Essay about Lvmh and Luxury Goods Marketing

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LVMH and Luxury Goods Marketing

1. Bernard Arnault has built LVMH into a luxury goods empire by making numerous acquisitions. Describe the strategy is being used here? Discuss why you agree or disagree with this type of strategy. If you disagree, what alternative tactics would you use?

Actually Mr. Bernard Arnault, one of the richest men in the world who took control of LVMH in 1990, has been snapping up luxury brands during past two decades one after another. He has build LVMH into a luxury good empire by conducting a selective acquisition strategy with which I agree. Now LVMH has more than 60 brands under control and is still pursuing some others including the old famous family business; Hermes.

LVMH structure is made up of
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Bernard Arnault has made LVMH into the word biggest luxury brand by adopting acquisition strategy and creating cost, corporate and management synergy between divisions of the group.

2. How do LVMH executives adjust prices in response to changing economic conditions, and why?

In response to changing economic conditions, LVMH executives adjusted prices in sepcific ways in each market. In Asian markets, Patrick Choel, president of the perfume and cosmetics division has increased wholesale prices in order to discourage discount retailers from selling the products to consumers at low price. Instead, he has reduced the advertising budget to offset profitability in case the company faces a decline in sales. In countries where LVMH faced currency devaluation, managers raised the price to counteract the effect of currency depreciation. In Indonesia, the chairman of Vuitton, Mr. Yves Carcell canceled the plan for opening a new store.

Since Japan market is sluggish and there has not been a sign of soon economic recovery, Japanese consumers are reluctant to invest in stock market. Mr. Arnault figured out the difference between Japan where most of his business is, and the rest of Asia. He noted: “Japan is in a growth slump, but it isn’t going to have the same difficulties as Korea or Indonesia”. Japanese had not many other spending option and

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