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1.Product(Customer Value) – Luxury GoodsoLuxury trunks, leather goods, readytowear, shoes, watches, jewelry.oQuality ProductsLouis Vuitton focuses on constant improvement of quality and offers lifetime repairguarantees for its customers.oProduction and Quality ControlMost manufacturing plants are in France (i.e. 11 of 13 factories for bags)Leather raw material comes from North European cattle.Thorough quality control measures to test products.oPartnership with local artist and Limited Edition products has demonstrated thatproduct lineup and innovation are very strong parts of LV’s business model in Japan. 2.Price(Cost to Customer)oThe norm for luxury goods, including LV products, has been high prices, even duringrecession time.oIn essence, the Louis Vuitton difference isVALUE, not price.
Louis Vuitton in Japan – Case Analysis Marketing Mix - P’s (and C’s) 1.Product(Customer Value) – Luxury GoodsoLuxury trunks, leather goods, ready-to-wear, shoes, watches, jewelry.oQuality ProductsLouis Vuitton focuses on constant improvement of quality and offers lifetime repairguarantees for its customers.oProduction and Quality Control-Most manufacturing plants are in France (i.e 11 of 13 factories for bags)-Leather raw material comes from North European cattle.-Thorough quality control measures to test products.oPartnership with local artist and Limited Edition products has demonstrated thatproduct line-up and innovation are very strong parts of LV’s business model in Japan 2.Price(Cost to Customer)oThe norm for luxury goods, including LV products, has been high prices, even duringrecession time.oIn essence, the Louis Vuitton difference isVALUE, not price 3.Place(Convenience for the Buyer) – Japanese Luxury MarketoLV in the Japanese Market-1977 – opening of 1stLV store in Japan-1980economic boom in Japan / “Vuittonmania” / 20 million women owned a LVbag-LV sold over million units of the classic leather monogram bags each yearoEntry into the Japanese Market-LV was the 1stmultinational luxury house to open its own shop-in-shops in Japan,without the help of Japanese distributors It established its own subsidiary andexported products from France to Japan.-LV first entered Japanese market through department stores w/ a single brand of itsportfolio.-1981 – LV opened its first retail store in Tokyo.By 2007, LV controlled 54 stores through a directly owned shop network in Japan Louis Vuitton in Japan International Marketing Cody Coovert, Jessica Kelley Mandi Ontis, Scott Swaggart, Shawnee Viets Louis Vuitton in Japan Introduction Early 19th Century Luggage Designer Louis Vuittons brush with destiny/dynasty Founded Louis Vuitton in 1854 “The Father of Modern Luggage” Question “the cult of the luxury market” Pressure to possess luxury status-driven brands Convinced these customers that they belong to a privileged club Owning LV items associated with being on top of social totem pole Question Luxury fashion are highly demanded in Japan Question 45% of luxury goods produced worldwide end up in Japan 55% of Louis Vuitton’s revenues came from Japanese consumers in 2004 The Japanese luxury market stays healthy and continued to grow throughout the 2008-2009 worldwide recession Question Who knows what a shop-in-shop is? Where a brand owner or retailer takes space in another retailers store and makes space to sell their product Distribution from France Exclusive distribution strategy "In which focuses on offering products through only one wholesaler or retailer in a particular market" Presented by: Louis Vuitton (suitcase from 1890) Louis Vuitton First international location: London, England Continued international expansion for a century Known for Quality and Prestigue Celebrity Placement Audrey Hepburn in film “Charade” LVMH 1987-Moet Hennessey and Louis Vuitton create worlds largest and most prestigious luxury conglomerate Moet Hennessey World Class Champagne and Brandy What has made Louis Vuitton business model successful in the Japanese Luxury market? What are the opportunities and challenges for Louis Vuitton in Japan? What are the specifics of the Japanese fashion market? How did Louis Vuitton enter into the Japanese market originally? What were the other entry strategies it adopted later to strengthen its presence? Will Louis Vuitton have any new challenges arise due to the global financial crisis? How does it overcome the new challenges? Question Quality, Luxury, Vuitton 54 Louis Vuitton Stores 34 Bulgari stores 37 Chanel stores 115 Coach stores Highest Luxury Spending Per Capita in the world Collectivist Culture 252 Stores of LVMH Group 49 Gucci stores 64 Salvatore Ferrgamo boutiques 50 Tiffany & Co boutiques Understanding the wants and needs of the Japanese culture Geert Hostede Status hierarchy in their “grouporiented culture” Individualism for Japan is 46 Not high as we expected Japan does show characteristics of a collectivistic society Not so much