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Louis Vuitton Analysis Essay

INTRODUCTION

This is a report about the brand named Louis Vuitton in terms of brand analysis on the context of Marketing Lectures. We choose Louis Vuitton because it is an interesting brand to analyze since it is strongly established in the market and has been growing despite the economic crises. To do so, we are going to analyze the brand from three different perspectives.

Louis vuitton – The brand

Founded in 1854 by Louis Vuitton, Louis Vuitton is nowadays one of the best known luxurious brands around the world. Has its headquarters in Paris – France but it is spread out around the world. It’s key people are Bernard Arnault (President), Marc Jacobs (Art Director) and Antoine Arnault (Director of Communications). LOUIS VUITTON (1821-1892)

SWOT Analysis

Strenghts
– Heritage – More than 100 years history
– Biggest luxury brand in the world with great profits
– Loyal customers in Japan, Europe and USA.
– Belongs to the LVMH group
– Strong a well-defined brand positioning
– Wide geographical presence. It has presence in the world’s leading commercial hubs, New York, London, Tokyo, Hongkong, etc. – Louis Vuitton pieces are iconic/Legendary house of fashion – Excellence in design, quality and customization: since the 19th century luggage is still made by hand and LV offers costum made products, like a toiletry case especially made for opera singer Marthe Chenal. – Visual identity easily recognized (LV initials on every product) – Broad product portfolio. From Luggage to glasses and fine jewerly. -Sustainability values well defined; environmental responsibility within the business – “5R’s” – Renew, recycle, reduce, review, repair. – Philanthropy values well defined

– Anti counterfeiting team around the world. Their own stores allows to control product quality and pricing, and prevents counterfeiting products to enter the distribution channels. – Online presence/e-commerce exclusively for their products. Wide geographical access rates. – Advertising featuring world known celebrities like Madonna, Gisele Bündchen, Angelina Jolie, Michael Phelps.

Weaknesses

– Restricted retails opportunities as Louis Vuitton only sells at their own stores
– No discounts or sales
– Limited customer base – only an elite can afford
– Depends on economic situation: depression and recession makes the demand of luxurious goods decline.

Opportunities
– Emergent markets as Brazil, China, India, Middle East (…)
– More conscious consumer behavior
– Partnerships with well-known fashion designers to renovate image and keep the interest of the fashion followers.
– Custom made products that can satisfy a specific client need.
– Variety of products allows entrance in more markets

– Advertisement through celebrities and important people, on Tv, magazines, etc.
– Important exhibitions, events and contests promoted by LV or where LV can participate.

Threats
– Counterfeiting products
– Animal rights protection group
– Current global economy/economic recession or crisis
– Different markets penetration implies different marketing & communication and distribution strategies. This can be dangerous but also can represent an opportunity

Porter’s Model – Competition analysis

The analysis of an industry, luxury goods in Luis Vuitton case, from a strategic point of view, is done by the definition of the competition factors determinant for the structure related to that same industry, for its evolution and for the relationship between those. With Porter’s analysis model, we aim to measure how this industry could be threaten by competition/new entrants, the bargaining power of suppliers and of the customers, the threat of new potential substitutes and finally the rivalry among existing players. After the analysis we will be able to determinate the potential income and the current/near future situation of the Company in the sector.

Following the Porter’s five forces Model

The threat of Potential Entrants – the brand is already very well established part of a solid group called Moët Hennessy Louis Vuitton, MHLV. Even though new entrants can always cause inexpected harm to the already existing companies, we could say that LV has an high-level of differentiation and positioning that needs many years to achieve plus the huge investment needed to compete at this level would strongly desencourage new investors to focus them selfes at this level of competition. We should also mention the high-rate loyalty from Luis Vuitton company/brand customers. The brand has already created a style (protected by numerous patents) and even if some brands create something similar, can’t replace LV supply as a whole.

The bargaining power of customers (Buyers) – the power to bargaining of buyers seems to be really restrict. LV is a luxury brand, colpetly targeting prime-class customers, with status, that don’t mind to pay for the image LV gives them and certainly will not bargain a price. The price plays an important role on the companies positioning, it is one of the focal interesting points of this luxury items. Customers also look for high quality products, which causes even more restrictions to their bargaining power – Higher price supposedly Higher quality. The bargaining power of Suppliers – Suppliers, many of them located in locations where the social and economic scenes don’t allow to bargaining much, big groups like MHLV requires huge demand of items which give bairgain power to the LV and not to the Suppliers, which leads to a bairgaining disable stage .

A few exception can be made, regarding the unique attributes to be present on a certain LV item to be sold later, such as a diamond, for example, in this case and since it is a precious stone could lead to a certain level of bargain power from the supplier The threat of new potential Substitutes – It is possible to rise new products from other companies already existing in the upscale products market, although the brand lives for itself. LV is nowadays on such a level that its no longer just and only about the design or for the purpose of the product itself.

The products re purchased for the brand power as well, for the image that the customer take advantage of when using a LV purse or bag or a travel suitcase. Rivalry among existing firms – There are rivalry against this kind of companies/brands, but their products are so exclusive that they can quite well cohabit, plus they are protected by strict copyright patents that prohibits product duplication. The most direct rival groups of MHLV, that holds Luis Vuitton brand, are Christian Dior and Valentino Fashion Group. It also happens to exist rivalry against brands part of the same company, which somehow converge the income and makes brands and the company itself stronger. I believe they respect each other.

Conclusions:

The industry is attractive and quiet restrict for the ones that already exist, in the way that the consumers and suppliers have no space to impose their prices and a huge investment would be required to attempt to reach this level. For LV, it is also attractive because they are in a really strong position and very well established with copyright protected items in the market that can not be copied by their direct rivals or any other brand. Anyway we should keep in that they have to keep differentiating their products and getting better and achieving excellence towards new consumers.

PESTLE Analysis
PESTLE Analysis – Portugal

Political factors

Republic of Portugal – President Aníbal Cavaco Silva and the government body, Prime minister – Pedro Passos Coelho – and cabinets, are nominated by the president. Portugal has a long and stable relation with the European Union (since 1986), with African countries, strategic relation with USA, India and China. Member of NATO since 1986.

Economical factors
Portugal have an open economy.
Economical recession
– Inflation tax (2011), 3.66%
– Unequal distribuiton of income around 5% (2010)
– Minimum wage in 2012 is 485 euros and around 10% of the population earns that value (2010 data)
– According to Bain&Company, the luxury market reached a market value of 172 thousand million euros. In terms of geographic location, Europe and Americas have 68% of this market and China and India are the emergent countries who stand in the luxury business.
– In Portugal, the luxury market in not expressive.

– Personal credit loans decreasing

Social factors
– Increasing of unemployment rates – around 15,7% in July (2012)
– Conscious consumer as cause of a reduced disposable income
– Fashion clients go shopping less times a month
– Aspirational public who wants to buy a certain brand and saves to do it –
Significant group of people that dreams about purchasing a product from a certain brand and as they can not buy it, they go to counterfeiting product

Technological factors
– Internet usage is growing and the majority of the population having Internet connection has broadband.
– Investment in the Technological Plan as strategy for growing based on knowledge, technology and innovation. It aim to create partnerships with foreign universities.

Legal factors
– Intellectual property protection – according to WIPO, No 45/85 of Sep 17, 1985 states the copy right and related codes.

Environmental factors
Portuguese Environmental Agency states Decree Laws


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