louis vuitton moet hennessy
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04/11/2023 1
Louis Vuitton Moet Hennessy:Expanding Brand Dominance in Asia
Presented byGroup 6Nitish Bodake (9010)Sandesh Nayak (9043)Aparna S (9066)Dr.Balamurali (9068)Priya Surendran(9094)Sriprasanna M (9111)
04/11/2023Group 62
Agenda Company Profile Need for Globalization LVMH in Asia and challenges faced Core issues Objectives Competitors Cultural dimensions Tackling the internal issues Recommendations
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Louis Vuitton Leading luxury products group with 150 years
of heritage and with 50 sub companies 1500 retail stores across 60 countries Net income – Euro 2 billion clear leader in directly operated stores with
approximately 350 retail outlets 70%+ is in-house production
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Brand Portfolio
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Why Global? Competition Competitive advantage
Sustainable development in productivity driven by quality of business strategy and operations.
Customers are fragmented and scattered all over the world
Strategic window is open for Asia
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Strategic Windows for the Asian Market Emergence of a high net worth individuals Declining trade barriers Changes in communication Better information and transportation
technologies Increasing middle class income Increasing young population Growing sophistication in lifestyle needs
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LVMH in Asia
Expanded to China, South Korea, India, Japan
In 2004, 40% of sales from Asia (20% from
Japan)
Fashion and Leather segment – 33% from
Japan
18 retail outlet and planning to make 40
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Challenges faced in Asia
Declining Asian tourism
Cultural differences
Embedding the French culture into the Asian culture
Arbitrage businesses in Japan
Counterfeits in China
LVMH fakes accounted 18% of the counterfeit accessories
apprehended in the EU in 2004
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Core Issues Should Asia be given more emphasis than
European markets? Private ownership versus Franchising Cultural influences of Asian markets
No liquor retail in middle east Special consumption tax on luxury goods in Asia
Protecting the brand against dilution the culprits being counterfeits Arbitrage
Managing Political, legal and cultural regulations
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Objective
The strategy to operate in the Asian markets
Strategies to address the legal, political and
government regulations and risk
Addressing the brand dilution
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Luxury products market A good that consumers will pay a premium
which is above and beyond its utility. Level of acceptance and understanding of
luxury in different markets is different. Correlate with GDP Short and finite product life cycle
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Product Portfolio of luxury brands
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Influencing FactorsControllable Price Exclusivity Product design and
style Brand management Distribution
Uncontrollable Political risk
Against luxury brands Economic
environment Cultural barriers
Sales of wine Legal and
government regulations Customs
counterfeits
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Perceptual Mapping of the markets w.r.t to exclusivity
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Perceptual Mapping of the markets w.r.t to indulgence
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Size of the Asian Markets
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Strategic Importance of Markets Japan - must win market
unaffected by recession 25% of the luxury goods Aspirational Market is fairly mature
China - must win market Second largest luxury goods market after US both outsourcing manufacturing as well as end
consumption Will drive a large portion of the growth in the industry No dominant brand High demand for luxury goods coupled with internet,
travel and marketing have accelerated the embrace of different cultures like European
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Strategic Importance of Markets Korean Market – most ‘Luxury friendly’ market
People loves to distinguish themselves from each other
Higher expenditure than Japan, US and Europe 4% of global spending on luxury goods Increased tourism
Indian Market – Potential market Smaller market compared to the other countries 1.7 million Indian qualify as rich (source: consumer
dynamics)
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Cultural Dimensions
China France India Japan Singapore South Korea World0
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Power distanceIndividualism/collevtivismMasculinity/feminityUA
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ABCD Framework
Japan China South Korea
India
Physical Access
47 stores 9 stores 15 stores High custom duties; against luxury products10 TH and 12 CD
Economic access
High per capita income ; hence affordable
Average percapita income. Partially affordable
affordable growing middle class. so partially affordable
Buying behaviour
•Quality and premium goods•status driven
•Price sensitive•Status driven
•Quality (finer) premium goods
Value for money
Consumption pattern
•Both urban and rural•Modern culture•Mass appeal for western goods
•Conservative•Affordable for urban
•Modern culture•Urban•homogenous culture
•Traditional •Urban•Nascent stage
Disposal Tradition of passing on to the next generation
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Resource Based ViewTangible Resources Presence in many
countries Skilled labor Financial strength Multiple successful
products High Productivity
Intangible Resources
Design innovation Brand Image
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Competencies & Capabilities
Competencies Creating exclusivity ,
production, distribution, sourcing and R&D
Designing, manufacturing, marketing, advertising and branding
LVMH is the only company in the segment with substantial holdings in alcohol.
