LUXURY STRATEGIES

THE END OF AN ERA

Antoine Vaugier

THE BEGINNING OF LOUIS VUITTON

1837: Louis Vuitton became a box-making apprentice in Paris & gained his own reputation as one of the best in this field

French luxury brand specialized in leather-goods

1854: Opening of the Louis Vuitton shop at 4 Neuve Rue des Capucines

1858: The trunks was designed with a beige & brown striped known as “Rayée”

1888: Vuitton introduced the Damier Canvas pattern

1892: Louis Vuitton dies & his son Georges Vuitton takes control of the company

1896: The Monogram Canvas was proposed & introduced

THE LOUIS VUITTON HOUSE1914: The Louis Vuitton building was opened in the Champs-Elysées & Coco Chanel was nominated as a patron

1987: Louis Vuitton takes part of the LVMH group

1997: Marc Jacobs became the Artistic Director of Louis Vuitton and designed their first “prêt-à-porter” collection

2003: Louis Vuitton collaborates with the artist Takashi Murakami to create the Multicolour Monogram collection

2013: Nicolas Ghesquière joined the Artistic team of Louis Vuitton as Artistic Director

2014: The Louis Vuitton Foundation was built at 8 Avenue du Mahatma Gandhi in Paris

2016: The designer Marc Newson made the Horizon bag for Louis Vuitton & the actress Léa Seydoux is the ambassadress of the “prêt-à-porter” and the perfume series

THE LUXURY ACROSS THE WORLD

Louis Vuitton internationalization:Opening Art & Architecture spaces in Tokyo, Munich, Paris & Venice

2009: Louis Vuitton created the first Journey Awards film competition: an international short films to express talent & creativity across the “travel” universe.

Louis Vuitton is associated with Unicef “#makeapromise”

The company is involved in the protection of the environment Louis Vuitton has cultivated his image and values with strong celebrities & personalities such as Bono, Angelina Jolie, Sean Connery, Scarlett Johanssen, Jennifer Lopez…

AN AUDACIOUS & VISIONARY BRAND1867: Bronze medal at the International Exposition in Paris organized by Napoleon

1889: Gold medal & the Grand Prize at the Universal Exposition

2007: Award at the Grand Prix du Luxe Strategies/Condé Nast

2012: Louis Vuitton was named the world’s most valuable luxury brand ($25.9 billion) by Millward Brown OptimorLouis Vuitton takes part of the Sport World:

2014: Louis Vuitton created the trunk for the World Cup in Brazil2017: They created the America’s Cup Trunk2015: Trunk for the famous Webb Ellis Cup, one of the most famous through the world

TIMELESS & SCARCITY RANGE

Louis Vuitton is specialized in different trends as fashion, shoes, jewellery, trunk, furniture, belt…

Some of the most famous Louis Vuitton bags & handbags through the time:

1901: The designed “Steamer” bag was introduced 1930: The “Keepall” bag & The “Speedy” bag were created 1934: The “Squire” or Alma bag was introduced 2008: The “Sofia Coppola” collections & the “Damier Graphite” were launched 2013: Creation of The “Louis Vuitton Capucines” 2014: Louis Vuitton designed the “Little Trunk”

2016: Louis Vuitton presented their 7 own perfumes made by the Perfumer House Jacques Cavallier Belletrud

THE EMOTION

“L’art du voyage” what translate their mains values revolving the history of the brand

Inspired by the poem of Baudelaire “L’invitation au Voyage”

« Core Value » campaign shoot by Anne Leibovitz that showcase the core identity of Louis Vuitton, famous people around the world traveling with Louis Vuitton

Sean Connery, Angelina Jolie, Mikhail Gorbatchev…

Louis Vuitton is renowned for its luxury universe & stories heritages

Today, the brand try to turning Emotion into Fragrance

THE 4E’S

THE EXPERIENCE

Their main store at the Champs Elysées created in 1912 in an “art nouveau” style

For a long time, all the stores were very look alike, in the past few years it has become more diverse

