Luxury Brands: What Are They Doing About Social Responsibility?

Topics: LVMH, Corporate social responsibility, Luxury good Pages: 8 (2488 words) Published: June 12, 2013
Luxury Brands: What Are They Doing About Social Responsibility? David S. Waller, Marketing Discipline Group, University of Technology Sydney Anurag G. Hingorani, Marketing Discipline Group, University of Technology Sydney Abstract Although luxury goods may be synonymous with extravagance, lavishness, and even waste, it may appear to be a contradiction that a number of companies that manufacture and sell luxury brands have also discovered the value of being socially responsible. With growing criticism of the high costs and exploitation in the manufacture of luxury goods, some companies are increasing the extent to which corporate social responsibility and sustainability issues feature in their business practices. This paper will look at the issues regarding luxury brands and social responsibility, and will focus on LVMH Moët Hennessy Louis Vuitton, the world‟s largest luxury goods conglomerate.

Introduction Despite the recent global financial crisis and continuing economic troubles worldwide, sales of luxury brands are growing. According to the Luxury Goods Worldwide Market Study, luxury spending in 2011 rose 8% to €185 billion ($US274 billion) in 2011, with growth in the US, Europe and China, which was after a fall in sales in 2008 and 2009 (Holmes 2011). Brand names like Chanel, Yves St Laurent, Louis Vuitton and Tiffany & Co. have become household names and brands that some people aspire to purchase and wear. However, luxury brands have also been often criticised for being extravagant, overpriced, exploiting third world suppliers, and wasteful when many people are struggling financially. As luxury brands promote themselves to the global audience, some companies are increasing the extent to which corporate social responsibility (CSR) and sustainability issues feature in their business practices.

This paper will explore the issues related to luxury brands and social responsibility, with a particular focus on LVMH Moët Hennessy Louis Vuitton, the world‟s largest luxury goods conglomerate which includes internationally recognised brands such as Christian Dior, TAG Heuer, Fendi, Marc Jacobs, Guerlain, Kenzo and Givenchy. A content analysis of the 2010 Annual report will reveal the CSR initiatives/activities undertaken by LVMH and some implications for CSR disclosure will be discussed.

Background Since some embarrassing corporate ethical and financial disasters, many organisations are taking steps to improve their corporate governance, ethical practice and CSR activities (Agrawal and Chadha, 2005; Margolis and Walsh, 2001). There has been particular interest in CSR, in which there is a “concern for the impact of all of the corporation's activities on the total welfare of society” (Bowman and Haire, 1976, p. 13). CSR activities and disclosure have increased with organisations identifying different types of CSR initiatives that they undertake, including those that relate to work output, HR activities, social/community commitment, and environmental initiatives (Gray, Owen and Maunders, 1987; Luo and Bhattacharya, 2006; Waller 2009; Waller and Lanis, 2009). These CSR activities can help promote a specific image that management would like to portray to its various stakeholders, and counter criticism for other issues that may affect the company.

The luxury industry thrives on the creation of an image and the communication of brandassociations. This contributes to the interest in luxury brands by many consumers who might want to portray a particular image or feel a certain way by acquiring and consuming luxury goods and services. Not only consumers but also academic and industry researchers are

interested in luxury brands (Bendell and Kleanthous 2007; Fionda and Moore 2009; Kapferer and Bastien 2009; Phau and Prendergast 2000). Most consumers prefer to purchase a wellknown, reputable brand over a cheaper, unknown brand, especially when making highinvolvement purchases, or products that reflect a buyer‟s personality....

References: Agrawal, A. and Chadha, S. (2005). Corporate Governance and Accounting Scandals. Journal of Law and Economics, XLVIII (October), 371-406. Bendell, J. and Kleanthous A. (2007). „Deeper Luxury: Quality and Style when the World Matters, World Wildlife Federation-UK‟, Available at www.wwf.org.uk/deeperluxury. Fionda, A. M., & Moore, C. M. (2009). The Anatomy of a Luxury Fashion Brand. Journal of Brand Management, 16, 347 ‐ 363. Gray, R., Kouhy, R. and Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing and Accountability, 8(2), 47-77. Gray, R., Owen, D. and Maunders, K. (1987). Corporate Social Reporting: Accounting and Accountability, Prentice-Hall, London. Holmes, Elizabeth (2011) “Luxury Goods Sparkle” The Wall Street Journal. 4 May, found at: http://online.wsj.com/article/SB10001424052748703834804576300941315031916.html Kapferer , J . N . and Bastien , V . ( 2009 ) “The specificity of luxury management: Turning marketing upside down”, Journal of Brand Management. 16, 311 – 322 Luo, X. and Bhattacharya C.B. (2006). Corporate Social Responsibility, Customer Satisfaction, and Market Value. Journal of Marketing, 70, October, 1-18. Margolis, J. D., and Walsh, J. P. (2001). People and profits? The search for a link between a company’s social and financial performance. Mahwah, NJ: Lawrence Erlbaum Associates. Phau, I. and Prendergast G. (2000) “Consuming luxury brands: The relevance of the „Rarity Principle‟” Brand Management. 8 (2), 122–138. Waller, D.S. (2009). Advertising Agencies See the Pros of Pro-Bono. International Nonprofit and Social Marketing (INSM) 2009 Conference, Melbourne, July. Waller, D.S. and Lanis, R. (2009). Corporate Social Responsibility Disclosure of Advertising Agencies: An Exploratory Analysis of Six Holding Companies Annual Reports. Journal of Advertising, 38(1), 109-121.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Business Ethics and Social Responsibility Essay
  • Luxury Brand Essay
  • What Matters Most: Corporate Values and Social Responsibility Essay
  • Luxury Brand Essay
  • What Is the Social Responsibility of Corporate Management? Essay
  • Essay about What is the social responsibility of business
  • What Is Corporate Social Responsibility Essay
  • Social Responsibility Essay

Become a StudyMode Member

Sign Up - It's Free