBAL PET ACCESSORY MARKET Pet accessories are specialty products that are manufactured based on the functional requirements of pets such as dogs, cats, birds, and other small animals. These accessories include a variety of products such as feeding, bedding products, toys, carriers, collars and leashes. These accessories are available in pet stores and retail outlets such as supermarkets, hypermarkets, and discounters globally. According to Technovia’s (2015) report, “In 2014, North America dominated the market, followed by Europe, APAC, Latin America, and MEA. The market witnessed a rapid growth in developing countries such as Argentina, Brazil, China, Mexico, India, Russia, and Vietnam. Experts forecast the global pet accessories market to grow at a CAGR of 5.65% over the period 2014-2019, and the market will ranch to $17.2 billion in 2015”. Technavio (2016) report also indicates that the global pet accessories market is expected to exceed $19 billion by 2020, growing at a CAGR of over five percent during the forecast period and the global pet collars, leashes, and utility market is expected to exceed $3 billion by 2019. According to Research Nester’s report, global pet accessories market is anticipated to reach $22 billion by the end of 2023 witnessing a compound annual growth rate of 7% over the forecast period.

(Source:Technavio and Research Nester)

2.2 US PET PRODUCT MARKET Sales of Pet Products in the US (Billion) 16.00 14.00 12.00 10.00

12.40 12.90

13.30

13.80

14.30

2014

2015

14.90

8.00 6.00 4.00 2.00 0.00

2011

2012

2013

2016

Source: 2016 EUROMONITOR

Sales of Pet Products by Type: % Value 2016

Beauty Products 8%

Accessories 31%

Other 61%

=4.6 million

As the pet industry shows a blooming p e r f o r m a n c e , p e t p ro d u c t s a l s o i n c re a s e . According to Euromonitorâ&#x20AC;&#x2122;s report, in the US, current retail value of pet products grew of 4% and reached $14.3 billion in 2015. The total sales of pet products will reach to $15.9 billion in 2021. The pet accessories constitute 31.3% of the total sales of pet products that equals to $4.6 billion in 2016, which takes an important portion of pet products.

2.3 PET ACCESSORY MANUFACTURERS DOG PRODUCT MANUFACTURERS

Rise in number of pet ownership and increasing concern towards health and wellbeing of animals among the owners are some of the key elements which are expected to bolster the demand for pet accessories in the near future. The worldâ&#x20AC;&#x2122;s leading pet accessory brands in the market are Ancol Pet Products, Beaphar, Ferplast, Hartz Mountain, Rolf C Hagen, and Rosewood Pet Products. Pets Global claims that there are more than 698 manufacturers of dog products. China is the leading country, with 146 manufacturers; US is the second largest manufactory country with 110, and India has 103. There are also 282 manufacturers of cat products; the top three countries are still China, the US and India. Chinese manufacturers have competitive advantages, since the labor cost is much cheaper than the cost in US; they can make products faster to meet the big demand of their consumers.

CAT PRODUCT MANUFACTURERS

Source: PetsGlobal

2.4 PET ACCESSORY RETAILERS

Although there is rising competition from every direction as players from other retail channels—such as the Internet—try to capture the lucrative pet care market, pet chains have been able to effectively leverage their unique competitive strengths to continue growing (Kalaygian, 2016). The Pet Business’ Top 25 Retailers, which ranks pet store chains based on the number of locations in North America. Almost every retailer experienced at least some growth since the beginning of 2014; “in fact, the Top 25 chains collectively added more than 600 stores during this period, representing a nearly 14-percent increase in just two years” (Kalaygian, 2016).

Pet Business’ Top 25 Retailers Brands

Territory

Stores

PETSMART

U.S. & Canada

1,433

PETCO

U.S.

1,292

PET VALU

Canada & Mid-Atlantic, Northeast & Midwest 620

PET SUPPLIES PLUS

East Coast & Midwest

331

GLOBAL PET FOODS

Canada

167

PET SUPERMARKET

Southeast, CA & NV

159

PETSENSE

U.S.

120

PETLAND

U.S., Canada & Mexico

117

PETLAND DISCOUNTS

Metro NY

UNLEASHED BY PETCO

CA, CO, Northeast & Mid-Atlantic

WOOF GANG BAKERY

NV, TX, TN, NC, GA, FL, NJ, KS, SC, VA

PET CLUB

AZ, CO, Houston

MONDOU

Quebec

PET FOOD EXPRESS

PET PLANET

Canada, AZ

BOSLEY’S BY PET VALU

Canada

HOLLYWOOD FEED

TN, TX, AL, AR, MS

PET DEPOT

U.S., Canada

MUD BAY

WA, OR

CHUCK & DON’S PET FOOD

MN, CO, WI

KRISER’S

Chicago, So. CA, Denver, Houston

CONCORD PET

DE, PA, NJ, MD

PET PEOPLE

OH, IN, MI, IL

PET PROS

WA, OR

KAHOOTS PET STORE

So. CA

Total

*As of Jan. 15, 2016

5,055 (Source: PetBusiness, 2016)

2.5 PET PRODUCT PRICES AND BRANDS The average price of a regular food bowl runs from $10 to $40; beds can go from $30 to more than $100, depending on size and extras; collars can range in price from about $10 to $30; and leashes can run from $10 to $40 for a retractable lead. Some owners buy coats, jackets, raincoats, and shoes for their pets; the price can range from $15 to $50, depending on the size and materials (Dogsuppliers). In fact, each following year, pet owners may also pay extra money to renew the products. Currently Millennials become increasingly important as pet owners, at the same time, most of them prefer shopping online. From big chain stores to local pet stores, customers can find everything from food to toys to luxury pet furniture online. Mallek (2016) lists five online pet stores that are famous for their productsâ&#x20AC;&#x2122; quality, categories and services; Puplife, Chief Furry Officer, Styletails, Wag, and Doggiefood. They pride themselves on providing the finest products to pet owners. There are also some luxury pet brands, such as MiaCara, Charley Chau, Vackertass Supply Co, Ralph & Co, Meryn, Baker & Bray, Canine Styles, Hartman&Rose and etc. The average price of these luxury pet products is much higher than regular brands; some of them are even more expensive than LV, Gucci or Goyard. These brands use the best materials and designers to produce items, but they are not well known globally as luxury brands. The average price range for collars, harnesses and leashes are $45-$185; apparel is $68-$179; bowls are $80-$227; carriers are $85-$590; litter boxes are $86-$634; cat furniture is $97-$550 and beds are $135-$778. From the numbers of pets and owners, sales of pet industry, sales of pet products and accessories, and numbers of pet product retailers, we can determine that the pet industry is increasing currently. The average price of pet accessories and price range of luxury pet products can show that customersâ&#x20AC;&#x2122; humanization and their attitudes to their pets. They treat animals as their family members and provide them the best life. The next section will discuss customersâ&#x20AC;&#x2122; lifestyle, attitudes and what drives the humanization phenomenon.

LOUIS VUITTON

Customer 2017

3.1 PET OWNERS Fewer than 20 years ago, dogs were kept as guard animals and typically lived outside the home; however, attitudes towards pets are undergoing a period of rapid change, as they become increasingly considered family members. A 2012 American Pet Product Association (APPA) survey found that 62% of small dogs, 41% of medium-sized dogs and 32% of large dogs sleep with their owners. About 62% of cats sleep with their adult owners, and another 13% of cats sleep with children (ASPCA, 2016). There are two main groups of pet owners; one is Baby Boomers, aged from 50 to 68; another is Millennials, aged from 18 to 33. Richter (2016) reported that Baby Boomers represent 32% of the US adult population and account for 55% of consumer packaged goods sales. Millennials represent 27% of the US adult population currently. By 2018, they will eclipse Baby Boomers in spending power to $3.39 trillion (Richter, 2016).

Source: Kaiser Family Foundation 2016

Age

U.S.

0-18

78,181,900

19-25

30,474,600

26-34

38,959,600

35-54

82,570,800

55-64

41,135,100

65+

47,546,500

Total

318,868,500

3.2 LIFESTYLE People show a big interest in pets due to the smaller family structures, lower fertility rates, and urbanization. Besides, the increased incidence of living alone or choosing not to have children also increases a need for a pet as a companion. Usually a cat or a small or medium sized dog could be the first choice for these people. 1. Smaller family structures Women used to stay at home and do housework. Since the traditional family structure has eroded, more and more women work outside the home. They have neither the time nor the space to keep high maintenance pets. On the other hand, some people prefer living along or not to have children; these phenomena increase a need for a pet as a companion. Sometimes, they adopt a pet in order to round out their family. Furthermore, some families with only one child are willing to find a pet as a companion for their fur-child and to teach the child empathy and caring. According to Euromonitor’s report, “household sizes fell or remained stable in all surveyed markets between 2008 and 2013, while the number of single-person households increased in every market, with the developing markets, particularly China and Mexico, the most dynamic in this regard, albeit from a small base.” In a word, the single-person household includes older widowed consumers as well as young people – these are still strong candidates for adopting a pet. Many couples whose children have their own lives, what’s refer to as an “empty-nest family,” treat pets as their children. Some retired people have money and time to take care of their pets; that is why they spend a lot to offer dogs extreme humanizing services and luxury products, such as Doga (dog yoga), massage, spa, animal hotels and expensive pet accessories.

2. Fertility rates: Pets as child substitutes

3. Urbanization: limitation of time and space

The global population now exceeds seven billion people, and the rate of natural population is slowly increasing or even decreases in many countries with low fertility rates. Having one or two children is very common in many major cities, while an increasing number of people choose to have no children at all, which we called DINK (stands for "Dual Income, No Kids). In homes without children, some people start to treat their pets as a substitute and focus on their needs. In some households with only one child, parents see a pet as a sibling of their child. Parents teach their child how to live with animals and show their sympathy. In China, there used to be a “one-child policy”. Each family could have only one child, and this phenomenon lead to children being indulged to a greater degree, such as China’s so-called “little emperors”. So some parents would like to adopt pets and teach their children how to be a warm-hearted person and be nice to everyone.