Always using famous architect to design their stores

Through their monogram as well as their iconic product Louis Vuitton always had their own universe

Very present in their stores & in the representation of the brand

Since 2015, Louis Vuitton has a certain decrease concerning the financial growth of the brand: They have closed 3 stores in Guangzhou, Harbin & Urumqi - China

THE 4E’S

THE ENGAGEMENT

In 2012, the “Digital Girl” was introduced across all the windows-shop of the world

Louis Vuitton driving Luxury Digital engagement via its shop window

They have made a digital effort on the window at their St Germain des Près store. The front window invites passers-by to download the “Louis Vuitton Pass app” in order to interact with the window.

The Louis Vuitton Pass is a smartphone app designed to bring its advertising campaigns to life.

Louis Vuitton is a pioneer into the Digital world & try to innovate their digital tools & contents

THE 4E’S

THE EMPOWERMENT

LV never gives the permits to other shops or online shops

Louis Vuitton products are exclusively sold in Louis Vuitton stores and through the Louis Vuitton official website

Louis Vuitton never reduces its prices, and unless it is second-hand, discounted Louis Vuitton merchandise found on the Web is highly suspicious of being counterfeit

THE 4E’S

PARTICIPATIVE MARKETING

Customers can customized their own products

Louis Vuitton has offered their clients the possibility to personalize their items by having their initials printed on their bags

“Customization works particularly well for heritage luxury brands because it’s a way for them to set themselves apart from fast fashion”

City Guide: People can travelled across 15.000 different addresses all around the world & give you the opportunity to share your journey

THE 4E’S

THE EXCLUSIVITY

Loosing exclusivity

LV operates in 50 countries with more than 460 stores worldwide

The perceived value is decreasing, it lost its exclusivity by massively investing in more and more locations

While the profit is increasing

The Pop-Up store created in Moscow on the Red square was a big scandal, and show the weakness of luxury and by extend the power of the monogram. Keep it classy people will buy it, show it to much and you will shock the public opinion

THE 4E’S

4P’S

THE PRODUCT

FORCES WEAKNESSESHigh capacity of innovation Handmade quality & know-how Luxury product make in France Innovation Capacity of adaptation & quality of services powerful groups that helps them to access a lot of technology and innovation

Important costs of raw materials Important cost of innovation/technicity & creativity

4P’S

THE PROMOTION

FORCES WEAKNESSES

French Luxury Brand Famous brand through the world Organization of events to assure the best positioning of LV High-end positioning of LV across the different markets

Low communication across the media (magazines – Vogue / Billboards) Known through word of mouth is the best key for the LV communication

4P’S

THE PLACE

FORCES WEAKNESSES

Possibility to buy online Worldwide distribution Department Stores (Macy’s New York, Saks Fifth Avenue) Exclusive Distribution Development & innovation of the strategy for the future

Available products at the point of sale to much stores that decrease the luxury side of LV’s image

4P’S

THE PRICE

FORCES WEAKNESSES

High price Price Range Consequent margin premium strategy and positioning

the space between the truly luxurious products and the accessibles one could lead to a confusion to who really is our target.

BENCHMARKING

For benchmarking analysis, we chose four brands to analyze:

Hermes: huge opinion leader of the industry, still family owned, luxury the proper way. a must study.

Chanel: the main brand when talking about luxury, true to their values keeping the excellence and the scarcity of their product at the highest level.

Supreme: The leading brand in the streetwear business as for their strategy of highly limited product and distribution, lately they have not only featured a collection with Vuitton but they might be the next big move of the LVMH group.

Henry Poole & Co: which is a heritage brand since 19’s in London, with good reputation and limited distribution

Brand Louis Vuitton Hermès Chanel Supreme Henry Poole & Co

Core value Craftsmanship, outstanding quality

Craftsmanship, precision, timelessness

Craftsmanship, timelessness, heritage in product

Streetwear cult Heritage, timelessness.

Key product offering Luxury fashion good, specializing in luggage, travel bag and handbag.

