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Louis Vuitton in Japan

International Marketing
by

Jessica Kelley

on 29 November 2012

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Transcript of Louis Vuitton in Japan

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
Full transcript