...The success of luxury brands in Japan and their uncertain future Ronald Jean Degen International School of Management Paris 2009 Working paper nº 52/2009 2 globADVANTAGE Center of Research in International Business & Strategy INDEA - Campus 5 Rua das Olhalvas Instituto Politécnico de Leiria 2414 - 016 Leiria PORTUGAL Tel. (+351) 244 845 051 Fax. (+351) 244 845 059 E-mail: globadvantage@ipleiria.pt Webpage: www.globadvantage.ipleiria.pt WORKING PAPER Nº 52/2010 Janeiro 2010 Com o apoio da UNISUL Business School 3 The success of luxury brands in Japan and their uncertain future Ronald Jean Degen Ph.D. Candidate at the International School of Management Paris Vice Chairman of Masisa Chile Address: E-mail: degen@lomasnegras.com Phone: +55 41 9918 9000 Cabanha Orgânica Lomas Negras Ltda. Caixa Postal 95 Campo Alegre, SC 89294-000 Brasil Ronald Jean Degen is in the Ph.D. Program of the International School of Management in Paris, and the Vice Chairman of Masisa in Chile. He was a Professor at the Getúlio Vargas Graduate Business School of São Paulo where he pioneered the introduction of teaching entrepreneurship in 1980 and wrote the first textbook in Portuguese on entrepreneurship published in 1989 by McGraw-Hill. He just published a new textbook on entrepreneurship that was published in 2009 by Pearson Education 4 The success of luxury brands in Japan and their uncertain future ABSTRACT The Japanese are the...
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...Luxury Goods Project Jewellery and Watch Sector Stefania ALVARES MEDRANO Marie-Laure GIACOMELLI Anamaria TUDORACHE Nadine STEWART INSEEC Alpes-Savoie, Year 2013-2014 Guidelines Paper assignment – Luxury sector analysis * Select a luxury category. Categories include: Jewellery * Within your category select three brand leaders : Cartier, Chaumet, Chopard * Prepare a SWOT analysis for each brand * Analyze these leaders by discipline: visual merchandising, website, e-commerce (if applicable), social media, customer service, PR, special events, advertising. * Prepare a final report (4-6 pages) on your category ranking your three leaders in order of effectiveness with detailed explanations as to your ranking decisions. Oral Presentation on December 4, 2013 Chaumet “The history of Chaumet dates back to 1780 and is closely interwoven with the history of France. Over five centuries, Paris has been celebrated for the magnificence of its jewellers.” 1. Introduction The Company Chaumet * Category Jewellery and Watches * Parent Company LVMH * Name Chaumet International S.A. * Number of employees 147 * Tagline “Bijoux de sentiment, horlogerie d’émotion” STP * Segment Luxury and Fashion – Jewellery and Watches * Target Group High income/Upper class men and women * Positioning History, tradition and savoir-faire LVMH main data for the Jewellery and Watch Sector History Chaumet is a « maison...
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...Chongqing Sichuan Guizhou Source: China National Statistics Bureau, BBDO Analysis 3 As the economy expands and breaks into new ground… …the luxury category is also following suit -- it is achieving high growth simply by getting MORE PEOPLE TO BUY LUXURY GOODS FOR THE VERY FIRST TIME… 4 Luxury spending growth is driven by CATEGORY FIRST-TIMERS DECONSTRUCTING LUXURY SPENDING IN CHINA Source: Bain Luxury Market Survey – China 5 The crucial role of China’s BURGEONING MIDDLE CLASS % SHARE OF URBAN HOUSEHOLDS by income group (in RMB) % SHARE OF LUXURY CONSUMPTION by income group (in RMB) Source: McKinsey & Co. 6 How can they AFFORD LUXURY GOODS What is driving THEIR INTEREST IN LUXURY ? 7 China’ s middle class have a MINDSET THAT IS CONDUCIVE Optimism Ambition Loving of Life for luxury goods & services 65% feel their life will be better in the next 12 months. 42% say they work or study harder in order to succeed. 87% find it important to experience new things & enjoy life. Source: BBDO Voices 8 Their is a desire that is much stronger than THEIR EARNING POWER 49% 62% Say they long for luxury goods despite not being able to afford them right now. The figure specifically among 20 to 25 year olds. Source: TNS China 9 They SAVE UP for luxury products “ I thought about it for a very long time, and bought an LV bag. But my husband said if you carry it, others will think it is fake...
