You are on page 1of 13

GROUP 7

Program & Batch: PGDM (2018-20)

Term: 5

Course Name: Luxury Marketing

Name of the faculty: Dr. Sheetal Jain

Topic/ Title: Louis Vuitton

Original or Revised Write-up: Original

Words: 4,249

Group Number: 7

Group Members:

Roll No. Name

1 180103045 Arjun Jain

2 180103072 Dibyani Nayak

3 180103237 Salman Haider

4 180101001 Aamir Ahmad

5 180201140 Shivank Mehra

1
GROUP 7

Contents

Louis Vuitton ............................................................................................................................ 3


Evolution of LV in India.......................................................................................................... 4
Coming to India...................................................................................................................... 4
Post-2017................................................................................................................................ 4
Future in India ........................................................................................................................ 4
Literature Review .................................................................................................................... 5
Conceptualizing Luxury ......................................................................................................... 5
Key Dimensions of Luxury Purchase Intention ..................................................................... 6
Scope of Luxury Market in India ........................................................................................... 7
Idiosyncrasies of Indian Luxury Consumer ........................................................................... 7
Louis Vuitton’s Marketing and Communication Strategies ................................................ 8
Marketing Strategies for Deeper Penetration in Indian Luxury Market ......................... 11
References ............................................................................................................................... 13

2
GROUP 7

Louis Vuitton
Louis Vuitton is a French luxury brand founded in 1854 by its namesake, a box-maker and
packer. Having humble origins in the French countryside, his skill, inventiveness, and grit led
to his signature trucks becoming the envy of the global elite. In 1997, LV entered into
producing bags, clothing, shoes, accessories, and jewelry, under the leadership of its new
Creative Director, Marc Jacobs, making it the world’s most valued brand. [1] LV is
synonymous to elegance and creativity.

In 1987, LV merged with MH (Moët et Chandon and Hennessy), a leading producer of


champagne and cognac, to form the luxury goods conglomerate, LVMH [3]. Jacobs, in
collaboration with designer Stephen Sprouse, launched in 2001 a limited-edition line of bags
featuring "Louis Vuitton" written in graffiti over the LV monogram pattern. The brand began
to accumulate a significant celebrity following [2]. Models, actors, musicians – all have been
the face of the brand.

In 2016, LV launched what was its first perfume in the last 70 years, building a high-tech
factory for fragrances. Its first fragrance film starred Actress Emma Stone. In 2017, the brand
ventured into men’s perfumes and also opened a new flagship store in Paris. Actresses Léa
Seydoux and Alicia Vikander are the brand ambassadors [4].

Demand for LV products often exceeded supply, requiring customers to go on a waiting list
that could take several months to clear. In 2012 it was named the most valuable brand for the
seventh year in a row, according to a study by M Optimor, at a value of $25.9 billion, beating
Hermes and Rolex [1]. In 2018 it was valued at $33.6 billion, generating an annual revenue of
$12.9 billion [5]. LV products are available in LV standalone boutiques and high-end
department stores, and can also be ordered online from the LV website.

Louis Vuitton has several social network accounts that show its latest collections and allow
fans to watch live fashion shows, as well as giving fashion advice. The company regularly
publishes in its accounts, and it seems that it is doing very well. They currently have social
media accounts on Facebook, Twitter, Instagram, Pinterest, YouTube, with over 39 million
followers in total [6].

Louis Vuitton is an affiliate of the Better Cotton Initiative that seeks to bring innovative
solutions in cotton production to reduce its environmental impact and improve livelihoods and
economic development in production areas. As part of its climate efforts, it targets the reduction
of carbon emissions by 25% [7].

LV has launched an initiative ‘LIFE 2020’ under which it has set the following targets for itself
[8]:

 Improve the Environmental Performance Index (EPI) of its products by 10%


 Applying the highest standards in 70% of the procurement chains, to reach 100% by
2025
 Improving environmental performance indicators by at least 10% for all production and
administrative sites and stores

3
GROUP 7

Evolution of LV in India
Coming to India

Louis Vuitton was one of the first few luxury players to enter the market in India, in 2003 at
the Oberoi Hotel in Delhi and then went on to inaugurate its second store at the Taj Mahal
Hotel in Mumbai in early 2004.

