Description
This is ppt about marketing strategies adopted by LVMH to garner market share in luxury goods space.
LVMH & LUXURY GOODS MARKETING
Notable Facts
•
Moët Hennessy Louis Vuitton , usually shortened to LVMH, is a French holding company.
World’s leading luxury brand empire with excess of $ 17 billion revenues and more than 60 brands Took luxury marketing to new paradigm by connecting with everyday customer’s aspirations
– – – – – – –
•
•
Champagne: World No. 1 Cognac: World No. 1 Fashion & Leather Goods : World No. 1 Perfumes & Cosmetics : World No. 3 No. 1 in France Watches & Jewellery: World No. 3 Selective Retailing: World No. 1
Product & Revenue Categories
Wines & Spirits (18%)
Fashion & Leather (34%)
Perfumes & Cosmetics (18%)
Watches & Jewelry (5%)
Selective Retail Distribution (25%)
Business Environment
?
?
?
?
The main strength of the company is Strategic Alliances and partnerships it performs with famous and quality brands. It has a total of 60 prestigious brands under its umbrella. Problems: LVMH is vulnerable to fluctuation of the economic environment. For example, the effect of September 11th terrorist attacks had an important impact on the demand for luxury products and therefore on LVMH sales results. Fluctuation of the sales. The sales of LVMH are unforeseeable; they strongly depend on the environment.
Innovation
?
?
?
?
?
Innovation and high quality – key to the success for luxury goods. In case of LVMH, production process and its design can take even months. Product line is extensive however it is only conformed of high priced products. Price in this case is a guarantee of the quality present in the product. Moreover, high pricing represent an element of differentiation that the customer appreciates.
Culture alignment of the strategies
?
?
?
It shifts the production to a particular country (for eg. China) without changing the retail prices. This way they adopt Glocalisation LVMH's experience is clear evidence that the super rich of the world, irrespective of which country they belong to, have similar lifestyles, tastes and aspirations. They want the best and the latest in fashion. So they undertake constant innovation to satisfy their customers. Moreover, with luxury goods purchasers, uniqueness is a prime concern.
Culture alignment of the strategies
?
?
The other concern is the brand should act as a status symbol & help them to flaunt the fact that they have spent big bucks. New consumers are unsure about buying extravagant luxury goods but still want to flaunt their wealth. For eg. “When Chinese buy, they are thinking, „how am I going to use this??”
Problems
They have only one retailing system. The unique retailing system may be a threat if it not adapted for all their products: it may be different to retail wine and cosmetics. The target is very large , that is why they have to keep classical models and an innovative and fashion line to satisfy the whole target
Objectives
?
?
?
Expand the consumer base for luxury items Cater to the needs of a more diverse nouveau riche clientele “The trick is not to sell real luxury to very rich people. It’s to sell a perception of luxury to aspiring people.”
Strategies
To expand the current existing brands geographically
Alliances with new creators
Acquisitions of luxury companies in foreign countries
Acquisitions-I
? ? ?
? ? ? ?
?
? ? ?
? ?
LVMH focussed on growth and expansion in the mid 1990s In 1996, 61% stake in DFS Group Ltd. a specialty retailer that catered to international travelers Winery Chateau D'Yquem Fashion companies Céline and Loewe In 1997, Acquired Sephora, the French retailer of perfumes and beauty products Invested in Douglas International, a German retailer of cosmetics and beauty goods. In 1998, Purchased Le Bon Marché, an exclusive specialty retailer in Paris Marie-Jeanne Godard, a leading distributor of fragrances and cosmetics in France. Premium champagne brand Krug from Rémy Cointreau Upped its interest in Gucci, from 4.8 percent to 34.4 percent in early 1999, with the hopes of acquiring the company
Acquisitions-II
Year 1999 marked the company's busiest year in terms of acquisitions
?
?
? ?
