Louis Vuitton is the world’s biggest luxury brand for bags and accessories. It was established in France, Europe in year 1854. Louis Vuitton brand and company is an international well-established firm named after the founder and designer Louis Vuitton. Louis Vuitton entered Japanese market in year 1968, and it came the most popular luxury brand in Japan. In year 1970, LV opened its first stores in Japan, which had revenue of $1 Million on its first day.
By 1977, the company owned two stores in Japan with annual profits of US$10 million Until Louis Vuitton, the strategy for business in Japan for multinational companies was to send their products through Japanese distributors (Nagasawa, 2009a).
LV was the first company that took different approach and strategy of opening its own store in Japan. LV also hired Japan’s top designer for the Japanese Market products. In fact, LV tired to localize their products for Japanese to attract more customers as they saw the demand for the luxury in this market.
One way LV localized their products was the use of Japan’s Classic Monogram Canvas Print on their bags, which was inspired by Japanese floral print. One way to show the success of LV’s business model is by using the four Ps. How did LV enter into the Japanese market originally? What are the other entry strategies adopted later to strengthen its presence? Enter of LV in Japanese market started in mid of the year 1970 however thanks to Vuitton Recamier family who was concentrated majorly on building the Japanese clientele.
LV opted for the newer strategy through opening their individual shop in shops in between Japan without help of the Japanese distributor. Louis Vuitton turned out towards being the pioneer in establishing their individual subsidiary as well as exporting products directly from the France to Japan. However, hiring the domestic Chief Executive Officer along with managers for leading Louis Vuitton within Japan permitted brand for doing business much
more efficiently trusting they have been much more capable of making market driven decision, as they have been capable of better understanding domestic people (Saillard, 2009). However, through providing architectural stores with the interior design comparable to found in their flagship stores within Paris, Louis Vuitton has been capable of revolutionizing entire buying experience in store matching emotion brought out through products.
For strengthening their presence within the Japan Louis Vuitton opted for many others strategies, like hiring Marc Jacob who was created new energy for every ready to wear collection, mixing tradition as well as innovation however in addition through collaborating with the Japanese artists along with launching lesser editions products (exclusivity perceive through consumers) that allows Louis Vuitton to enhance their profit right away. With Japanese economic boom of 1980, Louis Vuitton saw the real option along with decided for entering within this Asian market.
However the strategy adopted through company had been totally separate along with uncommon from rest of the world wide actors. Rather, Louis Vuitton had been initially multinational for opening their individual shop in shops through establishing their own subsidiaries, concentrated on only 1 brand of their portfolio. LV did not use usual supply chain schema along with help of the Japanese distributors however exported their products, straightly from France to Japan. Such a strategy provides real benefit to company, underlying higher quality of their production along with distribution systems.
LV strategy had original in fact, which that gave the stronger autonomy towards their subsidiaries, and power about market driven decisions. LV trusted Japanese managers along with started on its perfect comprehension as well as knowledge of domestic people, domestic culture along with local consumer behavior. For strengthening their presence in the Japan, LV gave some flexibility towards Japanese market through designating that the place for test newer products and for opening open avantgardist stores, with help of renowned Japanese designers as well as artists.
Opportunities and challenges are explained in details by the SWOT analysis. Strengths: World’s number one luxury brand, high standard product quality, lifetime products warranty, well established market in many parts of the world including Japan, luxury products variety, attention to distribution internationally. Weaknesses: Main source of revenue is still bags; only product manufacturing is in Europe, not able to make products for lower income market, no mobile application for any market, controlling multinational business.
Opportunities: No expended to the whole Japan, Target middle class, different age group, adopt social and culture relation with fashion Threats: Counterfeiting worldwide, competition with other luxury brands, keeping control of the multinational business, reducing the dependence on the Japanese market, economic crisis can decline the market. Japan has been known for its culture in which there a real pressure to possess luxury and brand named items. In Japan, younger women were more beauty conscious so they want to own a luxury, expensive and famous items.
To shop for luxury, expensive items are a compulsory form of social environment in Japan. In Japan there is “Psychological need to own something considered to be beautiful”. Japanese society could be described as an “impersonal” society in which looks were very important, and people were supposed to dress in a way that corresponded to their social positions (Nagasawa, 2009a). Some of the specifics are: •Highly saturated or over saturated market •Very high competition High barriers to entry •Availability of price comparison web sites, auction web sites and online stores are making market for luxury fashion more difficult.