The main challenge for the company was to identify the right target audience and find a location
where they have access to these stores as during early 2000’s India’s retail market for luxury
goods was still underdeveloped.

"People (in India) know what quality stands for, but (the market) is still at the beginning, in
terms of development. So, we see it as a baby that we have to grow," Roberto Eggs, president,
Louis Vuitton

During those days there were no luxury malls, and even that craze for Luxury goods was not
realized, this was the prime reason why Louis Vuitton decided to open their stores in the best
and most expensive hotels in India starting from the capital Delhi then targeting Mumbai- The
most glamorous city of India.

They took ten years to grow from two stores to five stores in India-

2 in Mumbai, 1 in Bangalore, 1 in Chennai, 1 in Delhi, they chose to target the metro cities.

First Ten years, though they were enjoying double-digit growth and profit, they were not happy
with the numbers. On the other hand, they have been far-sighted and decided not to dilute the
standard of locations, services, and exclusivity of the brand.

Post-2017
As per the reports, “Louis Vuitton made 50% more profit in the FY-17 as compared to last
year.”

There were multiple reasons responsible for that kind of growth and Demonetization is
considered to be the main reason for it. LVMH made eight crore Profit after Taxes as compared
to 5 crores in the previous financial year with a revenue of 178 crores.

Then in the successive year, the implementation of Goods and Sales Tax as per which all the
luxury items started falling in the 28% tax slab, which again hurt the numbers.

Future in India

The Indian Luxury market is expected to rise to US $30 billion by the end of 2018 and up to
US $50 billion by 2020, as per ASSOCHAM. The increasing number of stores and malls
(luxury) across the country shows how the market is evolving, and the future of the luxury
market is bright

4
GROUP 7
As the customers these days are younger, better informed about the brands and the global
brands and increasing competition in the market will help the market as well as prestigious
brands like Louis Vuitton to make customer relationship and increase sales.

Literature Review

Conceptualizing Luxury
Luxury is derived from the Latin term ‘Luxus’ meaning ‘excess,’ which indicates these were
goods which were above basic utility items, though now the term is more routinely used in our
everyday life which means a promise of decadence and a dream of an exclusive lifestyle. In
1997 Kapferer presented the semiotics of the word ‘luxury’ as “Luxury defines beauty; it is art
applied to a functional item. Like light, luxury is enlightening. Luxury items provide extra
pleasure and flatter all senses at once.” An integrative definition mentioned by Hennings,
Wiedmann, Klarmann & Behrens (2013) is, “Luxury is omnipresent but rare; it is bound to
traditions and cultural heritage, but known for its ability to innovate and to set trends.” [14]
Finally, luxury has been summarised by Jain, Khan & Mishra (2015) as “products, service or
brands which are highly-priced, exclusive or rare in existence with outstanding product quality,
excellent craftsmanship, and timeless investment.” [11]

Due to the recent large increase in the demand of luxury goods, there is a trend towards
‘Democratisation of Luxury’ discussed in detail by (Dubois & Laurent, 1995; Vickers &
Renand, 2003; Ernst & Young, 2005; and Okonkwo, 2007). They stress on a: Trend of shifting
towards

 Class to masses
 Trading up Phenomenon
 Vertical brand extension strategy
 Sub brands/ Diffusion brands

Michael J. Silverstein & Neil Fiske, in their HBR article “Luxury for the Masses” (2003), have
identified three major types of new luxury goods: [13]

1. Accessible Superpremium: These goods are relatively low-ticket items, priced nearly
at the top of their category, but it is still accessible for middle-market consumers.
2. Old-Luxury Brand Extension: These goods are a lower-priced version of goods that
have been previously affordable only by the super-rich.
3. Mass Prestige or “Masstige”: Theses goods can be called bridge brands as while
commanding a premium over traditional products, but they are priced well below old-
luxury goods or super-premium.

