Promotion Management Individual Assignment

IMC Plan for Louis Vuitton’s Neapolitan

Hazeem Azam Dar

PBS1331434For Dr. Maznah Ghazali

LOUIS VUITTON

Louis Vuitton Analysis & IMC Plan

1

Established in 1854 in a small Parisian workshop by Louis Vuitton, himself, the

company was initially established on pristine craftsmanship and quality leather

trunks. After Vuitton’s passing, son George Vuitton took ownership and later

expanded the company globally, maintaining the company’s emphasis on quality

and luxury.

Since its establishment, Louis Vuitton has continued to develop and refine its

reputation for quality based on the “four main elements of the company’s business

model—product, distribution, communication and price,” explains an executive at

Louis Vuitton. The company currently serves 12 different countries, capturing 60

percent market share in luxury goods.

EXTERNAL TRENDS: LUXURY GOODS INDUSTRY

As a result of the 2008 Recession, the past four years have been a gradual recovery

for most major luxury fashion brands. The following outlines key trends in the

luxury industry that have aided Louis Vuitton and others navigate the industry

reemergence in 2012.

Luxury and Technology

The intersection of luxury and technology is more pervasive and apparent than

ever within the luxury market. Today’s technology speaks to several pillars of

luxury: badge of importance, immersive experience and exclusivity. Global markets

are likely to represent at least 80 percent of the luxury industry’s growth by 2015,

(Capece, 2010). Attributing to massive growth in distribution and online sales for

multi-channel luxury retail brands. Luxury companies need to manage complexity

to a greater degree by using the Internet more resourcefully. Louis Vuitton will

need to be savvier in responding to social concerns, leveraging the uniqueness of

their brand and selling a sense of tradition and belonging.


2The luxury industry is recognizing mobile applications as a channel to connect with

customers and build relationships. Louis Vuitton has done so by creating a number

of applications as well as a highly popular iAd called Amble, which acts as a tour

guide to all of the major cities and provides an immersive experience for users,

(Lamb, 2011).

Implied Value of Quality & Timelessness

Another trend is recession-proof luxury that focuses on timelessness and enduring

quality. Generation Y is most concerned with exceptional quality and regards

luxury purchases as an investment. Many high net-worth individuals are savvy

shoppers and are wary of spending superfluously, however, are interested in

investing in luxury. As luxury purchases become more deliberate, consumers

expect and desire an exceptional product. Luxury brands need to increase their

product longevity, both in quality and trends, to position the product as a long-term

investment. Furthermore, there is a rising trend in luxury that stretches beyond

superficial, status symbols, and speaks to rejuvenation, personal energy, and

sustainability, (Capece, 2010).

Increased Brand Loyalty

Starting in 2012, luxury brands are implementing a more comprehensive

understanding of consumers by gathering more information from their target

market and developing more comprehensive brand strategies. These companies

will begin to codify their brand history and heritage, along with their mission and

values, in order to establish a compelling, actionable, credible and measureable

brand positioning. The luxury industry will see many brands establishing

personalized, customer-centric cultures in 2012, (Ransom, 2011). The increase in

brand loyalty also calls for a greater awareness of competitor pricing and

promotional activities.

COMPETITOR BRANDSCOMPANY TARGET MARKET PRODUCT POSITIONINGGucci Affluent women 20-30

Actual or aspiring jetsetters Distinctive, high-end

products


3 Social Elites who are brand loyal Compete on quality

Target heavy users Market leader in

sunglassesPrada Affluent women 20-30

“Fashionista” seeking timeless products

Shop luxury brands and carefully follow fashion trends

Stylistically simple, high-end products

High price Best known for

accessories Target brand loyalists Compete on quality

Hermes Women of all ages “Super Luxury” consumer Social Elite, shops Hermes

because all the women in her family do

Expensive and exclusive High quality, hand-made Best known for specialty

silk scarves and their “H” logo on leather products

Chanel Females 35-49, often married Heavy users Shop Chanel in all product

areas; shoes, clothing, cosmetics

Chic & elegant product Timeless, exclusive Best recognized for

quilted leather bags, lipstick and apparel

CURRENT TARGET MARKET

Louis Vuitton targets consumers that value fine craftsmanship, tradition, style, and

above all else, exclusivity. More specifically, Louis Vuitton targets the following two

segments: wealthy middle aged women from 35 to 54 years old and affluent young

fashionable female adults aged 18 to 34 years old who have disposable income and

are brand aspirants.