Capabilities Unique capability to
harness the creativity potential hidden in people
Massive cost savings and unique product differentiation
Ability to penetrate easily into a new market
Reinvent itself every season
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Managing Political Risk Activist groups against the popularization of
luxury market Tolerate to win over the Asian markets Use of business environment risk intelligence
systems like-Historical Ratings Research Package (HRRP), Financial Ethics Index (FEI), Quality of Workforce Index (QWI), Labor Force Evaluation Measure (LFEM), and Government Proficiency Measure (GPM)
Use of operation risk intelligence system
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Managing RegulationsCountry Issue and Importance Mode of tackle
South Korea
Importance-Comparatively smaller market size but high potential for luxury goods, young age of customers, stable and secure marketTo retain the market for lifeStand alone market cum Must win market
Ally/ Accede- to manage the regulatory changes
China Huge marketStand alone cum Must-win market
Accede -to manage the regulatory changes
Japan Growing market for luxury goodsMust win cum Lead market
Accede for time being then gain a strong foot and Alter
India Issue: 85% duty on luxury goods+ve : conducive environmentPotential market
Alter- to manage the regulatory changes
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Hopes Increasing growth in GDP Substantial growth in the number of Millionaires
especially in India and China Reduction in tariffs in luxury brands in China Increasing ‘Mall culture ’ in China Women gaining economic independence Increasing Chinese Travellers to Europe ‘Little Emperors’ – young buyers Increasing Asian Tourism Emerging Asian markets like Taiwan, Thailand Chinese government is helping build up brands
that require IPR protection to check counterfeits
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Recommendations Asian Markets should be given emphasis Product adaptation – Chinese Lantern, Indian
traditional designs Give exclusivity and status to the products Use internet as a source of inspiration and ideas
of luxury brands Where to buy Email newsletter from reputed brands Establishing brand’s loyalty and authenticity
Near luxury opportunity Affordable luxury goods for middle class
Evergreen market
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Recommendations Poor brand image for Chinese manufactures
products Get IPR protection to check counterfeits For China, tap the potential cities like Shenzhen,
Hangzhou and Macau Spend on advertisements in Chinese media more
which only very few brands like LVMH can afford Faster pace and reference to tradition
China – Ownership (DOS) rather than licensing Create a ‘luxury culture’ through fashion shows,
special events and other public relations efforts Increased distribution of alcohols – higher margin
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Recommendations Simultaneous product launches in India to reduce the
time lag and to build brand loyalty Tap the lavish Indian wedding markets along with
product adaptations. Utilization of International airport retail space since it
speaks out aspect of modern life and international lifestyle
“The strength of Louis Vuitton is its high recognition among people of wide generations, so opening more shops in middle-size cities makes sense.” ~ Mitsubishi
UFJ Securities. Japanese market is not mature for LVMH Prevent arbitrageurs by maintaining a profile of the
customers
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Recommendations Finer Accessories for the South Korean Market Provide more exclusivity
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Learning Lower/ value for money pricing necessarily is
not the best strategy Mature market entry may not be always a bad
option Effective Usage of Internet and Marketing to
build brand image Brand building through providing exclusivity
and status
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A journey is not a tripA journey is life itself,,