Professional Documents
Culture Documents
SEMESTER-3
The Louis Vuitton brand and the LV monogram are among the world's most valuable
brands. According to a Millward Brown 2010 study, Louis Vuitton was then the world's 19th
most valuable brand, and was estimated to be worth over US$19 billion. For six consecutive
years, Louis Vuitton was number one of the 10 most powerful brands list published by the
Millward Brown Optimor's 2011 BrandZ study with value of $24.3 billion. It was more than
double the value of the second ranking brand.
Louis Vuitton is one of the most counterfeited brands in the fashion world due to its image as a
status symbol. Ironically, the signature Monogram Canvas was created to prevent
counterfeiting. In 2004, Louis Vuitton fakes accounted for 18% of counterfeit accessories seized
in the European Union.
The company actively seeks to eradicate counterfeiting, and employs a team of lawyers and
special investigation agencies to pursue offenders through the courts worldwide. The company
allocates approximately half of its communications budget to counteract counterfeiting of its
goods. LVHM, Vuitton's parent company, has described "Some 60 people at various levels of
responsibility works full-time on anti-counterfeiting in collaboration with a wide network of
outside investigators and a team of lawyers." The company closely controls the distribution of its
products. Until the 1980s, Vuitton products were widely sold in department stores, such as
Neiman Marcus and Saks Fifth Avenue. Today, Vuitton products are primarily available at
company-owned Louis Vuitton boutiques, with a small number of exceptions noted in upscale
shopping district or inside luxury department stores. Company boutiques within department
stores operate independently, and are operated by company managers and employees. LV has an
official online store, through its main website.
(Louis Vuitton)
Spear and Roper (2013) introduce in their article a recent area that may be considered when
managing a brand. This area is the corporate storytelling, which could help to build a positive
corporate reputation among stakeholders and, as Abratt and Keyn (2012) stated, “A positive
corporate reputation can be a strategic resource, which gives an organisation a competitive
advantage”.
According to Wilkins, 1978; Witherspoon, 1997; Kaye 1995., corporate storytelling is the
process of “developing a message that creates a new point of view by using narration about
people, the organisation, the past, visions for the future, social bonding and work itself.”
Dowling (2006) states that if the story transmits the desired attributes, then it will probably
improve the overall corporate reputation, defined by Brown et al., (2006) as a stakeholder’s
perception of the organisation.
Barnes (2003) developed the storytelling process by giving essential features for a successful
corporate story, as shown in the following figure:
(Rpoer, 2013)
But Louis Vuitton also uses stories in its advertising, focused on travelling and adventure.
But, how does counterfeit affect Louis Vuitton? According to Arghavan Nia Judith Lynne
Zaichkowsky (2000), counterfeit makes an impact in the brand equity and lower the image. This
is why Louis Vuitton has a legal department focused only in counterfeiting, with an annual
budget of €15 Million (Forbes, 2015) and, according to Klara (2009), Louis Vuitton developed
its well-known monogram for deterring copying. Louis Vuitton led 13.000 legal actions against
counterfeit in 2004 (Louis Vuitton, 2016) and the company informed the customers that their
brands are only available on the exclusive Louis Vuitton shops or in their website as a way to
prevent customers to being misled.
(Zaichkowsky, 2000)
Marketing Mix
The 4 Principles or 4P’s of marketing mix of LV can be classified under product, price, place
and promotion. Following are the 4P’s of LV:
1. Product
Louis Vuitton is a brand that deals in the manufacture and sales of specialized products.
The main emphasis of the company is on the premium quality of the goods. In order to
supply the best imaginable products the company has always concentrated on the designs
that are intricately created and artisanship that is traditional as well as simply exquisite.
Instead of using machines to increase their production the company has taken a step
backwards by hiring specialized and expert workers. This has resulted in unique and
original merchandises that closely resemble the aspirations and imaginations of the
consumers. In order to tackle the market of counterfeit goods the company has paid a lot
of effort in the design itself, & therefore it is not easy to imitate its products.
