timer Asked: Apr 27th, 2020

Question Description

This section includes information on how the firm makes money, who are the firm’s buyers and suppliers, and what are one or two major industry changes that have affected (or in your estimation will affect) the Company, its buyers, or its suppliers in recent years (or the near future).

This section should also include an in-depth analysis of market(s) impacted by the selected challenge. It includes a SWOT analysis, details of your Company’s current market share and its marketing strategy consisting of market segmentation, target market customer profiles, positioning of the product(s), and marketing mix, as captured by the 4Ps.

References: Cite all the sources used in your report in the references section and use APA citation style format throughout the report. Example of APA citation style format: Appendices: Tables, Graphs, Graphics and other Supplemental Materials.

My analysis is attached.

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I. Market and Firm Analysis A. Brief history of the Company At the age of 16, Louis Vuitton (founder) made the life-changing decision to move to Paris. Upon his arrival, he began to apprentice for Monsieur Maréchal. Under Marechal, Vuitton learned to create durable containers to pack and protect items during transportation (what we would now call luggage). Vuitton became incredibly skilled and well-respected during his 17 years under Maréchal. He then decided to open his own trunk shop. Vuitton introduced a waterproof trunk and later expanded upon his design with the world’s first unpickable lock. Due to such high demand, Vuitton found immediate success and was forced into a larger workspace. Around this time was when he introduced the signature damier canvas design and monogrammed logo. Clearly, the company continued successfully as it was passed down to family members and nonrelatives. Louis Vuitton has positioned itself as one of the most notable brands in luxury fashion and the company continues to thrive to this day expanding beyond luggage and handbags to pieces like menswear, womenswear, and so much more. B. Company mission statement. Louis Vuitton mission statement is to: “Embody unique savoir-faire, a carefully preserved heritage and dynamic engagement with modernity and to represent the most refined qualities of Western “Art de Vivre” (The Art of Living) around the world; to be synonymous with both elegance and creativity; to blend tradition and innovation, and kindle dream and fantasy,to be creative and aim for excellence.” C. Major competitors, including their strengths (at least 3) and weaknesses (at least 3). Louis Vuitton has six immense competitors. These competitors are Hermes, Gucci, Prada, Chanel, Burberry and Versace. Hermes is known for its strong brand and global image. They are well known for their portfolio, which produces about 14 products. These products are ties, scarves, leather goods, apparel for men and women, jewelry, perfume, gloves, watches, footwear, tableware and decorative items. Hermes has over 12,0000 well trained employees. Hermes allows online shopping, making it easy for shoppers to purchase items whenever they want. Some weaknesses the company holds is items being replicated and sold at a very cheap price. Also posing a threat to the company, Louis Vuitton owns nearly 22.3% of the company. Hermes is also economically unstable, they could face payment risk across the globe. Gucci, the second competitor, is considered the highest selling Italian fashion brand. They hold business operations in about 600 stores, while maintaining an online store, which lead to a 115% growth increase in revenue. Gucci products are sold at wholesale through various franchisees and department stores. Some weaknesses the company faces are instability in management and financial base. Gucci has a debt that has increased from 17 million to 1.3 billion. They lack marketing their products; a majority of their products do not sell well. The profitability ratio and net contribution percent of Gucci are below the industry average. Prada is well known for their products being widely available to both men and women, with a wide range of products. Prada has a strong cash flow, which produces resources in the hand of the company to expand into new projects. This is why they are able to hold a wide range of products for both genders. Prada is also accessible online, and is known for a high level of customer satisfaction. They are dedicated to customer relationship management. Some weaknesses the company faces is, it’s day to day inventory is high priced compared to its competitors. They face high losses of employees. One big problem Prada faces is that they are environmentally unfriendly. Chanel is a well known company because of its high level of customer satisfaction and the constant development of new products. The brand value is $7.2 billion, with sales that reach $5.2 billion. Chanel has highly skilled employees due to the fact the company puts a lot of money towards training and learning programs. Some weaknesses the