21/12/2011 Marketing Strategy analysis of LVMH with a special focus on LV Industry overview: Louis Vuitton Malletier is commonly referred to as Louis Vuitton, sometimes shortened to LV, is French luxury fashion and leather goods’ company. The company was founded in 1854, and now is the cornerstone of LVMH and its main division carrying almost a quarter of the total group. LVMH is the world leader in the luxury industry. It was established in 1987 through the union of three brands: Louis Vuitton, Moet and Henessy.
This union gave birth to a global group that, in addition to leather goods and spirits, brings together to the distribution, a big variety of brands in all segments of the luxury: perfumes, jewelry, watches and also champagne. Through its policy of brand development and expansion of its distribution network abroad (more than 2300 stores worldwide), LVMH has became, since its creation in 1987, a part of a strong growth: it is now the first capital in France and the thirteenth in the world, with 77000 employees of which 74% are based outside France and that share the same values of the groupe.
Corporate strategy: A strategic segmentation: In the luxury sector, LVMH has invested in six different strategic business areas: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, selective distribution and other activities. Louis Vuitton is trying to represent by its products, the most refined qualities of Western “Art de Vivre” around the world. The company is also trying to continue to be synonymous with both elegance and creativity in leather products, blending tradition and innovation through their products and kindling dream and fantasy.
How Louis Vuitton attracts its costumers: Louis Vuitton is a luxury brand belonging to LVMH which is the most valued brand in the world of luxury. Since 1854 this has been succeeding with its luxury luggage first and then with fashion industry (especially with collections by Marc Jacobs). Louis Vuitton has introduced many advertising campaigns, but ten years of fashion communication have overshadowed the house. The company realized that customers were less sensitive to the values that were associated with the brand.
Therefore the company wanted to put aside while the commercial communication by focusing on a more institutional in order to enhance the house and not just the products. Louis Vuitton then chose to move from product communication to corporate communications. The goal is to communicate the values and philosophy of the brand and its leitmotiv: the trip. To create a close relationship with its customers, the Internet appears to be the best means of communication (interactivity, photos, videos …. ) The fundamental value that is conveyed is the trip.
Today the concept has evolved in travel habits (mass tourism, development of low cost), becoming very usual and then there is no more magic in the travel or escape. In this new communication campaign LV seeks to use the concept of journey from idea to idea of ?? physical personal journey (passenger). Two of LV advertisements that are using the trip concept Main objectives of the company: Long term objectives: The group aims to ensure the sustainability of the company by focusing on core brands like the capital (pillars) of the 5 areas of LVMH. In addition, LVMH has the opportunity to gain market share, eclining his offer of new niches (accessories). It must continue to invest for growth. Short term objectives: LVMH wants to achieve a rapid return to the strategic activities such as selling on the Internet like on “eLUXURY. com” These activities can be retained in the portfolio ones because they do not monopolize considerable energy over the long term and are a source of direct profitability (high margin). Analysis of the four Ps strategy: Product : Louis Vuitton’s products are very distinguished by their “absolute quality” and very high price.
The aim of LVMH is also to make people feel a big difference between any brand and a brand Louis Vuitton. Therefore a strong image is needed to achieve those aims. One of the big issues that touch LV products is counterfeiting which the company is trying hardly to fight against with enlightenment campaigns, distribution of warning notices to companies, registering
The company is also working on prohibiting appraisal of authenticity by officially sanctioning stores that are alone able to verify whether an article is genuine or not, but also using the mass media to tell people about some details to take into account before appraising whether an LV good is genuine or not. By choosing not to make cheap goods at all, LV is also prohibiting second-line operations or what we call lower-cost alternatives. This can be sort of limitation to a greater expansion but a good choice to the company to stay in the luxury area. Another principle of LV product is that LV is an independent manufacture that is prohibiting outlet product production in order to control the brand value and making a real control on the prices. LV has also a special order service for customers that would like to buy customized and order-made products. Price: LV goods prices are very high, but their value is also of a very high level. The prices are widely accepted by women.
