PowerPoint Presentation

LOUIS VUITTON IN JAPAN

PresentedByArukwe Chioma J.Egbunonu ObioraEkpuyama EdirinMbah Justice C.Osarumwense Annette

AGENDACase synopsisIndustry overviewThe Louis Vuitton brandKey issuesCompetitive landscapePositioning mapMarketing mixSWOT analysisPESTEL analysisPorters 5 forcesRecommendations to key issuesAlternative scenariosRecommended strategyPotential risksMitigation of risksAdditional areas of explorationLouis Vuitton 2016Key learningsConclusionReferences

MISSION STATEMENT

Represent the most refined qualities of Western Art de Vire around the world

SYNOPSISJapan appeared to be a very attractive market for louis Vuitton to enter. 1977 Louis Vuitton opened its first stores in Tokyo and Osaka.LV entered the Japanese market without a local distributor.1980 - 20 million Japanese women owned a bag of the brand 2007- with the expansion the company controlled 54 stores through directly owned shop network in japan.55% of LV revenue came from Japanese consumers Louis Vuitton has an exclusive distribution strategy

SYNOPSIS CONTD

This case deals with the opportunities and challenges of Louis Vuitton in japan , a top player in the European luxury fashion industry, taking into account the unique features of brand management ,integrating culture and consumer behaviour.

SYNOPSIS CONTD2002 - decrease in sales in luxury item globally.Louis Vuitton was forced to adjust its products offering and approach to local consumers.A new marketing strategy limited edition. Collaboration with Japanese artist Takashi Murakami who recreated a colourful pop version of LV monogram in 33 colours.2003- Profit increased by 10 percent.2006- Change in managementEstablishing an internet business Expanding the range of lv products for children.

SYNOPSIS CONTD2009- Global economic crisis resulted in a decline in sales. Facing a weak economy and a shift in consumer preferences.Different approaches were implemented in Japan 7% price reduction Market dilutionIn Japan, Louis Vuitton has lots of competitors which make the market saturated

INDUSTRY OVERVIEWMarket weightWorld second largest luxury market (www.McKinsie.com)12% - 40% of worldwide sales for luxury brand (HSBC Feb, 2009)The market is Worth $15 billion -$20 (www.McKinsie.com)Nature of market Mature and concentrated marketWorld highest per capita spending for luxury goods

CONTDCategories of buyersSenior citizens >65Young working women between 20-35Homogenous consumersKey success factorsQualityBrand reputationThe growth rate in Japan stated to decline in 2006

THE LOUIS VUITTON BRANDLouis Vuitton Malletier the company's founder was born in 1821 in Anchay, Jura, FranceHeadquarters : Paris, FranceEstablished: 1854In 1854 it launched its first product- Flat Bottom Trunks with Trianon CavasesRegional involvement: GlobalIn 1885 the firm opened its first overseas firm in London England

THE LOUIS VUITTON BRAND CONTDIn 1888 its logo Marque Louis Vuitton depose was createdIn 1896 George Vuitton created the Monogram Canvas and attained worldwide trademarks on it to limit counterfeitingRevenue in Japan (year end 1st October, 2015)- 25.3 billion (www.lvmh.com)Growth in revenue: 18% (www.lvmh.com)

LOUIS VUITTON MOET HENNESY BUSINESS DIVISION

LOUIS VUITTON PRODUCT OFFERING

KEY ISSUES2008 Economic CrisisCounterfeitingOver dependence on the Japanese marketChanges in consumer preferencesKeeping control of its Multinational businessMarket dilution

COMPETITIVE LANDSCAPE11 luxury brands in Japan as at 20052 main competitors- PRADA and GUCCILong-standingWell-established luxury brands that cater to the high-end marketHigh Quality Materials and Fine CraftsmanshipThe brand positioning of Louis Vuitton in Japan as compared to Prada, Gucci and other fashion brands is based on prestige pricing (value) and exclusivity

