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Copy of LVMH Marketing Project

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Rahul Nair

on 23 April 2013

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Transcript of Copy of LVMH Marketing Project

LVMH Marketing Assignment Sahil Aggarwal
Nausif Maknojia
Rahul Nair
Sahil Jakhar PESTLE Analysis Emergence into Asian countries International Presence Social Factors Technological Factors Political Factors Economic Factors Product Place Price Louis Vuitton Workforce age: increase in working class people.
Market age: increase - baby boomers are affluent
Trends: Fashion and innovation
Perception of Prestige Items: displaying vs. hiding wealth Recognized as a top luxury brand worldwide
Three main consumer nations - US, France and Japan. Environmental Factors Legal Factors Macro Economic Factors Waste disposal: adds to production costs
Energy costs: affects distribution costs
Carbon footprint: air pollution, large amounts of carbon dioxide released in wine production
Runoff and water quality: chemicals affect vineyards and grainfields, release chemicals LVMH -
Marketing Mix Future Recommendations Reflect a larger Asian influence in products and market to the growing demand for luxury products in Asia.
Non-core luxury businesses should be divested.
Build up current companies.
LVMH should establish its market in Asian countries like India and South Korea through its subsidiary brands which are affordable by the upper middle class population. Quotas: restricted quantities of imports; restrict sales and supplies
Labour law: may affect production and public perception, add to costs
Labeling and Product information disclosure: adds to production costs
Counterfeiting: reduces market share and prestige; adds to expenses LVMH: empire of luxury goods based in France
Product portfolio: over 60 SBUs/brands Stars: High market share, high market growth Luxury goods, high-end clothing, luggage
World's most valuable luxury brand ($25.9 billion)
Fashion = fast-paced industry Tag Heuer manufactures high-quality watches
well-established products
watches have high functional and emotional value Prestige pricing --> preserves luxury/high-class image Those who buy from LVMH = affluent consumers
Paying for brand name, synonymous with luxury and good taste (emotional value)
High price for high quality
Price inelastic --> higher prices don't matter
Lower prices = less prestige Fashion boutiques in urban centres
Unique retailers like Sephora
Department stores
E-commerce: high-quality sites to reflect products Use retailers as a channel of distribution Exchange rates: UK, US, Europe, Asia
Global economy: out of recession
Inflation rate: low
Interest rate: low
Availability of work force: more people means lower wages, fewer people means reduced production high-end clothing, fragrances, cosmetics
fast-paced industry Cash Cows: One of the world's largest champagne producers
Market is mature, products are timeless World's largest cognac producer (>%40)
Well-established in the market Hennessy: A world designed for women Cosmetics line
Store that sells high-end beauty products
Competition with drugstore brands ill will between countries or groups of people
Views of one group contradicts that of another
Poor relationship = reluctance to trade
Many countries in Middle East reluctant to trade with "Western" countries - contradiction of political views Opposing Philosophies Trade Sanctions Government bans trade with a country
Loss of an entire market Trading Partners Good trade relations = more trading
Easier to trade with established trading partners
Existing commerce infastructure
European Union allows France to trade easily within Europe - same currency and regulations within the Union International Relations Good relations = more willing to trade
Consistent trading leads to better relations between countries and firms Trade Balance Based on country's GDP and whether country has net import or export of products Online Presence Raises brand awareness and information levels
Around the clock access to information
Effective way to reach customers, who have means to purchase latest technology Social Media increases exposure of product and brand
promotes brand loyalty
engages younger age demographic Production Machinery advances increases production efficiency
Chemical formulas for cosmetics and fragrances more accurate and precise Innovations new fabrics and polymer formulas expand product and creativity range Data Management improves marketing functions
better understanding of consumer statistics
timely access to consumer information What's happening around the world? * hot and happening What are the most popular
Apps that you use? Kissing cousins? Icelandic
app warns if your date is a
relative Risk of dating relatives an
embarrassing problem in Iceland

App uses genealogical details to
study if your date is your relative
or not.

"Bump the app before you bump in bed," - Islendiga App

The database can be sourced online by any Icelandic citizen or legal resident. The app makes the data available to Icelanders on their mobile phones — and adds the anti-incest feature

Incest Alarm rings if you are related. HISTORY Early Days (1854-1892)
1854 - Louis Vuitton opens first store in Paris
1885 - first LV store opens in London, on Oxford Street
1892 - Vuitton dies; the Vuitton company begins selling handbags.

Golden Age of Louis Vuitton (1893-1936)
1893 - Georges (Louis’s son) begins his campaign to make the company into a worldwide corporation.
1936 - The golden age of Louis Vuitton ends as Georges Vuitton passes away. Estimates attribute Georges Vuitton with over 700 new Vuitton designs.