•The tendency of having “It” bag is fading with new concepts like “Rent It” Louis Vuitton entered Japan market as a shop-in-shop, which allowed them to conduct business without Japanese distributors and also get to know the demand of Japanese market. The products were controlled completely by Louis Vuitton even in Japan because they had the items shipped directly to their shop-in-shop business. It appears that the entry in to Japan was well planned by Louis Vuitton management. The rich culture and social habits of women to be distinctively beautiful and show me what have you got attitude was tempting enough.
Then LV planned to go into the market without any local distributers and opening own distribution units and channels. Louis Vuitton’s strategy in Japanese market made them pioneer of the luxury brand in Japan. LV treated Japan as testing grounds of its strategies and strengthened the brand identity by flawless gigantism architecture of the stores and celebration of Japanese artist in product designer and worldwide launch. Just like any other industry LV has taken a hit from the economic meltdown of last few years. Decrease in customers can lower the profitability due to economy.
Louis Vuitton might have to lower the prices to be competitive and profitable and to gain more customers in the economic crisis (Nagasawa, 2010). One of the main reason is that people are reevaluating their need of luxury brand and so they turn to less expensive brand name or counterfeiting items. Some of the ways to overcome these challenges are incentives to loyal customers, awareness of counterfeiting and competitors. The Louis Vuitton brand pronounced its power in the luxury apparel category through years of specifically constructing and maintaining its brand equity as a fashion leader.
The brands global dominance as a fashion innovator is recognized by its LV monogram branding, that communicates its reputation and classiness today even more than it did when created in 1896. Louis Vuitton’s equity is the most valuable amongst luxury apparel brands. To maintain that position, the brand must take aggressive marketing measures to compete with other recognizable brands. Using varied strategies from the Ansoff’s product matrix will aid the brand in sustaining its market share in this highly competitive market (Castets, 2009). Louis Vuitton’s brand category is luxury apparel and accessories.
They have a ready-to-wear line for men and women, shoes, watches, jewelry, and sunglasses, and they are famous for their extravagant handbags. What are the specifics of the Japanese fashion luxury market? Consumer behavior has been one of biggest specific of Japanese fashion luxury market. Japanese method of consumption has been separate from Western one, as they have been called to be the group related culture in that there had been actual pressure for possessing the luxury brands, its methods of consuming those looks more like the compulsory form of the social expression.
And with sufficient marketing strategies successful luxury brand had made Japanese luxury market big market. Apart from that, Japanese customers have often been sensitive towards quality, price, and creativity along with higher fashion these have been the important factors for the successful brands in Japanese market. Will LV have any new challenges arise due to the global financial crisis? How does it overcome the new challenges? As described earlier there has been the shift within the Japanese customer preferences along with this has been even much more highlighted because of the global financial crisis.
Rather, days of charging the higher price for products having proprietary logo looked to be gone within the Japan. In the time of recession Japanese customers have been becoming much more aware about value of money. However, counterfeiting seemed even in Japanese market in which quality has been one of important factors within act of buying the luxury goods along with this became the bigger challenge for LV. Now that fake bags have been hard to differentiate from genuine ones, Japanese customer would purchase
fake LV bags, which they would use for daily life, even if they own authentic, which they would save for important occasions. As there had been sustained slowdown in demand for luxury goods in the year 2008 to 2009 because of the global recession, Japanese luxury market would remain the healthy as well as increasing industry along with strategic decisions may overcome those challenges. On the contrary LV has decided to reduce their prices however they had made 7% price reduction on their range of products. On the contrary LV designated Kiyotaka Fujii the new CEO that initial change in Japanese management team (Nagasawa, 2009a).
Such a change in the management allows brand to have the newer vision along with newer concepts such as expanding range of the products for children, sales of smaller products (wallets, sunglasses), spreading the business on web, expanding their strategies as well as opening the newer stores in the mid-size cities in which brand has not been well know. Conclusion: As there had been sustained slowdown in demand for luxury goods in the year 2008 to 2009 because of the global recession, Japanese luxury market would remain the healthy as well as increasing industry along with strategic decisions may overcome those challenges.
On the contrary LV has decided to reduce their prices however they had made 7% price reduction on their range of products. On the contrary LV designated Kiyotaka Fujii the new CEO that initial change in Japanese management team. Such a change in the management allows brand to have the newer vision along with newer concepts such as expanding range of the products for children, sales of smaller products (wallets, sunglasses), spreading the business on web, expanding their strategies as well as opening the newer stores in the mid size cities in which brand has not been well know
Cite this History of the World’s Biggest Luxury Brand – Louis Vuitton
History of the World’s Biggest Luxury Brand – Louis Vuitton. (2016, Jul 03). Retrieved from https://graduateway.com/louis-vuitton/