High-fashion clothing, specializing in scarves and bags

Luxury goods and jewelry

Street style design clothing & accessories.

Make- to- measure suits and accessories

Unique identity Brown monogram graphic symbol

Orange carriage Black& white “double C “

Red background with white “Supreme”

Gold brand name symbol

communication Lots of communication through arts and in digital world.

Not much communication

Spending a lot in their campaign.

Through social media, collaboration with lots of brands

No communication at all

Target audience Middle upper class people who wants quality products

High net worth people who wants exclusive products

Worthy people who wants exclusive products.

Young people Really high net income man with quality life

Distribution more than 460 stores in 50 countries. Selective items sold on official website

307 stores worldwide. Items sold online in certain global regions

310 stores worldwide. Selective items sold on official website.

10 stores in NYC, LA, London, Paris, Tokyo, sold on website

One store in London. Accessories are sold on official website

Promotion No sales/discount Sales on seasonal items

Sales on several products

Sales/discount No promotion

PLACE OF THEIR STORE

Louis Vuitton has more than 460 stores in 50 countries. And they are all in the prime location in the cities.

The prices remain the same in their boutiques, departmental stores and online.

In addition, the company never gives licenses to outside firms to avoid brand digression.

The online distribution channel:

1. The products are never discounted. 2. Maintain total control over the brand by making its product available only though louisvuitton.com 3.Educate customers about where the product can be safely obtained on

DISTRIBUTION

Louis Vuitton posses a vast distribution system. however in those last years, the frenzy of store opening seems to have reach it’s term point.

• MARKET SEGMENTATION

Demographic segmentation：Louis Vuitton‘s target market consists of individuals who have a higher income, the higher the propensity to purchase luxury goods.

For this segmentation, their targeted clients are both sex, aged between 25-50 years old, who have earned an income between $50,000 ~ $200,000 yearly and most of them would be graduate professionals with sense of self-worth and high social status.

TARGET BOARD

Geographical segmentation : One of the most important markets of Louis Vuitton is not from Paris where its original is, but Asia.  And it is said that the mainland Chinese were Louis Vuitton's third-largest customer segment in the world in 2015.

Psychographic segmentation: 46% of LV customers are Self-indulger, 33% are quality seeker and 21% are status seekers.

CORE TARGET

The historical target of Louis Vuitton is the urban middle aged woman.

35+, CSP+ classy.

Reading fashion magazine such as Vogue or Vanity Fair If they are not from Paris (which represent a huge part nowadays) they still want to link to the parisian lifestyle.

Driving an Audi, Jaguar, Mercedes, Mini.

Watching Canal +, TMC, LCP, Itele

Reading Le Figaro, Le Monde, Times Magazine

SECONDARY TARGET

The new target, the one impacted by social media

18-25, willing to access the luxury world, present on social media, impacted by young influencers.

Driven by Facebook Snapchat Instagram

Could come to any social status, the poorer as the richest are always exposed at one point to our brand everyone could want to acquire one of our products even if they will not became a client on a regular basis, they contribute to building the dream.

PERCEIVED VALUE IN CHINESE MARKET

• It is perceived as a “brand for secretaries”, it is gaining popularity with the middle class. It is loosing its brand value and upper class customers.

• This brand was once a synonym for quality and exclusivity. It has already associated terms like: fake, cheap, everywhere.

PROBLEMATICS

SPREADING TO FAST ?

As we have seen even tho the numbers of Vuitton and the group behind it seems really successful, one of the leading brand in the luxury industry is slowly decreasing the standard that where initially set for this type of business.

« 453 stores worldwide in 2017 »

The first one identified was the way Louis Vuitton spreads around the globe, flooding the Chinese market and create a weariness in their customer base. Their image is declining, by becoming a global brand they have lost the exclusivity that define luxury.

Even tho their huge communication power allows them through initiative like The Louis Vuitton Foundation to keep a feet in what link them to Luxury.

