Louis Vuitton in India

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.

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.

Sociocultural: In the recent years, the desire to appear wealthy has attributed to the increased popularity in luxury products. Also, the desire for luxury goods was promoted by effective advertising and TV programming that promoted conspicuous consumption to middle-income consumers. Middle-income consumers also tend to “reward” themselves with luxury items.

The following case analysis will assess Coach Inc. and its strategy in the accessible luxury brand goods market. The coach strategy focuses on its luxury rivals in matching key quality styles while offering it at a cheaper price. The company offers most products at a 50% off discount price less than other brands which gives them a competitive advantage pertaining to its customer base. Coach marketed its products to middle –income consumers desiring taste of luxury, but also affluent and wealthy consumers with means to spend considerably more on a handbag (Gamble, 2012. P.C-73) .The Company also has several other strategies such as to increase global distribution, improve same store sales productivity and continue its multi-channel business model which includes indirect whole sales to third party retailers but also focuses on direct consumer sales. Coach has done well in the luxury goods industry but the companies profit margin is still below the levels achieved prior to the onset of a slowing economy in 2007 ( Gamble, 2012. P.C-73.The Company had experienced a decline in sales as they are unsure if the company recent growth could remain constant and maintain their competitive advantage with other successful luxury lines Michael Kors, Salvatore Ferragamo, Prada and Dolce & Gabbana.

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.

It is hard to imagine that after the financial crisis swept across Europe, many great transitional enterprises had to face collapse and bankrupt while the luxury goods industry become more prosperous. Recently, the French luxury goods group LVMH announced their recent business condition. The volume of the first week in October had incredibly increased by 12% the previous week. The Hermes Corporation also said that in order to meet the increasing number of market demand, it would open 15 branch stores in the latter half of the year. These aroused some fierce debates, the public held a skeptical opinion towards the questions: How can the luxury companies maintain their positions? Why didn’t they strike down by financial crisis?

Louis Vuitton is considered under the luxury goods industry. The luxury goods industry is a high profitable industry with low outside threat. There are only few large players in the industry and they server to the wealthiest people in the world. The luxury companies have high power to control the price so they have ability to grow sustainably.

Maintenance of the brand image is always the fore most important factor for the luxury brands in order to sustain in the market. is very critical. Therefore, of all the criteria mentioned above, we have determined the brand image is the most important criterion on which we will base our recommendation.

Conclusion: Overall, the global luxury goods industry still has high potential to growth sustainably in the future. Since the market of this industry is worldwide, companies’ revenues will not largely affected by a single country or region. The important thing is to keep the balance of expansion between different countries. Companies should also be carful about increasing production effectiveness while retain the heritage value of the brands.

The overall sales of luxury goods in the year 2009 is expected to be more than US$150 billion and Asia contributes 10% to it. The concept of luxury is now not confined to only to Europe and US, the Asian subcontinent contributes majorly to it, with India and China as the newly emerging markets. Professor James Twitchell (2002) comments on the democratization of luxury and the changing consumer psychology These new customers for luxury are younger than clients of the old luxe used to be, they are far more numerous, they make their money far sooner, and they are far more flexible in financing and fickle in choice. They do not

Louis Vuitton Moet Hennessy, a luxury goods provider is looking to expand their brand dominance in Asia. In order to expand successfully LVMH must evaluate challenges that may arise and get in the way of their successful expansion. In the Asian market, LVMH must deal with political and cultural uncertainties, the threat of counterfeit products, and the increased cost of products in Asia compared to France.

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.

On the other hand, the large market potential has drawn a host of luxury-goods companies to enter the China market, which makes the competition fiercer and fiercer. And it is troublesome for LV that there are plenty of fake goods imitating LV’s style prevailing in China, which are actually not likely to reduce LV’s high-end consumers, but would exert negative influences on consumers’ impression and awareness of LV.

As such, LVMH has steered much of the focus of its central brand eastwards, to an area where consumers have more disposable income than ever and are ready and willing to embrace the influence of their Western counterparts – China. All the while, the company makes no substitute for quality by bringing the very same products to the Chinese market, making no concession in pricing, treating the Chinese market as that of a developed country, where demand for the service provision on offer from LV is growing faster than anywhere else.