Louis vuitton in japan Marketing Mix

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 - 4 P’s (and 4 C’s)

1.Product(Customer Value) – Luxury GoodsoLuxury trunks, leather goods, ready-to-wear, shoes, watches, jewelry.oQuality Products-Louis 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-1980- economic boom in Japan / “Vuittonmania” / 20 million women owned

a LVbag-LV sold over 5 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 1 “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 3 Luxury fashion are highly demanded in Japan Question 2 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 4 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

5 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 “group-oriented 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 self-worth 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