Louis Vuitton

Louis Vuitton Abstract This paper explores two published articles that report on the success of the luxury brand products for Louis Vuitton. This paper highlights the history and accomplishments of Louis Vuitton as a globally recognized brand and how it’s one of the most popular brands in the world due to its high-profile goods. This paper will identify from our textbook (Dess et al., 2014) how the company is successful through customer segments, pricing and distribution, and suppliers for the product. This paper lays out the major issues the company is facing in growing in today’s market. This paper shows you the strengths, weakness, opportunities and threats of Louis Vuitton. It also shows you the success of the company throughout the years with expansion into new markets and staying loyal to its high-end quality. This paper concludes with ways the company can better increase its business strategy to compete with competitors and the increase in cost of the market. Keywords: Louis Vuitton, luxury brand, high-end, goods  Table of Contents Abstract ……………………………………………………………………………………...……2 Introduction…….………………………………………………………………………………....4 Major Issues of Louis Vuitton….………………………………………………………................5 Internal and External Analysis………….…...…………...…………………………………......5-7 Recommendations…………………………….…………………………………………...............7 References ………………………………………………………………………………………...8 Introduction The company was founded by Louis Vuitton Malletier. He was born in 1821 in Anchay, France. He moved to Paris when he was 16 years old and took up a job as an apprentice trunk maker. “In 1854, he opened his own company and over the next four years went about redesigning the trunk.” (Dess et al., 2014, C166) He created a flat-top trunk with flat hinges that was stackable and suitable for long trips. The customers loved the unique designs of his blue and red striped canvas that other competitors were unable to copy his design. It allowed for Vuitton’s business to be very successful. He had three rules he followed, which were to master his savior faire, to provide excellent service to his customers, and to innovate continuously. Later after Louis Vuitton’s death, his son Georges Vuitton inherited the company. “He invented the five-number combination lock found on the trunks even today.” (Dess et al., 2014, C166) George also created the Louis Vuitton signature logo to increase counterfeiting facing the company at that time. George also designed hundreds of purses and helped Louis Vuitton gain global expansion. The company faced hardship after the second world war and had a family member Henri Racamier brought in to help the company. “Racemier discovered that the majority of profits in the value chain were being retained by merchants. “(Dess et al., 2014, C166) He began pushing for rapid global expansion by opening 95 stores. He also started acquiring companies that produced high quality products. This allowed for revenue to grow to nearly 1billion US dollars by 1987. Louis Vuitton is now one of the leading luxury goods companies in the world. The company operates through six business segments: fashion and leather goods; selective retailing; wines and spirits; perfumes and cosmetics; watches and jewelry; and other activities and holding companies. (LMVH, 2017, pg.4) It now has a brand value of 28.8 billion dollars as of 2017. Major Issues of Louis Vuitton Louis Vuitton is one of the world’s most valuable luxury brands in leather goods, handbags, trunks, shoes, watches, jewelry, and accessories. It has seen rapid growth in both Europe and the US. However, they also started to see rapid growth in China. “In 2011, the sales in mainland China had grown by 30 per cent, in euro and constant exchange rate terms” (Dess et al., 2014, C167) Wealthy customers in China traveled worldwide. Because of their loyalty for Louis Vuitton, they not only bought luxury goods at home, but across the globe as well. This helped to continue the growth rate of Louis Vuitton, but was the growth rate sustainable? Brands like Gucci and Chanel were making their way into the luxury brand market as well. Chanel has a wide-range of products like Louis Vuitton in handbags, perfume, shoes, and accessories. “Chanel was also ranked higher than its competition in terms of brand quality, customer experiences, and social status by high income earners.” (Dess et al., 2014, C175) Gucci manufactured and distributed leather goods, ready-to-wear apparel, and fragrances. Most of its products were manufactured in Italy. “The brand was making significant efforts to reduce distribution through resellers and also making efforts to limit merchandise offered at discount prices.” (Dess et al., 2014, C175) So how was the company able to continue its global recognition to rise on top? Internal and External Analysis One of the greatest strength of Louis Vuitton is their brand recognition. “LVMH sells its products under a portfolio of strong brands operating through a multi-brand concept. The company owns 70 brands” (LMVH, 2017, pg.25) This allows them to have a large brand awareness. Customers know when they invest in Louis Vuitton products that they are getting exceptional quality. One reason is because “many of the companies, especially at the higher end of the market, designed and manufactured their products in-house.” (Dess et al., 2014, C169) This allows Louis Vuitton to ensure the supplies being purchased met the required quality standards. Another strength is customer loyalty. Customer desire exclusive products backed by brands that were based on heritage and tradition. “The customers looked for excellent craftsmanship, the use of high-end materials, and an excellent buying experience.” (Dess et al., 2014, C168) This leads to pricing and proper distribution of the products. “The highest prices were reserved for limited edition products or bespoke, made-to measure-offerings.” (Dess et al., 2014, C169) Louis Vuitton is strong in its pricing strategy by pricing high enough to invest in great quality, but low enough to still be attractive over competitors. “LVMH is engaged in diversified businesses both in terms of business segments and geographies.” (LMVH, 2017, pg.26) This allowed for Louis Vuitton to control their production and distribution in order to ensure a level product quality and experience to justify their higher prices for their products. One major weakness for Louis Vuitton is counterfeit or knock off brands of their products. George Vuitton tried very hard to ensure the Louis Vuitton logo was original; however, over the years fake imitations of the products have started to surface. This hurts the brand reputation and also hurts sales of the products if customers are willing to accept fake brands over the real ones. This also leads into a threat for the company because it allows for more competition to enter the market, which hurts the growth share of the company. “In each of its geographic markets, the company faces significant competition from global and regional branded apparel, perfumes, cosmetics, watches, and jewelry companies.” (LMVH, 2017, pg.28) This means opportunity is important for Louis Vuitton to stay true on its brand quality and competitive pricing to ensure it keeps its strong customer base. One opportunity for the company to get more involved in other revenue streams like Sephora or ecommerce platforms. They can market into a more diverse customer base to target people with affluent lifestyles that stay up to date with the latest fashion trends. Recommendation Louis Vuitton needs to continue to builds its brand on providing quality products and luxury brands. They need to continue to create a diverse market profile by branching into other revenue streams that stay with the generation. An active lifestyle is huge right now and a potential for them to branch into athletic wear and accessories. Louis Vuitton never offers discounts on their products; however, to continue sustainability in its products it would allow for a larger customer base to invest in their product if they did occasionally offer a discount. They need to continue to market and stay ahead of competitors in fashion trends over well-known brands like Gucci and Coach. Innovation into the future is key for Louis Vuitton to continue to grow and appeal to a younger generation. Natural product quality in their brand will help to attract the younger generation who are more environmental conscious in not buying leather or harmful chemicals in their products. Lastly, they need to continue growing their customer experience in making sure they listen to the feedback of customers to ensure they understand what the customer wants. References Dess, G., Lumpkin, G., Eisner, A., & McNamara, G. (2014). Strategic management: Text and cases (7th e.d.). New York, NY: McGraw-Hill Education. LVMH Moet Hennessy Louis Vuitton SA. (2017). 1-35. Louis Vuitton 7 Louis Vuitton 1