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  2. 2. Presented By Arukwe Chioma J. Egbunonu Obiora Ekpuyama Edirin Mbah Justice C. Osarumwense Annette
  3. 3. AGENDA • Case synopsis • Industry overview • The Louis Vuitton brand • Key issues • Competitive landscape • Positioning map • Marketing mix • SWOT analysis • PESTEL analysis • Porters 5 forces • Recommendations to key issues • Alternative scenarios • Recommended strategy • Potential risks • Mitigation of risks • Additional areas of exploration • Louis Vuitton 2016 • Key learnings • Conclusion • References
  4. 4. MISSION STATEMENT Represent the most refined qualities of Western Art de Vire around the world
  5. 5. SYNOPSIS • Japan appeared to be a very attractive market for louis Vuitton to enter. • 1977 – Louis Vuitton opened its first stores in Tokyo and Osaka. • LV entered the Japanese market without a local distributor. • 1980 - 20 million Japanese women owned a bag of the brand • 2007- with the expansion the company controlled 54 stores through directly owned shop network in japan. • 55% of LV revenue came from Japanese consumers • Louis Vuitton has an exclusive distribution strategy
  6. 6. SYNOPSIS CONTD This case deals with the opportunities and challenges of Louis Vuitton in japan , a top player in the European luxury fashion industry, taking into account the unique features of brand management ,integrating culture and consumer behaviour.
  7. 7. SYNOPSIS CONTD • 2002 - decrease in sales in luxury item globally. • Louis Vuitton was forced to adjust its products offering and approach to local consumers. • A new marketing strategy – “limited edition”. • Collaboration with Japanese artist Takashi Murakami who recreated a colourful pop version of LV monogram in 33 colours. • 2003- Profit increased by 10 percent. • 2006- Change in management oEstablishing an internet business oExpanding the range of lv products for children.
  8. 8. SYNOPSIS CONTD • 2009- Global economic crisis resulted in a decline in sales. Facing a weak economy and a shift in consumer preferences. • Different approaches were implemented in Japan o 7% price reduction o Market dilution • In Japan, Louis Vuitton has lots of competitors which make the market saturated
  9. 9. INDUSTRY OVERVIEW • Market weight oWorld second largest luxury market ( o12% - 40% of worldwide sales for luxury brand (HSBC Feb, 2009) oThe market is Worth $15 billion -$20 ( • Nature of market oMature and concentrated market oWorld highest per capita spending for luxury goods
  10. 10. CONTD • Categories of buyers oSenior citizens >65 oYoung working women between 20-35 oHomogenous consumers • Key success factors oQuality oBrand reputation • The growth rate in Japan stated to decline in 2006
  11. 11. THE LOUIS VUITTON BRAND • Louis Vuitton Malletier the company's founder was born in 1821 in Anchay, Jura, France • Headquarters : Paris, France • Established: 1854 • In 1854 it launched its first product- Flat Bottom Trunks with Trianon Cavases • Regional involvement: Global • In 1885 the firm opened its first overseas firm in London England
  12. 12. THE LOUIS VUITTON BRAND CONTD • In 1888 its logo Marque Louis Vuitton deposèe was created • In 1896 George Vuitton created the Monogram Canvas and attained worldwide trademarks on it to limit counterfeiting • Revenue in Japan (year end 1st October, 2015)- €25.3 billion ( • Growth in revenue: 18% (
  13. 13. LOUIS VUITTON MOET HENNESY BUSINESS DIVISION Fashion and leather goods Selective retailing Wines & Spirits Perfumes and Cosmetics Watches and Jewelleries
  15. 15. KEY ISSUES • 2008 Economic Crisis • Counterfeiting • Over dependence on the Japanese market • Changes in consumer preferences • Keeping control of its Multinational business • Market dilution
  16. 16. COMPETITIVE LANDSCAPE • 11 luxury brands in Japan as at 2005 • 2 main competitors- PRADA and GUCCI oLong-standing oWell-established luxury brands that cater to the high-end market oHigh Quality Materials and Fine Craftsmanship • The brand positioning of Louis Vuitton in Japan as compared to Prada, Gucci and other fashion brands is based on prestige pricing (value) and exclusivity
  17. 17. NUMBER OF STORES 34 Bulgari stores 37 Chanel stores 115 Coach stores 49 Gucci stores 64 Salvatore Ferragamo 50 Tiffany & Co. boutiques 252 LVMH stores 35 Prada stores
  18. 18. Baccarat Bulgari Burberry Coach Hermes Gucci group LVMH group Loius Vuitton (Fashion & Leather Goods) Salvatore Ferragamo Tiffany & Co. Van Cleef and Aprels 35% 26% 36% 22% 25% 27% 15% 30% 27% 20% 33% TOP MULTINATIONAL LUXURY BRANDS- % OF OVERALL REVENUE FROM JAPAN IN TOTAL WORLD WIDE SALES (2005)