Urbanization is increasing in both developing and developed economies. People decide to go to large cities in order to find good work opportunities and living environments. Urban dwellers, for example, now account for over half of China’s population and almost a third of the population in India (Euromonitor, 2014). Urbanization typically squeezes living spaces, for instance, some families prefer living in an apartment rather than a house, so there is no enough space for them to adopt a larger pet. This issue is particularly acute in major urban centers such as New York, London, Tokyo, Beijing and Mumbai. Considering the long working hours or commuting times, high maintenance pets are also not feasible for people. In countries from the US to Spain and Ireland, scarcer job opportunities force people to take on longer commutes: “For example, in the US, the average annual distance travelled to work by car rose by 9% between 2008 and 2013” (Euromonitor, 2014)

All these factors drive people to have more pets, especially small animals. Peopleâ&#x20AC;&#x2122;s attitudes change quickly, and this humanization essentially the impetus to treat pets like they are humans, is borne of changing family structures, rising incomes, lack of children, and the availability of humanized products and services. There are three types of pet owners in the industry. They are normal humanizing pet owners, who treat their pets as family members; extreme humanizing pet owners, who treat pets as a substitute child and fashion statement; and antihumanizers, who treat pets as well cared for animals.

3.3 PET OWNERS CATEGORY

The largest group is normal humanizing pet owners, which accounts for 60%-70% of pet owners and is present across the world. These people see pets as one of their family members, and wish to indulge pets with a keen sense of prioritizing the pet’s wellbeing (Euromonitor, 2014). This group people spend mainly on high quality food and treats, and some of them also focus on grooming, daycare and boarding. However, they rarely buy luxury pet products unless on special occasions. They prefer brands that feel wise and reliable, that they believe to be credible and that they trust with their pet’s welfare. They go to local stores for services and products, and they are happy with mass-market brands that convey an indulgent feel, such as those found at a leading supermarket. The next largest group is the anti-humanizers, a group that embraces the animal nature of their pets and rejects the more twee aspect of humanization. It doesn’t mean these people don’t love their pets; in fact, they also spend a lot and care about the animal’s welfare. The smallest, which accounts for 3%-7% of pet owners, is extreme humanizing pet owners. Usually, these people are females from big cities. They see their pets as babies or even a fashion statement, and are likely to purchase apparel, accessories and extreme services, such as designer outfits, crystal encrusted drinking bowls, pet hotels, pet massages, and pet traveling. Even though a small group, this group is often willing to spend a lot of money on pet products, healthcare, etc. For this group, exclusivity and cuteness tend to be paramount (Euromonitor, 2014).

3.4 EXTREME HUMANIZING PET OWNERS In markets such as the US, Japan and parts of Europe, many owners are extreme humanizing pet owners, with pets elevated to a role similar to that of children. Their pets might wear dresses and jewelry, eat premium food, and regularly visit a groomer and therapist; the animals might marry, traveling, and have a funeral ceremony. People reject the animal nature of the pet and rebuild it as a human substitute (Euromonitor, 2014). They are part of a niche market that attracts luxury brands such as LV, Gucci, and Hermes. Some owners buy luxury pet products as a gift for their friends or for themselves, especially Millennials. They consider it as a way to show their friendship, social status and purchasing power. Some of them choose products with big logo, so that other people can recognize luxury brands as soon as they see the products. They prefer decorating products, such as pet necklaces and apparel. On the other hand, Baby Boomers have time and money, and they prefer functional products, such as leashes, collars and beds. They care about their petâ&#x20AC;&#x2122;s feelings and living environment. They choose luxury brands because of the reliable quality. In markets such as the US, Japan and parts of Europe, many owners are extreme humanizing pet owners, with pets elevated to a role similar to that of children. Their pets might wear dresses and jewelry, eat premium food, and regularly visit a groomer and therapist; the animals might marry, traveling, and have a funeral ceremony. People reject the animal nature of the pet and rebuild it as a human substitute (Euromonitor, 2014). They are part of a niche market that attracts luxury brands such as LV, Gucci, and Hermes. Some owners buy luxury pet products as a gift for their friends or for themselves, especially Millennials. They consider it as a way to show their friendship, social status and purchasing power. Some of them choose products with big logo, so that other people can recognize luxury brands as soon as they see the products. They prefer decorating products, such as pet necklaces and apparel. On the other hand, Baby Boomers have time and money, and they prefer functional products, such as leashes, collars and beds. They care about their petâ&#x20AC;&#x2122;s feelings and living environment. They choose luxury brands because of the reliable quality.

LOUIS VUITTON

Market Trends 2017

4.1 FOCUS ON SMALL ANIMALS Due to the changing of family structures, lower fertility rates, and emerging urbanization, high maintenance pets are not appropriate for most owners. They don’t have time and space to take care of big sized animals, so they prefer small animals, especially dogs and cats. Regionally, the most important area for small dogs is Latin America, where the small dog to human ratio is unusually high and where growth continues to be dynamic (Euromonitor, 2014). Mexico has the third largest small dog population of the markets, after the US and China. The US has the largest population of small mammals in the world, well ahead of second and third ranked Russia and Germany. According to APPA’s 2016 report that millennials and Baby Boomers are the main groups of pet owners, understanding their behaviors is essential. As mentioned before, millennials don’t have time and space to have big animals at home. What’s more, growth in ageing populations has also led to more elderly people living alone, many of whom choose to have a small pet as a companion, usually a cat or a small or medium sized dog. They don’t have enough energy to play with big dogs; all they want is having a “fur-baby” to take care of.

Development of Small Dog Population by Market 2009-2014

4.2 INCREASING DEMAND OF HUMANIZING PRODUCTS As millennials increasingly become pet owners and small dogs grow in popularity, pet humanization trends continue to accelerate. Some owners try to pamper their pets; they invest more than ever in pet care products that contribute to the health, wellbeing and happiness of their pets. The report from Eurpmonitor claims that “Global pet care sales, including pet food and products but excluding pet services, got $98,301 million in 2014, up by a CAGR (compound annual growth rate) of 2% in constant value terms on 2009, and set to increase by a CAGR of 2% in to 2019” (Eurominotor, 2014). It means that pet care sales grow fast on the back of humanization. As millennials increasingly become pet owners and small dogs grow in popularity, pet humanization trends continue to accelerate. Some owners try to pamper their pets; they invest more than ever in pet care products that contribute to the health, wellbeing and happiness of their pets.

The report from Eurpmonitor claims that “Global pet care sales, including pet food and products but excluding pet services, got $98,301 million in 2014, up by a CAGR (compound annual growth rate) of 2% in constant value terms on 2009, and set to increase by a CAGR of 2% in to 2019” (Eurominotor, 2014). It means that pet care sales grow fast on the back of humanization. Some Baby Boomers have superimposed their proclivities toward health or wellness and self-pampering onto their pets. They are looking for premium pet products, such as natural pet products. According to Pet Food Industry’s report, “premiumization drives increased sales of high-end pet products, and some experts view the profit and margins on premium pet product lines can be considerably higher than for standard brands (Pet Food Industry, 2015)”. Pet health is also another key aspect that owners care about; they are willing to spend more if they believe that the products offer health and wellness benefits. Although pet healthcare continued to struggle in the US, the sales of pet healthcare in 2011 was $2,201m, it decreasing to $1,820m in 2016 (Euromonitor, 2016). Some experts believe the sales will increase in the future due to the humanization of pets.

Stewart (2015) claims that one major reason Americans spend more on their pet is because their pets are becoming older: “Aging animals suffer from age-related conditions such as joint, coronary, cognitive, and immunesystem issues, and even diabetes and cancer”; these pets need more care than younger pets. These owners are the targets for professional pet products and veterinary services. As of 2015, 39% of dog owners have a dog aged 7 and older, while 43% of cat owners have a cat in the oldest age bracket (Stewart, 2015). Since older pets require specialized care, prices for professional pet products and services can be well above average, allowing companies to earn more revenue. With the development of technology, owners and companies begin to focus on pet technology, such as tracking pet activity levels, monitoring pet waste and helping pet exercises. According to Euromonitor’s report, “New companies such as Petnet and Petcube garnered significant interest, and industry shows such as the Consumer Electronics Show (CES) saw a significant increase in pet products” (Euromonitor, 2016). Some pet food brands also seek on this trend, as Mars Temptations announced a new “talking cat collar” in April 2016 where customers use a smartphone app to connect with the collar, which “translates” cat meows into human language. Although these are small parts of pet products, these luxury products and high-end services stand to grow increasing in the future. 49

4.3 SOCIAL PLATFORMS OF PETS

In the US, glamorous and luxury dog items are widely available. Some owners dress their pets with luxury fashion brand items, set up social networking profiles for them, take photos or shoot videos and post them on Instagram. Millennial owners are familiar with various social platforms; they share their life everyday. They also post some useful information on pet care, animal protection and fashion forecasting. Some celebrities use pets to show their daily life and work. For instance, Marc Jacobs has a dog named Neville Jacobs; he has more than 189K followers on the Instagram. He loves to spend time at his dad's office. He is also the muse of his dad. The public can get close to Marc Jacobs’ design through his dog’s eyes. Cara Delevingne even brought her dog to the Chanel Couture Show. Donatella Versace's dog has expensive pillows to sleep on. These pets could be the superstars in some social media channels and show their owners’ humanization, wealth and social status. Although this is a small group of people, it still shows a big potential market for pet products, such as designer outfits, crystal drinking bowls, leather collars, leashes and carriers. For this group, exclusivity and creativity tend to be paramount. Some pet blogs can be advertising channels for some pet brands. When they show their products and luxury services, readers would follow them and buy the same products and services. When some bloggers become famous, they even cooperate with pet companies and promote their own accessories. Some of them work with charities or animal protection organizations and encourage people to donate to non-profit organizations. It is clear to see that showing pets on the Internet is also a way to enlarge the pet product market.

4.4 EMERGENCE OF PET-FRIENDLY TRAVEL As more and more people consider their pets as beloved family members, they are willing to take them along on vacations. Traveling with pets seems to be much more common today-37% of pet owners take their animals on the trip, up from 19% about 10 years ago, according to a survey by the APPA. Noel (2016) said, “The embrace is coming from hotels, restaurants, the airlines and even Amtrak, a longtime holdout. Websites like Burkert's or BringFido.com specialize in identifying pet-friendly hotels and more”. People believe that leaving pets at home can cause pets’ mental depression and diseases. Since animal’s lifetime is limited, people want to spend more time to stay with their pets. Traveling with pets is a good way to enjoy their vacations and take care of their pets. Susan Smith, who founded Pet Travel Inc. indicates that when she began the business, there were only 1,900 pet-friendly hotels, but now they have 30,000 to 40,000. More and more hotels are pet-friendly, and they welcome owners to stay with their pets. On the other side, some companies provide luxury pet hotels or clubs only for animals. When owners don’t have time to take care of their pets, or they want to send their pets to have professional training, they would choose these luxury services. According to Emily’s report, these hotels or clubs offer exercise schedules to keep pets healthy and active; they even have pet spa treatments, training lessons, behavioral lessons, beach day trips, and hikes. The average price ranges from $45-$300.

