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Business Management Case Study

The success of Louis Vuitton's Business Model in the Japanese Luxury Market

Louis Vuitton's (LV) success in the Japanese luxury market may be attributed to LV's

business strategy, which appeals to the country's penchant for extravagant displays of wealth. By

its likely impact that customers would fit in with an elite club as if they were members of the

French aristocracy if they bought LV brand products, the company demonstrated that it

understood the wants and demands of the Japanese culture. LV's domestic competitive advantage

lies in the quality of its products and the efficiency with which its management practices are

carried out. Additionally, the company has succeeded in markets worldwide thanks to its strictly

implemented controlled network allocation and high-quality offerings. As part of the quality

control process, the weighted bags were lifted and dropped repeatedly, and the zipper was

opened and closed 5,000 times to ensure smooth operation. In addition, the product's durability

against fading is evaluated using UV light.

Opportunities and Challenges of Louis Vuitton in the Japanese Market

Opportunities and challenges exist in any business. Over half of all Louis Vuitton goods

made worldwide reached Japan, accounting for 55 percent of the company's 2004 revenues. Even

when the rest of the world was feeling the effects of the crisis of 2008-2009, the Japanese luxury
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market was strong and expanding. They helped LV attract affluent, middle-aged women. Other

growth areas for the firm include a children's line, an e-commerce platform, and a ready-to-wear

line.

Although Louis Vuitton has found great success with its limited edition line of handbag

designs, the brand must remember that behind every achievement stands a set of difficulties.

Louis Vuitton's competitors' attempts to undermine its limited-edition success piqued the interest

of the masses in ripping off its luxury brand, opening the floodgates. Among its marketing

strategies, this led to customer doubts. While Japanese customers account for at least 20% of

total sales for the top 10 transnational luxury brands, and as there are more than 600 locales in

Japan selling luxury items, the corporation must compete with its pricing while maintaining the

quality of its products. How would they pull it off, given that knockoffs of high-end items are all

the rage these days, reducing Japan's economic importance? Louis Vuitton would be wise to

adapt to customer needs and market fluctuations without jeopardizing their reputation for quality.

Specifics of the Japanese Fashion Luxury Market

The high quality and lavishness of Japanese clothing are well-known worldwide. This

market is notoriously tricky due to the abundance of established competitors. In addition to Louis

Vuitton, other LVMH-owned luxury brands, including Bulgari, Chanel, Coach, Gucci, Salvatore

Ferragamo, Tiffany & Co., and others, have strong demand in Japan. 54 Louis Vuitton boutiques

can be found across the country of Japan. Despite its supposedly communist society, Japan is

often considered to have the world's highest per-person expenditure on luxury goods. This was

due to the widespread belief among Japanese women that material wealth is a prerequisite to

beauty.
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Entry of Louis Vuitton in the Japanese Market and Strategies Adopted to Strengthen its

Presence

To enter the Japanese market, Louis Vuitton first relied on department shops to sell a

single item from its collection rather than teaming up with a local distributor. It was the first

international luxury brand to launch shop-in-shops in Japan when a vendor set up shop inside the

physical location of another business. To create a French sense of luxury in Japanese partners,

the company provided them with a shop design inspired by its flagship locations in Paris. This

would allow the company to control the sales staff, inventory, pricing, etc. In addition to their

use of a luxury distribution strategy, they have also implemented strategies like expanding

beyond the borders of Japan, releasing a limited edition line of products, recreating new LV

handbags with smiling blossom designs, and coming up with a monogram line inspired by the

cherry blossom fruit and flat monogram called Cherry Blossom. The celebrity endorsement

tactic, as was Marc Jacobs' 2003 collaboration with Japanese artist Takashi Murakami, was used.