Case in MarketingGroup 2

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

Founded “House of Louis Vuitton” in 1854

Headquartered in Paris Louis Vuitton merged Moët Hennesy in

1987 Distinguished five business lines

• Wines & Spirits • Fashion & Leather • Watches & Jewellery • Perfumes & Cosmetics• Selective Retailing

Operated around 1500 stores and 50 Brands over the world

Company Profile

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

　 LVMH Gucci Richemont Bulgari Hermes

Main market Asia-Pacific

Europe, North

America, Japan

Europe US, Japan, Asia-Pacific

Outside French, Japan

Stores 1500 348 　 99 200

No. of brand 50 10 19 4 　

Luxury products goes up high quality and unique design in the world ( Total spending $88 billion)

The main customers shift from exclusive to middle class

Market and Industry (World)

2001 2002 2003 2008E$0.0$5.0

$10.0$15.0$20.0$25.0$30.0$35.0$40.0$45.0

$26.0 $26.7$28.8

$40.7

Financial Wealth of Millionaires Worldwide (trillions)

Market and Industry (Asia)

Japan

• Stores 47• Mature

market

China

• Stores 16• Business

chance• New

lifestyle

India

• Stores 22• Economi

c growth• Culture

difference

South Korea

• Stores 15• Young

age customer

As high potentials. middle class with having stable income and the increased of population exist in Asia market.

Although Asian market is attractive, each countries has difference environment and behavior.

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

Company Performance

2001 2002 2003-500

- 500

1,000 1,500 2,000 2,500 3,000

Income from Operation by Business Group

Selective RetailingWatches & JewlleryPerfumes & Cosmet-icsFashion & Leather GoodsWines & Spirits

Income increased, but

sales flactuated for 2001-2003

Reduction administrative

cost

Financial condition remained stable not improve

2001 2002 2003 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Sales by Business Group

Selective RetailingWatches & JewlleryPerfumes & Cosmet-icsFashion & Leather GoodsWines & Spirits

27%

20%17%

15%

15%6%

26%

21%

17%

16%

13%

7%

Sales by Geographical Regions 2002-2003

America Europe (excl.France) France

Japan Asia (excl.Japan) Other

Regional shares are relatively

equal

Sales results remain over

years

Asia market slightly reduced

Company Performance

Strengths Weaknesses

High brand value Large global distribution

network 50 luxury brands Wide range of product lines High sales in different

regions Key player in Asia-

Pacific

Limited distribution in

Asia

Focus mainly in big

countries

Some products do not suit

local taste

Opportunities Threats

Prosperity on the rise

Fast growing economies

New middle-class

customers

Japan remain strong

consumption

High competition

Macro-problems (political,

culture,…)

Counterfeit products

Gray market in Japan

SWOT Analysis

Why was LVMH sales unchanged while demand was

growing in Asia?

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

French culture in Asia market

Diversification of lifestyles in Asia especially new entrepreneurs

Narrow distribution in Asia excl. Japan

Marketing Issues

Japan China India S. Korea

No. of store

47 16 22 15

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

Challenges in Asia

Counterfeit Products

Gray Market in Japan

Different Customer

behavior in Asia

Cultural and lifestyle

difference

Economic and Political Risk

HOW to IMPROVE in Asia market?

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

Addressing solutionsSolution Pros Weig

ht Cons WeightProduct

customization and Government interference

• Suit local tastes• Fix counterfeit

problem• Increase sales

4

• Long time to build relationship with Governments

• High investment-2.5

Production in China and India

• Reduce production and distribution costs 3

• Lower brand image

• High management investment

-2Price differentiation by regions and social classes

• Expand customer range

• Higher market penetration

4

• Lower brand image

• Encourage gray market

-1.5

Enhance brand and customer values and distribution network

• Suit local taste• Enhance market

penetration• Improve brand

image4.5

• High capital investment

-1

Addressing solutionsSolution Pros Weig

ht Cons WeightProduct

customization and Government interference

• Suit local tastes• Fix counterfeit

problem• Increase sales

4 • Long time to build relationship with Governments

• High investment

2.5

Production in China and India

• Reduce production and distribution costs

3 • Lower brand image

• High management investment

2

Price differentiation by regions and social classes

• Expand customer range

• Higher market penetration

4 • Lower brand image

• Encourage gray market

1.5

Enhance brand and customer values and distribution network

• Suit local taste• Enhance market

penetration• Improve brand

image4.5

• High capital investment

-1

Company Profile Market and Industry Company Performance Marketing Issues Challenges in Asia Addressing solutions Key solution implementation

Content

Customer Value and

Relationships

SegmentationTa

rgetin

g

Differentiation

Posi

tion

ing

Product

Promotion

Pla

ce

Pric

eSEGMENTATIONYoung people, old people, new entrepreneurs, lineage wealthy people and middle class buyers

TARGETINGYoung people, new entrepreneurs, middle class buyers

DIFFERENTIATIONProducts based on lifestyle and culture. Designs in bags and fragrances in perfume for example

POSITIONINGPositioning products that can be bought to celebrate success and for social status people, new entrepreneurs, lineage wealthy people and middle class buyers

Quality products with differentiation

Should not compromise in price. Continue

charging the same price

Promotion through

testimonials and celebrity

events.

Setting up more stores in financial

hubs such as Shanghai, Mumbai

etc.

Marketing Mix & STP approach

Key solution implementation

Sustain luxury brand image, remain premium price strategy

Exclusive luxury events

to promote brand

Testimonials

Strengthen advertisement

in high-end channels

Enhance Brand value

Key solution implementation

Improve customer benefit to gain loyalty and reduce impacts from counterfeits

VIP club/ high value membership

Lifestyle activities (parties, Xmas,..)

Enhance customer

values

Key solution implementation

Dragon Elephant Sakura

Assimilate indigenious cultural elements into product design to cater for local consumers’ tastes.

Foster local market by embedding the European way of living and lifestyle into the Asian culture.

Product customization

based on lifestyle/culture

Improve customer benefit to gain loyalty and reduce impacts from counterfeits

Enhance brand and customer values and distribution network

Capture more customers, enhance brand, reduce counterfeits

Key solution implementation

Producers

India China S.Korea Japan

Wholesaler/Stores

Wholesaler/Stores

Wholesaler/Stores

Wholesaler/Stores

CUSTOMERS

Unified System

Vertical Marketing System

Prime & Flagship stores

Thank You

Group 2