Airline companies have strict requirements for pet owners and their animals. There are more than 160 airline companies that allow pets to fly with owners. Pets can travel on a commercial airline in one of 3 ways: in-cabin, checked baggage and manifest cargo. For example, American Airlines claims that in-cabin means pets traveling in the cabin must fly with an adult passenger and travel in an airline compliant carrier stowed under the seat. These animals usually are small dogs or cats and must be at least 8 weeks old to travel in the cabin. The total weight of the pets and carrier must not exceed 20 pounds. The cost is $125. Checked baggage means pets traveling with a passenger that are not permitted in the cabin can be transported as checked baggage in the cargo hold. Airlines allow larger dogs and cats to travel this way. Birds are not permitted. Flights must be less than 12 hours. Pet owners must provide a Health Certificate issued by a licensed veterinarian within 10 days of travel. If they are returning to their country of origin on the same ticket, the health certificate is valid for 60 days. The cost is $200. Manifest cargo means unaccompanied or very large pets will travel as manifest cargo in the hold. American Airline doesn’t have much restrictions of this type. Pet owners must make a reservation and provide related certifications.

World’s Top 10 Pet Hotels and Clubs Brand

Location

The Wags Club

California, USA

Urban Tails

Dubai, UAE

Fitdog Sports Club

California, USA

Luxe Pet Hotel

Las Vegas, USA

Grand Dogaroo

Hong Kong, China

D Pet Hotel

New York, USA

Best Friends Pet Care

Walt Disney World, USA

Actuel Dogs

Paris, France

Chateau Poochie

Florida, USA

Pet’s Dream Park Hotel

Taipei, Taiwan

Extreme humanizing pet owners want to spend a lot of money on pet traveling, no matter pet hotels, carriers, airline services, and pet accessories. Exclusivity, luxury, and comfort are they key words of their attitudes and lifestyle. Pets are no longer an animal for them; they treat pets as real family members. Since the humanization is increasing, it shows a big market in luxury pet products. This secondary research section illustrates the history, mission, strategy of LV, LVâ&#x20AC;&#x2122;s customers and main competitors, and product categories especially pet accessories. This section also explains the demographic and psychological aspects of pet owners and their attitudes, behaviors and lifestyles. Humanization is the main trend in the pet marketplace; it causes a lot of new trends, such as developing of small animals, large demand for extreme humanizing products and services or luxury pet products, a growing market on social platforms, and increasing travel projects and travel accessories. All of these materials show that the pet industry is blooming, and it is essential for LV to capture and target extreme humanizing customers and the pet marketplace.

LOUIS VUITTON

Primary Research 2017

5.1 INTERVIEW The luxury pet accessory industry is a niche market with a specific customer base, which means that they must have pets and that they would like to spend a lot of money on accessories for their pets. By using in-depth qualitative research, the primary research is going to focus on customers’ psychological behaviors and purchasing habits, what products customers look for, what drives them to spend a lot of money on pet accessories and what prompts them to choose Louis Vuitton pet products. Keeping customers is important for Louis Vuitton, and based on this principle, the research should solve the following questions: • What type of products do customers want? • Why do they choose LV pet products rather than other competitors? • What is the customer’s lifestyle and purchasing habits? • What price range fits the purchasing power of potential customers? • What social platforms do they use to show their luxury pet products? The proper approach to answer these questions is to interview Louis Vuitton personnel and professional experts in the pet accessory industry. Interviewees consist of pet owners, regular pet store personnel, LV personnel, famous bloggers and animal organization personnel. Customers treat their pets as their babies and want to give them the best products and services. Some of them are LV loyal customers, and they have the purchasing power to buy LV products; some of them are regular pet owners; even though they are not LV loyal customers, they still have purchasing power to buy some lower priced LV accessories. Pet product stores and LV personnel communicate with customers directly, so they clearly understand customers’ needs. They also know costumers’ shopping habits and behaviors; this information helps us provide the right products to satisfy our loyal and potential customers. Animal protection organization personnel work with warm-hearted people who would like to adopt dogs or cats, and big companies. These personnel know how to cooperate with companies and their donations, how to operate the business and improve donator’s brand images. Our interviewees are from different cities, so most of our conversations will be on phone, email and FaceTime. 58

5.2 GENERAL THINKING This section concludes the results of interviews: the goal of these interviews are focusing on customers’ psychological behaviors and purchasing habits, what products customers look for, what drives them to spend a lot of money on pet accessories and what prompts them to choose Louis Vuitton pet products. These interviews reveal that customers become humanized; in other words, they treat their pets as children. They prefer functional products, especially something good for the pet’s health. Some young customers spend a lot of money on pet apparel and accessories; they believe that animals can also feel fancy when they wear clothes. All the customers interviewed put quality as the first considering element. They want to give pets a safe and comfortable product. Furthermore, since traveling with pets is a hot trend, people are willing to spend money on high-quality and beautiful traveling products for their “fur-baby”. How do they choose pets There are two ways for owners to have pets; one is buying online or local stores. Some interviewees prefer purebred animals, because they believe purebred animals will live longer than mixedbreed ones, and they are more beautiful. They also believe that having pure blood dogs or cats can show their social status and purchasing power. For instance, Emily (26 yrs) told me she spent $3,500 to buy a pure blood French bulldog. Another way to have pets is adopting. People can also adopt animals from local pet product stores such as PetSmart or local animal rescue associations. Most of these animals are mixed-breed; after they are rescued, these stores or organizations will give them a health check. Depending on the animal’s size and age, the adoption fees range from $60$130. These pet owners don’t care about whether animals are purebred or not, they care about how to save these pets and offer them a better life. •

Spend a lot on pet food Customers like to spend a lot of money on their pets no matter if they are pure blood dogs or mixed blood. For the owners, these pets are treated as their real babies. The interviews, it indicate that regular people would spend $150-$350 per month for pet products. Pet food takes up an important portion of the expenditure, about $45-$80. Pet accessories, such as leashes, collars, and apparel, take the second place with $30-$70. S ome customers indicate that when they bring the dogs outside, they will use these products. If they stay at home, they will not put clothes on their pets. So they may buy only one pet accessory and use it for a long time. Pet bed and food bowls are optional elements because they don’t need to change frequently. The cost range would be $20-$40. As for furniture, such as cat trees or cat caves, it is also an optional choice with a range from $19-$45. Pet grooming products can cost $12$25, but owners don’t need to buy monthly. Some of their pets have long hair, so they will bring pets to local grooming centers for haircuts and facial trimming. Depending on the pet’s size, the groom fees range from $29-$131. •

Spending on apparel and accessories Some rich pet owners are extreme humanizing people; they provide the best resources and living environment for their pets. The average cost can reach $500$800 per month. Pet food is not the biggest portion of expenditures; pet accessories instead take an important place. Heidi (39 yrs) said she only bought organic dog food for her dogs. The cost of organic food can reach $100-$150 per month. She loves dog accessories, and she even wants to wear parent-child matching attire with her dogs. But her dogs have long hair so she prefers to buy luxury collars and leashes for them. When she brings her dogs outside, she really enjoys the admiration she receives from people. As a loyal LV customer who values LV’s high quality, Heidi has already bought LV collars and leashes for her pets: “I buy LV products for once, however I can use them for a very long time. I don’t need to change them frequently, in fact, I save a lot!” Heidi also said, “when my pets wear LV products, I feel very confident, and I believe my Daisy and Rocco (her dogs’ names) also feel proud.” •

Spending on healthcare products Older customers, on the other hand, spend a lot on pets’ healthcare. Gloria (58 yrs) has two old dogs, so she spends money on vitamins, glucosamine, and chondroitin at a cost of $40-$70 to help improve her dog’s joint and hip health. •

She said, “I want my children to live happily, I can’t bear to see them suffer pain. So I buy organic food and vitamins for them.” Gloria doesn’t like dog collars because they can make the dog feel uncomfortable. She prefers a harness, which doesn’t hurt the dog’s neck. Gloria also buys clothes for her pets; unlike Emily, she said that clothes can keep pets warm, especially her eight-year old Chihuahua. To make sure the safe activities of her pets, Gloria spends a lot of money on cat furniture; she even spent $400 to buy a climber cat tree. • Spending on grooming and behavior education These rich owners always want their pets look pretty, so they spend a lot of money on grooming and behavior training. They offer animal extreme services, such as spa, massage, and even hair dye. These pets are a fashion statement to show owners’ tastes and status. They also bring pets to some professional training schools, and there are two benefits: one is that pets can be trained in a professional way; another is that rich pet owners get together and become part of a relationship loop. Some people think of these group meetings as a high-end social event. They share their experiences about feeding pets, and sometimes they even become business partners. Research indicates that different ages choose different types of products and they have different purchasing behaviors. 63

Younger pet owners want to decorate their animal so pet accessories are their first choices, especially luxury products. Older owners care about pets’ health; therefore, they buy health products, medicine or toys to make sure their pets can live longer. Celebrity launches pet products Since the pet industry is i n c re a s i n g , s o m e c e l e b r i t i e s h a v e also put their eyes on this potential p e t a c c e s s o r i e s m a r ke t . B o b, o n e of the PetSmart personnel, told me that a f amous American comedian and television host Ellen DeGeneres launched her pet accessories in PetSmart exclusively. The products include dog essentials such as collars, leashes and beds as well as items for humans like toy storage and wristlets that hold waste bags. The prices range from $4-$50; the cheapest product is a dog toy at $4, and the most expensive product is a dog carrier, which costs $50. Bob indicated that customers really love this collection because they like Ellen’s TV show, the quality is good, and the price is low. Regular customers who may not buy some expensive products before think Ellen’s collection is affordable and special, so they would like to try them. We have to admit that celebrity endorsement can lead a trend and attract customers to follow and purchase. •

Affluent Customers: Cost of Pet Products

Ellen DeGeneresâ&#x20AC;&#x2122;s New Line for Pets

Quality>Price>Design From the interview, all the interviewees said quality is the NO.1 rule to consider. A good quality product can be used for a long time, so they would prefer to buy an expensive product just once. For regular customers, they want to give their “fur-baby” the best product; however, they still need to think about the price. They will buy the most expensive pet accessory under their purchasing ability. Since leashes and collars are functional products, they all look the same and so design is the last aspect to consider. On the other side, some younger consumers still like cute and beautiful products. For them, design is also an important element. •

