Louis Vuitton in Japan - A case study

Presented by Wade Allen, Mark Bauer, Morgan Coker, Hannah

Farhadi, Kendall Ragatz, and Allie Todd

Contents1. Louis Vuitton’s history2. Factors in the company’s global success3. LV and the Japanese market4. SWOT analysis5. 4 P’s6. Question & Recommendations7. Sources/References; Discussion

1. Louis Vuitton’s history (I)Foundation and Origins:

- Louis Vuitton established the brand in France in 1854 (LV: Malletier à Paris)

International Expansion:

- First store overseas opened in 1885 in London - Georges Vuitton took over in 1892 with the aim of building a global brand- Global expansion strategy executed in spite of WW1 (e.g. Buenos Aires/NY)

1. Louis Vuitton’s history (II)LV in the Modern Age:

- Expansion of product line (small leather goods)

- Late 70s: Japan; 80s: Other Asian countries

- 1987: Merger with Möet-Hennessy ->LVMH luxury conglomerate

2. Factors in the company’s global success (I)I) Efficient management

a) Tight grip on distribution & store network

b) Continuous improvementc) Adaption of techniques used outside

fashion industry

➢ Teamwork, productivity and efficiency, 45% gross margins

2. Factors in the company’s global success (II)II) Product Quality

a) Lifetime product guarantees offered (customer retention)b) Extensive testing effortsc) Strict no-discounts policy (rather destruction of surplus stock)

2. Factors in the company’s global success (III)III) Publicity and Advertising:

a) Belief, cutting marketing budget to be counterproductive

b) Celebrity culture (Famous models; also unconventional figureheads)

c) Strategy of reaching out to high-income groups in metropolitan areas➢ Careful choice of advertising

channels, coordinated cross-country branding

3. LV and the Japanese Market (I)

I. Consumer BehaviorA. Group-oriented cultureB. Women more beauty-conscious - “compulsory form of social expression”C. Japanese people are spending more time out of their homes than people

in any other cultureD. Matching outfit and social position

3. LV and the Japanese Market (II)II. Competition

A. Multitude of other luxurious brandsB. Mass Market

3. LV and the Japanese Market (III)III. Changes/Challenges

A. Counterfeit products, market saturation to a certain degreeB. Dependence on the Japanese market

3. LV and the Japanese Market (IV)Louis Vuitton’s position in Japan

1. Entry:- First Japanese store openings in 1977, first LV retail

store 1981 - “Louis Vuitton was the first multinational luxury house

to open its own shop-in-shops in Japan, without the help of a Japanese distributor.”

● First luxury multinational to distribute goods through own subsidiary (high degree of local autonomy)

- Rapid sales growth during 1980s ● By 2007 controlled 54 stores through a

directly owned shop network● Japanese economic ‘miracle’ ->

“Vuittonmania”

3. LV and the Japanese Market (V) 2. Strategy:

● LV has always been a trend-setting brand in Japan

● With Marc Jacobs as their artistic

director they rapidly entered the “Ready to Wear” market

● Symbiosis with Japan as a testing laboratory

● 2003 Spring/ Summer Limited Edition

in Japan that then spread to America

and Europe showed the admiration of Japanese culture.

● After 9/11 LV in Japan had to redefine their

strategy from focusing on tourist to focusing on locals

● Combined perception of quality & innovation

4. SWOT AnalysisStrengths:

- Owning a luxury good is important to Japanese women

- Japanese society is considered “impersonal” where outward appearances convey social prestige

- Brand loyalty (in spite of comparatively low advertising budget)

- Less regulation on building

Weaknesses:

- Social changes (Aging, greater individualism)- Economic weakness reduced middle-class

purchasing power

4. SWOT Analysis (II)Opportunities:

- Need to push into mid-sized cities, offer cheaper products- Recognition of the need to be more locally adaptive and focus on local customers’

tastes

Threats:

- 9/11 US attacks- Counterfeit products- Risk of brand dilution when seeking further revenue growth- Financial crises (1990s Asian, 2008 global)- Possible departure of Marc Jacobs❗ Biggest threat is that they are a saturated market

5. The 4 P’sProduct:

- Started off with bags and trunks- Introduced jewelry & luggage lines - Expanded into younger markets by

offering different product lines- Example: smaller purses &

wallets

Price: - Known high priced luxury goods- Lowered prices when expanding into

different markets- I.e. luxury goods are seen as less

important in western culture - Louis Vuitton Coquille d'Oeuf Minaudiere

Bag: $1,001,000- LV Circle Bag Charm: $320

5. The 4 P’sPromotion

- Celebrity endorsements - Limited editions

Place

- 54 LV stores- All located across japan, typically in major cities and markets.

LV revenues 2015(Regional shares)

6. QuestionsQ: How could Louis Vuitton reinvent itself and regain what used to be its well-attested fame in Japan?

Q: What has made Louis Vuitton’s business model successful in the Japanese luxury market?

Q: What are the opportunities and challenges for Louis Vuitton in Japan?

7. Referenceshttp://www.economist.com/node/12270950

http://www.economist.com/node/14447276

http://www.presidiopenthouse.com/hellotaitai/lv.html