All the goods and designs are registered to counter fake goods. The portfolio of luxury
goods that the company deals in includes items like leather goods that are made from
hundred percent original leather and exclusive ready- to-wear clothes line that are
designed with utmost care and are hundred percent original. The company is famous for
its handbags and beautiful watches.
The buyers also covet the glittering jewelry and designer shoes. Louis Vuitton also offers
a range of eyeglasses, briefcases, scarves, belts and wallets. In recent years, the company
has hired new, young and talented designers to attract the young generation of buyers.
2. Price
Louis Vuitton has made handsome investments to maintain the rich quality of its
products. The contemporary designs of the products have helped the company to
maintain a premium pricing policy. Louis Vuitton employs a policy of integrity pricing
strategy throughout its distribution network.
Therefore, it does not believe in reducing the actual price of any of its product and does
not offer either sale periods or discounts. As the prices are very high, only the elite or
As the cost price of the products is actually much higher because of its uniqueness,
material and quality the value of the product simply results in premium pricing. A Louis
Vuitton product is actually a style statement and hence, the customer is happy to pay the
exorbitant prices. The perceived value of Louis Vuitton is very high, so in the case of
Louis Vuitton products the consumers feel that they are receiving the value even though
the price paid is high. Thus, the high value based pricing strategy of the company is apt
for the consumers.
3. Place
Louis Vuitton is very clear in its distribution policies. Its products are highly exclusive
and sold with the same mindset of providing exclusive accessibility. To purchase a Louis
Vuitton product the customer has to reach its personalized stores. The sale of these items
is through limited channels of exclusive distribution. The company is of a set and
preconceived mindset that allows them to use its own outlets for product distribution.
They do not sell any of their branded products in departmental stores. They feel that they
have the best possible options to sell their products in their own stores, as their
salespersons are highly professional with a keen mindset to tackle the customers in an
intimate and warm environment. In the long term, this marketing strategy helps in the
reduction of intermediary costs that other brands face while selling through long channels
of distribution. This also results in direct dealings with the customers that lead to efficient
and friendly relations. All its stores are located at very high profile and prime locations.
Products in these stores are prominently displayed keeping in mind the latest
fashions. Louis Vuitton has opened its outlets in different parts of the globe and they
have at least three hundred retail outlets. This includes stores in Los Angeles, Dubai, Las
Vegas, New York, Paris and Tokyo. Online purchase of Louis Vuitton products is
possible only in the United States.
4. Promotion
Louis Vuitton has employed a promotional strategy for its products with the help
of celebrity endorsements. Famous actors like Jennifer Lopez, Kate Moss, Scarlett
Johansson and Uma Thurman have been associated with the brand as its ambassadors.
They have featured in the high profile ad campaigns for this brand. Louis Vuitton has
These events are attended by mostly the elite society and by associating with these
events; the company has made a direct link with the target audience. Advertising is the
main tool to create awareness about the product and keeping with its illusion of
exclusivity the company has managed to make ads that are really individual and
fashionable.
Although the company does not advertise on television but it does follow a policy of high
profile advertisement in newspapers and fashion magazines. These ads are all about
exclusively handled images that leave a distinct mark on the public.
This demographic strategy has created waves in the advertisement industry and helped in
making the goods popular throughout the globe. Most of the advertisements revolve
around the celebrities and this is to create an emotional connection of the consumer. The
customers believe that they are also a part of this exclusive group.