The average Louis Vuitton consumer is a part of the upper economic and social

class and is fashionably aware. These consumers have the need to feel prestigious

and emphasize the importance of self-esteem and power.

SEGMENTATION STRATEGY

Demographic segmentation

Louis Vuitton segments the market demographically based on age, sex, and

disposable income. Specifically, Louis Vuitton targets women aged 18-54 with high

annual incomes of $75,000 plus, constituting high disposable income.

Psychographic segmentation


4Louis Vuitton uses psychographic segmentations such as lifestyle and motives to

further identify their target market. For instance, Louis Vuitton targets jet setters,

trendsetters, and those who pursue prestige.

Usage segmentation

Louis Vuitton segments consumers by usage; specifically targeting heavy users.

Buyer information is collected at the point of sale and stored in a database. Heavy

users are sent seasonal catalogues as well as invitations to purchase exclusive

product collections to encourage repeat sales and brand loyalty.

CURRENT COMMUNICATION TOOLS

City Guides

An interactive series of video guides are available on the Louis Vuitton website,

these city guides provide a mix of history and style tips for the contemporary

consumer. The guides focus on the traditional elegance of iconic cities such as Paris,

London, and Rome. Louis Vuitton’s City Guides tailor to their jet setting consumer

segment. These consumers travel frequently and seek entertainment. By providing

these city guides Louis Vuitton is providing their loyal customers an additional

service and reinforcing their brand as a staple in any large city’s history of fashion.

Louis Vuitton Cup

The 2013 Louis Vuitton Cup will mark the 30th anniversary of this esteemed event;

a yachting competition sponsored by Louis Vuitton in which the winner advances

to the America’s Cup. This sponsored event caters to the extremely wealthy, who

are traditionally loyal Louis Vuitton customers. The event reinforces Louis

Vuitton’s prestigious image and creates a sense of exclusivity that those who

participate in the event seek.


5Advertisements

Louis Vuitton advertises through a mix of targeted mass media as well. Examples

include full-page ads in high-end fashion magazines such as Elle and Vogue, and

billboards placed in major metropolitan areas. These advertisements target the

younger, fashionable female adults who make up a significant segment of Louis

Vuitton’s customers. These ads, often featuring popular celebrities such as Uma

Thurman, convey brand image of elegance and luxury that this segment seeks to

emulate.

[See APPENDIX I for visual examples of the above communication tools.]

NEED FOR PRODUCT DEVELOPMENT

In order to capitalize and further develop the Louis Vuitton brand, the company

must remain competitive within the luxury industry. Unlike Chanel, Dior, Gucci, and

Prada, Louis Vuitton has yet to establish a luxury cosmetics line. The development

of a Louis Vuitton cosmetics line will entice a profitable, new target market that

could translate into brand loyalty. By capturing this younger target market, Louis

Vuitton will ensure larger market share as their consumer matures and begins to

purchase other products from the company.

[See APPENDIX III for Product Mock-up.]

NEW TARGET MARKET

This cosmetic line will target the young, American female between the ages of 20

and 35 years old. This young woman is establishing or has established her career

and has a reasonable amount of disposable income. However, she cannot afford the

majority of Louis Vuitton products. As a brand aspirant, she is trendy and fashion-

forward, and admires the lifestyle and history of high fashion. She values what

brand her product is and is intentional about her cosmetic’s brand.

As a company that caters heavily to loyal customers, this “fashion-ista” serves as

both a relevant and profitable future market for Louis Vuitton. A recent study

conducted by Bain & Company in cooperation with Vogue magazine found that

women in the U.S. who consider themselves “stylish” and follow the latest fashions


6spend three times the average on all apparel, accessory and beauty purchases,

(Horton, 2010.) Additionally, the 2012 Beauty Brand Index – based on a

combination of purchase incidence, share of wallet and brand loyalty – showed

Louis Vuitton in the top 10 brands for accessories. (Horton, 2010.) This positive

position will allow Louis Vuitton to enter the cosmetic industry with ease and the

trust of their new consumers. Louis Vuitton has the perfect opportunity to leverage

their brand to capture market share from competitors, creating brand loyalists as

either new customers or brand switchers.

