LVMH is one of the largest luxury goods manufacturers in the world with 6- sub-companies. The company was founded as a result of a merger between Moet et Chandon and Hennessy, Champaign, and Cognac manufacturers. In 1987, they acquire the fashion company, Louis Vuiton. Today, the company is owned by such fashion companies as Christian Dior (LVMH 2008). LVMH offers the same mix of merchandise in all parts of the world, ignoring international differences. In its bid to enter international markets, LVMH has defined its business concept in very clear terms: it would target young wealthy people and involve them in the selection and arrangement of unique styles. The stores provide a comfortable setting in which customers could refer to catalogs and conceptualize their unique needs (LVMH 2008).
The company office is located in Paris. The Chairman of LVMH is Bernard Arnault. When a business concept is spelled out in such specific terms, cross-cultural disparities get pushed in the background. The international manufacturer strives for homogeneity in global markets irrespective of geographical location. This requires a vertically integrated system of operation with sufficient control on manufacturing, design, promotion, and physical distribution. It also becomes important to establish warehousing facilities at critical locations in the global market. The headquarters are located on all continents (LVMH 2008). The main factory locations are located in European countries. The main factory is in Ducey. LVMH is a privately owned company. The company has always structured the way it’s now. The main changes took place during mergers and acquisitions which influenced some organizational functions and structure of some offices.
The company is oriented to wealthy consumers (Class consumers) who value unique image and personal identity. The store image stems from such diverse factors as advertisements, sales personnel, merchandise, services, pricing strategies, physical plant, and layout. Research findings seem to indicate that consumers choose to shop at stores and purchase brands consistent with their personalities (LVMH 2008).
The main divisions of LVMH are wines and spirits, watches and jewelry, fashion and leather goods, perfumes, and cosmetics. The subsidiaries are viewed as conservative, reputable, respectable, solid, and trustworthy. They are tied to the image of the wealthier members of the community. The uniqueness of LVMH is that they produce up-to-date products able to meet diverse customers’ demands and requirements. The main retail clients of LVMH are wealthy people who value unique personal image and are ready to spend thousands of dollars on clothes and food. Like businesses, consumers are concerned with their image. They want to be seen in a favorable light. The consumer’s interest lies in his self-image — the image he has and would like to have of himself. For LVMH’s client’s image are their part of life and the main factor of successful business relations. The self-image concept refers to what each individual sees in himself — his perceptions (Murphy, 2008). The consumer perceives his “true environment” as affording opportunities or restricting his actions and development, either of which affects his self-image. Within his phenomenal field, he attempts to satisfy his needs and achieve his goals, including the important goal of maintaining and extending a favorable self-image. The consumer seems to accept those experiences and opportunities that are deemed favorable to his self-image and to reject, alter, and ignore those that are not (Karimzadeh, 2008). The main designer of the company is Sell Mare Jacobs. They are not the owners of the company. LVMH has a design staff directed and managed by the main designers of the brand. LVMH does not license its brand but produces merchandise for such companies as Louis Vuitton, Dior, Fendi, and Celine (LVMH 2008).
The company is vertically integrated and is participated in multi-channel distribution. Vertical integration means a way of control based on heretical relations: control from the top. For example, manufacturers desire an adequate number of distributors to blanket markets and would prefer even greater numbers. This desire must be balanced with distributors’ preference for limited numbers of distributing units with protected territories. In the end, the number of channels must reflect a compromise; there must be enough of them to ensure fairly adequate coverage, but not too many to prohibit segments profitable enough to protect the interests of each. The company does not import its products and does not produce products off-shore (LVMH 2008).
Recently, LVMH’s sales reached Euro 16 481 (millions) in 2007. Ion 2008: “Based on calculations, sales in the three months improved 3 percent to 4.16 billion euros, or $6.24 billion, from 4.03 billion euros, or $6.05 billion, last year, broadly in line with analysts’ expectations. Dollar figures are converted at average exchange rates” (Murphy 2008 n/a). Thus, the company plans to expand its global presence and penetrate the Russian market. The forces that mold international environments include such things as increasing incomes and purchasing power, mass production, the geographic, social, and economic expansion of markets, mass distribution, the increasing security of international consumers, the willingness to buy on credit, and the development of mass middle classes (Meunier, 2003). Basic shifts from agrarian to industrial societies, from rural to urban complexes, from the home environment to the working wife, and from servant to servantless markets all influence the scene abroad. In addition, marketing abroad is very sensitive to border disputes, shifts in tariffs, legal cartels, and greater government participation in economic affairs. LVMH Chairman admits: “Through patronage, we wish to give something back that is in the general interest and thereby share our economic success with everyone” (LVMH 2008, p. n/a/). LVMH supports local schools and hospitals, spends money on special grants for young designers and promising children (LVMH 2008). This year, “LVMH sponsors Richard Serra exhibition Monumenta 2008 at the Grand Palais” (LVMH 2008).
The case of LVMH shows that to be effective, international marketing requires more than a consideration of corporate effort alone. It needs an integrated plan that takes into account both government policy and the competitive position of participating American businesses. The actual distribution of products tends to follow geographic boundaries. For economic efficiency, however, marketing activity should cross national boundaries. Communication through jets and satellites certainly helps to hurdle boundaries, if not to make them disappear. Marketing then tends to become multinational. The confinement of markets within national boundaries is neither economically feasible nor desirable since modern technology functions best in multinational mass markets (Murphy 2007). The free movement of resources across “frontiers” has been one of the keys to American marketing success, since the United States, in reality, is a “common market” composed of 50 states. Customs unions, common markets, and other organizations for supranational efficiency, however imperfectly they operate, are designed to facilitate the creation of mass markets. To ensure a competitive position on the market, LVMH should involve more segments including upper-middle-class consumers. The multinational or global corporation is emerging to prompt a new organizational style. Within organizations, a worldwide perspective is unfolding in marketing management, with marketing decisions made based on global alternatives.
References
Karimzadeh, M. (2008). Louis Vuitton Enters New Markets. WWD Retail. Web.
LVMH. (2008). Web.
Meunier, S. (2003). France’s Double-Talk on Globalization. French Politics, Culture and Society, 21 (2), 204.
Murphy, R. (2008). LVMH Sales Leap. WWDBusiness. Web.
Murphy, R. (2008). LVMH Upbeat During Economic Downtown. WWDBusiness. Web.