Shopping with pets I went to two local PetSmart stores in Savannah and Pooler, since PetSmart is the No.1 pet products store in North America. I went to PetSmart three times in different times: 12:00 pm on Friday, 2:00 pm on Monday, and 5:30 pm on Saturday. Most people go to stores after work or on weekends. Amanda (44 yrs) lives in Atlanta and she divorced a few years ago: “I don’t have social life after work, so I like to spend my time with dog. We usually go to pet stores after 6pm or on weekends, it’s a good way to relax.” Some retired people shop in the stores at noon. They like talking with salespeople about their life and pets. Emily, a PetSmart salesperson in Pooler, told me that she even knows every single detail about some customers’ pets. Some pet owners like shopping with their pets. They want their pets to choose toys and accessories. Lexie (29 yrs) told me that, “it’s interesting shopping with my dog, and I feel like I can understand her feelings and emotions. She can choose her favorite toys, all I need to do is paying the bill.” Lexie also indicates that, “I like local stores, because I can help my dog to try the clothes on immediately. I don’t need to wait three or five days for the shipping, and if the size is not appropriate, I have to return it back. It’s a waste of time and money.” In fact, some owners will send pets to the grooming salon while they are shopping; it’s convenient for them to have a one-stop service. •

Traveling products are essential Pet owners don’t want to leave their pets at home; even when buying pet products they still want to go together. Traveling with pets is a very hot trend today; all of my interviewees said they want to travel with pets. Lexie told me that, “I really want to go traveling with my dog, and it’s cruel to leave it at home or sent it to my friends. So if the destination is not far from home, I usually drive. Good quality boxes or carriers are important for me, because I want to make sure that my dog feels comfortable and safe during the trip.” Some rich customers agree that leaving pets at home can cause animal’s psychological issues, and these people would like to spend more than $125 to buy an airline ticket for their pet. Emily said, “I’m young and I don’t have children, for me, Knight (her dog) is my son. I can't leave my son at home alone, so I usually buy airline tickets for him. Since there are a lot of rules for pets onboard, I need a cute and highquality carrier to bring Knight on the plane.” It’s easier to figure out that no matter what transportation method people choose, traveling with pets is popular in today ’s market. Some regular customers are still price-sensitive; they don’t have purchasing ability to buy airline tickets for their pet. They prefer driving, so a comfortable box and carrier are their first choices. Some rich pet owners don't trust airlines to safely care for pets in cargo; they choose in-cabin services for their pets if they have small animals. •

For them, a comfortable carrier is not the only standard; they also want to use pet accessories to show their social status and wealth. Exclusive brands, luxury materials and aesthetic design are all important for these customers.

Choosing LV pet products Among my interviewees, only Heidi bought LV dog collars; Emily has plans to buy dog leashes and carriers; other interviewees said they don't have purchasing power currently, but they would buy some inexpensive and functional LV products in the future. •

When I asked these LV loyal customers why they choose LV, they said LV is one of the top luxury brands in the world. Having LV products can show their social status and heritage. They also indicated that LV is reliable for its high quality, and they believe they can use LV pet products for a long time. W h a t ’s m o r e , LV u s e s i t s traditional Monogram pattern on the products, so they never go out of fashion. As loyal LV customers, they also want their “fur-baby” to be a LV customer. A s for regular customers, although they are pricesensitive, they still believe in LV’s reputation. They said if LV could launch some inexpensive products, such as pet shampoo and conditioner, they try them and give their pets a luxury experience.

Future products Since Emily and Heidi are loyal LV loyal customers, they said they will buy any product that LV launches in the future. They also indicated that fashion items are important for them, so they want LV to offer pet apparel and necklaces. Gloria said she cares about pets’ feelings and health; clothes and harnesses can make her pets feel comfortable and safe. As for other regular customers, they said they want to try some inexpensive pet products such as pet shampoo, conditioner, pajamas and towels. •

From the interview, we can see that customers, especially affluent people, spend a large amount of money on pet products. They all want to give their pets the best life and products. Since they have various purchasing levels, they would like to choose the most expensive pet accessories under their control. They care about the quality and price; at the same time, safety and comfort are essential aspects that influence their choices. Shopping and traveling with pets are popular in today’s market; increasing customer experience service can attract people’s attention and improve brand value. There is still a large potential market for Louis Vuitton in pet product industry. The previous research and interviews indicate that people have humanized their pets for many years. Some of them are extreme humanizing people; they treat their pets as children and spend a lot of money on pet products, such as pet food, accessories, apparel and healthcare products. Whether regular pet owners or affluent owners, they care about their pet’s life and safety, so they always consider quality as the first factor when they purchase items. Louis Vuitton, as the one of the world’s leading luxury brands, is reliable for its high quality and brand reputation. However, these are still some risks such as product categories are simple, lower exposure rate and ineffective communication channels with customers in the LV pet accessories category. To satisfy customers’ different needs, it’s better to solve the risks and to launch more pet products. Here are some findings from the research and interviews.

5.3 FINDINGS & CONCLUSION 1. Humanizing products and services are essential Since pet owners care about their “fur-baby” and they would like to spend a lot of money on pet products, it’s necessary to launch various humanizing products and services to satisfy customers’ needs. Customers treat pets as real children and they care about what products can make pets feel comfortable and safe. If we understand their purchasing habits and psychological behaviors, we can see that pet accessories and related services are important in the market. Currently, LV only offers functional products such as dog collars, leashes and carriers. But it is not enough. Customers prefer more choices, such as beds, bowls, even decorating products such as necklaces and apparel. 2. Focusing on small animal accessories People prefer small pets, and the population of small animals is increasing constantly. So it’s obvious to see that small animal products are a big potential market. Due to the small size, the animal needs more care and patience; as a result, functional accessories will take an important position among all types of pet products. Carriers, collars, beds and bowls can keep them safe; raincoats and clothes can make them beautiful and warm. Since shopping and traveling with pets is a hot trend and pet owners would like to go anywhere with pets, a good quality carrier is also essential for most pet owners. 3. Using social platforms to attract and communicate with customers Millennials, as the main group of pet owners, prefer shopping online and sharing their life through social platforms. The Internet seems to be one of the important channels to communicate with the public and share information. People get knowledge from the Internet and they like to give their feedback to the public, so it’s important to communicate with customers and earn a good reputation online. What’s more, some pet owners enjoy the admiration from public when they show their luxury life and their pet’s luxury products. How to use Internet in an effective way is an urgent task for LV pet products. 4. Keeping brand value and high quality Almost all the customers put quality as the first consideration when they purchase pet products; fortunately, LV is famous for its high quality and skills for creating delicate products. On the other hand, the culture of LV is exploring the world, and it encourages people to go outside and travel around. This mission matches the hot trend of that traveling with pets. Since more and more luxury brands offer pet products, keeping brand value and increasing a product’s quality can help LV gain competitive advantages in the pet accessory market. 70

5.4 RISKS & OPPORTUNITIES Although LV has great brand image and reputation, we have to admit that there are some risks in current LV pet product market. 1. Product category is limited Currently, LV only sells dog collars, leashes and carriers with one color and one pattern. Since pet owners come from different ages, incomes, and education groups they have various purchasing behaviors, lifestyles, fashion tastes and social statuses.A limited pet product category not only fails to satisfy our customers, but it may also cause LV to lose it competitive advantages and customers’ loyalty.

2. Communicating gap between LV and pet owners LV has an official website as well as Facebook and Instagram accounts; however, it doesn’t have social platforms for LV pet products and customers. Although it is still LV product, it aims to extreme humanizing pet owners. Pet owners want to communicate with LV pet line frequently, and they also want to know latest news about pet fashion trends and other owners’ experiences. So there is a big gap between pet owners and LV in information sharing and effective communication channels. 3. Low exposure rate of pet products LV oesn’t have a clear strategy about marketing of pet products and communication with pet owners. It is perhaps inevitable that there are some affluent customers that don’t know LV has pet products as the LV official website, it is attributed to women’s travel accessories category. People can’t find much news about LV pet accessories, even on Instagram. When you search “LV dog”, there are only 946 posts. There is no fashion show, campaign, or topic about pet accessories. So the lower exposure rate directly influences the sales of pet products directly.

4. Animal groups’ pressure by purchasing stake in LV According to BBC news, “Animal rights pressure group Peta (People for the Ethical Treatment of Animals) has bought shares in Louis Vuitton Moet Hennessey (LVMH) in order to pressure it to stop selling bags and other products made from exotic animal skins” (BBC, 2017). It is inevitable that this behavior dilutes stakeholders’ shares and influences their benefits. On the other hand, loyal stakeholders may lose confidence in LV and face a lot of pressures when some people think LV is a cruel brand and refuse to buy their leather products. This big gap between LV and animal protection organizations can decrease LV pet product sales and brand reputation.

LOUIS VUITTON

Strategy 2017

STRATEGY STATEMENT LV will expand the pet product category, increase market share and revenue to satisfy both customersâ&#x20AC;&#x2122; and stakeholdersâ&#x20AC;&#x2122; needs. LV will also use effective communication channels to enhance brand loyalty and to educate consumers on LV brand image.

INITIATIVES 1. Introduce new collections of current pet accessories 2. Expand two additional categories 3. Improve marketing communication performance 4. Educate society on the positive attitudes to LV pet products and pet lifestyle

6.1 PET ACCESSORY

As mentioned before, pet accessories is NO. 1 demand for our customers, no matter beds, bowls, collars or leashes. Although LV launches dog collars, leashes and carriers, it is not enough. Currently, LV has three sizes of dog collar, two sizes of carriers, and two sizes of dog leashes. However, there is only one pattern on these products. It is true that the Monogram pattern is the classical pattern and it can represent LV. However, customers have different fashion tastes and purchasing preferences. The Monogram pattern may not satisfy all the customers’ needs. Based on these needs, LV should offer more sizes, colors, and pattern choices for customers. What’s more, many customers claim that quality is the first consideration, followed by design as the factors that influenc their decisions. People who choose luxury pet products want to be exclusive and different from regular customers. A delicate design can attract customers, show their fashion tastes, and drive them to purchase. Owners use collars and leashes when they bring pets out; this is the time that they feel confident and enjoy other people’s admiration. Pet owners also believe that good collars and leashes can make pets safe, because people can control their walking paths and make sure that they don’t run away. What’s more, collars are good for dogs who dislike the feeling of a harness and crave comfort. Collars and leashes are the most convenient to slip on and off and are handy “because they can hold dog’s identification, rabies, and license tags” (Valente, 2015). So offering more designs, patterns, colors and sizes of collars and leashes can increase the sales of LV.