Notably, recent study, “Why She Shops,” found that women in 2010 did not rate

“price” as a differentiator [in cosmetic purchases]. (Bain Company, 2010.) Based on

primary research conducted via a survey distributed to college students and recent

graduates, statistics confirm that this target consumer purchases makeup at least

once a month at department stores that offer luxury cosmetic brands (Nordstrom,

Sephora).

Additionally, the three most important aspects that influence purchase intent and

decisions were brand of product, quality and price. After analyzing the influencing

factors for 5 separate cosmetic categories (foundation, blush/bronzer, lipstick/lip

gloss, eyeliner/mascara and eye shadow) we found that while price was important,

the most crucial factor was the quality, implied through the brand of the product.

Conclusively, this new target market will be highly receptive to a Louis Vuitton

cosmetic line and will associate the brand’s reputation for quality with their future

products, despite the product category.

However, in reaching this new consumer and expanding their product offering,

Louis Vuitton must be very savvy in maintaining their brand image. The following

section will outline how Louis Vuitton will execute the promotion advertising and

release of the new Louis Vuitton cosmetic line.

CREATIVE DIRECTION


7

In order to maintain the brand image, the creative direction for the Louis Vuitton

cosmetic line will match the creative direction of current company advertising. The

marketing campaign will introduce and promote the new product line of cosmetics

by mimicking the brand image of prestige, simplicity, timelessness, and exclusivity.

Ads will be stylistically chic, with little text in a simple font and will rely heavily on

vivid imagery to execute the communication objectives. The advertisements will

intentionally emphasize the strength of the Louis Vuitton logo rather than product

qualities, results or slogans. The campaign will focus primarily on traditional media

and be supported by the company’s current social media channels.

In order to best reach the younger target consumer, the make up line will be closely

tied to a celebrity with whom this segment can relate. The brand representative

and face of the cosmetic line will be 26-year-old American actress Leighton

Meester. Meester is predominately known for her role as Blair Waldorf, in the CW

television series Gossip Girl. She is a recognizable celebrity and represents, both in

her daily life and as Blaire Waldorf, the ideal fashion-forward and sophisticated

young woman Louis Vuitton is trying to reach. Lastly, product placement

throughout the Gossip Girl season will increase consumer association between

Meester and the brand.

COMMUNICATION OBJECTIVES

The objectives of this IMC campaign are to maintain the Louis Vuitton brand image

and communicate the following communication objectives: association, perception,

and evoking an emotion.

1. Create an association in consumers’ minds between Louis Vuitton’s current

status as a leading luxury brand, noted for quality and timelessness, and

their new product line.

2. Extend the perception that the brand is not only a clothing and accessories

provider but also a luxury cosmetic supplier.


83. Evoke the emotions that consumers already associate wit the brand. The

imagery, font, and copy must all provide consumers with a sense of

belonging, exclusivity, elegance and timelessness that Louis Vuitton is built

upon.

COMMUNICATION GOALS

1. Increase Louis Vuitton site traffic by 30 percent within the first six months

of launch.

2. Double the new target market’s current perception of how accessible Louis

Vuitton is to them after 24 months of new product release.

3. Within the first six months, following the February release, increase in-

store awareness of Louis Vuitton cosmetic line by 50 percent.

EVALUATION METHODS

To ensure that these goals are met, Louis Vuitton must carefully evaluate and

measure in store and online sales, as well as general brand and product awareness.

In order to effectively measure these areas, the company will conduct the following

evaluations concurrent to product launch. The evaluations will be executed at 3

months, 6 months and at the end of each year’s fiscal end for a minimum of the first

5 years to ensure reliability and consistency in data.

Evaluations:

Evaluate annual sales relative to initial investment in the product line,

advertising spending and the sales of competitors.

