Louis Vuitton Case Study

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Louis Vuitton(LV) was est. in 1854 in France and is known as one of the oldest French luxury fashion houses. The brand became famous for its exclusive leather bags and trunks. Over the years the LV line expanded from leather goods to fashion, selective retailing; wines & spirits; perfumes & cosmetics; watches & jewellery making the brand one of the most luxurious brands worldwide.

The LV brand is most recognizable for its logo, quality, uniqueness and price. It resonates a sense of prestige, quality and longevity in the minds of the consumer and in the fashion world.

Previously tailored to the more affluent social strata, LV is now tapping into a more youthful middle class demographic by setting new trends in global high fashion.

The core of the case is about the restructuring of the LV brand in the Japanese market after the economic downturn since 2002 and the increase in competition. The Japanese Market is known as the ‘Capital of Luxury’, it is the leading market for Louis Vuitton products. Over 20 million Japanese women currently owns a signature LV bag and each year five million units of the class monogrammed bags are sold.

The Japanese market is known for having a high demand for fashion and it is the source for new trends and creative ideas. However, because of the decline in the economy and numerous competitors surfacing in the Japanese market sales for the LV brand have significantly declined. Therefore, the LV brand needs to restructure itself in the Japanese market to ensure future profits.

There are a few major hiccups the Louis Vuitton company faced in Japan. A major issue it encountered was market and brand dilution. As it ventured into product line expansion Louis Vuitton was challenged with upholding the prestige, exclusivity and quality its name epitomised, and growing its market share. A clear example of this problem was the repetition the ‘Limited Edition’ products which caused confusion in people’s minds as well as damage to the brand name.

Another issue was that of the ‘falsification’ of the brand. The well know counterfeiting ordeal with the two Japanese girls selling fake Louis Vuitton products , as well as the counterfeits coming into Japan from South Korea, created a culture for the population to use these on a daily basis and save their authentic products for special occasions. This caused the brand to become diluted as people could obtain status without the real Louis Vuitton product. The company now has to ‘share’ the market with these products.

The Global Economy faced a slowdown as a result of the September 11th terrorist attacks. The direct consequence of this was a decrease in sales in duty free zones in international airports and prestigious luxury destinations.

Another issue revealed in the case was the issue of whether or not Louis Vuitton reached its growth potential. The company relied heavily on the Japanese economy for approximately 20% of its revenue. As the market is becoming saturated (competitive pressure), coupled with the changing mind set of the Japanese women away from Louis Vuitton’s products, this can pose a real threat to its survival in the economy.

Louis Vuitton’s top designer, Marc Jacobs, may leave the company soon. This can pose a real problem to the company as customers who are loyal to him may veer away from the Louis Vuitton brand and follow his personal brand. The company can also suffer from a loss in creative direction. In essence, the brand can lose that personal meaning to its key loyalists.

Louis Vuitton’s main objective is how it can reinvent itself and regain what used to be its well attested fame in Japan. This includes targeting a younger segment of the market, market growth and offering new product lines.

There are many possible courses of action that can be taken as discussed in the case. The first option is to segment the market to include a younger population of women. This can be seen through the rental of bags...
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