The Segmentation, Targeting and Positioning (STP) strategies followed by Louis Vuitton is as
follows:
Okonkwo (2007) states that brand extension on luxury products is everywhere and that it is
really important to “extend a luxury brand from fashion to lifestyle”. He also highlights the
importance of having a clear and concrete positioning in the market before launching a brand
extension, warning that a brand extension could help the company to grow, but the risk factor is
certainly high. (Okonkwo, 2007)
Companies launch brand extensions for different reasons; According to Moorthi (2003), brand
names are used as an implied measure of quality
sometimes, therefore, a customer will buy a brand
extension of LV just because the parent brand is well-
known as a quality brand. Kapferer (2012) states that a
brand extension increases the visibility of the parent
brand, and Verma (2002) adds that a brand extension
brings clarity and helps to strengthen the brand´s image.
But there are some disadvantages of brand extension.
C.Viot (2007) ensures that a brand extension represents a
massive risk for the parent brand because the brand
image can be weakened. Aaker (2004) states that a
disaster which cannot be controlled by the firm can
occur, and, the more extensions the brand makes, the
more risk it faces. He also introduces the term of
“cannibalization”. Cannibalization occurs when the
extension sales increase while the sales of the parent brand decrease.
Louis Vuitton has launched brand extensions during the last decades, transferring its name from
the main product (handbags) to jewellery, perfumes, clothing and accessories. According to
Luxurydaily.com (2016), since luxury branded perfumes and accessories are less expensive than
handbags and clothing, more customers are able to buy them. The result is that more people feel
like they are being part of the brand experience. According to the same source
(Luxurydaily.com, 2016), this strategy is beneficial for luxury brands, since more customers will
be loyal to cosmetics and perfumes, endowing a constant income to the company during
recession times.
(Kapferer, 2012)
According to Catry (2003), the consumer tastes are homogeneous around the world because of
globalisation. Chadha and Husband (2006) state that companies that bring to customers these
homogeneous characteristics become leaders of the industry (Reddy, 2016)
Brand Equity
Aaker (1996) defines brand equity as “a set of assets (and liabilities) linked to a brand´s name
and symbol that adds to (or subtracts from) the value provided by a product or service to a firm
and/or that firm´s customers”. He also explains that brand equity is a set of assets that all
together generate value.
According to Roberts, (2013, 2014), Louis Vuitton suffers from a loss of brand equity in China,
basically because of the over-exposure. To solve this issue, LV applied a strategy to control
expansion by incrementing the sales of non-logo items (Roberts, 2013, 2014).
All 3 brands predominantly use leather and other animal skins to craft their bags. Louis Vuitton
handbags and luggage pieces contain elements that are painstakingly hand stitched and then put
together by mechanized processes to increase productivity. Gucci bags are constructed similar to
Louis Vuitton bags while Hermès bags are completely hand stitched.
The 3 brands retail their products mainly on high streets, in exclusive shopping malls and online on
the brands’ official websites. By choosing to sell their items directly to consumers via limited retail
channels, the luxury brands can also control product quality and pricing.
Bespoke Services
Louis Vuitton offers bespoke services, such as the personal engraving service on hand luggage
pieces. By offering consumers the choice to personalize and customize their wallets, bags and other
leather goods, Louis Vuitton effectively boosts its brand appeal amongst consumers who wish to
differentiate their leather goods to suit their personal tastes.
These bespoke services allow the luxury brands to maintain the notion of exclusivity that nobody has
it, and maintains their premium image in the luxury goods market.
Focus on Heritage
Louis Vuitton was founded in 1865 in Paris and is one of the oldest luxury fashion houses in world.
Louis Vuitton prides itself on its rich heritage and culture as a longstanding brand, and expresses its
rich history in all aspects — timeless product designs, interior decor of Louis Vuitton Maisons
around the world, Espace exhibitions and advertisements.
