LVMH: on a luxury shopping spree Case Study

Introduction - LVMH: on a luxury shopping spree

This paper explores LV’s strategy within luxury goods; it defines LV’s strengths and market positions and LV’s success in the contemporary market.

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Industry Analysis of the Luxury Industry Using Porter’s Five Forces

1. Threat of New Entrants: Some characteristics that the luxury industry possesses are some profound barriers to entry and often have high capital intensity and customer switching costs. For new entrants, the barrier is rather high since already existing brands like LVMH possess a strong seller reputation and brand history. Therefore, the threat of new entrants, which is a force that competitive rivalry can increase in the future, is low.
2. Bargaining Power of Suppliers: In the luxury sector, suppliers are mostly strategic because they offer superior materials that have an impact on brand image. LVMH to but a few are huge firms with a large market share and therefore have the leverage to negotiate with their suppliers competently. Therefore, the next critical success factor of the industry is moderate supplier power(Agnew, 2019).
3. Bargaining Power of Buyers: Those who buy luxury goods are becoming more sophisticated and with the growing dominance of e-business, they have varied options. However, the existence of a strong brand identification and prestige that is attached to luxury products, undermines the buyer power. Hence, although consumers can call the shots when it comes to quality and service, their bargaining power is still not all that powerful.
4. Threat of Substitute Products: The challenger is not only other luxury products but also other premium products or services from any subsectors (for example, travel or electronics). However, the special appeal to emotion and status disallows this threat to a great extent. On this basis, the threat of substitutes is considered to be moderate(Kapferer & Bastien, 2013).
5. Industry Rivalry: This industry is now highly saturated and currently has several key players including LVMH, Kering, and Richemont who release new products and advertising every so often. This competition forces the brand to advance and challenge the specifications of their product; which can prove advantageous to the consumer. But it increases tension on the operating margins of companies and organizations(Dwivedi et al., 2022).

Louis Vuitton's Strategy and Competitive Advantage

The paper provides a case of LV which uses a strategy that builds on brand image, product differentiation, and superior customer relations to cement its tố in the Luxury Industry. Most important among these is history and storytelling which go with each LV’s products, making them emotional purchases. Brand history of craftsmanship and tradition has always engaged the consumer and improved the perceived value of the produced items. Since there are few numbers of product copies, and it makes special collaborations with designers and artists, LV contributes to the exclusivity of the brand and strengthens its position in the luxury market segment. Besides, it helps to attract high net-worth clients but, at the same time, does not let the clients of the bank not feel that they are among the selected few, so the demand increases and the brand becomes more prestigious(Kale, 2016). Moreover, LV is consumer-oriented in that it offers only high-quality apparel and accessories made of top-quality materials and employing the latest technology, but the production process principally remains classic. Such dedication may help the customer feel happy and this in turn compels him or her to repeat the same purchase of the same brand thus promoting that brand. Further, the aggressive globalization that LV adopted in recent years ensures that it maintains its high growth rate as these emerging markets register high disposable income and expanding clientele. It also embarks on engaging in the construction of quality FLICT stores that create an ambiance of shopping to sustain the image of the company as a luxurious one. In the digital world, LV adapts well to change by developing the internet image and through social media enabling tailored marketing and improved customer bonding. By doing so, Louis Vuitton can establish itself as a competitor through enhancing brand appeal, the company’s commitments to quality, and designs incorporated into its advertisements. As a result of offering rather different and very qualitative products, and creating warm relationships with consumers who are ready to pay a high price for products of LV, the company guarantees long-term organic growth within a rather competitive segment of the luxury products market(Dhaoui, 2014).

Conclusion

This fashion house perspective in brand development, luxury service to the niches, and delivering remarkable experiences in conveying brand affinity and Market control for longer-term sustainable growth and profitability.

References

• Agnew, H. (2019). LVMH: on a luxury shopping spree. In Financial Times (pp. 1–7). https://www.ft.com/content/912476ba-1293-11ea-a7e6-62bf4f9e548a
• Dhaoui, C. (2014). An empirical study of luxury brand marketing effectiveness and its impact on consumer engagement on Facebook. Journal of Global Fashion Marketing, 5(3), 209–222. https://doi.org/10.1080/20932685.2014.907605
• Dwivedi, Y. K., Hughes, L., Baabdullah, A. M., Ribeiro-Navarrete, S., Giannakis, M., Al-Debei, M. M., Dennehy, D., Metri, B., Buhalis, D., Cheung, C. M., Conboy, K., Doyle, R., Dubey, R., Dutot, V., Felix, R., Goyal, D., Gustafsson, A., Hinsch, C., Jebabli, I., . . . Wamba, S. F. (2022). Metaverse beyond the hype: Multidisciplinary perspectives on emerging challenges, opportunities, and agenda for research, practice and policy. International Journal of Information Management, 66, 102542. https://doi.org/10.1016/j.ijinfomgt.2022.102542
• Kale, G. Ö. (2016). THE IMPORTANCE OF SUSTAINABILITY IN LUXURY BRAND MANAGEMENT. Intermedia International E-journal, 1(3), 106. https://doi.org/10.21645/intermedia.2016319251
• Kapferer, J., & Bastien, V. (2013). The luxury strategy: break the rules of marketing to build luxury brands. Choice Reviews Online, 50(07), 50–3944. https://doi.org/10.5860/choice.50-3944

Author Bio

Casey Bennett   7 years | PhD

My name is Casey Bennett and I have obtained my graduation, post-graduation and PhD from London Business School. I have been giving education to students for the last 7 years in the United Kingdom. I can help you deal with complex dissertation topics, assignments, and essays and finish them fast.