L V M H

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A case study on LVMH-Luxury Goods Market

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L V M H

  1. 1. Case 11-2 LVMH & Luxury Goods Marketing Case Study By-Group No.5 Rakesh DhalBisoi-90 Kunal Banthia-75 Mangesh gade-23 Chinoy Mehata-09 Amit Vishwakarma-04 MNC-Prof. Manoj Das EMBA,Batch-XIII,ITM,Kharghar
  2. 3. Bernard Arnault:The pope of high fashion <ul><li>Then: </li></ul><ul><ul><li>Born 1950 in Roubaix, France </li></ul></ul><ul><ul><li>Educated at Elite French Military & </li></ul></ul><ul><li>Engineering Institute </li></ul><ul><ul><li>Run family construction business after </li></ul></ul><ul><li>school </li></ul><ul><ul><li>1981 moved to US – 1983 returned to </li></ul></ul><ul><li>France </li></ul><ul><li>Now: </li></ul><ul><ul><li>Best known businessman in France </li></ul></ul><ul><ul><li>One of France’s wealthiest people </li></ul></ul>
  3. 4. What is LVMH ? <ul><li>A world leader in luxury goods created in 1987 </li></ul><ul><li>More than 2300 stores worldwide </li></ul><ul><li>77,000 employees worldwide </li></ul><ul><li>A unique portfolio of 60 prestigious brands </li></ul><ul><li>US$ 15 billionn in 2003 </li></ul>
  4. 5. LVMH Group Structure Wines and Spirits 18% Watches and Jewelry 5% Selective Retailing 25% Fashion and Leather Goods 34% Perfumes and Cosmetics 18%
  5. 6. LVMH Brands <ul><li>Louis Vuitton </li></ul><ul><li>Christian Dior </li></ul><ul><li>Givenchy </li></ul><ul><li>Guerlain </li></ul><ul><li>Fendi </li></ul><ul><li>Marc Jacobs </li></ul><ul><li>Donna Karan </li></ul><ul><li>Dom P érignon </li></ul><ul><li>Mo ët & Chandon </li></ul><ul><li>Pommery </li></ul><ul><li>Tag Heuer </li></ul><ul><li>Zenith </li></ul>
  6. 7. Discussion <ul><li>Q. Bernard Arnault has built LVMH into a luxury goods empire by making numerous acquisitions. What strategy is evident here ? </li></ul><ul><li>Answer : </li></ul><ul><li>A multi brand strategies, brand extension. </li></ul><ul><li>A Selective acquisition strategies -concentrating on external growth. </li></ul><ul><li>Acquisition means killing of competitors i.e, lesser competition </li></ul><ul><li>Increase market share leads to monopoly </li></ul>
  7. 8. Discussion <ul><li>Q. How do LVMH executives adjust prices in response to changing economic conditions ? </li></ul><ul><li>Answer: </li></ul><ul><li>Raised wholesale prices in individual Asian markets . </li></ul><ul><li>There by discourage discount retailers from stocking up with </li></ul><ul><li>designer products and then selling them to down-market consumers. </li></ul><ul><li>Advertising expenses on perfume and cosmetics reduced. </li></ul><ul><li>Cancel plans of opening new store. </li></ul><ul><li>Raised prices to counteract the effect of currency devaluation. </li></ul><ul><li>When tourism is at peak, increase prices by 10-12% </li></ul>
  8. 9. Discussion <ul><li>Q. Do you think the high retail prices charged for luxury goods are </li></ul><ul><li>worth paying ? </li></ul><ul><li>Answer : YES </li></ul><ul><li>Affluent consumers eagerly seekout luxury brands such as Armani, </li></ul><ul><li>Christian Dior,gucci,louis Vuitton,Prada, and Versace etc </li></ul><ul><li>They are willing & able to pay high prices for top quality merchandise </li></ul><ul><li>from fashion houses whose names are synonymous with status, good </li></ul><ul><li>taste, and prestige </li></ul><ul><li>If the prices are diluted then every one can afford such goods as a result </li></ul><ul><li>there will not be any aristocracy,status, and prestige involve with it </li></ul><ul><li>Luxury goods are percieve not as a product , as an image- a Lifestyle. </li></ul><ul><li>In short if you want status symbol then if you have to pay more </li></ul>
  9. 10. Discussion <ul><li>Q. How will luxury goods marketers be affected by the slowdown in tourism that </li></ul><ul><li>followed the terror attacks of September 11, 2001 ? </li></ul><ul><li>Answer : </li></ul><ul><li>In Europe and USA , the economy plays a greater role in consumer behavior </li></ul><ul><li>Japanese tourists are significant factor </li></ul><ul><li>Heavy taxes are levied on luxury goods in Japan,making prices about 40 % </li></ul><ul><li>higher than in many other countries </li></ul><ul><li>So Japanese buy these goods abroad . </li></ul><ul><li>In the wake of Terrorist attack they were less keen to travel which affected the </li></ul><ul><li>luxury good sales </li></ul><ul><li>If Japanese will travel more then they spend more . </li></ul><ul><li>Local market sales in Japan picked up </li></ul><ul><li>Serious impact on sales to tourist in most countries . </li></ul>
  10. 11. Questions ?
  11. 12. Thank You

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