5
GROUP 7

Key Dimensions of Luxury Purchase Intention

People buy luxury brands for primarily for two reasons, Intrinsic (For Self) & Extrinsic (For
Others). Based on extensive literature review, the group has followed the framework presented
in the study ‘Factors Affecting Luxury Purchase Intention’ by Jain, Khan & Mishra (2015) [11]
which gives a holistic view on luxury purchase intention by providing valuable insights on
various intrinsic and extrinsic factors that affect luxury purchase intention. The integrated
conceptual framework presented in the study gives a complete view of the determinants of
luxury purchase intention. Factors are classified in 4 broad categories: Cultural Orientation,
Intrinsic Factors, Extrinsic Factors, and Resources, which is then applied to the Theory of
Planned Behaviour given by Ajzen in 1991, to determine the key factors of luxury purchase
intention which is represented in the figure below. This framework will be used to gain detailed
understanding regarding luxury consumer behavior and accordingly formulate effective
communication strategies to penetrate LV better in India market.

Figure 1: Conceptual Framework based on an Extension of The Theory of Planned Behaviour

Cultural Intrinsic Factors Extrinsic Factors Resources


Orientation
Hedonic Value Status Value Income
Individualism /
Quality Value Conspicuous Value
Collectivism
dimension Susceptibility to
Materialistic
normative influence
Value
Uniqueness Value

Perceived
Attitude Subjective Behavioural
Norm Control

Purchase
Intention

Purchase
Behaviour

6
GROUP 7

Scope of Luxury Market in India

According to the report of Deloitte in 2018 titled ‘Global powers of luxury goods 2018’ [9],
India after a year of an economic slowdown is stabilizing and is consolidating gains from recent
reforms and elections. The report states that the forecasts for inflation and economic conditions
are good, with the prospect of general macroeconomic stability. The report also states that “the
increased economic status for the country is sufficient for an increase in aspirational urban
consumers with higher disposable income to invest in luxury products.” In India, the luxury
goods sector is still in the early stages of development, having slow but constant growth, hence
presenting many opportunities for luxury brands. A major challenge in the Indian market is to
gain the government’s support; another challenge is the high import duties levied on luxury
goods, which constitute a barrier to price parity with other countries.

Idiosyncrasies of Indian Luxury Consumer


Hennings, Wiedmann, Klarmann & Behrens (2013) mentioned: “to follow a long-term
strategy, understanding the consumers and their fundamental differences in the perception of
and motivation to buy luxury brands is critical.” [14] Therefore, we focused on learning about
the behavior of Indian Consumers for a luxury brand. In an additional study by Jain & Khan (
2017) on ‘Measuring the impact of beliefs on luxury buying behavior in an emerging market’
[12] they tested the applicability and validity of TPB in explaining consumer behavior
concerning the purchase of luxury fashion brands in emerging markets like India.

The study suggested a modified TPB model which revealed that Normative Behaviour has a
direct impact on the Indian consumers’ actual Purchase Behaviour toward luxury goods.
Additional being a collectivist society, reference group plays an important role in the consumer
decision-making process in India. It implies that positive word of mouth can have a viral effect
on Indian consumers. The study also suggested that there is an insignificant relationship
between Purchase Intention and actual luxury Purchase Behaviour. The implication is that
marketers need to introduce new luxury goods and emphasize on affordable luxury so that the
upper-middle-class population can turn their dreams into reality. The study lastly demonstrated
that luxury buyers in India are young, upwardly mobile, well-educated, and high earning
individuals. Females were dominating the Indian Luxury scene.

India has a strong tradition of craftsmanship, which is magnified when it comes to luxury
consumers as they already have a fine taste of excellent craftmanship. Puddick & Menon, in
‘Contemporary Lustre’ in the book ‘The Luxury Market in India: From Maharaja to Masses’
(2012) [13] set some ground rules for luxury brands’ engagement with Indian consumers:

 First, value-conscious shopping is ingrained in Indian culture. Indian luxury consumers


are willing to pay more for a luxury good but, they are unashamedly value-seeker, and
hence they will shop around for the best value for money goods.
 Secondly, culture plays an important dimension. Wedding is considered to be one of
the touchpoints with luxury.
 Lastly, they do not like to buy luxury good in India itself.

North Indians – conspicuous, whereas South Indians – subtle.