Measure the activity on social media channels (Facebook, Twitter, YouTube

and site clicks) to evaluate consumer interest in the line.

o Based on site hits, “Hot Maps,” and page views

o Response/Sale Conversion

Conduct Memory or Recall & Recollection tests with magazine dummies


9 Conduct surveys of store representative across all of their retail locations and

other retailers carrying the cosmetic line, including, Nordstrom, Sephora, Sacs

Fifth Avenue, Bloomingdales, and Neiman Marcus. The survey will measure

customer awareness, brand preference and purchase intent.

Measure consumer awareness and preferences by having retailers send a

survey to their valued customers, evaluating purchase intent, brand/product

recognition, and awareness.

INTEGRATED MARKETING COMMUNICATION TOOLS

Based on total revenue earned by the LVMH Moet Hennessy Louis Vui. Group, 37%

constituted by the Fashion and Leather Goods group, the majority of which is

generated by Louis Vuitton. To estimate Louis Vuitton’s total advertising budget

per year it is best to multiply that amount of revenue by the brand’s total

advertising and promotion expenses. This calculates to approximately $1.3 billion

for the entire Fashion and Leather Goods group. Between the months of June and

January Louis Vuitton spent about $22 million on advertising. However, this

spending almost doubles for the second half of the year. Therefore, the following

allocations will be based on the assumption of a $50 million annual advertising

budget.

[See APPENDIX V for financial documents.]

Additionally, initial investment in the new product line will require a larger portion

of the advertising budget. While the product may not be initially profitable, it will

be an investment in capturing the new target market and market share for Louis

Vuitton. The section below will outline the Integrated Marketing Communications

Tools used to promote and advertise the new cosmetic line.

[See APPENDIX II for a more specific IMC timeline.]

IMC PLAN & BUDGET ALLOCATION

Online:


10Louis Vuitton has a well developed presence online – including mobile applications

with over 1,000 monthly users, a YouTube channel, a Facebook page with over

85,000 “Likes,” and a Twitter account with over 100,000 followers. To capitalize on

this strong online presence, the visuals, videos and advertisements for the cosmetic

line will be featured across all online channels.

Facebook: Incorporate Makeup line into current Facebook page. Include

promotional videos featuring Leighton Meester. Additionally the page will

include pictures featuring the makeup and press releases of celebrities

wearing the new makeup line.

YouTube: Attempt to create buzz around videos to stimulate curiosity

around the line. The videos will be vague and a call to action to visit the

website to receive more information about the line including the ability to

buy the product.

Twitter: The Twitter page will include updates on the product line. The face

of the line, Leighton Meester, will promote the line through her account and

the tweets will be featured on the LV Makeup Twitter page.

Celebrity endorser: Leighton Meester

In June of the prior year to the launch of the campaign, Louis Vuitton will begin the

creative development of the advertisements, which will include negotiation of a

contract with Leighton Meester, estimated at $1 million dollars. The photos of

Leighton will be incorporated into each media vehicle of the campaign.

Product placement: CW’s Gossip Girl

The new LV cosmetic line in September will make a product placement agreement

with the television station the CW for the Gossip Girl season through February.

Leighton Meester’s character, Blair Waldorf, will be showcasing the cosmetic line in

to increase awareness and association between her and Louis Vuitton. Product

placement in Gossip Girl costs approximately $200,000 to $300,000 per minute per

episode. We will allocate $2 million dollars of the budget to product placement,

which is approximately 1 minute of footage for half of the episodes in one season,

constituting 10 episodes. This product placement will occur in the last 10 episodes


11so that the product is top of mind and relevant to the launch of the makeup line at

Fashion Week in February.

Billboards:

Four weeks prior to the official launch of the Louis Vuitton makeup line we will

advertise in four major metropolitan cities across the United States using

billboards. These cities will include New York City, Chicago, San Francisco, and Los

Angeles. The advertisements displayed on these billboards will act as teasers,

hinting at the launch of a new product by Louis Vuitton, with the intention of

building hype leading up to Fashion Week. The only text in the advertisements will

be the date of the official launch of the new product line so as to build anticipation.

