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Group 2: Patricia Fassler-Mize, Jesse Galindo, Maggie Jones, Ted Lasc, !onna Li

Louis "uitton in India

Executive Summary

Louis "uitton Mo#t $enness%, te &orld's leading lu(ur% )rand, *ade te decision to +or*all% enterIndia in . India &as a +a*iliar *ar/et +or Louis "uitton as te co*pan% ad +illed custo* orders

+ro* *aaraas since te late t centur%. $o&e1er, te Indian *ar/et &as unli/e an% in &ic teco*pan% &as currentl% operating. Te canging socio-econo*ic conditions o+ te de1eloping nationopened up opportunities +or te )rand )ut also posed uniue callenges suc as canging custo*erpro+iles and concepts o+ lu(ur%.

In te 3est, lu(ur% goods are o+ten sold troug co*pan%-o&ned stores in a lu(ur% retail cluster spreado1er se1eral )loc/s, usuall% in a cit%'s do&nto&n core. In cities tat did not a1e lu(ur% retail clusters,Louis "uitton operated in lu(ur% *alls. Pre1ious atte*pts to de1elop pre*iu* retail space in India adnot )een success+ul. Ne1erteless, se1eral real-estate entrepreneurs ad plans to open an esti*ated 400lu(ur% *alls in India )% 200. In India, Louis "uitton's +irst t&o stores &ere introduced in lu(ur% *allsin Ne& !eli and Mu*)ai targeting custo*ers &o ad sopped a)road and &ere +a*iliar &it te

)rand. Te co*pan% &as no& loo/ing to increase its reac and tea*ed up &it oter glo)al )rands tode1elop lu(ur% *alls in +i1e Indian *etros.

Does a high-end brand have a market in a low income country?

ccording to te National 6ouncil o+ pplied 7cono*ic 8esearc, in 200-02 tere &ere 20,000+a*ilies in India &it annual inco*es greater tan IN800 *illion. Tis nu*)er is e(pected to gro& to90,000 )% 200. ltoug ;< o+ te Indian population li1es on an inco*e o+ less tan =2.50 per da%te ig net &ort consu*ers, &ic are te pri*ar% target o+ ig-end )rands, is gro&ing. ltoug te*aaraas ad lost *uc in 5> and ;, te% &ere still signi+icantl% in+luential and +or*ed te ne&elite tat &ould )e te ne& generation o+ custo*ers +or Louis "uitton ?L"@ along &it Aoll%&oodactors, politicians, and )ureaucrats. 7(clusi1it% is a *ain +actor in *aintaining te gap )et&een te

super-ric and oter consu*ers. Bince L" caters to tis need, te% a1e an edge tat allo&s te* tocarge te pre*iu*s on teir goods. 71er% *ar/et in te &orld &ill a1e consu*ers tat desire to standout, )e recognized as special, and +eed teir egos. 3eter te% are loo/ing +or superior +unctionalit%and ualit%, a status s%*)ol tat so&s te% a1e Carri1edD, or sel+-indulgence, e1er% +ree *ar/et see/sto satis+% tese needs and, as suc, tere &ill al&a%s )e a desire +or lu(ur% goods.

Where should this high-end brand find its niche?

For centuries te *aaraas o+ India eld 1ast a*ounts o+ disposa)le inco*e and eno%ed spending teir*one% on lu(ur% ite*s as a so& o+ class distinction. Tese *aaraas and teir +a*ilies /ne& L" 1er%&ell and continued to )u% L" products up until te% +inall% lost po&er in ; +ollo&ing te Btates8eorganisation cto+ 5>. Fro* tat point +or&ard L" tried to connect &it te countr%'s ne& ric:

o&ners o+ )usinesses, 67Es o+ co*panies, and Aoll%&ood actors. In India, te super-ric sougt toC*a/e state*entsD a)out teir status. Ene &a% to so& it &as )% )u%ing e(pensi1e products tat &ereout o+ reac to te 1ast *aorit% o+ te population.

Toda%, India is one o+ te +astest gro&ing econo*ies in te &orld, second to onl% 6ina, and as seen ane(ponential increase in te nu*)er o+ *iddle and upper class +a*ilies &it ig net &ort ?$N3@ orliuid assets in e(cess o+ =00 *illion. India's econo*ic )oo* continued to add +a*ilies to tis class.Tese ne&l%-ric ad e(tra disposa)le inco*e and &ere starting to sa*ple te good li+e )% purcasing

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lu(ur% ite*s +or te +irst ti*e. Te idea &as tat tese consu*ers &ould get a taste o+ te +iner tingsand &ould ope+ull% )eco*e custo*ers +or li+e. Tese consu*ers are e(actl% &o L" &as targeting&it teir e(pansion plans.

Louis "uitton decided to target tese consu*ers directl% )% *o1ing teir stores out o+ te sa+et% o+

lu(ur% otels and into lu(ur% *alls. Lu(ur% *alls &ere ne& to India and L" desired to )e in1ol1ed inteir design so as to a1oid an% CceapeningD o+ te *alls )% adding tenants tat didn't +it te lu(ur%)rand status. L" traditionall% eno%ed te retail a*)iance o+ te lu(ur% retail cluster. $o&e1er, as notedearlier, i+ a lu(ur% retail cluster &asn't +easi)le, te lu(ur% *all &as te ne(t )est option. L" ad tead1antage o+ *ore tan one lu(ur% )rand under te L"M$ u*)rella &it di++erent product o++eringsincluding Fendi, TG $euer, 6ristian !ior, Gi1enc%, etc. Tese o++ering allo&ed L"M$ to place*ultiple products into te *alls so te% could eno% te Cspillo1erD +ro* )ro&sing soppers.