company faces is the need to invest more money in new technologies, which enhances global expansion. Another problem is the high prices, which limit potential customers. Chanel is not easily accessible online, it's only able to purchase cosmetics and fragrances. Burberry is known for its easily spotted checkered pattern design. The company is focused on creating a strong brand retention. The company is globally accessible, with 500 stores in 50 countries. Burberry has a strong social media marketing strategy. They engaged with the community and constantly updated their pages. They are on Facebook, Twitter and Youtube. Some weaknesses the company faces are limited products, prices too high, so they target a small group of individuals, and face highly replicas. Versace is known for exactly targeting the right market for their products being created. Their target market is all ages, both men and women. Versace engages with customers, they are very logal. They have multiple channels: stores, boutiques, and online. Some weaknesses the company faces is that prices are too high, and there are many individuals who love their products but cannot afford them. There are high amounts of replicas being created and high competition (brand switching). D. Other environmental factors that are relevant to your firm. - Political and legal factors Some political factors about Louis Vuitton are that their headquarters are in Paris, France, yet their products are made in France, Italy, Spain, and the United States so they operate on an international level. A recent controversy led to some calling for a boycott of Louis Vuttion, because LVMH’s CEO Bernard Arnault opened a Louis Vuitton Factory in Texas, and invited President Donald Trump to attend the ribbon cutting ceremony. Furthermore, people didn't like that Louis Vuitton associated fashion with politics in any way shape or form. - Economic factors It is no secret that designer goods tend to cost more than regular goods. Given that, the consumer then has every right to expect higher quality. However Louis Vuitton has (over the years) gained a reputation for producing their goods cheaply and lacking the same quality and craftsmanship of other high end brands such as Hermes, Chanel, or Prada. Furthermore Louis Vuitton does this so they can make a much bigger profit than their competitors. - Social and demographic factors Louis Vuitton makes high end leather goods, ready to wear, couture, and accessories all of which retail for very high prices. For example the classic monogram canvas speedy bag (which is considered to be an “entry level” purse) retails for $1,060 in the United States. Therefore their goal is to appeal to a wealthy demographic and socioeconomic class. - Technological and environmental factors According to their parent company, LVMH, “LVMH Maisons depend directly on preserving and respecting the natural resources they use to make their products.” and according to their 2018 Environmental Report they “strive for environmental excellence.”. While this may be somewhat true, the same Environmental Report shows that they make no effort to minimize textile waste or reduce use of potent chemicals. Furthermore, they use animal skin, fur, angora, and hair. Louis Vuttion does have technological advances including a state of the art website, a mobile app, and the Louis Vuitton Foundation Museum in Paris is one of the most technologically advanced museums in the world. E. Analysis of firm’s overall strengths, weaknesses, opportunities, and threats (full S.W.O.T. analysis). Strength 1. Brand recognition: the monogram pattern is highly recognizable, and some customers regards the logo and pattern as a symbol of social status 2. Consistency of quality and fashion: With the release of new products each season, Louis Vuitton keeps its standard of quality and innovation all the time 3. Strong brand portfolio: Louis Vuitton has a broad portfolio includes leather goods, apparel for women and men, fragrances, shoes, jewelry, watches, and tech accessories 4. Exclusive customized merchandise: provide personalization service: engrave the initials on bags and fragrance, and color selection of watches, which attract customers to design their own pieces and separate them from the crowd 5. Top celebrity advertising and marketing strategies: always choose the biggest name to endorse the brand and do advertising, celebrities like Scarlett Johansson, Angelina Jolie, Madonna, Rihanna 6. Top designers: the design team is composed by/collaborates with the top designers around the world, such as Virgil Abloh, Stephen Sprouse, Manolo Blahnik Weakness 1. Limited selling channel: merchandise only sold through its own stores, so people cannot buy in some department stores 2. High price & limited customer base: its high level of pricing limits the buying power from the masses and the brand is targeting the top market 3. Reliance on Economy: sales rely on the economic situation. Once there is an economic crisis or recession, it would lead to a decline of sales 7. Network: the total number of employees is over 156,000 