Louis Vuitton Case Study

Case Study:
Nabila Gharmadyuti - 29119167

Suryanti Rahayu - 29119108
Gia Pijar Perdana - 29119215
LOUIS VUITTON in INDIA
Louis Vuitton Milestone
Founded in Paris by Louis Acquisition spree Had 2,048 stores worldwide
Vuitton
Targeting heritage brand 71885 employees, Sales
For 7 decades remained a revenue € 16.5 billion, net profit
single product brand of €2.3 billion
handmade leather bag
1987 2000
1854 1990s 2007

Merged with Moët Hennessy Own over 60 brands
Moët Hennessy, a French wine Business segments:

maker of 1743 vintage merged - WIne & spirits
with Louis Vuitton & form - Watch & jewelry
LVMH Group - Perfume & cosmetic
- Fashion & leather goods
LMVH’s Fashion & Leather Goods Segment in 2019
What Makes Louis Vuitton thrived in Europe
The general attitude toward luxury in the The Perception of Luxury

region where aristocratic form the ruling
elite
US: for all, about Europe: for chosen few,
feeling special about feeling exclusive
Europe and United States were to become
the two largest consumers of luxury
products.
European luxury brand did not have price

point strategy
American luxury brand have price point

strategy
Louis Vuitton projecting itself as a
luxury brand with a distinguished
heritage and not a fashion brand that
changed with the time
- No promotional sales and discount
- Sell max 5 item to one customer at a time to
avoid parallel reselling
- Same merchandise in all stores
- Generate over half of the group profit
Louis Vuitton Brand Value vs Other Luxury Brand
Louis Vuitton Entering India
To sustain double digit growth rate, LVMH

planning to enter new market beyond the
traditional orbit of Japan, Western Europe, & the
US
In 1999, the company started working toward a

formal entry to India
Why India?
In the late 19th century, Indian Maharajas flooded

the small factory of Louis Vuitton in Paris to order
custom made leather bag & interior for their Rolls
Royce
The orders from Indian Royal Families, among other

wealthy customer help Louis Vuitton survive the
great depression of the 1920s
The rich in India were flying to London, Dubai,

Singapore, New York, and Paris to shop because
there was nothing available in India for them to buy
The Challenge in India
87% of the population in India lived on an income

less than $2.5 a day, it will not be hospitable for a
luxury brand
There was macro management issue:
- High custom duties for imported luxury brand

(30%-70%)
- The federal government didn’t allow foreign
direct investment in a retailing ventures
- An official ban on imports of leather product,
until it lifted on 2001
LV’s Market Size in India
● High-net-worth Consumer with

annual incomes of more than INR
100 Million
● The Cocooners → undergoing their
incomes level & spending habits,
have potential becomes their loyal
customer
Customers - LV was trying to connect with the new elite
● Start-ups owners in technology;

manufacturers; services
● CEOs in their 30s or 40s
● Non-residents Indians
● Small and medium retailers
● Big brand franchises
● Bollywood actors
● Politicians and bureaucrats
3 categories of luxury consumers
Buying Behavior
● Buying of luxury habits in India Personal

Concept of
influenced by exclusivity luxury
● If there is a clear gap between the

affluent buyers they are willing to
pay the premium ones Luxury
Product as
● Purchase decision was driven by: a
● Gratification reward
● Social Assertion
● Oneself consumption
Young
consumers
Indian Launch - 2003
Potential Market for Future
● Economy had been on a growth

path.
● Indian middle class expected to
grow 583 million
● 51% Population below 25 Years old.
● Over 5,500 companies listed on
stock
● 200 had more than $1 billion
capitalization
● The number of household categorized as near rich, clear rich, sheer rich, and super rich was
growing progressively
Typical LV Stores
● Had in Boulevard, ensuring brand value of exclusivity

● 382 Store worldwide in luxuring plazas housing high-
ends brand with premium aura
Problem in India
● Did not have high street to provide symbiotic clusters

of luxury retailers
● Few speciality store with nationwide chains (focus on
lifestyle)
● The infrastructure was not ready to receive global
luxury retailers
● Location was a major limiting factor.
The Power of Luxury Hotels
● Opened first India Store at the Oberoi Hotel in New

Delhi, in 2003. With only 3000 square feet. Before
Dior and Gucci Joined it.
● Second store in Taj Mahal Palace and Towers Hotel
(luxury and heritage Hotel) in Mumbai in 2004.
● First store in China in the basement of The Palace
Hotel
● Had a tradition of opening store in Luxury hotels in
Asia, Peninsula in Hong kong, The Oriental Bangkok,
The Metropole in Hanoi.
Courting the Potential Market
● Promotional brochures, special invitation

for exclusive gathering, personalized tours
in company’s private museum near Paris.
● Did not rely on conventional media, but
using Viral Marketing, largely on referral,
and word-of-mouth. Help sales requisition.
● “Special Order” customized to specific
Individual design New Delhi and Mumbai
become center for “Special Orders”.
Luxury Mall
Federal Government’s Role
● In 2006, government allow 51 % ownership by a

foreign enterprise in local retail venture. Only for
“single”-brand.
● Several real-estate entrepreneurs were planning to
develop luxury mall, without experience on Luxury-
Mall Management.
Countries without Luxury Retail Cluster (LRC)
● Luxury Mall as an alternative. Rented a space by mall