After the initial launch of the makeup line, billboard advertising will be extended

for another four weeks and will be expanded to transit shelter advertisements in

key markets. There will be ads in 200 New York Subway stations and bus shelters

in San Francisco near the city’s central business districts. The combined effect of

this advertising, based on figures found on clearchannel.com, amount to over 10

million impressions over the eight-week period. The cost for this portion of our

advertising campaign, as calculated from 2010 rates found on clearchannel.com,

amount to approximately $411,450. The breakdown of this cost is as follows:

New York City - $162,000 for three billboard ads, $40,000 for subway

San Francisco - $31,200 for two billboard ads, $56,250 (thirty bus-shelters)

Los Angeles - $78,500 for five billboard advertisements

Chicago - $42,000 for three billboard advertisements

Catalogs:

To coincide with our new product announcement we plan to giveaway 10,000 high

quality 6x9 booklets containing full page photos of the new makeup line. These

booklets will be included in the typical promotional gift bags, commonly known as

swag bags that are given away at Fashion Week. Based on figures found on

printingcenterusa.com, the cost to print these booklets will be approximately

$5,000.

http://printingcenterusa.com/

http://clearchannel.com/

http://clearchannel.com/


12Magazine Advertisements:

Full page, color advertisements will be printed in all major fashion magazines in

North America in which Louis Vuitton currently advertises. Print ads will be

consistent in message and imagery and will be uniform across all communication

channels.

Samples: Offer free samples to priority customers and with in-store purchases.

Additionally samples will be given out in special bags given out during Fashion

Week. Hopefully recipients will give powerful, free WOM advertising.

In closing, the initial investment in the Louis Vuitton product line will require a

large initial investment in development, advertising, and promotion. However, it is

a natural and strategic move for the brand and will allow Louis Vuitton to maintain

a competitive edge in the luxury industry while capturing market and wallet share

from competitors.

APPENDIX IExamples of current Louis Vuitton promotions

(City Guides online)


13

(Sponsorship)

(Print Advertisments)

APPENDIX II

General Calendar for IMC, beginning with June of the prior year to launch.


14

APPENDIX IIITwo mock-ups of Louis Vuitton Make up Line (Credit to Alex Zadig)

CREATIVE DEVELOPMENT:June (prior) - September: sign

Leighton Meester & develop visuals

PRERELEASE:December- Febrary: Product Placement in CW's Gossip GirlJanuary 1- Febrary1: Release

advertisements across all mediums

Febrary 17: Fashion Week Louis Vuitton gift bags at show and samples to exclusive guests

PRODUCT RELEASE:Febrary: Release to all department and retail locations following Fashion WeekExpand billboard advertisments to bus

shelters and subway stationsMarch: Product feautre in department store

catalouges

PRODUCT IN MARKETPost-release:

Continue promotions on social mediumsStagger and integrate cosmetic ads into

Louis Vuitton general magazine ads


15

APPENDIX IV


16Graphical summaries of primary research conducted by this group of college and recent graduates via a Qualtrics survey.

Participation:

Q: How frequently do you purchase makeup?

This trend reaffirms what secondary sources have stated that this target market, fashion-forward, young women who follow trends spend money more frequently than average consumers. Our survey shows that 52% of participants buy makeup items at least once a month.

[Results continued on next page]

# Answer Response %

1 18-21 23 41%

2 21-25 27 48%

3 25-30 3 5%

4 30+ 3 5%

Total 56 100%

# Answer Response %

12 or more times a month

6 11%

2 Once a month 29 52%

3Every 6 months

17 30%

4 Once a year 4 7%

Total 56 100%


17

Q: Where are you most likely to purchase make up?

Based on the below circle chart, the best and most relevant retailers are department stores like Nordstrom and beauty suppliers that carry luxury products like Sephora. These will be the best stores to conduct sale associate surveys and have customer surveys distributed through, during evaluation.

Q: Rank the following Factors in importance for each of the following cosmetics:

KEY:

Dark Blue: most important

Red: second most important

Green: third most important

Purple: fourth most

important

Teal: Least important

[Results continue on next page]


18

FOUNDATION:

BLUSH/BRONZER

MASCARA/EYELINER


19

EYESHADOW:

LIPGLOSS:

Across all cosmetic categories, participants ranked Quality, Brand of product, and Price as the three most important factors. In foundation, brand of product outweighed quality but the difference in importance across categories is not significant. This confirms the importance of the brand of cosmetics products and the quality implied by that brand.


20

APPENDIX V

Luis Vuitton Financial documents used in estimating annual advertising budget.