The company is trying then to keep the trust the costumers have in its reliable pricing, especially by prohibiting exorbitant pricing, bargain sales, sales in value sets, surprise price changes, pricing in odd prices… Place: LVMH has no boundary; its market is global, taking into account national or regional areas. The company has a geographical strategy that is built on the sentence: “Think global, act local”. The value of having a global market is to overcome the vagaries of economic conditions (fluctuations in exchange rates, etc. .. ), social (war, etc. .. and demographic issues (emerging Asian countries, etc. .. ). This allows them to meet the specific demands of the market better than in other possible way: for example, the Italians prefer sweet taste champagne that can be adapted to be the right product for them, with mixtures of wines and grapes varieties that are specific to champagne. On the other hand the internationalization of sales allows the company to respond to many different behavioral changes of consumers. Moreover, LVMH is seeking to emerge new markets with very high potential such as China and India.
LVMH benefits from the liberalization of world trade. Promotion: LV in comparison with most companies that use mass advertising, never advertise on television but only on magazines and newspapers with non aggressive sales ads, just images. The brand represents the discovery, travel, sophistication, elegance and creativity. When such words are associated with a company we understand that communication must be really special. Louis Vuitton does not use media such as radio and television media that are surely too popular. Louis Vuitton, because of the demands in women’s magazines (Elle, Vogue, Madame Figaro ,… , advertisements published in its journals always have a particular theme (urban, fables, seven deadly sins ,… ). To promote its goods, Louis Vuitton prefers to also organize special events such as Concours d’Elegance car and the America’s Cup (also known as Louis Vuitton Cup). The brand, as for other firms, is using the front of the stores being built for advertising. For example in New York can be seen at a height of over 20 meters Jennifer Lopez, new ambassador of Vuitton’s flagship products carry the brand. Vuitton also does not hesitate to call on great personalities to represent the company.
The parades are also a good way to make them known. The target is not only the public who attended the parade (a few hundred people), but the people who hear about in the press and other media. LV marketing strategy is also based on a special process of diversification: To stay number one in the luxury sector, LVMH group usually offers a similar product line to the 4 corners of the planet, but in different ways. LVMH is seeking to reach a new clientele that is willing to “splurge”. They have access to luxury by ancillary products already present in the product range; it requires no new skills or additional skills.
This diversification marketing involves distinctive innovations both in the cut of clothes (packaging for perfumes) that the composition of handbags (new materials). All this requires a research and development performance, bringing together the best designers to get a head start as soon as possible and find the trend. Weaknesses of Louis Vuitton and propositions for better strategy: LV products are the most copied in the World, which is not the case of other luxury companies like Hermes for example. Indeed, Counterfeiting is a real problem for the segment of luxury products.
The “extension” of the brand could contribute to the loss of image and prestige. To remedy this, Louis Vuitton is strongly committed to the fight against counterfeiting by establishing a specific team to sensitize the consumer and arrest the counterfeiters around the world and especially in countries where the phenomenon is more present like China. Also, the prices of LV products are not the same around the world: they are 50% higher in Asia and 25% higher in the U. S. In addition, foreigners that are residing outside European community can benefit from a tax refund.
It is therefore more interesting for many foreigners to buy Louis Vuitton products in France, thus we have a great development of the traffic around this brand. Indeed, there are many consumers that buy LV products in France and then resale them to foreigners. Others collaborate with foreigners and accept to act as intermediaries for the purchase of these products, with taking a commission for this service. The resale of a product devalues its image as luxury item; the resoled product loses its charm and uniqueness: it becomes such a commodity and no longer a luxury product.
To prevent this, LV has to develop more its computer control of sales. And since the luxury market is an area of a big concurrence, LVMH is always required to be distinguished from the others, to keep innovating its products, marketing, advertisements themes and in the same time defending its values… And since it has became a worldwide known brand, may be to make some customization in production, sales and marketing for each culture, I would like to propose to make for come chosen countries special processes of production , sales and advertising that meet but also emerge from their culture…
References: * http://www. iasdr2009. org/ap/Papers/Orally%20Presented%20Papers/Design%20Management/Luxury%20Brand%20Strategy%20of%20Louis%20Vuitton. pdf * http://veronique. estienne. free. fr/doc/SLIDE. htm