worldwide in more than 65 countries, and has a total of 4915 stores 8. High customer loyalty Opportunities Threats 1. Online channel: has opened its online purchase platform and thus can engage customers to buy anytime instead of physical stores 1. Increase of counterfeit products: affect the global business and erode the brand image 2. Collaboration with designers, artists, events and brands: Hiroshi Fujiwara, Jeff Koons, Chapman brothers, League of Legends, FIFA World Cup, Supreme, Off-White, which is an stimulus to attract potential customers and increase sales 2. Increasing pay level: result in pressure on profitability 3. Tariffs: part of Louis Vuitton in China increased its sales since the government slashed import tariffs on clothing products from 16% to 7%. By decreasing the import tariffs, sales can be increased 4. Growing market potential: the global market for luxury goods has a 4% growth rate, which would be an opportunity for luxury companies 5. Rise in income: many countries have an increase in the income so people have more demands to these non-essential goods and buy luxuries II. The Challenge CHALLENGE #1: Sustainability 1A - The Challenge: 3. Competition: increasing competitions from other luxury brands lead to the decline of sales 4. Substitute fashion products: imitation by other brands can dilute the market share Louis Vuitton is facing problems with sustainability, since they are not following being environmentally friendly, have poor labour treatment, and animal welfare. 1B - Viability: If the company continues to not push towards being sustainable, it could potentially lose customers in the long run. Many individuals are taking this shift to being more sustainable and animal welfare is one key aspect individuals look at. 1C - The Response: In order to become more conscious of sustainability as a whole company LVMH should implement using more sustainable materials to make their goods. Using materials such as recycled cotton and vegan leather would help lower their carbon footprint, water usage, and cruelty against animals. THE SOLUTION: The overall solution that we are proposing is a Sustainability Capsule Collection. The goal of this collection is for Louis Vuitton to produce a collection of clothing made of 100% recycled materials that would still remain true to their classic chic style. They would use materials such as recycled cotton with limited dyes and use of machines. So in a sense they would be creating sustainable couture. Furthermore, Louis Vuitton’s bags and accessories have to be made with leather to remain true to their brand. Given that this line would focus mainly on clothes with one special edition sustainable handbag made out of canvas that consists of recycled cotton this bag would be viewed as a special collectors item, and not step down from the traditional leather Louis Vuitton bag. The reason why we are proposing it to be a “Capsule Collection” is because Louis Vuitton is already one of the most famous and identifiable fashion houses on the global market, and to change their entire collection to sustainable would be too much of a shake up to the brand. Furthermore “Capsule Collection” sounds unique and exciting. Additionally we are proposing (as an incentive to the consumer) a special rewards points system exclusively to the sustainable line where every $1,000 spent equates to 10% off your next purchase in the sustainability collection. Overall we believe this would be an exciting collection that would get the fashion world excited, and perhaps pave the way for more high end fashion houses to do sustainable lines. CHALLENGE #2: 2A - The Challenge: Lack of Product Diversity Diversity is an essential component of the fashion industry. If the brand wants a customer more purchases, the collection has to be different the next time the customer looks at their website or comes into a store. However, when we think about Louis Vuitton, we all picture the same thing: a handbag with the brown print on all over it. There is no point for a customer to buy more than one bag with the same print on it. Therefore, the challenge for Louis Vuitton is to be more diverse and to change their collections more often. Luxury brands such as Chanel, Dior, Balenciaga, or Gucci have been able to diversify their style which helped them break into a younger market. 2B - Viability: If the company wants their customers to return to the store and buy more than once, they have to have more to offer. Offering more diversity would allow Louis Vuitton to create a more loyal customer base. 3B - The Response: In order for Louis Vuitton to keep their clients and make more than one sale per customer, they should implement more collections and more diversity in their products. By changing the color, the print, the shape of the bag, customers will have an opportunity and more interest in returning to the store to buy another item. III. Bibliographic Sources Bhasin, Hitesh. “Top 10 Louis Vuitton Competitors - Louis Vuitton Competitor Analysis.” Marketing91, 14 July 2018, ...
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