21


22


23APPENDIX VI

Pricing for full, single page color magazine advertisements in 1 issue.

Allure: $147,453

Average circulation is: 1,075,000. Audience: Median age is 32.5 yrs., average income is $66,386, 68.3% are

college graduates, and 93% are female. (condenast.com: Allure, 2012)Bazaar: $11,195

Average circulation is: 714,249 Audience: Median age is 44.8yrs., average income is $71,901, 78.5% have

some college, and 89.5% are female. (harpersbazaarmediakit.com, 2011)Cosmopolitan: $244,100

Average circulation is: 3,032,000 Audience: 58.3% are 18-34yrs., average income is $26,613, 62.6% have

some college, and 84.8% are female. (cosmomediakit.com, 2012)Elle: $141,210

Average circulation is: 1,124,569 Audience: Median age is 33yrs., average income is $76,596, 73.8% have

some college, and 92% are female. (ellemediakit.com, 2012)InStyle: $160,500

Average circulation is: 1,251,000 Audience: Median age is 35.3yrs., average income is $81,434, 76% have

some college, and 92% are female. (instyle.com, 2012)Marie Claire: $135,100

Average circulation is 963,305 Audience: Median age is 34.7yrs., average income is $78,015, 76% have

some college, and 73% are employed. (marieclairemk.com, 2011)Self: $182,321

Average circulation: 1,545,247 Audience: Median age is 38, average income is $81,374, 78% have some

college, and 94% are female. (condenast.com: Self, 2012)Vogue: $165,232

Average circulation: 1,248,121 Audience: Median age is 37.4, average income is $63,094, 64% have some

college, and 89% are female. (condenast.com: Vogue, 2012)W: $101,361

Average circulation: 1,421,000 Audience: 64% of viewers are 18-49, average income is 155,215, 75% have

had some college, and 76% are female. (condenast.com: W, 2012)


24BIBLIOGRAPHY:

"Advertising Rates." Clear Channel Outdoor. Clear Channel Outdoor. Web. 26 Feb.

2012. <http://clearchanneloutdoor.com/rates/>.

Atsmon, Y. & Pinsent D. (2010). “Five Trends that will Shape the Global Luxury

Market.” Mckinsey & Company: Consumer & Shopper Insights. Retrieved

from

http://csi.mckinsey.com/Knowledge_by_topic/Consumer_and_shopper_i

nsights/globalluxury

Bain & Company. (2010). “Why She Shops Study Report.” Bain & Company.

Retrieved from

<http://www.bain.com/bainweb/publications/why_she_shops_report.as

p?ref=retailpage>

LVMH Moet Hennessy Louis Vui. (2011). “Financial Statements.” Luxury Institute

"Booklet Printing Prices." PrintingCenterUSA. PrintingCenterUSA. Web. 27 Feb.

2012. <http://store.printingcenterusa.com/booklet-printing-

quote.aspx>.

Capece, D. (2010). 2010 “Luxury Trend Report.” Sparxoo. Retrieved from

<http://www.slideshare.net/sparxoo/2010-luxury-trends>.

Horton, S. (2010) Bain & Company. “Nearly Two-Thirds of Purchases by Style-

Conscious Consumers Favor Durable, Timeless, Classic Styles Over

Trendy, Contemporary Styles.” Retrieved from

<http://www.bain.com/about/press/press-releases/styleconscious-

women-actively-spending-in-2010.aspx>

http://www.slideshare.net/sparxoo/2010-luxury-trends

http://csi.mckinsey.com/Knowledge_by_topic/Consumer_and_shopper_insights/globalluxury

http://csi.mckinsey.com/Knowledge_by_topic/Consumer_and_shopper_insights/globalluxury


25

Lamb, R. (2011). Louis Vuitton Drives App Downloads with Targeted iAd campaign.

Luxury Daily. Retrieved from http://www.luxurydaily.com/louis-

vuitton-drives-app-downloads-with-targeted-iad-campaign/

Ransom, C. (2011). Lucky Seven Wealth and Luxury Trends for 2012. Mosnar

Communications. Retrieved from

http://mosnarcommunications.com/2011/10/lucky-seven-wealth-and-

luxury-trends-for-2012.html

Documents

Promotion Management Individual Assignment