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Louis Vuitton - Vibhor Arora

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Strategic Brand Management - Louis Vuitton

Strategic Brand Management - Louis Vuitton

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  • Louis Vuitton Malletier, also know as just Louis Vuitton or LV – is a French fashion house and it deals in ultra luxury products, mostly leather goods, such as – ready made attires, luggage bags, wallets, purses, accessories, sunglasses, watches, etc.
  • Marc Jacobs is not only the Art Director for LV, he also is a permanent face for the brand and there are many buyers who buy LV because of its association with Marc and not just the brand. More than 50% of revenues come from Japan, followed by Europe. To avoid dependency risk, company has started to diversify markets by introducing more stores in USA and Canada. Company also launched new stores in BRIC nations to lure their booming rich and upper middle class population as the target markets.
  • CEO of the merged entity Bernard Arnault also kept acquiring other luxury fashion brands and he is one of the wealthiest men in the world, mainly because of his shares in LVMH and his significant collection of art works. Presently, Christian Dior holds 42% of LVMH and majority of voting rights. However, Bernard Arnault also happens to be the majority shareholder of Dior and therefore Chairman of both the companies - Dior and LVMH.
  • LVMH Group also owns brands like Donna Karan, Tag Heuer, Kenzo, Fendi, Bvlgari, De Beers, Givenchy, Zenith and more. Company also used to own a minority stake (34%) in Italian competitor Gucci, which is now sold to a French fashion company - PPR (also owns of Puma).Group’s brands deal in following product categories - Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewellery, Selective Retail Chains and Media.
  • Leather products such as Luggage, Bags, Purses, Shoes, etc. are the flagship offerings from the house of LV, however, they also offer books, clothing line and accessories. Everything is sold through exclusive LV stores across the world and a selected high-end fashion stores to avoid people from buying pirated goods.
  • Source: http://www.bloomberg.com/news/2011-05-08/louis-vuitton-rises-gucci-falls-in-2011-brand-valuation-study.html
  • If we personify LV, its like the serious, elegant, classy person that exudes aura of desirability. Everyone wants to posses one, however products are expansive and therefore exclusive, which further increases the desirability factor.
  • Louis Vuitton has done an exceptional and radical job in creating an experience that every customer crave to go through. They have ‘Exclusivity’ written all over the place. Exclusivity is not just limited to stores and celebrities, it goes up to the extent of what kind of buyer you are. If you are a rich-n-famous personality, shop assistants will please you with the best of services and greetings that can provide, however, if you are a regular ‘emerging-middle-class-or-newly-rich-kind-of’ person, they won’t even greet you and the only expression on assistant’s face will be cold enough to make you feel completely ignored. Nevertheless, this is a marketing trick, and it worked out effectively. It might freaks out the customer but it plays emotionally with their minds, they want to come back again and buy more in the quest to make them a more identifiable customer. Also, customers like to bear the pain of being treated badly as a sacrifice to posses the ‘LV’. Overall, consumers love the brand and their desirability keeps on increasing, come what may and that inspires the company to charge higher price premiums. LV maintains 45% of profit margin, which is way above the industry (luxury goods) trend of 25%.
  • It’s mot just the famous actors, singers and famous entertainers who love to flaunt LV, there are famous people from different walks of life such as Mikhail S. Gorbachev, former head of Soviet Union – to endorse the brand. Furthermore, LV also sponsors elite sports like yachting and motorsports to target the super rich creamy layer of customers.
  • Louis Vuitton stores are one of a kind – for example the “Marina Bay Island“ store at Singapore (First Picture from left). As mentioned before, shop assistant’s behaviour for the new customers might not be pleasant enough. LV also offers online and shopping through their website and also through duty-free shops at international airports around the world. Stores are always opened in highly posh and up-town areas of metro cities – in accordance with the brand and it also makes it more accessible for customers – a subtle part of brand experience.
  • Louis Vuitton has something to offer to bring together their customers as single community of proud brand owners:Strong Brand Story – It is fascinating that how LV evolved from just a men’s trunk manufacturer to the biggest luxury brand in world. How it started from France (most important element for fashion industry) and found its major market in Japan. As mentioned before, Art Director - Marc Jacobs has his own fan following and its own brand called – Marc by Marc Jacobs (mostly popular in US and Canada), which is also under the umbrella of LVMH. When it comes to elite business class buyers, they think that buying LV helps them make an association with the CEO B. Arnault. LV is not leaving any store unturned to extend the brand journey to new markets.Collaboration among customers – Buyers of the brand need to connect with each other to acknowledge the same level of thinking, in a particular context. They share information through LV’s online portal and also through blogs to chat about what they liked and what they didn’t. The validate each other’s choice with respect. A brand provides a common symbol for the personalities and identification of its buyers, that is most important in forming a community. It gives them another way to celebrate their success in respective fields and to share it among other members.Identifiable Brand Elements –Even though acknowledgment among members is important, but more than that, a brand needs to offer something tangible for people to identify themselves with. Louis Vuitton has done that job simply superbly. The simplified LV logo is something that everyone likes to flaunt and why not? It is meant for that purpose because it reflects achievement and meanness which people like to carry as their underlying identity. The iconic texture, colors and canvas designs are other important elements of this brand that binds people together. However, because of simplified designs, LV has been a major target of pirated goods manufactured and buyers and that hinders this brand strongly by dissolving the factors like exclusivity and quality of products.Unique Culture – Companies need the real time feedbacks from customers across the world and for that companies need to create a culture which helps buyers to collaborate with each other, they need to provide platform to facilitate the exchange of information. LV provides such environment that allows customers to talk about their experience and also how is it in comparison with rival brands.
  • D&G – Is a major competitor for handbags, clothing and watches. It is based out of Milan, Italy and was founded in 1982.Gucci – It was formerly a sister concern of LV, because the parent company owned 34% in Gucci as well. However, now its the major rival which deals in mostly every product segment as LV: Footwear, Handbags, Sunglasses, Clothing etc. However Gucci is losing its brand valuation and has scored much lower at 15th spot in the “Brandz Top 15 Luxury Brand List” (LV is at 6th). Gucci has more than 425 stores world-wide.Hermes – It is the brand that LV should be scared of. They match, and in many cases surpass, the quality and image of LV. It also originated in France and has high reputation of customize and offer new products for different markets, in addition to standard product line. That helps Hermes to take the element of exclusivity to the next level. They deal in Leather Bags, Perfumes, Clothing and other Luxury Products. They have more than 220 stores across the world.Prada – It is another Italian (Milan) brand that offers shoes, eye wear, luggage and accessories. However, it doesn’t hold that much exclusivity effort as compared to other competitors, however, it has his own share of loyal customers, mostly from Americas and Asia.Other arc rivals for LV are: - VERSACE, BURBERRY, CALVIN KLEIN, CARTIER and ROLEX. These brands are not major competitors in leather goods or luggage segment, however they provide strong competition in other product lines such as - clothing, accessories, jewellery and watches.
  • Louis Vuitton’s Quality Emphasis  Extensive laboratory equipment test products (e.g. opening and closing zippers 5,000 times).Leather is sourced from Northern Europe, as they tend to have fewer insect bites, thus are less blemished.The company offers a lifetime repair guarantee.Integrate manufacturing initiatives such as “quality circles” in the production process.Source: Businessweek MagazineHermes, a key rival, offers even greater exclusivity by maintaining a 3 year waiting list before one of their bags (completely handcrafted) can be obtained.
  • Hermes has specially introduced Indian attires (first of its kind by any other global luxury brand), specifically to tap buyers from super rich Indian families and global admirers of such products. LV has to take steps in this direction too to provide more reasons for customers to visit the store.For luxury products, conventional advertising media such as print ads, billboards, sponsorships, etc. still holds good and LV should keep promoting the brand through those channels, in addition to their efforts on social media websites and mobile apps.LV should also launch new shadow brand to offer products original products at comparatively lower prices, it will help them keep customers from buying the pirated goods. Pirated LV products account for approximately 18% of total LV products sold world-wide.LV also needs to thing beyond BRIC nations, they should be pro-active in entering countries in African continent and other exotic Asian nations such as – Indonesia, Sri Lanka, etc. to have the early mover advantage.
  • Transcript

