Essay about Louis Vuitton Moet Hennessy Case

This expansion demonstrates how the luxury industry is now run by massive corporations whose focus is only on growth, visibility, brand awareness, advertising, and most importantly, PROFITS! With growth and expansion, has come a decrease in quality and rarity. The luxury garments produced are mostly not handmade but are even outsourced to large factories in places such as China and Turkey. Also, to meet quarterly turnover projections, “designers churn(ed) out increasingly trendy collections of clothes, handbags, and shoes.” (Thomas, Pg. 246) With hundreds of new stores around the globe the surplus of designer labeled merchandise is immense hence, the proliferation of outlet malls.

For years, Louis Vuitton enjoyed high profit margins from the luxury market in Japan until other competitors such as Prada and Gucci entered the market. Counterfeiting also became a threat to the firm’s brand by satisfying consumer demand at lower prices. Other external global environmental problems included highly priced products, limited availability in stores only, and a heavy dependency on the Japanese market (Pearce & Robinson, 2013, p. 14-18). Moreover, “the after-shocks of the global recession were a threat to Louis Vuitton’s luxury business in Japan”, and Japanese women became less interested in the brand’s products (Pearce & Robinson, 2013, p. 14-18). Alternatively, Louis Vuitton could “reinvent itself and regain what used to be its well-attested

Meanwhile, some consumers were also attracted by the counterfeit products, which have the same design and considerable quality. The situation of LV in Japan seems to be fierce, however, with effective solutions, LV can also seize the opportunity to sustain profitability in Japanese market rather than just survive. As it is stated in the case that Japanese consumers had been holding the desire for inexpensive luxury products from Louis Vuitton. Therefore, to solve this problem and attract more customers, LV should strive to make “inexpensive” products by increasing the value of products, lowering the costs and prices, and finally creating high value for the consumers. As the scandal of counterfeit sold on the websites in 2008 led to a decline in the sales of Louis Vuitton products, it can be viewed as a valued opportunity for Louis Vuitton to establish its own business online since it can both add selling channels and empower the company to fight with counterfeiting.

From consumer’s perspective, the motivation of their purchasing high-end products is complicated. According to the report of Mintel (Academic.mintel.com, 2013), which showed that the reason why a large number of customs have purchased luxury merchandise in UK. There were 44 percent of female interviewees and 48 percent of male interviewees bought high-end goods due to the good quality. In addition, 31 percent of men and 18 percent of women consider the sophisticated technique

Most luxury brands have been family-owned or -controlled and, consequently, were single-brand firms for the most part. However, mergers and acquisitions have been growing in the industry, with LVMH leading the way. Our strategic recommendation is to follow LVMH’s lead and acquire a multitude of diverse companies to build the Gucci portfolio.

LVMH has a wide range of consumers from different backgrounds. It is imperative that they are aware of religion, race, culture, and buying habits in every country. For instance, worldwide people are more dependent on the Internet, signifying that the methods of how people purchase goods are changing.

In the luxury goods industry, the rapid development has brought the market more brands and the latest design products. Industry matures has caused the accelerated development of a wide range of luxury goods (Chiari, 2009). However, one thing was constant, no matter how much increased production costs, the large luxury brand of origin will not be transfer. Long cultural history is an integral part of the luxury brand, and the origin of products have also brought a certain cultural value for luxury goods (Heine, 2012).Especially for Asian consumers, it seems that in the far west, craft superb tailoring and rich cultural history of the western area are the pursue of Chinese consumers (Sombart, 2001).Louis Vuitton 's president has said that (2013), “when customers buy our products, they expect Western quality. The mystery of the origin of our brand is closely linked with our brand”. Although with the close of trade, many luxury goods in the production and sales process will cooperation with other country’s companies, the final product definitely launch in the country of origin. Gucci is a legendary brand in Florence (Italy), and it will also strictly control the production done in Tuscany (Italy), to ensure pure and high-quality products (Gucci, 2015). Therefore, a regional feature has brought an intangible value and more local cultural characteristics to the luxury goods.