Modern Age of Louis Vuitton (1937-1996)
1978 - Vuitton opens its first stores in Japan, in Tokyo and Osaka.
1984 - Vuitton expands its presence in Asia by opening its first store in Korea, in Seoul.
1987 - Moët et Chandon and Hennessy merges with Louis Vuitton to form the world's largest luxury goods conglomerate, LVMH. The group is partly owned by the Christian Dior group, and Bernard Arnault is Chairman and CEO of both companies.
1992 - The first store in China is opened at the Palace Hotel in Beijing

Millennium Age of Louis Vuitton (1997-present)
1997 - hires designer Marc Jacobs to be the label's artistic director Porter's Five Forces Potential Entrants Low
Marketing Support
Product Quality
New entrants get kicked out or are acquired by larger groups Industry Competitors Relatively High
Fierce brand recognition competition
Need to 'feed' the competition Risk Of Substitutes Medium - High Influence
Company's Bussiness Model
Asian buying habits Suppliers Bargaining Power Relatively Low
Acquisition of suppliers
Raw material production
Purchases on consignment basis Buyers Bargaining Power Relatively Low
LVMH's strict policy
Target customers share small market size Fascination
for french
products... French fashion French Culture Following the legacy The Big fake industry Counterfeit products on the rise.. Described as ‘the crime of the 21st century'

Value of counterfeiting is estimated to be in the region of $250 billion per year.

The top five suppliers of counterfeit goods to the United States in 1997, were China, Korea, Chinese Taipei, Hong Kong and the Philippines

LVMH and its sister company, Christian Dior Couture, have filed a law suit against eBay for claiming €37 million in compensation for loss of sales.

Industry faces a direct negative impact in terms of revenue of between 4-7% due to counterfeiting In Class Activity Debate Topic

People love labels and think twice before spending hundreds of dollars, and fake brands have become a popular alternative...

Express your views on Counterfeit goods ? Loose's louis Strengthens its international presence by holding events in major cities throughout the year around the globe
Intensified its policy of innovation, expansion and gaining market share Popular brands in the big fake industry Adidas Louis Vuitton Apple and even Viagra... Fight against counterfeiting 1. Attain global visibility

2. Collaboration

3. Monitor points of promotion

4. Let online intelligence inform offline defense measures

5. Educating the customers How to find a fake Louis Vuitton bag. AND THIS IS WHY WE STAND OUT 1.Higher budgets for marketing and sales
2.Higher bargaining power with retailers and distributors
3.Economies of scale
4.International Expansion
5.Research and Development
AND our acquisitions. SWOT Is the high price worth it? Expansion of LVMH in Asia Declining trade barriers and trade tariffs in the luxury goods market
Communication factor
Economic growth
Young rich population & mass of nouveau rich customers
Tourists Customer base - 26% of people
Sales record - 30-40% of sales
Promotion Emphasize on personal selling
New advertising campaign
To reinforce their luxury image
Endorsements: Jennifer Lopez, Kate Moss, Madonna, Uma Thurman, and Scarlett Johansson CONS Different types of languages results in Communication difficulties
Cultural influence of the Asian region
Customer preference can differ in different regions of the country
New marketing strategy needed in the target country
Risk of emerging copycat products
Activist groups stands between consumers and company
Knowledge about local market
Existing competitors in the industry
Traditional goods given first choice
Wines are not preferred in the Indian market
Competitions of the cheap local products Pro's Growing economy -rapid growth in the recent years
Size of Population-huge market
Personal income-can spend on luxury goods
Brand awareness-Interest among Asians for international travel
Asian currencies remain strong
Public ownership by adopting multi-brand strategies
Lower Labor costs- availability of local labors
Consumer confidence and spending is likely higher than other markets
Buy luxury brands for social status
Rich consumers likely to buy jewelries
Young entrepreneurs creating perfect market for luxury goods Bernard Arnault's Vision LVMH Wines & Spirits Fashion & Leather Watches & Jewellery Perfumes & Cosmetics Selective Retailing Strengths
• Name recognition which makes them the largest product marketplace
• Long term experience
 • Leading position in their industry
• Premium quality reputation
• Distribution Weakness
• Their Diversification
• Conflict of interest within company (fashion vs. wine and spirits)
• Forward and backward integration
• Finance problems: net sales decreased by nearly 6% in 2003 
• Declining shares Opportunities
• Merger and acquisition (The small companies are seeking shield to exist in fierce competition.) usage of snob effect makes rising the demand of luxury products.
 • New consumer trends
• increase in wealth
• New buying potential in Emerging markets
• Improvement of way of selling their large productline (new distribution channels) Threats 
• Change of trends and consumer taste
• Economic recession (problems in coping withthe recent economic downturn)
• Competitor in smaller markets
• Competition ( The strongest one is Gucci) In Class Activity We will divide the class into 4 groups and each group gets to choose a brand : Kering (GUCCI)
Compagine Financière Financire Richemonte SA
Giorgio Armani
Burberry Group PLC Mike is a billionaire and you have to convince him to buy your company's product. You have 10 minutes to prepare. T

U Good luck for
the Law
exam folks....
Full transcript