PROBLEMATICSCOLLABORATION: BETWEEN SUCCESS AND FAILURE

The second problematic is the way they have diversified the range of their product through collaboration or even under their own name, they have been encouraged to this strategy by initiative like the collaboration with Takashi Murakami that was very successful and opened them the Asian market in a blink of an eye.

But they don’t seems to realize that by attracting the mass with collaboration with Supreme they create hype but loose the timelessness that is always closely link to the luxury industry.

The mix between high-end fashion and streetwear is still to be found, Louis Vuitton tried in the past with Kanye West, but even there the core target of Vuitton was not able to identify.

PROBLEMATICSATTRACTING NEW CUSTOMERS AND STAYING TRUE TO YOUR HISTORIC BASE

“Social media does play a huge role in desensitizing us to these things that used to feel so special, because we’re seeing it over and over again,” said Aba Kwawu, principal of TAA PR

As we have seen the Chinese market is evolving quickly, and they are not willing anymore to spend carelessly on monogram, they now want more.

Vuitton and others brand such as Fendi and Gucci are facing this huge crisis of their image

Facing the problems that we have been presenting should concern Vuitton as how to keep being an attractive luxury brand.

SOLUTIONS:

1 BACK TO THE ROOTS

one of the solutions is to go back to what as always been their core business, the true luxury. IN 2017 they can not continue to lie to themselves trying to be the biggest part of a segmented market does not have to be a priority.

Luxury is about creating the best product for a selected clientele

If they really want to lead this industry they should get rid of all their shops in secondary cities, only keep flagships stores. Like Apple, Vertu, Graff keeping a very selective distribution and exclusivity (waiting list for the iPhone or the Birkin Hermes bag) is the way to go. To make this strategy works they will have to end all collaboration and side distribution.

This will the follow with a reduction of collections a year from nearly 8 (counting cruises, FW,..) to only 2 one summer and a winter.

Higher quality, more hype created by the wait, scarcity of production and distribution equals the winning hand for a luxury business in 2017.

SOLUTIONS:

1 BACK TO THE ROOTS

we of course can’t keep out ouf the equation the impact of social media and the brand image for the youth that should become our clientele when they will have matured. Our very limited distribution will not affect our communication strategy, after the recent launch of the LV fragrance, the accessible product should continue to be a center of interest, but it will not exceed the primary one. Going back to what Louis Vuitton does best, exclusive and high end products.

SOLUTIONS:

2 SPREAD TO A GROUP DIMENSIONthe alternative solution that we want to propose is the opposite of the first one, not in therm of quality but in term of brand story telling.

In this solution we want to extend the image of Louis Vuitton to its closest match, their group itself, LVMH. with their wide variety of brands they have created over the years what no one could achieve, the biggest luxury industry.

Berluti, le Bon Marché, Bulgari, Céline, De Beers, Fendi, Givenchy, Hublot, Kenzo, Louis Vuitton, Guerlain, Dom Pérignion, La Samaritaine (still to come), TAG Heuer,.. Only with those names they could create a luxury empire that no one could counter. Creating a card for the buyers of the brand of the group, that would collect all their datas, the bought products, the place where, even for the alcohol. They would have a huge data base that would help them to develop a new kind of personalized services that will be the focus point for luxury in the upcoming years.

Extending this strategy lead you to an infinite numbers of possibilities, creating co branded stores or only displaying the LVMH product in one of the levels of either la Samaritaine or le Bon Marché.

By extending the loyalty program to a group dimension, they will recreate a bubble of luxury, either you are part of the LVMH family or either you aren’t. This will allow them to block any competitors such as Keiring to fight them, they will have their own market based on their group focused strategy.

SOLUTIONS:

CONCLUSION

Not only do they possess strong and valuables brand but they also have the best distributors with the two stated previously or even Sephora for all the accessible luxury products ( such as lipstick). Louis Vuitton and by extend LVMH is a growing octopus, they have a hand on every and each aspect of the sector, they are therefor dragging a huge attention, the curse that they will choose in the upcoming 5 years will drive the whole industry.

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