Executive Summary
We will be analyzing the company, Louis Vuitton, identifying the trends within the luxury jewelry industry and the future opportunities available for the brand. It will discuss several analyses regarding the company of Louis Vuitton and then make recommendations based on information presented within the previous analysis sections.
Louis Malletier Vuitton founded Louis Vuitton in 1821, and he was previously a farmer. The company started with flat canvas trunks and then continuously expanded into other industries like jewelry, clothing, and fashion items. The iconic LV monogram was only introduced after the death of Louis Vuitton, George had included it in the print of the luggage to honour his father in 1892, and it also successfully prevented counterfeiting.
Focusing on the jewelry industry and Australia’s market size, it was predicted that the market would be four billion dollars in 2020, as the statistics show. In 2015, the market had already reached the size of 4.1 billion dollars. Due to the growth in the e-commerce fashion industry, it has opened new channels for jewelry retailers. The company has to feature the potential for the future industry market and generate sales with its current product portfolio.
To avoid imitation and losing product quality, Louis Vuitton has registered all their designers and artisans, resulting in the exclusivity and uniqueness of their products. Many challenges are confronting the luxury market. Consumers are looking for authenticity and honesty when purchasing products, along with factors of new competitors arising with lower-priced brands that offer comparable quality. In the new digital age, the growth of the online market grew. It helps expand the demographics and geographics and attract new customers.
Introduction
We will be analyzing the company, Louis Vuitton, identifying the trends within the luxury jewelry industry and the future opportunities available for the brand. It will discuss the several analyses regarding the company of Louis Vuitton and then make recommendations based on information presented within the previous analysis sections.
Louis Malletier Vuitton founded Louis Vuitton in 1821, and he was previously a farmer (Koyaana. R, 2020). The first bag was designed in 1858, known as the Trianon trunk. His son, George, invented the locking system in 1886 to make it impossible to pick, and the lock is still used today (Koyaana. R, 2020). The iconic LV monogram was only introduced after the death of Louis Vuitton, George had included it in the print of the luggage to honour his father in 1892, and it also successfully prevented counterfeiting (Louis Vuitton GMX, 2014).
This report will be going through two different background analyses, and the first background analysis will contain the industry, competitor, and consumer analysis. The research used within this report will discuss the luxury jewelry or personal accessories industry. The second section will discuss the sales approach and the sales management found in the chosen company, mentioning the strengths and weaknesses. It will continue to the recommendation section for Louis Vuitton. Four recommendations will be included in this section, stating the justification of the recommendation and how it can be implemented within the organization.
Background Analysis: InduStry, Competitor and Consumer
Industry Analysis
Focusing on the jewelry industry and Australia’s market size, it was predicted that the market would be four billion dollars in 2020, as the statistics show. In 2015, the market had already reached the size of 4.1 billion dollars (Statista, 2016). Due to the growth in the e-commerce fashion industry, it has opened new channels for jewelry retailers. (Statista, 2016). According to the Boston Consulting Group (BCG) matrix, Louis Vuitton company can be considered a star. The company has to feature the potential for the future industry market and generate sales with its current product portfolio (Morgan, 2018).
To avoid imitation and losing product quality, Louis Vuitton has registered all their designers and artisans, resulting in the exclusivity and uniqueness of their products (MBA Skool Team, 2021). Many challenges are confronting the luxury market, as consumers are looking for authenticity and honesty when purchasing products (Brown, 2017), along with factors of new competitors arising with lower-priced brands that offer comparable quality (Danziger, 2019).
The trend that has surfaced recently is re-commerce. During the pandemic, the sales of second-hand jewelry grew as the consumers desired more sustainable purchases, with the bonus of it being good deals (MOF Team, 2022). The sales were conducted in a quiet setting with an expert in the past. However, in the new digital age, the growth of the online market grew. By 2025, it is estimated to grow to 21 percent. It helps expand the demographics and geographics and attract new customers. (Becker, Berg, Harris, & Thiel, 2021). The availability of genderfluid jewelry lines is more common, as 35% of Generation Z identify themselves as they/them, which opens an opportunity to expand on collections for all types of individuals (MOF Team, 2022).
Competitor Analysis
Louis Vuitton’s competitors in the luxury market are Chanel, Gucci, Hermes, and Dior. However, when focusing on the high-end jewelry industry competitors, they are known to be exclusive, with no discounts offered at their main official branches. However, Hermes does hold sales twice a year and previously had student discounts. The competitors are Chanel, Gucci, Cartier, and Hermes (Bhasin, 2018).
Hermes is more focused on premium luxury, making it less accessible than Louis Vuitton, enhancing Hermes’s exclusiveness (MBA Skool Team, 2022). But it doesn’t reach the potential market available (Louis Vuitton GMX, 2014).
Gucci is known for the variety of products sold compared to Louis Vuitton and Hermes, who are more recognized for their bags (Louis Vuitton GMX, 2014). Compared to others, Gucci and Cartier have an excellent online presence making it more advantageous for them.