operators.
● Limited opportunities to design and layout the stor,
and little control over neighbours.
● Not guarantee the quality of footfalls (window
shopping)
Conclusion
In India (2009)
● Indian first luxury mall was to open in New Delhi in a few month (2009), 130 brand, of which
about 70 were global brands.
● Plan to develop at Mumbai, Kolkata, Bangalore, Chennai, and Hyderabad.
● New customer segment (nouveau riche): taste for the good life and feel for a lifestyle.
Current Condition (2020)
● Currently, at India, LV has 3 stores. 2 Luxury Fashion House/Mall in New Delhi (DLF Emporio)
and Bangalore (UB City), that means the concept works In India.
● Sales have grown 41% from 2017 to 2019.
● The market of luxury goods in India strengthening, estimated $8 Billion, and growth 18 %
through 2023.
Source: https://insideretail.asia/2020/02/21/louis-vuitton-india-sales-and-profits-surge/
DISCUSSION QUESTIONS
1. Why Do People Buy Luxury Goods
● Word Luxus that means: indulgence of the sense regardless cost.
● Tiffany Wien from BBC: Seeking the Ultimate Experience, Feeling Good (will
make happy), Flashing the Cash (Signal of Successful)
● Rob Walker, New York Times’ Contributor: Buy Less, but Better.
● Leo Eisenberg’s Book, Creative Director of Esquire: The Romantic Shopper,
may buy something because of emotional and appeal.
Source: https://www.bbc.com/worklife/article/20171006-the-psychology-behind-spending-big
https://marker.medium.com/why-people-buy-luxurious-things-in-the-middle-of-a-financial-crisis-93cdc52dae63
Why Do People Buy Luxury Goods
2. LV is a high-end product and India is a low-income economy, can this dichotomy be
reconciled
● With the expected projection of India’s growth of annual income, luxury goods manufacturer in India
are highly optimistic.
● Young adults enter job market every month and offers potentially unrivalled demographic dividend
● The country’s consumer is vast, with growth prospects, by a young demographics and burgeoning
middle-class
● Indians higher income earners (30s-40s), will driving consumers growth shaping examples of
optional spending and interest for luxury goods.
References: https://blog.euromonitor.com/inside-indias-high-growth-luxury-market/
3. External factors hindering the purchase of luxury goods in India?
● E-influencers making a mark: social media is now an effective, today’s consumer trust words
of mouth more than company’s advertisement
● Environmental concern: lately some luxury goods have pledged to be fur free. Some of
millenials are now particularly conscious with the environmental issues . An ongoing report
by Mastercard uncovered that about 70% of purchasers in India offer significance to 'green'
and 'ethical' while making their buy. Consequently, luxury brands need to advance to lure Gen
Y who long for maintainable produce.
References: https://retail.economictimes.indiatimes.com/re-tales/luxury-in-india-the-way-forward/3357
4. Why do luxury goods marketers form retail clusters?
● Marketers with the same market segment locating their stores close to each other to locate themselves
near the center of their potential customer population and attract the greatest amount of customers.
● The agglomeration effect derives from the firm’s incentive to locate close to competitors to capture
more consumers. People often prefer to go to multiple shops, such as when trying out clothes, and
therefore may prefer to go to concentrations of similar shops.
As explained by Jonathan Becher of SAP: If a retailer opens a new location away from the current clustering,
there are two potential results:
1. It will fail to capture enough consumers and eventually close.

2. It will become successful, causing competitive stores to locate nearby.
5. Why do certain luxury brands look for store locations in
luxury hotels?
● To attract the five-star guests as the potential consumers

● High average tourist spending on shopping
● To maintain the brand values as luxury as the hotels
● Currently many luxury fashion company including LVMH also invest in hospitality
business, there was a cross-pollination with the high-end fashion customer and the
high-end hotel customer.
The future of luxury will not only be in luxury goods, as it’s been for many years, but also in luxury
experiences, and we want to be in both segments,” - LVMH chief executive officer, Bernard Arnault,
Mar 2019
6. How does a luxury mall work for luxury goods
marketers?
● Window Shopping and Footfalls are the two key problem faced by luxury mall,
even for standar shopping mall. Here are the suggestion:
- Knowing the conversion rate, then we could decide the strategy.
-Knowing Unique Selling Proposition to make our brand recognized.
● Customer Care/onfloor staff in store is very important

● Mall management should provide sign and attractive/interactive tech on the floor.
● Maximizing Digital Marketing, Create exclusivity (VIP treatment), Tell about Brand
Heritage, Online experience (images on pinterest or Instagram)
References: http://www.mediazest.com/luxury-brand-store-marketing/
https://www.indianretailer.com/article/operations/marketing/7-excellent-tips-to-convert-window-shoppers-into-potential-buy
ers.a6021/

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Case Study:

Nabila Gharmadyuti - 29119167

1854 1990s 2007

Moët Hennessy, a French wine Business segments:

The general attitude toward luxury in the The Perception of Luxury

European luxury brand did not have price

American luxury brand have price point

To sustain double digit growth rate, LVMH

In 1999, the company started working toward a

In the late 19th century, Indian Maharajas flooded

The orders from Indian Royal Families, among other

The rich in India were flying to London, Dubai,

87% of the population in India lived on an income

There was macro management issue:

- High custom duties for imported luxury brand

● High-net-worth Consumer with

● Start-ups owners in technology;

● Buying of luxury habits in India Personal

● If there is a clear gap between the

● Economy had been on a growth

● Had in Boulevard, ensuring brand value of exclusivity

● Did not have high street to provide symbiotic clusters

● Opened first India Store at the Oberoi Hotel in New

● Promotional brochures, special invitation

● In 2006, government allow 51 % ownership by a

Countries without Luxury Retail Cluster (LRC)

● Luxury Mall as an alternative. Rented a space by mall

Current Condition (2020)

1. It will fail to capture enough consumers and eventually close.

● To attract the five-star guests as the potential consumers

-Knowing Unique Selling Proposition to make our brand recognized.

● Customer Care/onfloor staff in store is very important

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