Consumers currently think of luxury brands such as Louis Vuitton and Gucci as “tainted by the
common touch”, as they are becoming more ubiquitous. This causes the dilution of the brands’
exclusivity. Apart from the bespoke services previously mentioned, Gucci and Hermès do not
Focus on Creativity
Apart from selling luxury fashion goods, Louis Vuitton also delves into art and architecture. Louis
Vuitton encourages consumers’ appreciation of art in hopes that consumers will embody creativity, not
only in their personal fashion sense but also in every aspect of their lives. Escape Louis Vuitton Tokyo
and Escape Cultural Louis Vuitton in Paris serve as exhibition places for stunning architecture and new
contemporary artworks created by young talents around the world. The “Louis Vuitton – Marc Jacobs”
exhibition in Paris also serves as a place to showcase the designer’s creative expression. Lastly, the Louis
Vuitton Art Wall allows people from around the world to express their creative personal fashion styles
and serves as “aspirational role models”.
(Meiyeeseah, 2013)
Global Strategy
The current rise and domination of the Louis Vuitton Moët Hennessy Empire in the luxury
brands is not merely a coincidence or luck but rather something achieved through its unique
strategy that set Louis Vuitton apart from other brands. Louis Vuitton’s core principles highlight
the elements of uncompromising quality, exceptional craftsmanship, the value of art and the
protection of heritage. These elements are strongly incorporated in its’ long term sustainable
strategy and can be seen in its marketing mix 4Ps.
Product
Price
Place
Promotion
Product
Price
Place
Promotion
Lastly, with its long history of arts patronage, Louis Vuitton has successfully associate the brand
with art by having sponsored several exhibitions, including its own Louis Vuitton Art Talk
Series discussion and many CSR activities with arts are the main driver.
For years, Louis Vuitton has focused more on product design, craftsmanship and image than on
the processes of keeping their stores stocked. When new designs caught on, they often run out of
stock, and Louis Vuitton often was ill-prepared to speed up production and distribution.
Vuitton executives grew intrigued with the lean production process developed by Japanese car
makers, which enabled their factories to react quickly to changes in vehicle orders. The Japanese
approach seemed to offer a way for Vuitton to shift production to the handbags that were selling
best, senior Vuitton executives say. The “zero-defect policy” of the car makers — all problems
are supposed to be corrected before cars left the factory — also seemed appealing.
The reorganization extended beyond the factory floor. A distribution center in France used to
send products directly to Vuitton’s stores around the world. Now, the company is building a
global distribution hub outside of Paris that will ship to six regional distribution centers: two in
Japan, two elsewhere in Asia, one in the U.S. and one near Paris for European orders. Within a
week of a product launch, stores around the world feed sales information to France and
production is adjusted accordingly.
In addition, According to Straits Time (1 Feb 2013), Louis Vuitton is planning to slows down its
expansion plan and focus on high-end products in order to preserve its exclusive image. The
company mentioned that as the brand has got a large footprint worldwide, it might become a
little too commonplace, hence this decision is made to protect this luxurious brand. It is reported
that the brand has got more than 460 stores in more than 50 countries, generating more than 7
million euros in annual sales.
(Meiyeeseah, 2013)
Louis Vuitton is effectively applying the new concepts and models in order to run a
successful luxury brand. We´ve seen some issues the brand has when talking about
counterfeiting, and how it affects to its brand equity; but the company has found the way
to fight against counterfeiting successfully.
The luxury sector is suffering multiple changes nowadays. Louis Vuitton is managing
this change relatively effectively, as the brand is still getting adapted to the Asian market.
Louis Vuitton will face a lot of new challenges during the next years, due to the dynamic
environment and the entrance in emerging countries. As I see it, the brand should try to
adapt as fast as possible to the rapidly changing customers, in order to be successful in
the future. There is an opportunity as well, the company could target a new segment of
the market: Millennials, a generation with influence and more disposable income. It will
be important to the company to keep fighting counterfeiting; since is one of the main
issues that affect the brand equity as seen before.
Okonkwo, U. (2007). Luxury fashion branding. 1st ed. Basingstoke: Palgrave Macmillan.
Reddy, M. a. (2016, 2 7). How Not to Extend Your Luxury Brand. Harvard Business
Review.