Presented by : Kamal Sunita Pallvi
Company Profile
LVMH is the worlds leading luxury products group.
A $13 Bn group of companies with operations across
the world- 1,500 retail stores in about 60 countries.
A parent of around 50 sub-companies In 2004 40% of the sales is from Asian market. In early 1990s it decided to expand in China, South
Korea & India.
Industry Profile : Luxury Goods
The sales of luxury products were expected to rise by 3%
to 5%.
Shares in luxury companies tend to go up
Growing middle class is also buying designer goods.
26% of the worlds millionaires are in Asia
8% increase in GDP
Competition in the industry :
Gucci :
Well entrenched player in Europe and North
America.
Guccio Gucci originally started as a reseller of luggage
imported from Germany.
As of 2003, Gucci Group had 348 directly operated
stores.
Competition in the industry :
Richemont
It was the second-largest luxury goods company in the world.
Major player in Jewellery and Watches. Sales of watches and Jewellery accounted for 70% of total
luxury products sales in 2000.
Hermes
Relied on single-branded strategy. Products mainly clothing , fragrance and leather accessories. Japan accounted for 25% of its sales in 2000.
Competition in the industry :
Bulgari :
It operated in seven luxury segments including
watches, perfumes, jewellery etc. Substantial part of its revenue was from watches and jewellery Customers were mostly first time buyers. Asia pacific accounted for 36% of its sales.
Wines & spirits
Fashion & Leather
Watches & jewellery
Perfumes & cosmetics
Target marketing
LV uses demographic targeting strategy to target their customers
pricing strategy
Premium Pricing
Never on sale!! Price range: Handbags: $550 - $3,700 Wallets: $200 - $700
Promotion strategy
Advertisements
used famous models and actresses such as Jennifer Lopez and most
recently Madonna in its marketing campaigns
USSR leader Mikhail Gorbachev appeared in an ad campaign Many rappers like Kanye West have mentioned the company in songs
uses print ads in magazines and billboards .
In 2008, enter the world of television and cinema: the theme is Where will
life take you? is translated into 13 different languages
Tagline Some journeys can change mankind forever
Emphasize on personal selling Dont emphasize on sales promotion
Endorsements: Jennifer Lopez, Kate Moss, Uma Thurman, and Scarlett Johansson
Louis Vuitton Advertising Campaign
Expansion of LVMH in Asia
Declining trade barriers and trade tariffs in the luxury
goods market
Change in communication technology Capture growing Asian markets Perception of luxury brand as status symbol Growing number of tourists from Asian countries
Expansion of LVMH in Asia
26% of people having financial assets more than $1
million lives in Asia in 2003
Asian buyers accounted for 30-40% of sales of all
luxury clothing, handbags and watches
Less competition in luxury market Young rich population.
Japan :
There were 47 Louis Vuitton stores in Japan.
By 2003, Japan accounted for about 20% of Christian Diors
sales.
Had plans to increase it to 30% in the future. Tough competition from competitors like Prada.
China :
China a huge market and was expected to play a pivotal role
in the future of brands. significant 30%.
Annual growth rate of premium cosmetic market was a there were 9 LVMH shops. LVMH was trying hard to establish an efficient operating
model in China. Mainly concentrating on eastern and southern China. jewellery.
Area of focus are selling wines, perfumes, watches and
South Korea :
Even though small in size was a huge market for
luxury brands.
LVMH had 15 stores. Here the market was comparatively more stable and
secured from external threats.
The young age of customers in the Korean luxury
segment also represented a tremendous opportunity.
India :
LVMH launched its first store in India in 2003 Product brands from its watches and jewellery group-
TAG Heuer and Christian Dior.
Indias growing economy, its English-speaking
population, its improved social & political stability and
opening of the economy to outside investors attracted
LVMH to invest in India.
LVMHs major challenges are
To create a culture in India to shop luxury goods & make them
aware of the same .
Convince Indian customers who shop luxury brand to buy from
India.
To face huge competition in watch market
Issues and challenges
Political uncertainty and cultural differences: risk of new tariffs
Opposition activist group
Asian crisis spread of chicken flu
Depreciation of yen against dollar
Cultural influence of Asian region Cost efficiency Counterfeiting Distribution and pricing : Gray market
Recommendations
Should be available only in small quantities Focus more on TV add Can open up to Franchising with High end malls around the
world To be more distinctive from the competition concentrating its business model to production of leather goods only Venture into Untapped market- Mauritius, Madagascar Offer more economic lines to the consumer
Conclusion
Is leading name in luxury and style.
With its outstanding quality , its expecational beauty
lv offers to for the customer of the world only the best of the best Lv Great showcase and reputation and pride for france Macro & Micro economic variables favorable in Asian market Thus it should aggressively expand in Asia without diluting its brand identity
Describe some of the country- specific target market for luxury goods?
Japan:
They are big buyers of luxury brands.
Japan accounts for 33% of fashion and leather category.
20% of Christian Diors sale is from Japan The brand image is everything in Japan were there is
little difference between the rich and the poor. Large percentage of single, working women.
Should LVMH reach out to new middle- class customers who are willing to purchase luxury items?
Answer
Yes , if the purchasing power of the new middle class
increases then it is good for LVMH as the customers who can afford it increases .
But LVMH should reach this market segment
without tarnishing its brand.
They should not decrease the price of their products. Maintain only exclusive show rooms.
Describe the counterfeit business today. How is this affecting companies and businesses?
Answer
Counterfeiting is the illegal use of a registered trade
mark
Counterfeits affect the sales of brands by diluting the
brand identity
Fail to perform up to the expectations of the customers
How should luxury brand fight against counterfeiting?
Answer
Check on internet auction sites for the sale of
counterfeit products
Employ full time staffs to work with investigators and
lawyers to protect the brand
Push for better legislation against counterfeits
Thank you
