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Submitted To: Submitted By: Dr. D.D.Swain Ajeet Singh Chauhan Mr.
Contents
1. Introduction 2. Identification of Problem(s) 3. Analysis of Environment 4. Development of Alternative Solution 5. Analysis of Alternative solution 6. Selection and Implementation of Alternatives
Introduction
Louis Vuitton Malletier commonly referred to as Louis Vuitton, or sometimes shortened to LV, is a French luxury fashion and leather goods company. Founded in 1854, one of the main divisions of LVMH headquartered in Paris, France. Known especially for bags and trunks, the company collaborates with prominent figures for marketing and design (most notably supermodel Gisele Bundchen and fashion designer Marc Jacobs). Louis Vuitton, the fashion and leather goods business unit of LVMH Group, the Paris- head quartered luxury goods conglomerate. It was founded by Louis Vuitton in 1854 a French craftsman invented the flat-topped trunk with a canvas cover. The company flourished with the growth of travel by rail and ship. It opened its first store in London. For seven decades Louis Vuitton remained a single-product brand of handmade leather bags before diversifying into leather accessories. In 1987 merged with Moet Hennessy, a French wine maker of 1743 vintage in form of LVMH. Luxury in Europe was for the chosen few. In Europe meaning of luxury was about feeling exclusive where as in U.S the meaning is about feeling special. Luxury is for all. European luxury brands did not have price points aimed at capturing consumers at various levels. American brands did. They had product lines allowed luxury nibbling.
In 1999, the company started working to enter to India. There was a historical reason for choosing India. In the late 19th century, more than 600 maharajas used to buy custom made leather
interiors for their Rolls-Royces and leather bags for their travel during annual vacations. This had helped Louis Vuitton to survive the Great Depression of 1920s. They had become customers for Louis Vuitton. Yves Carcelle, Louis Vuittons CEO was keen on leveraging the historical relationship between India and brand. He knew intuitively that India was a market for luxury products yet to be tapped. Post-liberalization Indian economy had grown. The percentage of those below the poverty line is coming down. In India 97% of the population lived an income less than $2.50 a day. Louis Vuitton while observing about the market scope in India, it observed that the rich in India were flying to London, Dubai, Singapore, New York and Paris to shop because there was nothing available in India. It articulated two clear long-term goals:
Open a Louis Vuitton store in every Indian city with a population of 10 million plus.
Acquire a cumulative customer base of one million in India. Another concern for LV is custom duties ranging between 30% to 70%, which had rendered domestic purchases of luxury products more expensive than offshore. The company spent the interim period preparing the ground. One major concern is MNC like Louis Vuitton would place the domestic leather trade at risk. It is planning here as it had the potential to become a sourcing center for its global requirements and also a manufacturing hub.
Identification of problem(s):
Small target as only 4% households qualify as target segment and super rich-near rich = 3 million
Luxury hotels shop space was a constraint as rentals were twice compared to that of luxury malls. Finding the market to be tapped.
Analysis of Environment:
One of the biggest factors that could affect sales of luxury goods in India is the tariff. The higher the taxes are for luxury goods, the smaller the incentive is to sell those goods because demand isnt going to be as high if prices have to increase in order to make up for the tax. The market is currently set up for an oligopoly, because the demand for goods at a luxury store would be inelastic for anyone interested in a luxury item and there are so few stores.
SWOT ANALYSIS
Strengths Brand Equity One of the best in luxury segment Flagship brand of fashion and leather goods of LVMH Craftsmanship focused production Weakness Heritage brand
Stores in Luxury malls Store Area Opportunities Individual store Time changing brand Customizing the products based on customer needs
Threats Exim policies Perception of the consumers about the offshore purchases Threat from competitors US luxury product brands
Its important to establish different price points with varying level of quality so that this segment (cocooners: who try to increase their income eventually buying exclusive products) can establish brand loyalty and eventually buy more expensive items once they establish a higher income.