    • 1. Brand and the History Founded in 1854, by Louis Vuitton: Malletier a Paris 1896 Georges Vuitton designed the famous „Monogram Canvas‟ 1920 - Global Expansion 1930 – signature bags launched
    • 2. Brand and the History 1959 – started using Monogram Canvas for Purses, Bags, and Wallets 1987 – LVMH formed 1998 – Marc Jacobs appointed as the Art Director 2000 – Launched new product lines 2009 – More than 300 stores globally. – Opened new stores in Brazil, India & China
    • 3. The Company Louis Vuitton Moët Hennessy - LVMH - worlds largest luxury conglomerate 60 different brands Headquartered in Paris, France The merger between the luxury leather goods company Louis Vuitton and the liquor company Moet Hennessy took place in 1987. CEO is Bernard Arnault
    • 4. LVMH Companies & BrandsThis information is sourced from company‟s website – www.lvmh.com
    • 5. Louis Vuitton Products
    • 6. Louis Vuitton Products
    • 7. Louis Vuitton Products
    • 8. LV – The Brand Value26th spot on the„BrandZ Top 100Most ValuableGlobal Brands 2011‟list6th spot on „Top 15Luxury Brands‟ listLV brand is worth$24.3 billion (23%of company‟s value)
    • 9. The Brand Identity • Ultra Luxurious Goods, Monogram, High Quality • Elegant, Subtle, Comfort, Classy • Legacy, Tradition • Art of travel, Craftsmanship, Exclusivity, Elite Clientele • Understated Luxury, Affluence, Success • Symbol for Social Status
    • 10. The Brand ExperienceExclusive Stores | Advertisements and Celebrity EndorsementsPublic Relations | Brand Recognition | Different treatment forRich-&-Famous than a regular customer | Association with theBrand Community | Customers from top 1% on affluence scale
    • 11. Elements of Brand Experience -Endorsements
    • 12. Elements of Brand Experience -Stores
    • 13. The Elite LV Community Louis Vuitton‟s brand community is the unique group of elite loyal customers that seek validation from fellow buyers for their choice of brand and the superior quality of product than other brands. To create a Brand Community, LV has all the required elements: Strong Brand Story / Associations Collaboration Among Customers Identifiable Brand elements Unique Culture
    • 14. Key Competitors Although LVMH (parent company) owns or has stakes in majority of luxury labels but still they are not untouched from the competition from brands of similar stature, such as:
    • 15. Differentiation With such a cut-throat competition in hyper-luxury goods market, LV leverage their Heritage, Quality and “No Discounts” factors to differentiate from competition Price is never a differentiator, because luxury goods industry works against the law of economics. More price leads to more sale and desirability factor LV‟s association with top celebrities, more than any other competitor brand, also helps in attracting more customers.
    • 16. What’s Next? - Recommendations Focus on its core activity of producing leather products and they should scrap the product lines that are not generating much profit such as: certain accessories, perfumes, books, etc. Enhance the exclusivity factor especially to compete with Hermes by launching limited edition or special edition products. Launch customized products for emerging markets like China, India, Brazil, Russia and Mauritius. Launch a economic line of products to fight piracy – may be as a shadow brand.

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