Sizes: PM, MM, GM Patterns: 3 Price: $315-$380 Total units: 2,160 Store sales: 2,235,600 Total sales: 2,484,000

Sizes: PM,MM, GM Patterns: 3 Price: $380-$440 Total units: 2,160 Store sales: 2,656,800 Total sales: 2,952,000

Sizes: 40,50 Patterns: 3 Price: $2,690-$2,940 Total units: 1,080 Store sales: 6,080,400 Total sales: 6,756,000

Sizes: PM, MM, GM Patterns: 3 Price: $550-$680 Total units: 2,160 Store sales: 2,721,600 Total sales: 3,024,000

Collars and leashes As mentioned before, pet accessories is NO. 1 demand for our customers, no matter beds, bowls, collars or leashes. Although LV launches dog collars, leashes and carriers, it is not enough. Currently, LV has three sizes of dog collar, two sizes of carriers, and two sizes of dog leashes. However, there is only one pattern on these products. It is true that the Monogram pattern is the classical pattern and it can represent LV. However, customers have different fashion tastes and purchasing preferences. The Monogram pattern may not satisfy all the customers’ needs. Based on these needs, LV should offer more sizes, colors, and pattern choices for customers. What’s more, many customers claim that quality is the first consideration, followed by design as the factors that influenc their decisions. People who choose luxury pet products want to be exclusive and different from regular customers. A delicate design can attract customers, show their fashion tastes, and drive them to purchase. Owners use collars and leashes when they bring pets out; this is the time that they feel confident and enjoy other people’s admiration. Pet owners also believe that good collars and leashes can make pets safe, because people can control their walking paths and make sure that they don’t run away. What’s more, collars are good for dogs who dislike the feeling of a harness and crave comfort. Collars and leashes are the most convenient to slip on and off and are handy “because they can hold dog’s identification, rabies, and license tags” (Valente, 2015). So offering more designs, patterns, colors and sizes of collars and leashes can increase the sales of LV. 81

Carriers Another pet accessory is a carrier. Since in today’s society there are some changes in the customer’s attitudes, family structures, lifestyles, and social environment, people prefer low maintenance and small animals such as dogs and cats. What’s more, many people like traveling and shopping with their pets. Small animals are easy to carry with carriers. Carriers are ultimately the most convenient way of transporting dogs while keeping them safe on a trip: the airiness and clear space also help dogs feel comfortable, which provides a sense of safety. Some owners even consider pets as a fashion statement. So good quality and aesthetic carriers are essential for these pet owners. LV offers a pet carrier that is resistant to water and scratches. It comes equipped with a double zip-around closure and a breathable mesh window. Pet owners care about their pets’ well being; if they have a good quality and well-designed carrier, customers can spend their time on caring for and talking with their “fur-babies” instead of worrying about their health. However, LV only has one pattern and two sizes currently. To solve this problem, LV should provide more options for customers. They can cooperate with some artists or celebrities, such as Jeff Koons and Jake and Dinos Chapman, and launch limited edition carriers for the public. We have to admit that celebrity endorsement has a great power to attract customers and give them fresh feelings which means consumers want to find something new to evoke their fashion inspirations. New pet carriers are still offered in two sizes, carrier 40 (L15.7 x H11.8 x W8.7 inches) and carrier 50 (L19.7 x H13.4 x W9.1 inches). However, we will provide different shapes in three traditional patterns. Each has cross grain, rounded leather handles and washable lining, and the estimated price ranges from $2,690-$2,940.

Harnesses Some customers suggest that itâ&#x20AC;&#x2122;s better to use harnesses instead of collars. People believe that dogs may feel uncomfortable and hurt when they use collars. A body harness is a great tool because of the comfort it affords the dog and the ease with which most dogs adjust to it. Harnesses can reduce pulling and provide safety for small dogs, so customers can feel secure knowing that their pets are comfortable and safe. From the interviews, most of interviewees said they would buy harnesses for their pet, indicating a potential market for LV to launch harnesses. LV harnesses will have three sizes, PM (Petit Model meaning small), MM (Moyden Model meaning medium) and GM (Grande Model meaning large), to satisfy the needs for different sized dogs. We use leather with Monogram patterns for the outside and there are three patterns to choose from. The estimated price ranges from $550-$680.

6.2 PET APPARELS Pet products are separated into two parts: one is a pet accessories, in which the goal is making pets comfortable and safe; the other one is pet apparel, with the main idea of making pets beautiful and showing off their owner’s fashion tastes. In fact, pet owners spend 25%-35% of the money they spends monthly on accessories and apparel for their pets. Some people treat pets as their substitute children; they even want to wear parent-child matching attire with their pets. Coats & sweater & Special Edition Pet owners like to put clothes on their pets due to two reasons. One is that they want their pets to look pretty and fancy. They are so proud when pets go outside with lovely clothes. Another reason is that they want to keep pets warm and release anxiety. Customers who have pets with short hair are willing to dress up their animal, and they think it’s cool to wear same clothes with pets. If so, they look like a real mother and son. Some extreme humanizing customers believe that if they can buy a LV product, their pets must have the same LV products. So the demand of market is increasing. Some luxury brands have already launched dog clothes, such as Roberto Cavalli and Ralph Lauren. What’s more, Mulberry’s AW 2013 fashion show asked models and dog models wear same apparels on the stage. It attracted public’s attention successfully. For LV, there are three benefits for launching parent-child attires: first is increases customer’s awareness. When some people wear the same clothes as their pets, it raises other people’s attention and interest. So it is a way to get brand and product awareness. Second, it is a way to express LV’s design concepts and aesthetics allowing people to understand LV in a visual way. Last but not the least, standing on a business financial point, when customers buy one item of adult clothing, they also want to buy a similar one for their pets. So they need to buy two items of clothes in the end, which increases the sales. For pets, when they wear clothes, especially small animals, they can release the pressure from anxiety. Clothes keep pets warm and comfortable on cold days, especially small pets with short hair. Customers don’t want their pets get sick or feel nervous. Putting clothes on an animal indicates these pet owners really care about their pets’ physical and psychological health. Based on latest fashion collection, LV will also provide a pet clothes collection that includes similar patterns and materials. There are three sizes and the materials are cotton, fur, and wool. The estimated price ranges from $270-325 84

Sizes: PM, MM Price: $275-$325 Total units: 720 Store sales: 432,000 Total sales: 480,000

Sizes: PM, MM Price: $270-$290 Total units: 720 Store sales: 403,200 Total sales: 448,000

Sizes: PM, MM Price: $200 Total units: 720 Store sales: 288,000 Total sales: 320,000

Raincoats Pet clothes are not only decorative, but also a functional product. A raincoat is necessary for owners who care about pet’s health and don’t want them get cold on rainy days. What’s more, using bright colors on raincoats, such as yellow and orange, can alert passengers or drivers to watch out for the pets. It can save a pet’s life and make them feel secure. What’s more, if pet owners forget to make pets dry after the rainy days, animal can also get sick. Soft towels are important for pets, because they can help them avoid getting sick after showering or rain, and it also make them feel warm. All in all, these pet products can express LV’s focus on details and customer’s needs. LV will provide two colors raincoat with one size, 52% cotton and 48% polyester. The estimated price is $200.

SPECIAL EDITION

6.3 PET FURNITURE Pet beds Although people treat pets as their small babies, some of them even sleeping with pets, it is undeniable that most owners buy a comfortable bed for their animal. As one of the high utilization rate products, beds can be used everyday. Some customers spend more than $3000 buying a dog, so comfort high quality and cozy are important elements when they choose a dog bed for their â&#x20AC;&#x153;fur babyâ&#x20AC;?. Beds can keep pets off the cold, drafty floor year-round. They also provide a private space for pets, which makes them feel safe. A soft place to lie is important for older or overweight dogs. Some extreme humanizing owners indicate that they care about petâ&#x20AC;&#x2122;s health and are willing to spend more on pet healthcare products. Caring for pets is one important aspect; on the other hand, some LV pet product customers also want to show their wealth. They feel proud because their animal has LV products; it makes it seem as if their pet is also a LV loyal customer. LV will use 100% organic cotton to make pet mattress because we care about the environment and sustainability. To keep the LV brand value, we will also use leather to cover outside. The bed comes in only one size and in one pattern with traditional Monogram pattern. The estimated price for a bed that will give pets a cozy space to lie down is $3,850. 88

Sizes: one-size Pattern: 1 Price: $3,850 Total units: 360 Store sales: 1,386,000 Total sales: 1,540,000

Pet bowls in the trunk A pet bed is an essential functional pet products; however, food bowls are also necessary. Bowls in the trunk is an appropriate product that fits customer’s traveling needs and LV’s culture— to go out and explore the world. According to Columbus’ (2017) research, traveling with pets is much more common today—37% of pet owners take their animals on the trip, up from 19% about 10 years ago. During these trips, owners need to feed their pets on the same time schedule as at home. Bowls in the trunk is convenient for traveling and it are clean compared with plastic or paper bowls. As for LV buyers, using LV bowls seems to be a vintage way to show their social status and fashion understanding of LV heritage. Customers also have a sense of belonging of LV. What’s more, customers don’t need to worry about whether they forgot to bring their bowls or whether they are clean. Everything is in the trunk and they can focus their care and attention on their pets during the trip. There is one size offered, a traditional LV trunk with two bowls. The estimated price is $ 3,550.

Sizes: one-size Pattern: 1 Price: $3,550 Total units: 360 Store sales: 1,278,000 Total sales: 1,420,000 89

Pet furniture According to the primary reseatch, pet owners may spend 10%-15% of their monthly expenditures on pet furniture such as cat trees, cat scratchers, pet stairs, etc. Most pet owners care about animals’ health, so they want to purchase useful furniture to train their pets. In fact, LV cares about customer’s needs; it will also provide different types of pet furniture for small animals. This pet furniture engages customers to play with pets and they will enjoy the happy time with their “fur-baby”. LV will also cooperate with famous pet product designers such as Gerd Couckhuyt and Regina Mol to provide modern animal furniture. This furniture can give pets the best training and playing spaces; what’s more, the design works also fit LV’s mission to represent the most refined qualities of Western "Art de Vivre" around the world. This cat tree stands over 6 feet tall and features 7 platforms with scratching posts all around. It also has stairs that lead to an extra large master bedroom where cat can take its catnaps. The master bedroom even has a window, so cat can check the weather before going out. This is perfect for a cat family of 2 or more. The price is estimated to be $2,280.