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...APPENDICES11 Appendix 1: Porters 5 Forces11 Appendix 3: Luxury Goods Group & Brands Top Ten Competitors13 Appendix 4: Industry Map*.14 Appendix 5: Financial Performance14 Appendix 6: PESTLE Analysis15 Appendix 7: SWOT Analysis16 Appendix 8: Evaluating industry Attractiveness and Competitive strength19 Appendix 9: A Nine Cell Industry Attractiveness-Competitive Matrix20 Appendix 10: Cross Business Strategic Fits20 Appendix 11: Evaluating the Strategy of a Diversified Company21 Appendix 12: LVMH's Timeline of Mergers and Acquisitions24 9.0 REFERENCES25 1.0 Executive Summary The aim of this paper is to discuss the key strategic issues that LVMH face and establish some future recommendations that can be implemented in order for LVMH to remain successful in the luxury industry. In order to determine the key strategic issues a number of analysis tools were applied to the case study; they include Porter's 5 forces model, SWOT analysis and PESTEL. It was found that the key strategic issues that LVMH face centred on diversification and vertical integration. A number of strategies have been proposed to offer some recommendations to LVMH, they namely in restructuring their retail sector, considering the concept of moderate diversification and focusing on the human resources side of acquisitions and mergers. 2.0 Introduction This report is based on the analysis of a case study 27 titled: LVMH's Diversification Strategy into Luxury Goods. The scope of this report is limited to the data contained...
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...GDP, the consumption of luxury goods, and therefore the growth of the luxury market, also increased, and increased to the point that China is now among the top nationalities in terms of total sales of luxury goods. In recent years, as a consequence of the increasing of personal wealth, the consumption of luxury goods in Mainland China has been growing, until last year, 2014, when the sales decreased to 15 billion euros (negative growth you -2%) due to three main reasons: the first one the slowing of Chinese economy; the second the tendency of Chinese people to purchase products either abroad or via cross border online platforms since the taxes on the products are lower than in their country; and the last one the government's anti-corruption drive (started two years earlier, in 2012) Regarding this point it is interesting to notice how this particular fact mainly affected the men watches sector, which recorded negative yoy growth rates of -13% (gift giving concept: probably the most popular gift for men). BUT... Nevertheless the small decrease in consumption, the luxury market is still going strong, and the purchase of luxury goods is in the hands of two big groups: wealthy individuals (being them millionaires/billionaires) and upper middle-class individuals (or white-collar workers). The number of both these two categories is growing year by year and economists predicted that it will reach extremely high levels by 2022. FEATURES OF CHINESE LUXURY MARKET So now the...
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...Customer Buyer Behavior Regarding Luxury Goods in Peter Jones By [Author’s Name] [Faculty Name] [Department or School Name] [Month Year] ACKNOWLEDGEMENT My thanks go out to all who have helped me complete this study and with whom this project may have not been possible. In particular, my gratitude goes out to friends, facilitator and family for extensive and helpful comments on early drafts. I am also deeply indebted to the authors who have shared my interest and preceded me. Their works provided me with a host of information to learn from and build upon, also served as examples to emulate. DECLARATION I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, & this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views & not essentially which are associated with the university. Signature: Date: ABSTRACT TABLE OF CONTENTS LIST OF FIGURES CHAPTER 01: INTRODUCTION 1.1. Outline of the Study Purchasing products and services is common around the world, and almost everyone indulges in shopping. The value of a brand is seen in its brand equity and the brand loyalty that the brand possesses. The way consumers perceive a product or service, and the importance it has in their life is what makes all the difference, watching dogs on the way...
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...How Globalization Affects Luxury Goods Industry? Andy Warhol, a pioneer in the visual art movement once said: “Whenever people and civilizations get degenerate and materialistic, they always point at the outward beauty and riches and say that if what they were doing was bad, they wouldn’t being doing so well, being so rich and beautiful” (Warhol, 1975). Throughout history, luxury emerged as early as civilization did. For old Romans, the concept of luxury was a “disruptive power of desire”. They set up the first laws about luxury: “how much could be spent on banquets and adornment” (Ward, 2011). Since the rise of Christianity, luxury stared to changed its meaning to be related to lust and sexuality. Until 17th century, perspectives of luxury products again changed across the continent of Europe because of the frequent trade and business. At that time, luxury was considered as an advantage, which brings money and profit. The extreme luxury phenomenon swept across France during 17th century, especially on the architecture of chateaus—the excessive styles and appearances with resplendent furniture. Until the late modern period, luxury began to experience the process of moralization since people’s revaluation on desire. According to “The Spirit of Laws”, Montesquieu said that: “ luxury is therefore absolutely necessary in monarchies; as it is also in despotic states” (Carrithers & Nugent, 2001). In terms of luxury products companies, they try to find the balance between history...