Consumer Analysis
The general consumer market is separated into two segments for Louis Vuitton. First, its wealthy middle-aged women aged 35 ~ 54, and the other segment is affluent young fashionable females aged 18 to 34 years old, who have disposable income and are brand aspirants. The second consumer segment can also be known as ‘chardonnay girls’; their crucial motivator is sharing their life and making moments unique. (Perch, 2020)
Background Analysis: Sales approach and Sales management
Sales Approach Analysis
As a luxury brand, Louis Vuitton has a sales approach focused on customers’ desire to acquire status symbols. Thus, consumers act as users and not influencers of style, which the company dictates (Seo & Buchanan-Oliver, 2019). The decision-making process is inspired by a customer’s need to purchase a unique, luxury product. Information search happens either through print media – the main traditional marketing channel on which the brand still relies – or influencers’ social media accounts and Louis Vuitton’s online store.
The choices’ evaluation is limited to a few luxury brands and depends on specific needs, as most luxury products are perceived differently and have easily distinguishable designs. Purchases can be completed in brick-and-mortar stores or on the official website and some resellers (Guilbault, 2021). The sales cycle focuses on investigating the consumer’s needs and introducing a small number of selected articles. Closing is soft, and sales associates can engage in cross-selling, not upselling, as the items are already high-class (Sudjono, 2020). As the brand does not actively advertise or offer its products, the methodology is based on collaboration in different industries. Sales associates act as advisors and storytellers, presenting each product as a part of history (Sudjono, 2020). Therefore, customers are attracted to the brand’s status rather than individual items.
Strengths
- With more than 150 years of history.
- The Louis Vuitton logo and brand are easily recognizable.
- The brand has a well-known global presence as a luxury and retail brand.
- Offers custom-tailored products for its few elite customers (MBA Skool Team, 2021).
- Louis Vuitton is recognized as one of the most valuable luxury brands (Swant, 2020).
- The product portfolio has a wide range of products. (Perch, 2020).
- Maintains production within France – reducing the cost of outsourcing (BusinessEssay, 2022).
- Efficient collaborations with top designers (Perch, 2020).
Weaknesses
- Limited customer targeting (Kenneth, 2013).
- Lack of interest in other cultures (Perch, 2020).
- Product pricing – overly priced, making it expensive.
- Lack of product innovation over the years.
- Weak online presence.
- The LV monogram within the product design is excessive (BusinessEssay, 2022).
Sales Management Analysis
The information about the sales management structure of Louis Vuitton is limited. However, it is stated that the brand’s parts are autonomous, and the organization is decentralized (MBA Skool Team, 2021). Thus, employees are expected to demonstrate entrepreneurial qualities and have a high level of self-organization. Salespeople are called client advisors, as noted above; in some countries, they do not get commissions for each sale – they have bonus programs instead, which leads to less aggressive and more relationship-based sales (HandbagHolic, 2021; Ingram et al., 2019). Other motivations include an employee discount, benefits, accessories as a part of one’s uniform, goal-based incentives. The sales results are built not on individual sales and internal competition but the overall success.
Recommendations
Recommendation #1 – Reducing Production
Louis Vuitton has the opportunity to reduce the production and emphasize some of its collections as limited-edition models (BusinessEssay, 2022). It would utilise the waiting list, establishing the exclusivity and visibility of the brand. This strategy is used by one of the competitors, Hermès, which produces a small supply of bags, driving the demand for limited luxury items. This recommendation is consistent with Louis Vuitton’s current sales approaches of storytelling and relationship building. A limited line of accessories could be created with a story behind it, which would further strengthen the brand’s image.
Recommendation #2 – Social Media Presence
The second advice is to further pursue growth in the social media sphere, where Louis Vuitton has a presence among aspirational lifestyle influencers. As a frequent collaborator in online and technological ventures, Louis Vuitton can easily integrate new social media advertising campaigns to attract a young audience (Sudjono, 2020). By using social media, the brand can expand its presence outside of print media and its official website. While Louis Vuitton already uses some online media for marketing, its current strategy does not directly engage social media (Sudjono, 2020). The company can reach out to social media influencers and make them brand ambassadors, similar to its celebrity connections.
Recommendation #3 – Promoting Unisex Collections
Based on the growing percentage of young individuals identifying themselves outside the gender binary, the introduction and marketing of unisex collections can attract new customers. Unisex collections fall in line with Louis Vuitton’s strategy of following current developments in the social sphere while being a trendsetter in fashion (Sudjono, 2020). Thus, creating a collection for all customers regardless of gender can be a part of the brand’s recognition of new customer interests.