  20. 20. MARKETING MIX Price Prestige pricing (Value) Advertising *Use of celebrities and famous models in campaigns *Prints Ads in magazines and billboards Consumer Behaviour *Group oriented *Beauty conscious *Compulsory form of social expression *Price sensitivity Distribution Strict controlled distribution network Competitive Threats Numerous competitors in the market
  21. 21. S.W.O.T ANALYSIS
  22. 22. STRENGTH • World’s Number one luxury Brand • Popular and profitable in Japanese market • Recognizable brand and logo • Efficient management practices • Quality products and Lifetime free repairs • High Productivity and quality control standard • Teamwork efficiency
  23. 23. STRENGTH CONTD • Consumer loyalty • Successful advertising strategy • Collaboration with well known Japanese Artists • Strong presence of Louis Vuitton stores in Japanese cities
  24. 24. WEAKNESS • Expensive and not readily available due to exclusivity • Brand product not affordable to the average consumer • Challenges in controlling multinational business • Marketing strategies are focused on accessing higher income groups • Large number of luxury competitors • Decline in sales due to global economic recession • Falsification of LV logo and market dilution
  25. 25. OPPORTUNITIES • Consumer’s Long time attachment to Louis Vuitton brand • Employing highly experienced personnel • Evolution of ageing of Japanese population • Increasing demand for high fashion • Socio Cultural relations with fashion • Constant innovation and support
  26. 26. THREATS • World wide Counterfeiting • High competitive brands • Challenges arising out of global recession and impact on Japanese customers • Over dependence on the Japanese market • Changing taste of customer preferences • Possible departure of Marc Jacobs • Keeping control of multinational business
  27. 27. P.E.S.T.E.L. ANALYSIS
  28. 28. POLITICAL FACTORS • Stable Political environment • Multi party parliamentary representatives • Low sales and high cooperate tax rate of 30% (World bank) • Emerging market • Member of WTO, APEC, OECD, G-20, G-8 • Open to investment with foreign entrants
  29. 29. ECONOMIC FACTORS • Annually growing GDP- 4.210 trillion (2015) 0.8% growth rate • High per capita income – $33,223 (2015) • Population – 126,422,104 as of Sunday, February 7, 2016, based on the latest United Nations estimates • Growing middle class • Low rate of inflation – 3.2% (may 2014) • Population below poverty line – 16% (2010) • Labor force – 65.93 million World Bank
  30. 30. CONTD • Exports – $697 billion • Japan Luxury industry annual growth rate – 6% • Rise of stock price due to economic policy • Exchange rate - constant exchange rate measurement • Competitive luxury industry World Bank
  31. 31. SOCIAL FACTORS • Group oriented culture • Exclusive life style • High demand for luxury goods- mostly women • Japanese consumers are beauty driven • Ageing population • Declining labor force • Change in consumer preference
  32. 32. TECHNOLOGICAL FACTORS • Rapid development of Internet • Most advanced cellular networks – ( source, euro technology) • Internet users – 122, 799, 736 • High Trend in mobile devices- oLV is also reckoning its odds in a potential partnership with a technology company to launch its first smartwatch series (Reisinger, 2014) World Bank
  33. 33. ENVIRONMENTAL FACTORS • Mountainous, volcanic island country • Strong environmental policies • Inadequate natural resources • Natural disasters • Global warming • Nuclear power threat • Air pollution • Acid rain
  34. 34. LEGAL FACTORS • Intellectual property right protection • High regulatory hurdles • Rigid and slow legal process • No 1 for resolving insolvency in the world
  35. 35. PORTERS 5 FORCES
  36. 36. BARGAINING POWER OF BUYERS/ CONSUMERS (LOW) • Buyer are insensitive to the price • Brand loyalty • High product differentiation
  37. 37. BARGAINING POWER OF SUPPLIERS (LOW) • Numerous no of suppliers • Purchasing raw materials from their supplier on the bases of consignment • Acquisition of key suppliers of leather products • Manufacturing of products in different locations • Large pool of suppliers due to strong brand value
  38. 38. THREAT OF NEW ENTRANTS (LOW) • High barrier into the industry due to the amount of resources required (Capital expenditure) • The industry is driven by brand recognition and loyalty and this takes a long time to build • Sustainability is also difficult
  39. 39. THREAT OF SUSBSTITUTE PRODUCTS (MODERATE) • Large number of relatively low priced products • As a result of the target group, middle and high class individual who seek luxury brands to display affluence will still patronise brand regardless of price • Counterfeiting is a huge problem in the industry
  40. 40. THREAT OF COMPETITORS (MODERATE) • Several competitors in the market • Consumer perception of the industry is not based on price alone but image and quality