NUMBER OF STORES

POSITIONING MAP Prestige Pricing (Value)

Mass Market Exclusivity

Affordability

MARKETING MIX

S.W.O.T ANALYSIS

STRENGTHWorlds Number one luxury BrandPopular and profitable in Japanese marketRecognizable brand and logoEfficient management practicesQuality products and Lifetime free repairsHigh Productivity and quality control standardTeamwork efficiency

STRENGTH CONTD Consumer loyalty Successful advertising strategyCollaboration with well known Japanese ArtistsStrong presence of Louis Vuitton stores in Japanese cities

WEAKNESSExpensive and not readily available due to exclusivity Brand product not affordable to the average consumerChallenges in controlling multinational businessMarketing strategies are focused on accessing higher income groupsLarge number of luxury competitorsDecline in sales due to global economic recessionFalsification of LV logo and market dilution

OPPORTUNITIES Consumers Long time attachment to Louis Vuitton brandEmploying highly experienced personnelEvolution of ageing of Japanese populationIncreasing demand for high fashionSocio Cultural relations with fashionConstant innovation and support

THREATSWorld wide Counterfeiting High competitive brandsChallenges arising out of global recession and impact on Japanese customers Over dependence on the Japanese marketChanging taste of customer preferences Possible departure of Marc JacobsKeeping control of multinational business

P.E.S.T.E.L. ANALYSIS

POLITICAL FACTORSStable Political environment Multi party parliamentary representatives Low sales and high cooperate tax rate of 30% (World bank) Emerging marketMember of WTO, APEC, OECD, G-20, G-8Open to investment with foreign entrants

ECONOMIC FACTORSAnnually growing GDP- 4.210 trillion (2015) 0.8% growth rateHigh per capita income $33,223 (2015)Population 126,422,104as of Sunday, February 7, 2016, based on the latest United Nations estimatesGrowing middle classLow rate of inflation 3.2% (may 2014) Population below poverty line 16% (2010)Labor force 65.93 million World Bank

CONTDExports $697 billion Japan Luxury industry annual growth rate 6% Rise of stock price due to economic policyExchange rate - constant exchange rate measurement Competitive luxury industry World Bank

SOCIAL FACTORSGroup oriented cultureExclusive life styleHigh demand for luxury goods- mostly women Japanese consumers are beauty driven Ageing populationDeclining labor forceChange in consumer preference

TECHNOLOGICAL FACTORSRapid development of InternetMost advanced cellular networks ( source, euro technology)Internet users 122, 799, 736 High Trend in mobile devices-LV is also reckoning its odds in a potential partnership with a technology company to launch its first smartwatch series (Reisinger, 2014) World Bank

ENVIRONMENTAL FACTORSMountainous, volcanic island countryStrong environmental policiesInadequate natural resourcesNatural disastersGlobal warming Nuclear power threat Air pollution Acid rain

LEGAL FACTORSIntellectual property right protectionHigh regulatory hurdlesRigid and slow legal processNo 1 for resolving insolvency in the world

PORTERS 5 FORCES

BARGAINING POWER OF BUYERS/CONSUMERS (LOW)Buyer are insensitive to the priceBrand loyaltyHigh product differentiation

BARGAINING POWER OF SUPPLIERS (LOW)Numerous no of suppliersPurchasing raw materials from their supplier on the bases of consignment Acquisition of key suppliers of leather productsManufacturing of products in different locationsLarge pool of suppliers due to strong brand value

THREAT OF NEW ENTRANTS (LOW)High barrier into the industry due to the amount of resources required (Capital expenditure)The industry is driven by brand recognition and loyalty and this takes a long time to buildSustainability is also difficult

THREAT OF SUSBSTITUTE PRODUCTS(MODERATE)Large number of relatively low priced productsAs a result of the target group, middle and high class individual who seek luxury brands to display affluence will still patronise brand regardless of priceCounterfeiting is a huge problem in the industry

