Supply Chain Modelling & Analytics Assignment

Overview
01 Mission, Vision and Louis Vuitton History

The Japanese Market

02 The Luxury Market Of Japan, Rise of LV in Japan, The Crisis

Agenda The Vuitton Analysis

03
SWOT Analysis

Strategy
04
Adapt to changes, Positioning Of Map, Marketing Mix

Solution
04
Potential Risk, Minimizing The impact of potential Risk, Conclusion
 An Overview
This case study deals with the opportunities and challenges of LV Japan, a top player in the European luxury fashion
Industry, taking into account the unique features of brand management, integrating culture and consumer behavior.

• International, well-established brand mostly

famous for its craft work leather bags and
trunks
INTRODUCTION • Established in France in 1854 by Louis
Vuitton

To represent the most refined qualities of

• One of the oldest French luxury fashion
houses
Western "Art de Vivre" around the world
MISSION LOUIS VUITTON
STATEMENT HISTORY
• Foundation

• The Modern Age (Gaston LV)

• 21st Century (Marc Jacobs)

 Louis Vuitton- The History

INTRODUCTION GASTON LOUIS VUITTON MARC JACOBS

• Born in 1821 in Anchay, Jura, France. • In 1936, Gaston-Louis Vuitton took over. • In 1998, the American designer Marc

• In 1885, the firm opened its first • The company expanded its product line Jacobs was appointed as Louis Vuitton’s
overseas store in London, England, on by applying the craftwork and design of art director.
Oxford Street. its leather to small leather goods, such • He was a highly successful international

• In 1888, Louis Vuitton developed the as purses and wallets, and to its whole designer, the youngest fashion designer
Canvas Damier Pattern in order to make luggage line. ever to be awarded the industry’s
the Louis Vuitton experience unique and • The brand started its first advertising highest tribute, the Council of Fashion
recognizable by anybody. strategy by handing bags to Hollywood Designers of America (CFDA) award for

• The logo “marque Louis Vuitton celebrity actresses. Audrey Hepburn New Fashion Talent.
deposée,” meaning “mark Louis Vuitton carried a Louis Vuitton bag in 1963 in • He guided through Vuitton’s first shoes
deposited,” was also created. the film Charade and ready-to-wear collections.

• Died in 1892 • Since the late 1990s, creating limited-

edition collections had become Louis
Vuitton’s marketing strategy to capture
consumers’ attention and reinvigorate
the brand’s identity.
 The Luxury Market of Japan
Japan had been considered as one of the most glowing market for luxury brands. A group-oriented culture in which there was a real pressure to possess luxury status-
driven brands. The Japanese way of consuming cosmetics and luxury brands seemed more like a compulsory form of social expression. The Japanese young women
were more beauty-conscious which made them different from the western consumers.

Louis Vuitton in Japan The Crisis

 First multinational luxury house to open its own

 2002- Decrease in sales in
shop-in-shops in Japan.
 By 1977, the company owned two stores in Japan luxury item globally
with annual profits of US$10 million.  2009- Global economic crises
 1980 - 20 million Japanese women owned a bag of resulted in decline in sales
the brand.  Weak economy & a shift in
 1987- The establishment of LVMH was the major consumer preferences
player in their success, setting the tone and
 Different approaches were
practices of the brand.
 LVMH had grown 16% in 2003 resulting in their implemented in Japan
shares doubling the price. With $3.8 billion in annual  Price reduction & Market
sales, Louis Vuitton represented in 2004 about twice dilution
the size of its two main competitors, Prada and  Future challenges would be
Gucci Group’s Gucci division.55% of Louis Vuitton reducing its risky dependence
revenue came from Japanese consumers.
 2007- with the expansion the company controlled 54
on the Japanese market.
stores through directly owned shop network in  Future challenges would be to
Japan.. fight against replicas and
falsification of the Logo.
Case Analysis for the World’s Biggest Luxury Brand

Strengths Weaknesses

S W
• World's No 1 luxury brand
• • Expensive & exclusive
Successful advertising strategy
• • Unaffordable to average
Consumer Loyalty
• Recognizable brand and logo consumer
• Efficient management practices
• Quality products & lifetime
repair
SWOT
Analysis

O T
Opportunities Threats
• Change in consumer behavior (Japanese
• Constant innovation &
market)
support
• Over dependence on Japanese market
• Increasing demand for high
• Worldwide counterfeiting
fashion standards
• Highly competitive brands
• Socio cultural relations with
• Decline in sales due to global economic
fashion.
recession
 Strategy- Adopt to Change

Positioning Map

• Louis Vuitton had always been a trend-

setting brand strategist in Japan, a
country that revolved around tradition
and culture
• Louis Vuitton in Japan had to redefine its
strategy after 9/11.Adapting to and
understanding local customers.
• Adjust its approach and products to
reach local customers.
 STRATEGY- ADOPT TO CHANGE

Marketing Mix- Discussing the 4Ps for Louis Vuitton in order to perform best in Japan.

Product- Customer Value Price - Cost to Customer Place - Ease of access Promotion - Creating noise
• Luxury Goods - Luxury • High prices, even during • 1977 – 1st LV Store through Marketing strategies
trunks, leather goods, recession time. • 1980- economic boom in • Louis Vuitton cultivates a
ready-to-wear, shoes, • In essence, the Louis Japan / “Vuitton mania” / celebrity culture and employs
watches, jewelry. Vuitton difference is 20 million women owned famous models and
• Lifetime repair guarantee. VALUE, not price. a LV bag actresses (i.e. Jennifer
• Quality control measures • 1st multinational luxury Lopez, Madonna).
revolved around tradition house without the help of • LV uses print ads in
and culture Japanese distributors. magazines, and billboards in
• It established its own large cosmopolitan cities.
subsidiary and exported • Limited Editions: Marketing
products from France to Strategy
Japan. • The company increased ad
spending by 20 per cent in
2003 which only represented
five per cent of revenues,
half the industry average.
 Solutions

Potential Risk
• Loss of customers due to price sensitivity
• Reduction in sales (cyclical) i.e. people waiting for
promotion periods

Re
•

k
Increased cost incurred in running promotions

is
• Recurrent strategy i.e. Competitors imitating louis

co
lR
Vuitton brand strategy

mm
ia
nt

en
te
Recommendation
Po

da
Minimizing the Solutions

tio
 Expansion/ Diversification
impact of Potential  Should expand to smaller cities in Japan

n

Risks 
Consider alternative manufacturing sites
Collaborate with Japanese and other
neighboring countries to combat
• Superior innovative promotional ideas Minimizing the impact counterfeiting.
• The fashion industry should better collaborate of Potential risks  Tap more emerging markets rather than
with the Japanese and other neighboring country depending on Japan only
government to combat counterfeiting
• Increase rental option to minimize counterfeiting
• Instill more sense of belonging in the Japanese
citizens
 Conclusion

The impact of global recession to Louis Vuitton was a real threat to

Louis Vuitton’s luxury business in Japan since its products were
priced very high.
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.