Lv in Japan
Q1. What has made LV business model successful in the Japanese luxury market?
Ans. I would like to demonstrate the success of the Business Model of ‘LV’ via the concept of Four Ps (Product, Price, Place, and Promotion).
Product – In general marketers seeks ‘adequate quality’, ‘faintness of use’ etc., and too much of quality can be undesirable because it increase the cost. However, ‘LV’ handbags represented ‘products of distinctive qualities’ and ‘attention to details’. In general the concept of ‘relative quality’ is challenged by the ‘absolute quality’ which has forced customers to LV or nothing attitude. To back their products ‘LV’ has taken action against counterfeiting item by ‘Enlightenment Champagne’, involvement of French trademark authorities etc., make there product defendable. Partnership with local artist and Limited edition products has demonstrated that Product Line up and innovation are very strong parts of ‘LV’ business model in Japan.
Price – Market Demands “Low Price”, this is achieved by reducing costs and off-shoring production to China and elsewhere. Louis Vuitton handbags, on the other hand, are priced high. Such high prices are unnecessary for merely stowing and carrying things. In essence, the Louis Vuitton difference is value, not price—this being absolute value, not relative value. Many of the principles for Price were innovations that came about after Kyojiro Hata became president of Louis Vuitton Japan and that subsequently went global. With the Yen getting strong ‘LV’ has reduced the prices between 1 to 4 folds over the course of last 4 – 5 years. This is in my opinion is correct or reliable pricing which earns trust of the customers.
Place – In general more distribution channels the company have more sales potential is predicted. However, in case of ‘LV’ – they are selling only from few stores and started online (via web) presence in Japan after the new CEO. The reason being, it’s easy to control few...
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