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...(“LVMH”) was formed in 1987 when Louis Vuitton, a leading luxury fashion brand, formed in 1854, merged with Moet Hennessy. Moet Hennessy had been formed in 1971 when Hennessy, a cognac manufacturer, merged with Moet et Chandon, a high end champagne producer. This formation of LVMH would signal the creation of one of the world’s most profitable and encompassing luxury goods conglomerates. In 1989, Bernard Arnault would enter the picture, become the major shareholder of LVMH and take up position as chairman. An entrepreneur and art admirer, Arnault had amassed a personal fortune in real estate and in other luxury goods markets before purchasing the majority share of LVMH. Under him, LVMH would grow exponentially, acquire even more brands, expand into new markets, and see unprecedented growth. By the late 1990’s to early 2000’s, the company would be posting net revenues in the billions of Euros, comprise some fifty sub companies, all of brand names synonymous with high end fashion and luxury, and have over 1,500 retail stores operating in every major market on a global level. LVMH became the parent company to some fifty sub companies across a variety of different product industries and types. All were owned by the same company, but most operated independently and, in some instances, were direct competitors of each other. Regardless, each company no matter how different had one thing in common; they all produced high end luxury products. LVMH operated five sub categories: wines and...
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...Louis Vuitton in India Executive Summary Louis Vuitton Moët Hennessy, the world’s leading luxury brand, made the decision to formally enter India in 1999. India was a familiar market for Louis Vuitton as the company had filled custom orders from maharajahs since the late 19th century. However, the Indian market was unlike any in which the company was currently operating. The changing socio-economic conditions of the developing nation opened up opportunities for the brand but also posed unique challenges such as changing customer profiles and concepts of luxury. In the West, luxury goods are often sold through company-owned stores in a luxury retail cluster spread over several blocks, usually in a city’s downtown core. In cities that did not have luxury retail clusters, Louis Vuitton operated in luxury malls. Previous attempts to develop premium retail space in India had not been successful. Nevertheless, several real-estate entrepreneurs had plans to open an estimated 300 luxury malls in India by 2010. In India, Louis Vuitton’s first two stores were introduced in luxury malls in New Delhi and Mumbai targeting customers who had shopped abroad and were familiar with the brand. The company was now looking to increase its reach and teamed up with other global brands to develop luxury malls in five Indian metros. Does a high-end brand have a market in a low income country? According to the National Council of Applied Economic Research, in 2001-02 there were 20,000 families...
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...INTRODUCTION Louis Vuitton (LV) is known for its manufacturing of fashion and leather goods. One of the company’s early successes occurred when a French craftsman invented a flat-topped trunk. This new trunk was different from its predecessors, the dome-shaped trunk, in that it was easier to stack and transport. For seven decades Louis Vuitton solely produced leather handmade bags. In 1987, the company merged with Moet Hennessy and diversified into leather accessories. In the mid/late 90’s the company received increasing pressure from Wall Street to sustain a double digit growth rate. In response Louis Vuitton began to look for opportunities to expand globally. Its focus quickly turned to infiltrating the Indian market. By 2008 Louis Vuitton had opened two other stores located in luxury hotels in India. These hotels provided easy access to LV’s targeted market, which was the “super rich”. Now the company was faced with another decision, to continue operation in luxury hotels or to expand into luxury malls. Up to this point, luxury malls were new to Indian consumers, creating a level of uncertainty for Louis Vuitton. In this case evaluation, we will discuss the impact of a high-end company entering a low income country. HIGH-END BRANDS IN LOW INCOME COUNTRIES A high-end brand, such as Louis Vuitton, can often find a market in a low income country. Sometimes the market is too small or too fragmented to pursue, but this is not always the case. Many low...
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...glittering French multinational in Japan took place in Aoyama, one of Tokyo’s fashionable districts. A unique vision of luxury took shape when Louis Vuitton opened yet another new store inside Comme des Garçons on September 4, 2008, in the heart of Japan’s capital. The pop-up store situated on the prestigious Omotesando Street was an illustration of Louis Vuitton’s attachment to the Japanese luxury market. Yves Carcelle, chairman and CEO of Louis Vuitton, said, “This project not only brings a new meaning to luxury, but also speaks volumes about how the know-how and heritage of Louis Vuitton have always been perceived in Japan, including by its foremost designers. We are very proud to have been able to help Rei Kawakubo2 relive her memories in such an original and creative way.”3The Omotesando guerrilla marketing event reflected Louis Vuitton’s success in Japan. Louis Vuitton had been following an aggressive marketing strategy in the country, opening extravagant stores such as those in Ginza or Roppongi.Take a walk on Ginza’s main street, Chuo Dori, the centre of a paradise for shoppers, with longestablished department stores, such as Mitsukoshi, Takashimaya and Matsuzakaya. Continue through the high-end fashion street Namiki-dori. Stop. There it is. You have reached the massive flagship Louis Vuitton store. When Louis Vuitton, the world’s biggest luxury-goods firm, inaugurated its huge shop in 2002 in the district of Omotesando, Tokyo, hundreds of people were queued outside...