Sizes: one-size Price: $2,880 Total units: 360 Store sales: 820,800 Total sales: 912,000

6.4 PLACEMENT Louis Vuitton ensures exclusive distribution channels as believes in operating its own stores. LV pet products will be sold in brick & mortar stores located in prestigious shopping areas or in luxury department stores such as Saks Fifth Avenue, Bloomingdales, and Neiman Marcus. LV has highly specialized sales persons trained to treat customers with the utmost care, providing warmth and personalized attention. These stores are pet- friendly; customers can bring their pets and shop together. Customers can also purchase LV pet products on its official website. LV will post not only product detail photos, but also small videos to explain how to use items and how to preserve the beauty of products.

6.5 PROMOTION The current performance of LV marketing is not satisfactory; it doesn’t have a clear strategy about pet products. Some customers don’t know much information about LV pet products; what’s worse, there are few pet fashion shows, advertising campaigns, events or topics to be found on the Internet. Lower exposure rates and no sharing channels for customers are big issues. The purpose of LV is increasing marketing performance, communicating with consumers in an effective way, attracting customers’ attention to our products and increasing product exposure rate so that pet owners can see positive images of our products in various channels. Communicating with consumers Understanding customers’ needs and attitudes are important for a company, because no one wants to lose their loyal customers and domination of a market. Communication is like a bridge to connect brand and consumers. On LV’s official website, customers can contact the brand with their questions or problems through email or phone. On LV Facebook page, people can leave a message, and usually LV will reply within 24 hours. Even though LV tries its best to reply to customers, the answers are quite simple. So LV should increase the quality of their solutions and satisfy people with the answers. On the other hand, people can’t get the latest news about pet products through email or other channels. If LV launches new pet products, it’s better for them to send a reminder and welcome customers to come to stores with their pets. Always let people know what happens in the store and what new pet products LV offers. All in all, the objectives of communication are: • Create an association in customers’ minds between LV’s current fashion trends and a new pet product line. •Extend the perception that LV not only has functional pet products, but also decorative apparel in many pattern, color, and size choices for customers. •Evoke the emotions of strong bonding between customers and LV. The products LV provides show they care about pet’s feelings and the owner’s sense of belonging, exclusivity, elegance and timelessness. 94

Social Media “Social media is the collective of online communications channels dedicated to community-based input, interaction, content-sharing and collaboration” (TechTarget, 2017). People usually get and share information through different platforms. Currently, LV has the following social platforms: official website, Facebook, Twitter, Instagram, Snapchat, Youtube and Foursqure, but you can find little information about pet accessories in these channels. LV pet products should also use these social channels in an effective way; if so, they can decrease the gap between brand and customers, provides the latest news and information, increase the pet product awareness, and understand customer’s lifestyle and purchasing behaviors. What’s more, when customers share their LV pet products and lifestyle, it’s easy for them to form a social circle; people can find a sense of belonging. As for the LV pet product, it will use some specific channels, such as Facebook, Instagram, and Youtube to show product details, answer consumer’s questions and educate how to treat their pets. Facebook Facebook is a worldwide social media and social networking service for the public. People can access it through desktops, laptops, tablet computers, and smartphones over the Internet and mobile networks. It’s a social community; users can express their ideas and share their life online. Currently, LV has its official Facebook page to post news, new collection information and event videos. More than 18 million people follow their Facebook page, and they receive more than 19 million “Likes” for their posts. According to a 2015 Unmetric Q4 report, the main followers of LV’s Facebook page are young and middle-aged females who like fashion and following the latest trends. For LV pet products, we will provide a new Facebook link under the official page. The objective is to create a buzz about LV pet products as well as provide a platform for customers to interact and share their pet life experiences. It also increases engagement with our customers. We will post product information, and PR event information three times a week. Our customer service people will answer consumer’s questions online. The information or news includes brand, products, services as well as upcoming opening ceremonies and campaigns. It is necessary to build up a bridge between LV and customers or followers.

Instagram Instagram is a mobile photo-sharing service that allows users to share pictures and videos either publicly or privately on the Internet. LV has 16.7 million followers and it has posted 1,918 photos and videos. Most followers are young people; they like LV fashion trends and want to know the latest information about LV. The objective is to gain customer’s attention by posting relevant pictures or videos of the products, services and events. We use some attractive visual pictures to show LV’s culture and spirit. Since the culture of LV is traveling the world, we will post pictures about pets traveling with our products, or their daily life. Another important element is that we welcome our followers to show their LV pet products on Instagram and tag us. From the research and interviews, we can figure out that some of our consumers like showing off, and they want to share their luxury life with public. Having a pet is a fashion statement to express their fashion tastes, social status and wealth. We’d like to provide a platform for them to this. What’s more, celebrity endorsement is a hot trend. We will also post some famous celebrities, such as Miley Cyrus, Liam Hemsworth, Cara Delevingne and Lady Gaga, and their pets’ street photos with our products to attract customers. These celebrities are extreme humanizing pet owners; they buy luxury pet products and take their pets to travel, to shop and even to go Haute Couture fashion shows. Celebrities expose their daily life with animals; which can increase their positive image to the public. LV believes the power of celebrity endorsement, and it’s a good opportunity for LV to introduce pet products, make products easier for people to buy them and learn about them. Followers like to know what happens to these famous people, what they look behind the stage, what products they use, etc. They copy stars’ purchasing habits some time, and it makes them feel confident. LV will post pet product photos or short videos three times a week; when it launches new products, the frequency will be changed to five times per week. LV also welcomes consumers tag us when they share their photos of LV pet products or with their pets. At the same time, we will also post some cute animal photos to raise customers’ animal protection awareness. Instagram is an important channel we use for the public.

YouTube

PR Events

YouTube is a video-sharing website where people can upload and watch videos. It is widely used all over the world, since there is no limit. LV has more than 145 k subscribers on the YouTube and it posts new campaigns and fashion shows. It’s convenient for LV to post new pet product campaigns and related events, and fashion shows on the YouTube to attract customers and share latest information. Visual information always attracts customer’s attention and makes them recognize product details directly. When they subscribe to our channels, YouTube will send a reminder automatically when we post a new video. It is an effective and efficient way to communicate with our customers. LV will post videos twice a month, and we will launch more than five videos at each time. LV expects to increase pet product awarene ss and excitement about the upcoming product category and events.

LV has a lower exposure rate of pet products, which influences the marketing performance directly. If we want to create m o re p ro d u c t a w a re n e s s , LV s h o u l d provide some PR events. As LV cares about customers’ needs, we would like to offer a platform or a social circle for them to share experiences and find a sense of belonging. There are two basic methods for creating this shared sense of belonging: one is a creating a fashion show that highlights pet products, and the other is creating a pet owner club.

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Pet owner club Some customers attend the fashion show because they want to form a social circle with other consumers with the same purchasing level, fashion tastes and wealth. As for our pet products, it’s better to provide a pet owner club. We invite our elite consumers to get together and share their feeding experiences and decorating skills. We offer them a platform, so they can know more people who have the same interest and fashion taste. It is a good way for LV to keep customer’s brand loyalty stimulated so that they will buy more LV products. We will also post these events on social media to attract more people to join our club.

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Sponsorship of Westminster Kennel Club Dog Show The Westminster Kennel Club is America's oldest organization dedicated to the sport of purebred dogs. “Established in 1877, Westminster's influence has been felt for more than a century through its famous all-breed, benched dog show held every year at New York City's Madison Square Garden” (PR Newswire, 2017). More than 3,000 dogs from the US and abroad makes Westminster Week like no other. Since LV makes a lot of products for dogs and we want to support our four-legged friends, LV will be thrilled to be part of this new tradition for dogs and dog lovers. As Westminster Kennel Club (WKC) is a high-end competition for pet owners and their dogs, TV, E-Press Kit, and Live Stream are available and updated regularly with press releases and one-sheets of information for the public. LV’s participation in this competition will ensure that when people think about the WKC and luxurious purebred dogs, they will think about LV and its strong bonding with luxury pet owners.

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Magazine Advertising Louis Vuitton has as its promotional strategy to use celebrity endorsements. LV pet products will still use celebrity-advertising campaigns to attract our potential customers. This is done in order to target the affective component of customersâ&#x20AC;&#x2122; attitudes by allowing them to feel a certain emotional bonding between brand and themselves. The goal is giving customers a social reference group so that they and their pets feel as if they are part of a group of celebrities. We will use full-page ads in high-end fashion magazines, such as Vogue, Town & Country, Hamptons Pet, Departures, and different Airline Magazines. We will also launch visual campaigns on YouTube and Instagram to attract younger, fashionable pet owners who have humanized their pets and treat pets as fashion statements.

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Airline Magazine People choose fly to reach a destination because flying gets people to their destination faster than any other means of transportation. It saves time and makes people comfortable, so people donâ&#x20AC;&#x2122;t need to spend a lot of time driving to the destination. Some people prefer first or business class; they donâ&#x20AC;&#x2122;t care about the price, and all they want is the best service and experience. Every airline company has its own magazine. When passengers sit on the plane, they can read these magazines and buy some products from airline companies. These magazines also introduce famous travel destinations, lifestyles and requirements of pets onboard. LV will launch new product campaign in airline magazines to evoke passengersâ&#x20AC;&#x2122; attention and interests. According to a Salamance article (2016), Alex listed 25 most luxurious airlines in the world. Based on this list, LV will choose the top 5 airlines to work with, those with a good reputation, pet-friendly, luxury experience and service, and various routes. These airlines are Etihad Airways, Singapore Airlines, Cathay Pacific, Emirates, Qatar Airways. These magazines will focus on passengers of First class and business class, since they have purchasing ability.

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6.6 DONATION

We have to admit that even though we care about our customers and stakeholdersâ&#x20AC;&#x2122; benefits, we are still subject to the voice of opposition from society. Some animal protections groups try to buy stake in LV to stop us using animal skins to produce leather products. Based on this risk, we want to use social platforms and events to tell society our attitude and ambition to protect the environment and promote sustainability. We will not use any cruel methods to treat animal and get their skins. We will also consider other materials to make pet products. LV aims to publish some video campaigns to correct the misunderstanding of society as a way to protect our stakeholders, keep brand values and increase brand image. On the other hand, teaching our elite customers how to treat animals and how to feed them the right way are essential elements. LV will use YouTube and Facebook to communicate with our customers; we will also teach them how to do product maintenance and how to choose the right size of LV pet products for their pets. We want to use these methods to increase brand image and obtain customerâ&#x20AC;&#x2122;s loyalty. LV will donation 10% of the total pet product sales to Animal Rescue Organizations every year to protect animals. In this way, we can increase our brand image and make a contribution to the society. What's more, we want to educate the society that LV is not a cruel brand, we really care about animal, especially pets.The public should change the mind and treat us with a positive attitude.