  41. 41. OUR RECOMMENDATIONS • Louis Vuitton should leverage its competitive advantage in building luxury brands (expansion/diversification) • Should expand to smaller cities in Japan • Consider alternative manufacturing sites • Collaborate with the Japanese and other neighbouring country government to combat counterfeiting • Reduce over dependence on the Japanese market and tap into emerging markets
  42. 42. WHAT STEP DO WE TAKE FROM HERE How could Louis Vuitton reinvent itself and regain what used to be its well-attested fame in Japan
  43. 43. ALTERNATIVE SCENARIOS LOUIS VUITTONS STRATEGY IN JAPAN I Continue the prestige pricing, high quality and strict distribution II Prestige pricing, market dilution and expansion of stores III Prestige pricing, high quality, more product offering and promotions IV Prestige pricing, high quality and continue with the limited edition
  44. 44. SCENARIO I PROS • Increased perception (status) • More attachment to the brand • Customer loyalty • Help differentiate the brand CONS • Product not being within reach • People see it as expensive • Emergence of counterfeit product
  45. 45. SCENARIO II PROS • Variety of product offering • It can be readily reached • Affordable • Increased customer database • Counter imitation of goods CONS • Reduced brand perception • A shift in market position
  46. 46. SCENARIO III PROS • Varieties for customer and boost sales • Maintain perception of the brand and customer loyalty • Create more sense of belonging for customer • Enhanced customer experience • Increased brand awareness CONS • Extra cost incurred to promote product • Some what expensive to create awareness
  47. 47. SCENARIO IV PROS • Exclusivity of product • Increased prestige • High value for brand product • Boost sales • Increased patronage CONS • Inability to identify between a limited edition and a market ploy • Lack of trust • Already under threat
  48. 48. RECOMMENDED STRATEGY Scenario III • Prestige pricing (Value) • High quality • More product offering • Promotions
  49. 49. POTENTIAL RISKS • Loss of customers due to price sensitivity • Continuous counterfeiting resulting from emerging technological know-how • Reduction in sales (cyclical) i.e. people waiting for promotion periods • Increased cost incurred in running promotions • Recurrent strategy i.e. Competitors imitating louis Vuitton brand strategy
  50. 50. HOW TO MINIMIZE THE IMPACT OF THESE RISKS • Superior innovative promotional ideas • The fashion industry should better collaborate with the Japanese and other neighbouring country government to combat counterfeiting • Increase rental option to minimize counterfeiting and instill more sense of belonging in the Japanese citizens
  51. 51. OUR SUGGESTION (NEW AREAS OF EXPLORATION) Children's clothing line Establishing and internet business & expanding to mid size cities Focus on Ready to wear clothing line
  52. 52. WHERE IS LOUIS VUITTON TODAY • Louis Vuitton continues to provide quality goods for the fashion industry with uncompromised traditional craftsmanship. LVMH also seeks to provide more innovative products through collaboration with brands in the other industries. • The partnership between Louis Vuitton and the German car-maker BMW to create an exclusive collection of suitcases and bags exemplifies Louis Vuitton's dedication to the art of travel. • Louis Vuitton also engages in fighting counterfeits and providing a safer online shopping experience with Google and eBay in a collaborative effort to protect
  53. 53. CONTD Intellectual property rights and preserve the value of trusted brands (LVMH, 2014/ Market Watch, 2014) • LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, recorded an 18% increase in revenue, reaching €25.3 billion, for the first nine months of 2015 ( • The Group continues to deliver strong growth in Europe and the United States, and is seeing an acceleration in Japan.
  54. 54. TEAMS KEY LEARNINGS • The issues associated with over independence on a particular market • Brand management, value and positioning • Use of various market strategy to thrive in an industry/market • Consumer behaviour and how it impacts the success of a brand • Change is inevitable • Key success factors in Japan (centralized system and proximity of stores) • Exclusivity, brand image and how to maintain customer loyalty in changing economic environment
  55. 55. CONCLUSION • Due to the experiences and lessons learnt in Japan, Louis Vuitton has been building its Global strategy • The brand is now expanding its strategy towards mid sized and smaller cities
  56. 56. REFERENCES Louis Vuitton in Japan Ivey 9B10M067 HSBC Feb, 2009 World bank

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