Louis Vitton in India Harvard Case

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  • Topic: LVMH, Luxury good, Gucci
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Louis Vuitton and the Indian market for luxury goods
Louis Vuitton redefines luxury. The Louis Vuitton Moet Hennessy (LVMH) group is a global leader in a variety of luxury industries spanning across various categories including: fashion and leather, wines and spirits, perfumes and cosmetics, and watches and jewelry[1]. The LVMH group has thrived in conventional markets such as Europe and the United States because both markets are characteristically and densely populated with high-income individuals. However, given that India is a developing economy, the success of Louis Vuitton in India is dubious. The analysis of Indian luxury goods’ market with respect to Louis Vuitton is essential for uncovering this case.

The 5 Cs
The Indian elite serves as a familiar market for Louis Vuitton given the historic connection between the two. In the late 19th century, many maharajahs ruling the regional provinces in British India had a taste for luxury. They were the international customers of Louis Vuitton, who purchased custom made leather interiors for their cars and leather bags. Although the maharajahs are no longer present in India, Louis Vuitton is targeting a similar demographic and customer, the super-rich people in India. These include professional CEOs, non-resident Indians, small and medium retailers, Bollywood actors and closet spenders like politicians and bureaucrats. Because the luxury market in India is in the initial stages of its growth, there is very little competition in the market. Other global brands like Versace, Gucci, Dolce & Gabbana, Armani, Chanel and TAG Heuer are entering the Indian market. However, their entrance into the Indian market does not serve a substantial threat due to Louis Vuitton’s historical brand imaging throughout India. As a company, Louis Vuitton, headquartered in Paris, has a strong value proposition of exclusivity and prestige associated with its luxury products. Because the company is under pressure from Wall Street to sustain double-digit growth rates, the company strives to have a store in every Indian city with a population of more than 10 million and to acquire a customer base of 1 million in India by 2010. Louis Vuitton has collaborated with top-end luxury hotels in India (The Oberoi and The Taj Mahal) to showcase their product to the super-rich of the country and any high-wealth individuals that may frequent Indian luxury hotels. Currently, the company seeks to enter into a strategic partnership with real estate developers such as DLF, who develops luxury malls. Apart from these collaborations, the company is working in sync with the government and local leather businesses. The overall Indian market characterized by low per-capita income and lack of infrastructure, and the increasing number of super-rich individuals forms the context of this case. Further, the government’s regulations on foreign corporate entrants and its high tariff placed many limitations on Louis Vuitton and other luxury brands.

Louis Vuitton has created a segment encompassing the higher-income class in India. The company has targeted the “cocooners” whose buying habits are in the stage of metamorphosis due to their increasing income. The “cocooners” have the potential of becoming loyal customers of luxury brands in the future. The mid-segment of the Indian economy, which the “cocooners” are apart of is estimated to be 97 million in 2010[2] and predicted to increase to 583 million by 2025[3]. The brand is targeting high-net-worth individuals who often fly to destinations like Singapore, Dubai and Paris to shop for luxury items that are unavailable in India.

Louis Vuitton plans to position itself as the premium luxury brand in India. Currently, Louis Vuitton has an established position among the Indian elite as one of the crème de la crème luxury brands, which is evidenced when high-income Indians travel to Paris to purchase Louis Vuitton products. Louis...
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