Invested in four American beauty products companies: Hard Candy, which targeted female youths, Bliss Spa, BeneFit Cosmetics, and Make Up For Ever Established a new watch and jewellery division, which included Tag Heuer AG, a Swiss watch maker in which LVMH gained a majority interest Acquired luxury watch makers Zenith, Ebel, and Chaumet. Majority interest in Thomas Pink, a British shirt maker Strategic partnerships to remain competitive: Partnered with Italian fashion company Prada, usually a competitor, to acquire a majority stake in fashion design house Fendi
?
LVMH – Strong Fundamentals
?
?
? ?
Presence in all luxury sectors Geographic balance (Presence in 3 continents) Multi-brand strategy Synergies stemming from the group?s size and internal organisation
LVMH Strategy
Selective acquisition strategy
? ?
Very selective external growth Strengthen strategic activities
Prioritizing internal growth
? ?
? ?
Innovation (20% sales from Perfumes) Strong support of brand image(12% of group?s sales dedicated to communication) Synergies Control over distribution(>1300 stores in 2001)
Adjusting prices in changing economic conditions
?
?
?
?
?
Increasing prices to avoid stocking up of designer products and selling to down-market customers Expenditures on perfume & cosmetic advertising reduced Raised prices to counteract the effect of currency devaluations Price increase when tourism is at its peak Got long term lease at one-third rates
Luxury goods & Pricing Strategy
?
Luxury Goods: In economics it is defined as goods whose demand increases more than proportionally as income rises; i.e. high income elasticity
? It
is not constant with respect to income, & may change sign at different levels of income. Eg. A wealthy person will stop buying luxury cars in his automobile collection to buy an airplane when his income further increases
?
Luxury Pricing Strategy
? No
Markdowns: It might devalue the brand ? High Mark ups: Perfect quality & fashionable
Luxury Pricing Strategy
?
Latest
? Wine
& Spirits division hit hard in 2009
? Revenue
declined by 12% ? Profit plummeted 28%
? The
worst phase was the first half of 2009, but in the second half the condition improved due to revitalized demand in China and the category?s “positive momentum” in the United States, where LVMH launched Hennessy Black earlier in the year
?
Even after this setback, LVMH has resisted price decreases & even raised prices in certain
Do you think high retail prices charged for luxury goods are worth paying?
Yes, • Luxury brands are aspirational in nature • High perceived conspicuous value signaling wealth - an expression of power and status • Sense of Uniqueness – limited availability, high prices • High Social Value: gives a sense of belonging to a particular prestige group • High perceived emotional value: hedonism • Highest benchmark for quality
•
If prices are reduced
– – –
Exclusivity will be lost The aspiration factor will be lost No status left in owning the product, many people will be able to have it
Effect of 9/11 Terrorism? Tourism?Luxury Brands
?
Customers post terrorist attacks paid more attention on saving and there was a sense of caution Sense of caution extended from purchase of luxury goods to the stock markets Western and Asian tourist place importance on buying “gifts for others” and slowdown in tourism would directly effect sales of luxury goods. A vicious cycle where sale of fake luxury goods supports terrorism and terrorism supports sale of fake
?
?
?
Facts
?
LVMH grew by 40% in 2000 and till September 2001 also they were maintaining the same growth rate It slowed down a little post 9/11 but they concentrated more on Europe and Asia for their growth They grew from 566 stores in 2000 to 765 stores in 2001. Both net sales and sales volume grew because of local customer in Japan, Europe and US
?
?
References
1)http://www.google.co.in/search?hl=en&source=hp&q=lvmh+pricing+strategy &meta=&aq=0&oq=LVMH+pric&rlz=1R2GUEA_en-GBIN332 2) http://www.oppapers.com/essays/Marketing/184038 3) http://www.allfreeessays.com/essays/Lvmh/70170.html 4) http://www.authorstream.com/presentation/Funtoon-7906-lvmh-IndexWorkshop-Case-Analysis-Debate-Questions-Use-Resources-DisclaimerLearning-Objectiv-ppt-powerpoint/ 5) http://www.tradenewsonline.com/content/show/id/7219 6) http://www.articlesbase.com/online-promotion-articles/lvmh-delivers-strongfirst-half-fashion-sales-619870.html 7) LVMH annual report 2001
THANK YOU
doc_168585897.pptx
This is ppt about marketing strategies adopted by LVMH to garner market share in luxury goods space.