THREAT OF COMPETITORS (MODERATE)Several competitors in the marketConsumer perception of the industry is not based on price alone but image and quality

OUR RECOMMENDATIONSLouis Vuitton should leverage its competitive advantage in building luxury brands (expansion/diversification)Should expand to smaller cities in JapanConsider alternative manufacturing sitesCollaborate with the Japanese and other neighbouring country government to combat counterfeitingReduce over dependence on the Japanese market and tap into emerging markets

WHAT STEP DO WE TAKE FROM HERE

How could Louis Vuitton reinvent itself and regain what used to be its well-attested fame in Japan

ALTERNATIVE SCENARIOS

LOUIS VUITTONS STRATEGY IN JAPANIContinue the prestige pricing, high quality and strict distributionIIPrestige pricing, market dilution and expansion of storesIIIPrestige pricing, high quality, more product offering and promotionsIVPrestige pricing, high quality and continue with the limited edition

SCENARIO I

SCENARIO II

SCENARIO III

SCENARIO IV

RECOMMENDED STRATEGYScenario IIIPrestige pricing (Value)High qualityMore product offeringPromotions

POTENTIAL RISKSLoss of customers due to price sensitivityContinuous counterfeiting resulting from emerging technological know-howReduction in sales (cyclical) i.e. people waiting for promotion periodsIncreased cost incurred in running promotionsRecurrent strategy i.e. Competitors imitating louis Vuitton brand strategy

HOW TO MINIMIZE THE IMPACT OF THESE RISKSSuperior innovative promotional ideasThe fashion industry should better collaborate with the Japanese and other neighbouring country government to combat counterfeitingIncrease rental option to minimize counterfeiting and instill more sense of belonging in the Japanese citizens

OUR SUGGESTION(NEW AREAS OF EXPLORATION)

WHERE IS LOUIS VUITTON TODAYLouis Vuitton continues to provide quality goods for the fashion industry with uncompromised traditional craftsmanship. LVMH also seeks to provide more innovative products through collaboration with brands in the other industries.The partnership between Louis Vuitton and the German car-maker BMW to create an exclusive collection of suitcases and bags exemplifies Louis Vuitton's dedication to the art of travel.Louis Vuitton also engages in fighting counterfeits and providing a safer online shopping experience with Google and eBay in a collaborative effort to protect

CONTD Intellectual property rights and preserve the value of trusted brands (LVMH, 2014/ Market Watch, 2014)LVMH Mot Hennessy Louis Vuitton, the worlds leading luxury products group, recorded an 18% increase in revenue, reaching 25.3 billion, for the first nine months of 2015 (www.lvmh.com)The Group continues to deliver strong growth in Europe and the United States, and is seeing an acceleration in Japan.

TEAMS KEY LEARNINGSThe issues associated with over independence on a particular marketBrand management, value and positioningUse of various market strategy to thrive in an industry/marketConsumer behaviour and how it impacts the success of a brandChange is inevitableKey success factors in Japan (centralized system and proximity of stores)Exclusivity, brand image and how to maintain customer loyalty in changing economic environment

CONCLUSIONDue to the experiences and lessons learnt in Japan, Louis Vuitton has been building its Global strategyThe brand is now expanding its strategy towards mid sized and smaller cities

REFERENCESLouis Vuitton in Japan Ivey 9B10M067HSBC Feb, 2009www.McKinsie.comWorld bankwww.lvmh.com

QUESTIONS/COMMENTS

SO! ANYWHERE, WHEN NEXT YOU & I HEAR LOUIS VUITTON, WHAT SHOULD COME TO OUR MINDS

LOUIS VUITTONPRESTIGELAVISHCLASSYELEGANTGLAMOROUSALLURINGMAGNIFICENTSOPHISTICATEDFASHIONABLEUPSCALEESTEEMAUTHENTICEXQUISITESTATUSFLASHYBEAUTIFULSTYLISHBAD-ASSCREATIVE