Lu(ur% )rands struggle to gain +ooting in India e1en toda% due to a poor retail in+rastructure and igi*port dut% ta(es.i Te $N3 Indian consu*er li/es to spend *one% and )u% e(pensi1e ite*s )ut alsois price conscious. Tis *eans e &on't )u% te sa*e ite* in India i+ e can get it ceaper outside o+ te

countr%. lso, te )u%ing e(perience is apparentl% *uc )etter in +oreign countries )et&een te selectionand custo*er ser1ice. Tere as )een an e++ort )% so*e lu(ur% retailers to clear tose o)stacles )%adding *ore o+ a local +la1or in teir o++erings and custo*er ser1ice and L" &ould )e &ise to do tesa*e. $a1ing a custo*ized CIndia-speci+icD product *a% create te sense o+ Ce(clusi1it%D tat &ealt%Indian consu*er's desire and could elp dri1e sales up locall%.

How should a luxury brand comany deal with changing customer rofile?

In te past, lu(ur% )rand co*panies suc as Louis "uitton, Aentle%, and Prada a1e ne1er ad an issuetr%ing to *ar/et teir products +or teir targeted $N3 custo*ers. In +act, a co*pan% li/e L" see*ed to+ollo& a )asic strateg% to attract custo*ers ranging +ro* te Cnearl% ricD to te Csuper-ricD &it teslogan, CI+ %ou )uild it, te% &ill co*e.D Bi*pl% put, te na*e spea/s +or itsel+ and creates de*and. InIndia, o&e1er, te custo*er pro+ile is entirel% di++erent - te super-ric are also interested in loo/ing +orte )est deal, not ust te igest priced one - and L" &as no& +orced to *a/e canges in order to )etter*ar/et teir goods to te respecti1e target population.

It is apparent tat L"'s target group &as going to )e &ar% o+ te cost, as teir consu*ers also sop atdiscount stores li/e Target and 3al*art, and tis concept is illustrated )% te tendenc% o+ te &ealt% tonot )u% pre*iu* cell pones since, oter tan te na*e, tere &as no inerent superior 1alue.Tere+ore, an%ting tat L" puts out in an atte*pt to re+lect itsel+ as a lu(ur% )rand *ust )e seen as teCcr*e de la cr*eD o++ering a uniue 1alue proposition.

In tis, L"'s custo*er )ase *ust )e si+ted to te Cne(t lo&er le1el,D rater tan +ocusing onl% on teCsuper-ricD in order to *a(i*ize pro+its and )u% into an%ting &it a lu(ur% )rand logo on it. Instead,as Bing, Aoo/er, and Aarasia put it, Louis "uitton can Cacuire a less e(pensi1e )rand, price products*ore care+ull%, and launc ne& 1alue-+ocused )rand e(tensions.D iiIn te case o+ L", since a lesse(pensi1e )rand is contradictor% to tat &ic te% are tr%ing to e*pasize, and L" as stated tat it isnot a discount lu(ur% )rand ?and tere+ore as ne1er once )een discounted in price@, te )est option&ould )e to open up a ne& line o+ products +ocused solel% on Indian consu*ers and teir )u%ing)ea1iors. In doing so, L" can sustain teir )rand i*age as a ig-end lu(ur% )rand +or te super-ric,&ile also redirecting +ocus geared to&ards teir *ore appropriate custo*er pro+iles in India.

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i 6a/ra1ort%, Jui. CInsigt: Lu(ur% retail not part o+ India's success stor%D.Reuters. ug 29, 20. 8etrie1ed ug2>, 20 +ro* ttp:&&&.reuters.co*article20029us-india-lu(ur%-idHBT87;;N20029.

ii Bing, sis, Aoo/er, Mi/e, and Aarasia, Bandeep. CIndia: Btrategies +or 6onsu*er Goods.DBloombergBusinessweek. 2 June 200. 8etrie1ed 2> ugust 20 +ro*ttp:&&&.)usiness&ee/.co*glo)al)izcontentun200g)2000>2;0>5;.t*.

iii !LF 7*porio 3e)site. 8etrie1ed 2; ugust, 20 +ro*ttp:&&&.dl+e*porio.co*dl+&c*connecte*porio7*porioBiteLe+tLin/7*porio.

iv 6a/ra1ort%.Ibid.v CLouis "uitton Locations in India.D M%Btore9. 8etrie1ed 2; ugust, 20 +ro*

ttp:&&&.*%store9.co*storelisting;IndiaLouis-"uitton-L"--store-locations.vi Mu/eree, 8upali. C!onna aran to enter India &it !LF Arands.D The Times of India. 2; Marc 200.

8etrie1ed 2; ugust, 20 +ro*ttp:articles.ti*eso+india.indiati*es.co*200-04-2;india-)usiness2094>0;dl+-)rands-donna-/aran-ne&-%or/-d/n%.

vii andel&al, Pa%al. C lu(e li+e.D The Financial Epress. 24 ugust 20. 8etrie1ed 2; ugust, 20 +ro*

ttp:&&&.+inanciale(press.co*ne&sa-lu(e-li+e45;0.viii 6a/ra1ort%.Ibid.

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