Recommendation #4 – Jewellery Design
Most luxury companies have their own chosen animal as their motifs and are featured within the jewelry lines. For example, Gucci’s competitors have tigers and a bee; Cartier incorporates the panthers; Chanel has lions in their high jewelry collection; Bulgari has serpents. The new group released by Louis Vuitton, the Wild at Heart collection, features leopard prints (Louis Vuitton, 2021). Expanding the current collection to the jewelry design will bring more interest from consumers as it is something different from past jewelry designs
Conclusion
Louis Vuitton is a popular luxury brand with a wide variety of products and a long history of success. Currently, it is established in many countries, and its customer segmentation shows two distinct categories, older and younger affluent females interested in high-end living. The brand’s sales approach is rooted fulfilling one’s need for luxury products and experiences. Customers are attracted to stories behind products and non-aggressive selling techniques. However, the brand uses a limited range of advertising channels, lowering the interest among younger customers. It is advised for Louis Vuitton to introduce limited collections, increase its social media presence, promote unisex products, and present a distinguishable jewelry design.
References
Athwal, N., Istanbulluoglu, D., & McCormack, S. E. (2019). The allure of luxury brands’ social media activities: a uses and gratifications perspective. Information Technology & People, 32(3), 603-626. doi:10.1108/ITP-01-2018-0017
Becker, S., Berg, A., Harris, T., & Thiel, A. (2021). State of Fashion: Watches and Jewellery.
Bhasin, H. (2018). Top 10 Louis Vuitton Competitors – Louis Vuitton Competitor analysis.
BohatALA. (n.d.). Louis Vuitton Marketing Strategy.
business essay. (2022). Louis Vuitton: Managing Corporate and Business Strategy.
Guercini, S., Ranfagni, S., & Runfola, A. (2020). E-commerce internationalisation for top luxury fashion brands: some emerging strategic issues. The Journal of Management Development; Bradford, 39(4), 423-436. doi:10.1108/JMD-10-2019-0434
Guilbault, L. (2021). LVMH’s rebound: Louis Vuitton, Dior and e-commerce drive growth. Vogue Business.
HandbagHolic. (2021). How much do Louis Vuitton employees make? The Truth.
Hennigs, N., Wiedmann, K.-p., & Klarmann, C. (2012). Luxury Brands in the Digital Age – Exclusivity versus Ubiquity. Marketing Review St. Gallen; Wiesbaden, 29(1), 30-35. doi:10.1007/s11621-012-0108-7
Huang, A., & Romaniuk, J. (2020). Understanding consumer perceptions of luxury brands. International Journal of Market Research., 62(5), 546-560. doi:10.1177/1470785319891109
Ingram, T. N., LaForge, R. W., Avila, R. A., Schwepker, C. H., & Williams, M. R. (2019). Sales management: Analysis and decision making. Routledge.
Kenneth, K. P. (2013). Louis Vuitton Brand.
Koyaana.R. (2020). LOUIS VUITTON 101: THE HISTORY OF A LUXURY GIANT.
Louis GMX. (2014). Competitor Analysis. Web.
Masè, S., Cedrola, E., Davino, C., & Cohen-Cheminet, G. (2022). Multivariate Statistical Analysis of Artification Effect on Customer-Based Brand Equity in Luxury Brands. International Journal of Arts Management, 22(3), 55-66. Web.
MBA Skool Team. (2021). Louis Vuitton SWOT Analysis, Competitors & USP.
Moraes, C., Carrigan, M., McGrath, M., Ferreira, C., & Bosangit, C. (2017). Understanding Ethical Luxury Consumption Through Practice Theories: A Study of Fine Jewellery Purchases. Journal of Business Ethics, 145(3), 525-543. doi:10.1007/s10551-015-2893-9
Nash, J., Ginger, C., & Cartier, L. (2016). citation_instructionAccessibility Information and TipsThe Sustainable Luxury Contradiction. Journal of Corporate Citizenship(36), 73-95. doi:10.9774/GLEAF.4700.2016.se.00006
Perch, D. (2020). Marketing Strategies and SWOT Analysis of Louis Vuitton.
Seo, Y., & Buchanan-Oliver, M. (2019). Constructing a typology of luxury brand consumption practices. Journal of Business Research, 99, 414-421.
Seung-A, A. J. (2012). The potential of social media for luxury brand management. Marketing Intelligence & Planning, 30(7), 687-699. doi:10.1108/02634501211273805
Statista. (2022). The market size of the jewellery industry in Australia from 2010 to 2020.
Sudjono, N. (2020). Louis Vuitton: The 166-year-old brand that keeps attracting the young.
Swant, M. (2020). The world’s Most Valueable Brands.
Uggla, H., & Lashgari, M. (2012). Portfolio Strategy for Luxury Partner Brands: Strategic Guidelines. IUP Journal of Brand Management; Hyderabad, 9(2), 18-28. Web.
Vogel, A. T., & Watchravesringkan, K. (2017). Consumer evaluations of trend imitation: brand equity, consumer attitudes and preference. The Journal of Product and Brand Management, 26(5), 516-527. doi:10.1108/JPBM-07-2016-1257
Yu, Y., Rothenberg, L., & Moore, M. (2021). Exploring young consumers’ decision‐making for luxury co-branding combinations. International Journal of Retail & Distribution Management, 49(3), 341-358. doi:10.1108/IJRDM-12-2019-0399