LVMH & LUXURY GOODS MARKETING
Notable Facts
•
Moët Hennessy Louis Vuitton , usually shortened to LVMH, is a French holding company.
World’s leading luxury brand empire with excess of $ 17 billion revenues and more than 60 brands Took luxury marketing to new paradigm by connecting with everyday customer’s aspirations
– – – – – – –
•
•
Champagne: World No. 1 Cognac: World No. 1 Fashion & Leather Goods : World No. 1 Perfumes & Cosmetics : World No. 3 No. 1 in France Watches & Jewellery: World No. 3 Selective Retailing: World No. 1
Product & Revenue Categories
Wines & Spirits (18%)
Fashion & Leather (34%)
Perfumes & Cosmetics (18%)
Watches & Jewelry (5%)
Selective Retail Distribution (25%)
Business Environment
?
?
?
?
The main strength of the company is Strategic Alliances and partnerships it performs with famous and quality brands. It has a total of 60 prestigious brands under its umbrella. Problems: LVMH is vulnerable to fluctuation of the economic environment. For example, the effect of September 11th terrorist attacks had an important impact on the demand for luxury products and therefore on LVMH sales results. Fluctuation of the sales. The sales of LVMH are unforeseeable; they strongly depend on the environment.
Innovation
?
?
?
?
?
Innovation and high quality – key to the success for luxury goods. In case of LVMH, production process and its design can take even months. Product line is extensive however it is only conformed of high priced products. Price in this case is a guarantee of the quality present in the product. Moreover, high pricing represent an element of differentiation that the customer appreciates.
Culture alignment of the strategies
?
?
?
It shifts the production to a particular country (for eg. China) without changing the retail prices. This way they adopt Glocalisation LVMH's experience is clear evidence that the super rich of the world, irrespective of which country they belong to, have similar lifestyles, tastes and aspirations. They want the best and the latest in fashion. So they undertake constant innovation to satisfy their customers. Moreover, with luxury goods purchasers, uniqueness is a prime concern.
Culture alignment of the strategies
?
?
The other concern is the brand should act as a status symbol & help them to flaunt the fact that they have spent big bucks. New consumers are unsure about buying extravagant luxury goods but still want to flaunt their wealth. For eg. “When Chinese buy, they are thinking, „how am I going to use this??”
Problems
They have only one retailing system. The unique retailing system may be a threat if it not adapted for all their products: it may be different to retail wine and cosmetics. The target is very large , that is why they have to keep classical models and an innovative and fashion line to satisfy the whole target
Objectives
?
?
?
Expand the consumer base for luxury items Cater to the needs of a more diverse nouveau riche clientele “The trick is not to sell real luxury to very rich people. It’s to sell a perception of luxury to aspiring people.”
Strategies
To expand the current existing brands geographically
Alliances with new creators
Acquisitions of luxury companies in foreign countries
Acquisitions-I
? ? ?
? ? ? ?
?
? ? ?
? ?
LVMH focussed on growth and expansion in the mid 1990s In 1996, 61% stake in DFS Group Ltd. a specialty retailer that catered to international travelers Winery Chateau D'Yquem Fashion companies Céline and Loewe In 1997, Acquired Sephora, the French retailer of perfumes and beauty products Invested in Douglas International, a German retailer of cosmetics and beauty goods. In 1998, Purchased Le Bon Marché, an exclusive specialty retailer in Paris Marie-Jeanne Godard, a leading distributor of fragrances and cosmetics in France. Premium champagne brand Krug from Rémy Cointreau Upped its interest in Gucci, from 4.8 percent to 34.4 percent in early 1999, with the hopes of acquiring the company
Acquisitions-II
Year 1999 marked the company's busiest year in terms of acquisitions
?
?
? ?