7
GROUP 7

Louis Vuitton’s Marketing and Communication Strategies


Louis Vuitton is a well-established brand which deals with items in the orbit of fashion space.
Founded in the year 1850, Louis Vuitton has been able to construct a good brand name amongst
its fellow competitors like Gucci, Chanel, Hermes, and Vertu by creating an amalgamation of
handmade craftsmanship with the least possible mechanization. Louis Vuitton has been able to
position itself synonymous to quality products due to maximized productivity.

Coming to the one major P’s in the marketing mix, that is the product, Louis Vuitton has been
successful in taking an initiative of hiring specialized workers who design the best products
that are beyond imagination in terms of its intricate beauty. Instead of using mechanization is
its products which can be replicated in the cheaper market, LV can overpass this obstacle. As
the company is majorly popular for its handbags and splendid watches, Louis Vuitton deals
with items such as leather goods which is made authentic leather. They also engage in Jewellery
and designer shoes, briefcases, belts, scarves, and wallets and has hired fresh young designers
to attract the millennials and younger generation of buyers.

Louis Vuitton is extremely inclined to its distribution policies. The fact that they manufacture
exclusive products, it is very evident in the way they are sold. One needs to reach to its
personalized stores to buy products. Their sale occurs through limited channels which provide
exclusive distribution. They do not offer the sale of its products through any departmental
stores as they are of the mindset that the ambiance plays a major role in which only their stores
can provide. They also state that their sales professionals can do the best job in tackling the
customers who generally have a high profile as the stores are located in prime locations.

Price is a major factor how Louis Vuitton plays well to maintain its position in the Luxury
market. The prices are quoted in a way that only elite customers can afford it. It states that they
pursue a value-based pricing system as they feel that the customers not only buy the exclusive
product but also the social status that they carry along with it. The Louis Vuitton products are
a style statement which makes the customers pay an enormous amount for it. When it comes
to promotions, Louis Vuitton has created a network of promotions through endorsements done
by celebrities and fashion shows. They have also been involved in sponsorship activities of
mega sports events like motorsports and yachting. Louis Vuitton has made ads which are
individual and fashionable. In India, Louis Vuitton also hosts multiple parties and meetups with
the elite influencers and loyalists. Louis Vuitton has multiple ways of connecting with its target
group, the major one being word of mouth and person to person advertisement as the brand is
well known. They also endorse their core values and high fashion themes in their ads. They use
their monogrammed canvas and brand logo instead of their whole name as it is easily
understood by the public. They streamed fashion shows, which were once exclusive to the
fashion world and now to everyone. They have been successful in attracting the wealthy
consumers towards it and also put out their motto of “less is more.” Because of the pull strategy,
the consumers themselves get portrayed as walking advertisements which are like role models
to the society holding the Louis Vuitton merchandise. This creates a demand for such goods;
the concept of conspicuous consumption being highlighted the most and creating business of
the company. Their messages to the public are never loud and flashy; rather, they are clear and
targeted messages which help them maintain their status as a luxury brand. The Louis Vuitton
stores in India hosts elite parties and meetups at the launch, re-launch and new collection

8
GROUP 7
events. Celebrities from movie stars to designers like Jahnvi Kapoor and Pernia Qureshi have
been a part of this glamour stud events. The posts are majorly posted by the celebrities and
bloggers rather than from any Louis Vuitton Instagram handle. The bloggers also post their
latest collection in their posts. This strategy states that the invitations to such events are
exclusive, and their customers are their brand ambassadors. They do not need flashy and
attention-seeking posts at their end to advertising at the store level. Their followers and loyalists
do the work

Louis Vuitton’s Marketing Mix is explained through the 8P’s of marketing, as mentioned by
Rohit Arora (2010) [15], in his article with the same name. According to the article, these 8P’s
are the pillars of luxury brand marketing. The 8P’s are as follows:

1. Performance
2. Pedigree
3. Paucity
4. Persona
5. Public Figure
6. Placement
7. Public Relation
8. Pricing

Performance:

LV is hiring specialized workers who design the best products that are beyond imagination in
terms of its intricate beauty and radiates elegance and creativity. Their products give a sense of
class and timelessness

Pedigree

The pedigree of a brand refers to the heritage and history of the brand. LV’s mystique is
carefully built around the exceptional legendary founder character of the past, making up an
integral part of the brand story and brand personality.