One of the main reasons why Chinese customers prefer to shop abroad is the fact that it is seen as a better show off and also the prices tend to be lower due to the taxes that are applied for luxury products in China. No matter the fact that the sales of their products in other locations than China bring them important profits in Europe, LVMH is still trying to redirect the Chinese people to buy their products in China. One of the measures they took in this aim was to limit the number of leather products available on the LVMH European market and also limit the working hours in their stores in certain European locations such as Paris, which is one of the most wanted and perceived as the most preferred shopping destination.

This behavior brings competitive advantages to the European luxury brands. Moreover, customers in different countries have different purchase behaviors. For instance, some countries’ customers are willing to move away from common recognized brand, because they want to purchase more exclusive products. Furthermore, because of the increasing speed of globalization, people are more likely willing to travel between different countries. These travelers will buy luxury good during their trips. In fact, Chinese tourists contributed over one third of sales in Europe. The luxury goods industry should notice to adjust the actual demand between local people and tourists in Europe

Bulgari could provide strong support for Louis Vuitton Moet Hennessy Group to grab emerging market. Bulgari’s product has established the market abroad and held a place in emerging markets. Bulgari entered the Chinese market in 2003 and captured the largest market share rapidly, the selling condition ranked fourth in 2011. Bulgari owns a positive market foundation in the Chinese market that will assist Louis Vuitton Moet Hennessy Group to capture Chinese luxury market, especially the rapid growth of the watch and jewelry business, and as a fulcrum, leveraging the Group's overall business, and to this effect to enlarge the global competition with other luxury brands.At the same time, Louis Vuitton Moet Hennessy Group offer Bulgari more selling distributions and channels.On the other hand, in combination with Louis Vuitton Moet Hennessy Group greatly enhanced Bulgari’s watch and jewelry business, significantly improved its cosmetics and perfume

Risk is a core reason why other luxury goods companies, with an eye on a Hong Kong listing, have hesitated. Prada was bold in its listing strategy, and that has to be one of the biggest lessons. It is one thing to identify emerging Asia – and China in particular – as the sweet spot of luxury goods opportunity, it is another to act on it

Luxury brands are becoming more a more popular everyday. More people are spending more just os they can have the name brand look. Except, not many people really know what they are paying for. They don’t know where their two thousand dollar purse came from or who was the manager in charge of the person who designed the thousand dollar bottle of Champagne they just popped open on new years. Most people really don’t know who or what it takes to give them the finer things in life. The answer to these questions though is one company that has been striving in the light as the luxury company is LVMH. Moet Hennessy Louis Vuitton SA was founded in 1987 and now owns over 60 brands like Dom Perignon champagne and Bulgari jewelry. That is all people seem to know though, the luxury brands and not the organization behind it.

LVMH’s brand portfolio is a catalogue of the finest things money can buy. Arnault said, “A Star brand is timeless, modern, fast growing and highly profitable.”[iii] LVMH has positioned its brands strongly in the luxury segment offering more than 50 different brands under their five core competencies. LVMH has been successful through all of their various brands in their portfolio giving them each their independence and creativity. “LVMH is well known for leaving much operational and marketing freedom to the various brands it owns.”[iv] “LVMH has done an excellent job of brand positioning, says Ben Cavender, senior analyst at China Market Research Group. It has succeeded in securing the particularly enviable position of gaining a following among the top percentage of China’s wealthy. As the financial crisis stretches on, LVMH customers in China still have money to spend.[v] “LVMH’s brand imaging, which relies heavily on pushing its European heritage, is so successful that it has benefited other brands by proxy, says Paul French, one of the founders of Access Asia, a group dedicated to tracking regional consumer and marketing trends. “Everyone hangs on the coattails of Louis Vuitton’s brand imaging in China.”[vi]

The last problem we highlighted concerns how to increase the number of customers in the mainland China market . First, we believe that the most relevant issue is a survey amongst customers on the Shanghai Tang brand perception and the 5 luxury brands in their top-of-mind, in order to analyze the competitors that the company has to face in the future.

Emerging markets- The 2 biggest emerging markets for luxury fashion products are China and India, which is a great opportunity for the brand to explore and