Louis Vuitton (LV) is known for its manufacturing of fashion and leather goods. One of the company’s early successes occurred when a French craftsman invented a flat-topped trunk. This new trunk was different from its predecessors, the dome-shaped trunk, in that it was easier to stack and transport. For seven decades Louis Vuitton solely produced leather handmade bags. In 1987, the company merged with Moet Hennessy and diversified into leather accessories. In the mid/late 90’s the company received increasing pressure from Wall Street to sustain a double digit growth rate. In response Louis Vuitton began to look for opportunities to expand globally. Its focus quickly ...view middle of the document...
In emerging economies, where the middle class is growing and the wealthy are becoming even wealthier, this dynamic results in a growing market of both population and consumer spending per capita.
High-end brands benefit from selling low volume with high margin products. They do not rely on selling a large quantity of items to as many individuals as possible. Instead, they focus on only those consumers who are truly wealthy enough to purchase such products. This can be seen by Louis Vuitton’s policy of never discounting its products. This business strategy helps support its reputation as a high-end brand. If Louis Vuitton were to make its products affordable for more individuals, it would be seen as less exclusive and less luxurious, and therefore less appealing to those who are willing to pay premium prices for luxury goods.
In this case study, India provides a suitable market for the high-end brand Louis Vuitton. India has an emerging economy with growing middle and upper classes. With a total population of over one billion people, even a small fraction representing the super-rich can be a relatively large market for luxury brands like Louis Vuitton. Consumer spending by Indian citizens on luxury items, including assets, services, and products, has grown in recent years and is expected to continue growing. In addition, luxury items are generally considered to be a status symbol showing off an individual’s wealth. In some cases, consumers purchase luxury items to show that they are part of the elite. In other cases, luxury items represent the idea that one has become successful. Either way, those who can afford to purchase luxury items often do for the feeling and for the representative ownership statement.
LOUIS VUITTON’S NICHE
Louis Vuitton, a business unit of LVMH group, should find its niche with the super-rich and the up and coming affluent consumers. The number of high net worth individuals in India is growing at a rapid rate and luxury goods are increasing in demand. The super-rich are interested in purchasing exclusive goods not affordable by all, so that they stand-out as more successful and elite. Louis Vuitton offers this experience with its limited quantities and expensive prices.
Louis Vuitton is considering capturing another segment of the population, the up-and-coming rich, who often perceive luxury items as positive self-indulgences and status symbols. This can be achieved with products that are slightly lower in price for those consumers looking for bargains to balance their high price purchases. Louis Vuitton has never discounted its items, and we do not recommend that they start now; however, they could have lower priced items in India by changing their product line for that country.
CHANGE IN CUSTOMER PROFILE
Luxury brand companies such as Louis Vuitton, Dior, and Prada have never had to deal with changing customer profiles, due to their products being synonymous with high-net-worth....