as other Asian countries China at an Individual rate of 20 Putting the opinion of the group over the opinion of an individual Strong sense of shame for losing face $3.4 billion in annual sales (2004) Efficiency of their management practices Strictly controlled distribution network Emmanuel Matheiu (the head of industrial operations) Efficient in productivity, design and manufacturing Quality control = Quality Products National competitive advantage "Built a reputation with regards to an aspect of producing a product" Louis Vuitton: World Wide Successful Company Louis Vuitton: Growth By 1997, the company owned two stores in Japan with annual profits of US $10 million The establishment of LVMH Louis Vuitton’s major player in their success Setting the tone and practices of the brand LVMH had grown at least 16 percent in 2003 Resulting in their shares doubling in price More than $75 dollars per share Hides from the Northern European cattle Relatively fewer blemishes Many extensive test in the laboratory: Mechanical arm hoists and weights for durability Opening and closing the zipper over 5,000 times UV rays for fade testing Quality Assurance Wealthier families and older women with more purchasing power Ready-to-wear collection Louis Vuitton Internet business Louis Vuitton children's line Opportunities Opportunity or Challenge? “Limited Edition” handbag designs Great success However Challenge: Flood of mass-market interest would rob brand of prestige Over exposure of “limited” edition Confuse customers whether or not this a "marketing ploy" Geert Hofstede: Reinforces this perception Japan Uncertainty Avoidance at 92 (Very High) Challenges Competition 20% or more of total revenues of the top ten multinational luxury brands comes from Japanese consumers Over 600 luxury store locations in an area the size of Montana Competing with prices, while keeping up the quality Other Challenges Mass counterfeiting of all types of luxury products around the world Reducing the dependence of revenues on the Japanese market As the demand and market changes Louis Vuitton will have to change with it without damaging their brand image For the purchase of illegal products Booming Economy History: Harsh economic times of early to mid-nineteenth century Protectionist policies limited trade and import of luxury items were punished with hefty fines Post WWII Liberalization of goods Purchase of "prestigous" Western goods embodied the rapid success of the economy Became an obsession to purchase luxury items “The Japanese way of consumption was different from the Western one” (Page 8) "Japanese women have a psychological need to own something considered to be beautiful" Long Term Orientation of 80 well exceeds the LTO of US and France May influence the Japanese society to be more impulsive in buying "They think as their life as a short moment in a long history of mankind" Take advantage of the short moment Reliance on Japanese management Unique architecture Few rules and regulations Entice Japanese customers and make them enthusiastic to shop for their products Guerilla marketing approach to build a new extravagant pop-up store in the heart of Tokyo’s large fashionable districts Rigid social orders has made Japanese: Strive to find their place in the hierarchy of their society "They are part of a new social protocol where your identity and selfworth are determined by the visible brands on your body” (Chadha, Radha, and Paul Husband) Geert hostede: The Masculinity score of 95 for Japan reinforces the fact that their society is driven by competition “You are what you wear” Culture Introducing “limited editions” Marc Jacobs teamed with Japanese artist Takashi Murakami in 2003 Re-create new version of LV handbags with smiling blossom designs Designed the Monogram Cherry Blossom line Trendy motif inspired by the fruit of the cherry blossom New Marketing Strategies Change in consumer preferences Japanese women market Value of money Smaller purchases Christmas of 2008 New challenges and overcoming them Strategy tools SWOT analysis THREATS: Challenges Looming economy factor Forced to lower prices Lower prices means less revenue Increases competition Demand was still present, just shifted Brand loyalty may stray Counterfeit products Difficult to differentiate Weaknesses: Challenges Heavy Japanese market reliance Over 50% of profits came from Japan Plays on maintaining control with the global crisis Being a multinational company, global issues have a larger impact September 11th attacks Opportunities: Overcoming the Challenges Slumps in the luxury market Always rebounds Bag rentals Still profiting Still upholding brand image Strengths: Overcoming the Challenges Strong presence While reliance is classified as a weakness, presence serves as reinforcement Brand positioning Prestigious products Highly regarded and high focus on quality Ties into how well-established Louis Vuitton is as a whole Celebrity endorsement Superflat Monogram