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...it to the middlemen such as suppliers and retailers. The company has also increased the number of their Directly Operated Stores (DOS) as part of the defensive strategy of taking more control of the distribution process. The 2003 figure showed that DOS accounted for 61.3% of revenues compared to a much lower 32.5% in 1999. Its aggressive strategy accomplished through diversification and communication is also another of Gucci’s strengths. Gucci changed its strategy of carrying a single brand to branching out to a multi brand group. This strategy is also adopted by other conglomerates such as Louis Vuitton and Prada. Some luxury companies use the strategy of focusing only on one brand and add other business segments such as what Armani, Polo Ralph Lauren, and Versace did. Read on Discount Luxury Brands Big luxury brands offer discount and cheap luxury products under tough economic time. This strategy is done in order to allow the positioning of the brand in the industry to differ depending on the number of brands and the number of business segments the company wants to compete in. This is the idea behind focus (mono brand) versus diversification (multi-brand). Gucci Group has more than 10 brands, including Gucci, Yves Saint Laurent, YSL Beauté and Sergio Rossi. Weaknesses The weaknesses of Gucci include instability in management and financial base. The instability of its management can affect the group’s corporate strategy and vision. The financial base is weak and...
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...Analysis12 4.5 PESTEL Analysis14 5.0 STRATEGIC ALTERNATIVES20 6.0 RECOMMENDATION23 7.0 ACTION PLAN24 8.0 CONTIGENCY PLAN28 9.0 REFERENCES28 1.0 CASE SUMMARY In recent years, modern customers are no longer acquiring shopping only for their goods and services. Nowadays, these customers are buying for different reasons such as to show off their personality, to boost self esteem or to satisfy physiological needs. Shopping good brands like Louis Vuitton, Gucci, Channel and other luxury brands is like a form of self expression and gives people a sense of accomplishment. Louis Vuitton or famously known by its acronym LV, is known for world’s most valuable luxury brand. It was founded by Louis Vuitton Moet Hennesy (LVMH) in 1854 on Rue Neuve des Capuccines in Paris, France. The historical journey began when Vuitton found out traveller trunk were easily stacked. He was made famous for crafting the luggage for Napoleon. This company is famous for its luxury products such as trunks and leather goods to ready to wear, footwear, watches, jewellery, accessories, sunglasses and books. Louis Vuitton stands out more among other brands through their relentless focus on product quality. Since the 19th Century, the manufactures of Louis Vuitton goods are still handmade and over 100 stages are involved in the making of each bag. All products are extensively tested to make sure that they can withstand wear and tear, and that there are no imperfections. The company markets its product through...
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...Brand Name and the Quest for Success in the Luxury Sector All luxury designers strive to achieve long-term success. To put a label on a collection of products is to create a brand, but that label does not provide for definite staying power. Lucrative brands have gone beyond creating something pretty; an outstanding brand writes a story that the consumer believes and wants to buy into and the brand then becomes more than its product. Labels that grasp the importance of branding understand that they must be more than the watch or bag or scarf. The appeal of a brand must be in who the consumer becomes when he or she puts on or uses a certain product. Brand awareness widens when a high-end label creates and conveys a clear message or lifestyle that the consumer thinks he or she can attain through purchase. That is the art of branding. Branding convinces the consumer not to simply buy a product, but instead buy the brand as a whole. A stellar product does not stand alone—behind it must be something deeper, a message or a symbol which should represent or relate back to the identity of the brand. Within the luxury sector, where products are often an investment regardless of one’s socio-economic status, conveying an identity is crucial. If the consumer cannot see what he or she will gain from purchasing a $2,000 handbag or a $26,000 watch, there will be no sale, and the ship that is the brand will sink. John Goodchild and Clive Callow, authors of Brands: Visions and Values...
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...requires a significant amount of capital both to refinance debt that is maturing in the next six to twelve months and the planned financing of growth in the Asian (especially Chinese) markets. Since financial markets aware urgent need Prada, are to raise capital, it is important that the Board of Directors of a credible strategy to increase the required minimum capital of 1 billion? to develop. Although the press was suggesting that Prada is to do an IPO, the company has tried this several times in the past without success, mainly because of poor timing (9/11, the SARS outbreak and the ongoing global financial crisis and the European sovereign debt crisis). China represents a major market for global luxury goods brands like Prada. As beyondbrics recently pointed out, the country’s luxury goods sector is expected to be the fastest growing in China over the next decade. Existing capital structure Recommendation: Prada, which has scrapped an IPO four times in the past 10 years, might raise more money having a primary listing in Hong Kong than in...
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