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6.7 ADVANTAGES Since LV plan to launch more pet product lines, increase communication channels with our customers, and educate society about the right attitudes to LV pet products and pet lifestyle, we believe we have some competitive advantages from our competitors, such as Hermes, Gucci, Burberry, etc. Provide more choices for customers LV provides both pet accessories and apparel, which cover most pet product categories. Customers who want to buy various pet products can find these in LV stores. What’s more, we offer different patterns, colors and sizes to satisfy consumers’ needs. Other competitors, however, can’t offer a wide variety of products as LV does. Evoke customer’s sense of belonging LV tries to evoke customer’s sense of belonging through our advertising campaigns and related events. Customers can get news and information via our official website, fashion shows and emails. It increases product awareness and attracts more potential consumers than other brands. When pet owners join our events and club, they know they are part of our brand and keep brand loyalty. Increase brand image Since LV provides many events and strategies to correct misunderstanding of the society, we believe it can increase our brand image and brand reputation. Other luxury leather brands may still be misunderstood by the public or animal protection organizations. We want to show our attitudes to environmental social responsibility and sustainability. When we increase the brand image, more and more stakeholders are convinced to LV value and future sales. Overall, there are some risks and gaps in LV pet products that we have to overcome. We believe LV can be the exclusive choice for our elite customers through expanding product lines, offering communicating channels via social platforms, and educating people right attitude to LV pet products and pet lifestyle. We will make benefits for our shareholders and society, and be a leading brand in luxury pet product market. 108

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LOUIS VUITTON

Calendar 2017

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Jan

Facebook Instagram YouTube Owner Club Westminster Vogue Town & Country Hamptons Pet Departure Airline Magazine

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Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Facebook and Instagram are the main social platforms for LV to communicate with customers, so LV will post photos or new once a day. However, since Westminster competition will be held on Feburary and Four Fashion weeks start on Spetember, these two months LV will post news, photos and videos two times per day. People prefer traveling with pets in warm days; LV will launch carriers and bowls during that time. So advertisement campaigns will also be launched on YouTube. To prepare for the fashion weeks, LV will post some information on August to improve customersâ&#x20AC;&#x2122; awareness. LV will open pet owner club four times per year; the goal is attracting affluent pet owners get together and sharing their feeding experiences. So we will have this club party on March, June, September, and December. Pet owners can talk about latest pet fashion trends, especially after the fashion week and what gifts will they buy for their pets on the Christmas Day. Advertisement campaigns will be posted on magazines during the travel seasons. The target customers are affluent pet owners who sit in the first class or business class in the plane.

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Marketing Data 2017

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MARKETING COSTS

MARKETING COST 1%

Facebook ($150,000) Instagram ($570,000) YouTube ($6,000,000)

29%

38%

Pet owner club ($600,000) Westminster Kennel Club ($2,000,000) Hamptons Pet ($1,000,000) Departures ($750,000)

10% 3% 5%

Airline Magazines ($1,735,600) Donation to Animal Organization ($8,000,000)

Total: $20,805,600 116

MARKETING SALES

Size

Pattern

Average price

Units per store

Total units

Inventory (top 60 stores)

Collar

345

2,160

745,200

3.0

2,235,600

2,484,000

Leash

410

2,160

885,600

3.0

2,656,800

2,952,000

Carrier

2,815

1,080

3,040,200

2.0

6,080,400

6,756,000

Harness

630

2,160

1,360,800

2.0

2,721,600

3,024,000

Coat

300

720

216,000

2.0

432,000

480,000

Sweater

280

720

201,600

2.0

403,00

448,000

Raincoat

200

720

144,000

2.0

288,000

320,000

Bed

3,850

360

1,386,000

1.0

1,386,000

1,540,000

Bowls in the trunk

3,550

360

1,278,000

1.0

1,278,000

1,420,000

Furniture

2,280

360

820,800

1.0

820,800

912,000

180

10,800

10,078,200

Total

Turnover (6 months) Store sales

Total sales

18,302,400 20,336,000

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LOUIS VUITTON

Summary 2017

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From the research and interview, we can see that more and more people begin to change their attitudes to work and life, especially millennials, they want to have pets to make them happy. It’s inevitable that people have humanized their pets for many yeas and this trend is still increasing. Pet owners treat their pets as real babies and offer them the best life and products. Some of them are extreme humanizing people, they even offer pet some luxury products and services such as pet weddings, funerals, spa and expensive clothes. Pet owners are willing to spend a lot of money on pet products; they want to give their pets a luxury life and experience. There is a potential market for luxury brands to enter the pet accessory industry and satisfy those high-end, extreme humanizing pet owners. LV has some basic functional pet products today such as dog collars, leashes and carriers. But that is not enough when compare with some luxury competitor brands, such as Hermes, Gucci, Burberry and Goyard. They launched functional pet products like dog beds, collars, leashes, and clothes. If Louis Vuitton wants to break into the luxury pet product market and be the exclusive high-end brand for affluent pet owners, it’s essential to understand what do customers need, what are their purchasing abilities, lifestyles, and purchasing behaviors.

In this article, I interviewed some pet owners in different ages, wealth, and social statuses. I also interviewed the manager of PetSmart, one of the largest pet products stores in the US, and relative employees. After all, I got some important findings and conclusions: pet owners are willing to spend a lot of money on pet products, small animals are the first choice for most people, and people still rank quality as the first factor to buy products, so LV should take this chance and launch more products in pet categories. Since there is a communicating gap between LV and consumers, people may not notice that LV has luxury pet products; it’s necessary to increase the exposure rate through social media, advertisement campaigns and other useful promotion channels. So the strategy plan for LV is to expand new pet product lines and include different collections to take advantage of how pet owners humanize their pets, which will increase the total sales, benefit our stakeholders by increasing market share and improve society’s positive attitudes about LV’s brand image and lifestyle. I believe the extreme humanizing pet owners are increasing; they have various for pet products. LV, as one of the world’s leading brands, has ability to benefit animals, pet owners and our loyal stateholds.

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Appendix 2017

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Name: Emily (LV loyal customer) Age: 26 Location: Atlanta, GA Education: Master degree student on Luxury and Fashion Management Marital status: Single Preferred bands: Louis Vuitton, Dior, YSL, and Chanel Homeownership: Lives with boyfriend Pet: Knight, 6 months, French bulldog Lifestyle: reading luxury magazines, traveling, shopping, volunteer for animal organization; bring her dog to professional pet hospital Social media: Instagram, Facebook, Twitter, Snapchat Name: Gloria (LV loyal customer) Age: 58 Location: Los Angeles, CA Occupation: Retired Marital status: Widow Preferred bands: Louis Vuitton, Hermes, and Fendi Homeownership: Lives alone Pet: Biscuit, 2 yrs, American Shorthair cat; Dumpling, 5 months, Aegean cat; Apple, 5yrs, Poodle; Ruby, 8 yrs, Chihuahua Lifestyle: Readings, traveling, cooking, planting and learn flower bouquet, spending a lot of time with pets and taking good care of them Name: Amanda (normal customer) Age: 44 Location: Atlanta, GA Occupation: Project manager in a financial company Income: $120,000 Marital status: Divorced Preferred bands: Banana Republic, Coach, and Michael Kors Homeownership: Lives alone Pet: Gus, 4 yrs, Labrador Retriever Lifestyle: shopping, running and traveling Social media: Twitter, Facebook

Name: Heidi (LV loyal customer) Age: 39 Location: New York City, NY Occupation: Senior project manager in a fashion company Income: $250,000 Marital status: Married Preferred bands: Louis Vuitton, Bottega Veneta, and Armani Homeownership: Lives with husband and two children Pet: Daisy, 2 yrs, Golden Retriever; Rocco, 3 yrs, Alaskan Malamute Lifestyle: yoga, running, traveling, reading fashion magazines, attend fashion weeks, playing with children and dogs, training dogs with dog behavior experts Social media: Instagram, Twitter Name: Lexie (normal customer) Age: 29 Location: Savannah, GA Occupation: HR in Gulfstream Aerospace Income: $60,000 Marital status: Single Preferred bands: Kate Spade, Zara, and Topshop Homeownership: Lives with boyfriend Pet: Chelsea, 4 months, Yorkshire Terrier Lifestyle: yoga, swimming, shopping, washing dog by herself, posting life and dog photos on social platforms Social media: Instagram, Twitter, Facebook, Snapchat

Interviewee Profile--customers

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• How much do you spend on your dogs per month on average? What about food, pet accessories, and healthcare? Emily: About $500-$600. I like dog clothes and collars, so I buy a lot of dog apparels every month. Food doesn’t cost too much, it probably costs $80$100. I only choose organic food for my dog. I also buy dog beds every month, because my dog is too small, he likes to bite bed. So I have to change it frequently. Heidi: About $600-$800. I buy organic dog food and some vitamins to keep them fit. I bring them to professional behavior training center. My dogs have long hair; so every month I bring them to grooming salon. Gloria: About $500-$650. My Chihuahua is getting older, so I buy some healthy food. You see I have two cats and two dogs; I usually buy toys and pet furniture for them. Lexie: I spend about $150-$250 per month. Dog food is about $45-70; dog treats are necessary for me to train my dog. I usually go to PetSmart for leashes and collars. Bed and bowl are cheap and I don't need to buy frequently. Sometimes I buy dog clothes and I think they are cute. Amanda: It depends, usually about $200-$300. I buy some organic foods and healthcare products. I have a big dog, so I like to buy toys for him. It’s interesting that shopping with my dog after working or on weekends. • Which brands do you choose for your pet accessories currently? Emily: I usually use Louis Dog website, I can buy a lot of cute dog apparel and accessories for my dog. The price is a little bit higher than common brands, buy I really like their design. Heidi: I like reading some pet blogs; it’s interesting to see what products or brands do they buy for their pets. So I choose different brands for my dogs. Lexie: I go to PetSmart or some local stores. I don’t like shopping online, because I can’t try them on my dog immediately. What’s worse, I have to wait three or five days. If the products are not appropriate, I also need to return them back. It’s a waste of time and money.