Invested in four American beauty products companies: Hard Candy, which targeted female youths, Bliss Spa, BeneFit Cosmetics, and Make Up For Ever Established a new watch and jewellery division, which included Tag Heuer AG, a Swiss watch maker in which LVMH gained a majority interest Acquired luxury watch makers Zenith, Ebel, and Chaumet. Majority interest in Thomas Pink, a British shirt maker Strategic partnerships to remain competitive: Partnered with Italian fashion company Prada, usually a competitor, to acquire a majority stake in fashion design house Fendi
?
LVMH – Strong Fundamentals
?
?
? ?
Presence in all luxury sectors Geographic balance (Presence in 3 continents) Multi-brand strategy Synergies stemming from the group?s size and internal organisation
LVMH Strategy
Selective acquisition strategy
? ?
Very selective external growth Strengthen strategic activities
Prioritizing internal growth
? ?
? ?
Innovation (20% sales from Perfumes) Strong support of brand image(12% of group?s sales dedicated to communication) Synergies Control over distribution(>1300 stores in 2001)
Adjusting prices in changing economic conditions
?
?
?
?
?
Increasing prices to avoid stocking up of designer products and selling to down-market customers Expenditures on perfume & cosmetic advertising reduced Raised prices to counteract the effect of currency devaluations Price increase when tourism is at its peak Got long term lease at one-third rates
Luxury goods & Pricing Strategy
?
Luxury Goods: In economics it is defined as goods whose demand increases more than proportionally as income rises; i.e. high income elasticity
? It
is not constant with respect to income, & may change sign at different levels of income. Eg. A wealthy person will stop buying luxury cars in his automobile collection to buy an airplane when his income further increases
?
Luxury Pricing Strategy
? No
Markdowns: It might devalue the brand ? High Mark ups: Perfect quality & fashionable
Luxury Pricing Strategy
?
Latest
? Wine
& Spirits division hit hard in 2009
? Revenue
declined by 12% ? Profit plummeted 28%
? The
worst phase was the first half of 2009, but in the second half the condition improved due to revitalized demand in China and the category?s “positive momentum” in the United States, where LVMH launched Hennessy Black earlier in the year
?
Even after this setback, LVMH has resisted price decreases & even raised prices in certain
Do you think high retail prices charged for luxury goods are worth paying?
Yes, • Luxury brands are aspirational in nature • High perceived conspicuous value signaling wealth - an expression of power and status • Sense of Uniqueness – limited availability, high prices • High Social Value: gives a sense of belonging to a particular prestige group • High perceived emotional value: hedonism • Highest benchmark for quality
•
If prices are reduced
– – –
Exclusivity will be lost The aspiration factor will be lost No status left in owning the product, many people will be able to have it
Effect of 9/11 Terrorism? Tourism?Luxury Brands
?
Customers post terrorist attacks paid more attention on saving and there was a sense of caution Sense of caution extended from purchase of luxury goods to the stock markets Western and Asian tourist place importance on buying “gifts for others” and slowdown in tourism would directly effect sales of luxury goods. A vicious cycle where sale of fake luxury goods supports terrorism and terrorism supports sale of fake
?
?
?
Facts
?
LVMH grew by 40% in 2000 and till September 2001 also they were maintaining the same growth rate It slowed down a little post 9/11 but they concentrated more on Europe and Asia for their growth They grew from 566 stores in 2000 to 765 stores in 2001. Both net sales and sales volume grew because of local customer in Japan, Europe and US
?
?
References
1)http://www.google.co.in/search?hl=en&source=hp&q=lvmh+pricing+strategy &meta=&aq=0&oq=LVMH+pric&rlz=1R2GUEA_en-GBIN332 2) http://www.oppapers.com/essays/Marketing/184038 3) http://www.allfreeessays.com/essays/Lvmh/70170.html 4) http://www.authorstream.com/presentation/Funtoon-7906-lvmh-IndexWorkshop-Case-Analysis-Debate-Questions-Use-Resources-DisclaimerLearning-Objectiv-ppt-powerpoint/ 5) http://www.tradenewsonline.com/content/show/id/7219 6) http://www.articlesbase.com/online-promotion-articles/lvmh-delivers-strongfirst-half-fashion-sales-619870.html 7) LVMH annual report 2001
THANK YOU
doc_168585897.pptx