Case 11-2: LVMH
11-16. LVMH Moet Hennessy is the worlds’ largest marketer of luxury products and brands. It has assembled a diverse empire of more than 60 brands sales of which totaled $28 billion in 2010. If there is one communication space that luxury goods brands have not yet aggressively pursued, it is television advertising. Because of this, there are possible risks of Louis Vuitton’s first-ever television advertising campaign. First TV marketing can be seen as mass media market. Executive raise wholesale prices in an effort to prevent discount retailers from purchasing designer products for resale in mass-market outlets. Also, it could damage the perception that consumers have for the brand. Moreover, advertising budgets are limited and television is viewed s too expensive. And in addition, some in the industry believe that TV’s status as a mass-marketing medium can undercut a luxury brands aura of exclusivity.
11-17. In March 2008, $8,000 equals to 5,333 euros ($8,000/1.50). In November, tweed suit is $7,200 ($8,000 * 10%off) converted into euro it will be 5,760 euros (7,200/1.25). Revenues of tweed suit sell in US are increase 427 euros even if the price in dollar is 10% off. It happens because dollar had strengthened against the euro.
11-18. Louis Vuitton executives raised prices in 2008 and sales continued to increase. This say about the demand curve of the typical Louis Vuitton customer that is inelastic, meaning consumers are willing to pay for it no matter what the cost is. Luxury products are characterized because of their high skill creativity. Also, Luxury goods prices are based on perceived exclusivity and differentiation of the brands. Consumers have shown high confidence about luxury goods, and naturally many will want the best, which means luxury brands.
11-19. Coach’s brand positioning can be considered as affordable luxuries, while LV describes itself as selling dreams. LV markets are...
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