Louis Vuitton (LV) is the world’s leading luxury brand. It is ranked number 1. It is also regarded as the leading brand of the LVMH group and the 1st world group of luxurious goods which were produced and distributed. This brand was created in 1987. LVMH earned worldwide sales of €16.5 billion in 2007 (+7.7%). This achievement has ensured and conquered competition with its revenues being three times greater than its follower Richemont Group. The group has been split into five core activities with a rich portfolio of over 60 brands. Fashion and leather goods constitute €5.6 billion sales which accounts for nearly 34 % of the group’s turnover. It is also this sector that stimulates the group’s growth engine. LV dominates the luxury segment by reaching a target of €1.659 billion turnover in 2006 (which is nearly 2 times its two main followers PPR and Valentino),. Further, LV owns 405 stores (+15 net openings in 2008). Its mission focuses on aiming at being the ’ambassador of the occidental art of life’, to be the symbol of elegance and creativity by realising its selling dreams crossing tradition and modernity. Hence, it frames its core values with concepts such as creativity and innovation, state-of-the art product quality, and an invaluable brand trademark appeal. The high dynamism of the global group is driven by the exceptional appeal of the LV branding, its efficiency in strategic development, and a long standing presence worldwide. Credit goes to factors such as the strong organic growth, innovative and creative product development, the influential and impact driven communication means and messages on luxury voyage and thematic ideas, the French prestigious lifestyles, the authentic know how and the well managed distribution network. All these factors have fuelled LV’s dynamism.
The current strategy has been developed on three main axes1: Strengthening of its position in the emerging market segment: As growth relays when mature markets slowdown (E.U.&U.S.) or declines (as in the case of Japan), with a retail network extension, there is a high growth potential of new customers with increasing purchasing power and eagerness to adopt the foreign luxury goods (e.g. China, Russia, and India). A ’premium” positioning’: By adopting a differentiation strategy, selling high quality innovative products at a higher price, and then staying above the emerging competition of the middle markets, rivals trade up in such a manner that they begin comforting its profitability. Therefore, they simultaneously engage a production cost cutting policy, while steadily investing in marketing, promotion and communication strategies which is essential to enhance the brand image. This serves as the main factor of the purchasing decision of such luxury goods. Innovation and communication: Innovation and communication is essential to support the premium strategy and to increase the customer panel by taking advantage of globalisation and the democratisation of the luxury market.
- High sales revenue worldwide and a well-balanced and a developed situation versus emerging markets. (€ 5.6 billions) - High growth rates (+7.7%)
- Financial resources and the capacity to support growth and investments (€ 246 millions in 2007). Physical
- 405 owned boutiques worldwide, and the increasing presence in the emerging markets (China: +9 openings in 2007, and 3 planned). - Progressive and discrete relocation of production sites to low labour cost locations (such as Portugal and India) Intangible
- High artisanal skills and the technically savvy know how
- Numerous trademarks and models being patented
- Efficient use of IT in retail and marketing sectors, and for worldwide strategic management Reputation
- Ranked as number one in the luxury market and has acquired the 17th position in Global brand market2 Emulates as image of luxury occidental and...
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