Paucity

LV try to maintain the perception that their products are scarce by launching exclusive products
at a very high price range. LV also uses tactical-driven paucity, such as the limited editions or
the special series to generate artificial desire and demand. Since, easy accessibility of luxury
brands can cause dilution of luxury character.

Persona

The persona of a luxury brand is largely a result of, first, its distinctive projection plus
coherence of its applications across consumer touchpoints and, second, the brand
communication through its advertising. LV’s persona is based on travel and exploration with
all their communications revolving around that theme. LV remains focused on adventure and
exploration across their touchpoints to generate a genuine affinity with LV that transcends
beyond the product to an extent where the consumers feel that they have found a soul mate.

9
GROUP 7
The brand launches travel-inspired collections, uses messaging focused on adventure and
exploration, releases video city guides, and does most of its ad filming in exotic locations.

Public Figure

Most brands use public figures or ‘celebrity endorsements’ somewhere in their promotion as a
way to increase the awareness and status of the brand. The type of person chosen to endorse
each brand must be in keeping with the theme. Famous actors like Jennifer Lopez, Kate Moss,
Scarlett Johansson, and Uma Thurman have been associated with LV as its ambassadors, and
they have featured in the high-profile campaigns for this brand.

Placement

LV has three stores present in metro cities of India, namely Banglore, Mumbai, and New Delhi
[16]

Public Relations

LV gain positive publicity through hosting elite parties and meetups at the launch, re-launch,
and new collection events. Celebrities from movie stars to designers like Jahnvi Kapoor and
Pernia Qureshi have been a part of these glamour stud events. The posts are majorly posted by
the celebrities and bloggers rather than from any Louis Vuitton Instagram handle. The bloggers
also post their latest collection in their posts. One other way of public relations that LV uses is
sponsoring mega sporting events like yachting and motorsports.

Pricing

Price is a major factor how Louis Vuitton plays well to maintain its position in the Luxury
market. The prices are quoted in a way that only elite customers can afford it. It states that they
pursue a value-based pricing system as they feel that the customers not only buy the exclusive
product but also the social status that they carry along with it. The Louis Vuitton products are
a style statement which makes the customers pay an enormous amount for it.

10
GROUP 7

Marketing Strategies for Deeper Penetration in Indian Luxury


Market
From the exhaustive literature review, we could see that female is dominating the luxury space
[12], and thus, Louis Vuitton can target the ‘independent’ female consumer or Hostess
specifically through their communication strategies to increase their market share.

Based on the literature review on the key dimensions of luxury buying intention, we found out
the importance of 4 broad factors: Cultural Orientation, Intrinsic Factors, Extrinsic Factors, and
Resources.[12]

Puddick & Menon, in their article ‘Contemporary Lustre’ in the book ‘The Luxury Market in
India: From Maharaja to Masses’ (2012) [13] stress on the importance of heritage for an Indian
luxury consumer. Wedding being a social occasion of deep-rooted traditions have utmost
importance for Indian luxury consumers, being a social occasion, it can have a huge influence
on the extrinsic factors of the Indian consumer. Puddick & Menon additional states that the
Indian consumers love celebrations, and an Indian spends one-fifth of their wealth accumulated
in a lifetime on a wedding. At times like this, luxury consumption is a badge that they wear
proudly.

Since LV is not doing anything specifically for the wedding industry, for deeper penetration,
LV can introduce an exclusive curated collection of bridal trunks and shawl. The exclusive line
can feature luxury luggage, cashmere shawls, jewelry trunks, beauty and watch cases and also
a special whiskey and flower trunk. The product should reflect the core values of the brand and
must be of excellent quality and craftsmanship.

Culture exerts a strong influence on consumer’s beliefs, attitude, subjective norm, perceived
behavior control, and luxury purchase intention [12]. For India, Cultural Orientation is an
important factor as it affects all three factors of TPP strongly. India being a collectivist society,
they buy luxury goods to enhance social status and to achieve group acceptance. As people in
collectivist society give more importance to others’ opinions, hence referral groups play a
critical role in decision making. LV should emphasize on the importance of the reference group
in their advertising and promotions to influence the consumer in purchasing the product. One
way is by organizing ‘Page 3 parties’, LV can organize parties, and invite local socialites, well-
known business executives, and Bollywood celebrities. This will result in positive media
coverage and word of mouth in the right social circles and create a sense of hype in the
mainstream media.