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• Would you be happy to pay slightly more than the average pet shop price for high quality, unique and well-designed products for your dog? Emily: Of course! I think the more expensive, the higher quality. I plan to buy LV dog leash and collar in the future. Heidi: Yes! In fact I already bought LV collars and leashes for my pets. I want to wear parent-child attires with my dogs, but they have long hair. So I buy some luxury collars and leashes for them. I buy LV products for once, however I can use them for a very long time. I don’t need to change them frequently, and I think I save a lot! On the other hand, when my pets wear LV products, I feel very confident, and I believe my Daisy and Rocco also feel proud. Gloria: Why not! I always believe expensive means good quality. That is why I spend $400 to buy a car tree for my pets. Lexie: I want to give my dog a luxury life, however I care about the price. If it is too expensive, I probably not buy it. • What drives you to buy luxury pet products? Emily: I think they have high quality, so I can use their products for a very long time. What’s more, I want to give my dog a luxury life, just like my life. In fact, I like showing my life on some social platforms, such as Instagram, and Facebook. Every time I’m so proud to see people press “Like” button when I show off my luxury dog products. Heidi: Pets are my children, as a mother, I want to give them the best services and products in their limited lives. • What products do you think LV should provide in the future? (Functional and decorative features) Emily: Clothes. I want to wear same clothes with my dog, so we look like mother and son. I like to decorate my dog with some cute and shinning accessories, so I want LV offers some dog necklaces or shoes. Gloria: I want my pets feel comfortable, I don’t like collar, and it hurts my dog. If it is possible, I want LV provide harness. So the leash and collar will not hurt. Lexie and Amanda: pet shampoo and conditioner, also LV towels. Because they are cheap, I think it’s a good chance to give my pet a luxury experience.

• Do you travel with your pets? Emily: Yes, I traveled with my dog several times. I don’t trust airlines to safely care for pets in cargo, so I usually choose in-cabin services. Lexie: Yes, and if the destination is not far from home, I would like to drive. I don’t want to leave my dog at home or sent it to my friends. But considering my current purchasing ability, if the airline ticket is expensive, I will not fly with my dog. Heidi: Absolutely! I like traveling with my family and my dogs. It’s interesting to post our photos on social platform and I believe this is the best way to remember all the happy hours. • If LV donates it proceeds to animal protection organizations, will you consider purchasing LV pet accessories? Emily: Definitely! It’s a good idea to donate animal protection organizations. But you know, every year these organizations pressure LV to stop selling leather products. Gloria: it’s a good idea, and I want my money to help more animals. • As a LV loyal customer, why do you choose our brand? Emily: LV has a long history and it is one the world’s top luxury brands. When I use LV products, it shows my purchasing power and social status. Heidi: I love many luxury brands, but LV gives me a feeling of heritage. They choose the best leather and I can use their products for a long time. The famous pattern is a kind of slow fashion, it never out of fashion. • (For regular customers) How do you like Louis Vuitton’s products? What about LV pet products? Lexie: I know LV represents the best quality and service in the world. I also want to buy some LV products, but the price is too high for me. LV has three dog products, however, they are still out of my purchasing ability. If the price lowers a little bit, I would consider about it.

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Interviewee Profile- LV personnel and pet accessory store personnel Name: Peter Age: 38 Location: San Francisco, CA Occupation: LV Manager of product management, 8 years of relevant experience Marital status: Married Preferred bands: Armani, Louis Vuitton, and Dunhill Homeownership: Lives with wife and one child Lifestyle: traveling, running and reading Social media: Twitter, Facebook, Snapchat

Name: Bob Age: 42 Location: Savannah, GA Occupation: Salesperson of PetSmart, 15 years of relevant experience Marital status: Married Preferred bands: Gap, and American Eagle Homeownership: Lives with wife and three children Pet: Rocky, 2 yrs, Rottweiler; Kobe, 8 yrs German Shepherd Dog Lifestyle: fishing, playing with dogs Social media: Twitter, Facebook

• What is the top-seller? Many customers come to our stores for pet food • What is the age range of your customers? Who are they and what are their jobs? Well, we have various ages, but I think each age group has almost same quantity. • Do they have big pets or small pets? Small pets, especially dogs and cats. • Are they loyal customers or new customers? I think they are loyal customers. Our PetSmart has various product categories and different brands. Customers can buy anything in our store with lower price. • Do they prefer functional pet products or decorative pet products? Some young customers like buying toys or other decorating pet products, such as clothes. Some middle age or older people they focus on functional products. They care about quality and price, so I have to say, it depends. • What is their shopping behavior? Shopping with pets Most of them shopping with pets, as you can see, they really enjoy the time. Our PetSmart also has grooming salon. After they shopping, they usually send their pets to our salon. It’s very convenient for them. • (For PetSmart) What is the percentage of them buying expensive pet products? I don’t have the exact number, but currently, Ellen DeGeneres launches her pet product in our store exclusive. Some consumers believe it is a type of luxury products, so we sell a lot of products from this collection. • (For PetSmart) What are the main reasons customers shop at PetSmart? What elements do they consider when they purchase products? Price, quality, brand or others We have various brands and product categories, and we offer the lower price than other local stores. Our salespeople are enthusiastic and warm-hearted; I can say that we have the best service. Customers share their life and pets information with our salespeople; I think it can also reflect our service.

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PET OWNER CATEGORY

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(Source: Unmetric “Louis Vuitton Social Media Analysis Q4 2015”)

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LOUIS VUITTON

Reference 2017

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Alex Salamanca, “25 Most Luxurious Airlines In The World”, March 31, 2016 http://list25.com/25-most-luxurious-airlines-in-the-world/4/ ASPCA, “Pet Statistics”, (read on Nov 10th, 2016) http://www.aspca.org/animal-homelessness/shelter-intake-and-surrender/pet-statistics APPA, “Pet Industry Market Size & Ownership Statistics”, (read on Apr 4th, 2017) http://www.americanpetproducts.org/press_industrytrends.asp Alissa Wolf, “The World Pet Markets Trend- Countries that are Experiencing Growth in the Pet Industry”, February 19, 2017 https://www.thebalance.com/the-world-pet-market-booms-2660629 Baker, Dave, “Dog Scared of Storms? Learn How to Calm Your Pet”, August 15, 2013 http://www.petful.com/behaviors/how-to-calm-your-pet-during-a-thunderstorm/ Belime, L., 2010. “Material Flow Improvement”. [pdf] Available at: <publications.lib.chalmers.se/records/fulltext/127812.pdf > Clarice Brough, “Pet businesses will prosper: Industry trends for 2014 and beyond”, read on Aril 2, 2017 http://www.multibriefs.com/briefs/exclusive/pet_businesses_will_prosper.html#.WQTDf7vythB ColumbUs “DOG-FRIENDLY TRAVEL” read on April 28, 2017 https://www.experiencecolumbus.com/things-to-do/dog-friendly-travel/ Dog Supplier, “THE AVERAGE COST OF DOG OWNERSHIP”, read on Apr 4th, 2017/4/4 http://www.dogsupplies.com/pages/ The-Average-Cost-Of-Dog-Ownership.html DLX, “WHAT WEARING THESE 12 LUXURY BRANDS SAY ABOUT YOU.” Sep 1, 2015 https://destinationluxury.com/perceived-wearing-12-luxury-brands/ Emily, S “20 Most Luxurious Pet Hotels Around the World”, Apr 03, 2016 http://www.thethings.com/20-most-luxurious-pet-hotels-around-the-world/ Euromonitor Strategy Briefing, “Pet Humanization: The Trend and Its Strategic Impact on Global Pet Care Markets” Oct 1st, 2014 Euromonitor Industry Overview, “Pet Care in the US”, May 31st, 2016 Euromonitor Local Company Profile, “Blue Buffalo Pet Products Inc in Pet Care (USA)”, May 31st, 2016 Forbes “The World’s Most Valuable Brands”, 2016 https://www.forbes.com/companies/louis-vuitton/ Holborow, Olivia, “Louis Vuitton”, (Vogue, June 20, 2012) http://www.vogue.co.uk/article/louis-vuitton

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Kalaygian, Mark “The Top 25 Pet Retailers in North America” Published: 01.26.2016 http://www.petbusiness.com/February-2016/The-Top-25-Pet-Retailers-in-North-America/ King, Jen “Louis Vuitton emphasizes importance of journey over destination for cruise ads” (Published Oct 19th, 2015 by Luxury Daily) https://www.luxurydaily.com/louis-vuitton-emphasizes-importance-of-journey-over-destination-for-cruise-ads/ LVMH, “2015 Social Responsibility Report” (LVMH, June 2016) https://www.lvmh.com/investors/publications/?publications=29&pub_year=&pub_month=# Neol, Josh “Travel industry accommodating people with pets” Feb 10, 2016 2:30 pm http://www.chicagotribune.com/lifestyles/travel/sc-mechanic-travel-column-0216-20160209-story.html Pet Food industry, “Report: 4 key trends driving $15 billion US pet market” On Oct 21, 2015 http://www.petfoodindustry.com/articles/5438-report-4-key-trends-driving-15-billion-us-pet-market PR Newswire, “Cunard Sponsors 2017 Westminster Kennel Club Dog Show”, February 2, 2017 http://www.prnewswire.com/news-releases/cunard-sponsors-2017-westminster-kennel-club-dog-show-300401088.html Saul McLeod, “Maslow's Hierarchy of Needs”, published in 2007, updated 2016 https://www.simplypsychology.org/maslow.html Shore, Damian “Sales of OTC Pet Healthcare Suffer in the US as Prescription Products Make Inroads” Aug 5th, 2016 (Published by Euromonitor) Stewart, Caitlin, “Projected 2016 Trends in the Pet Industry”, Nov 25, 2015 8:30:00 AM http://blog.marketresearch.com/projected-2016-trends-in-the-pet-industry Technovia, “GLOBAL PET ACCESSORIES MARKET 2015-2019”, December 30, 2015 https://www.technavio.com/report/global-pet-supplies-pet-accessories-market Technovia, “Global Pet Accessories Market Expected to Exceed $19 Billion by 2019”, February 24, 2016 https://www.petage.com/global-pet-accessories-market-expected-to-exceed-19-billion-by-2019/ Tomshinsky, Ida “Bags & Purses: The Story of Chic and Practicality”, (Published March 19th 2016 by Xlibris) UK Essays. (November 2013). “Louis Vuitton Becoming Successful In The Luxury Market Marketing Essay.” Retrieved from https://www.ukessays.com/essays/marketing/louis-vuitton-becoming-successful-in-the-luxury-market-marketing-essay.php Valente, Stephanie “Harness vs. Collar: Which Is Better For Your Pup?” 2015 http://stories.barkpost.com/harness-vs-collar/ Westbrook, Gina “Strategy Briefing - Pet Humanization: The Trend and Its Strategic Impact on Global Pet Care Markets” Oct 8th, 2014 (Published by Euromonitor)

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LOUIS VUITTON Line Extension of Louis Vuitton's Pet Products

M.A Final Project Xuejiao Li Spring 2017 Savannah College of Art and Design Luxury & Fashion Management

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