Consumers can develop a favorable attitude to LV by designing creative promotional activities


like fashion events and exhibitions, fashion magazines, and blogs. Indian editions of
international publications such as Robb Report, Vogue, GQ, Harper’s Bazaar or Indian ones
such as verve have a large readership in metro cities and can be leveraged to convey their brand
story. Additionally, fashion events in India attract high participation form designers and buyers,
for example, Mumbai’s Lakme Fashion Week, which is organized by IMG. LV can do their
new product launch of bridal collection through a fashion show which will also attract good
PR for the brand.

11
GROUP 7
Since Bollywood stars have a deep impact on consumers’ mindset, what film stars wear is
tracked and emaluated by thousands of fans and make fashion news in glossies and gossip
columns in tabloid across the nation. Celebrities like Aishwarya Rai & Anushka Sharma can
be roped in to endorse LV’s new line of bridal trunks and shawl.

Luxury goods market is very limited and is consumed by only a fractional part of the
population. LV being part of LVMH group has access to data of the consumers of their group’s
different brands and can leverage its database to design a direct and database marketing using
sophisticated tools for data analysis and extracting valuable consumer insights.

Research shows a linear relationship between social media followers and luxury retail sale;
another report states that 80% of sales are digitally influenced and hence, LV should strengthen
their digital presence to penetrate better in Indian luxury market. Also, Indian consumers love
browsing for goods before purchasing, and digital media can be leveraged to facilitate this
desire. While designing the digital campaign, LV should follow the 7C’s of creating high
impact digital consumption experience, namely Content, Customization, Customer Care,
Communication, Community, Connectivity & Convenience.

12
GROUP 7

References
[1] https://www.vogue.co.uk/article/louis-vuitton

[2]https://www.spottedfashion.com/2013/10/09/art-and-fashion-the-many-collaborations-for-
louis-vuitton-by-marc-jacobs/

[3] http://www.fundinguniverse.com/company-histories/lvmh-mo%C3%ABt-hennessy-louis-
vuitton-sa-history/

[4] https://www.forbes\\][po09.com/companies/louis-vuitton/

[5] https://expandedramblings.com/index.php/louis-vuitton-statistics-facts/

[6] https://medium.com/global-luxury-goods-management/pros-and-cons-of-louis-vuittons-
social-media-marketing-fe334cd9bee1

[7] https://goodonyou.eco/how-ethical-is-louis-vuitton/

[8] https://r.lvmh-static.com/uploads/2014/11/lvmh_environment_2017en.pdf

[9] Deloitte (2018). Global powers of luxury goods 2018: Shaping the future of the Luxury
Industry. Retrieved August 12, 2019, from
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Consumer-Business/cb-
global-powers-luxury-goods-2018.pdf

[10] Silverstein, M. & Fiske, N. (2003). Luxury for masses. Harvard Business Review, 81(4),
48-57.

[11] Jain, S., Khan, M.N., & Mishra, S. (2015). Factors affecting luxury purchase intention: A
conceptual framework based on an extension of the theory of planned behaviour. South Asian
Journal of Management, 22(4).

[12] Jain, S., Khan, M.N. (2017). Measuring the impact of beliefs o luxury buying behaviour
in an emerging market: Emperical evidence from India. Journal of Fashion Marketing &
Management, 21(3), 341-360.

[13] Puddick, M & Menon, P. (2012). Contemporary Lusture. In: Atwal, G. & Jain, S. (eds)
The Management, 21(3), 341-360

[14] Hennigs, N., Wiedmann, K., Klarmann, C., & Beherens, S. (2013). The concept of Luxury:
A global Phenomenon with local implications, The European Financial Review.

[15] Rohit Arora. (2010). 8P’s of Luxury Brand Marketing, BPG bates in Dubai

[16] Retrieved August 12, 2019, from https://eu.louisvuitton.com/eng-e1/stores

13