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Consumer behavior related to luxury goods essays
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Louis Vuitton Moët Hennessy Key Issues
The company we know today as Moët Hennessy Louis Vuitton (LVMH) group was founded in 1987 with a merger between Louis Vuitton and Moët Hennessy. For the past two years, the organization has sustained rapid growth and profitability. Bernard Arnault, the CEO of Moet Hennessy Louis Vuitton, has to deal with the extensive high pressures of growing a business today. Arnault must keep growth and maintain a competitive edge while preserving the value, the heritage and the stones of the company.
External Analysis
An external analysis will be used to evaluate the company’s opportunities and threats based on its external environment.
PEST Analysis
Political
Moët Hennessy Louis Vuitton is a high quality luxury goods company focusing mostly on absolute and aspirational customers. LVMH constantly battles with domestic and international governments around the world to crack down on counterfeit items.
Economic
The recession in 2007 had a worldwide effect on business. However, according to exhibit 4, the luxury goods market maintained strong growth during the recession. Moët Hennessy Louis Vuitton had problems with tourists mostly from China LVMH buying products from Europe and selling back in China to avoid the duty fees.
Socio-Economic
Moët Hennessy Louis Vuitton focuses on the higher end of the market. The market is made up of three segments: absolute, aspirational and accessible customers. LVMH focuses on the top two segments; absolute customers are individuals of ultra-high net worth who value brands that are based on heritage and tradition and aspirational customers who are celebrities with high net income. Both categories of customers value high quality and exclusive buying experience. ...
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...me at some point.
Alternatives
1. Move to perfume market – to increase profitability and growth. The perfume market revenue in 2011 was 19 billion euro and was expected to grow 5 percent. Also the absolute and aspirational customers made up 25 percent of the market. LVMH has leading brand in the perfume industry; Christian Dior, Guerlain and Givenchy, those are all top perfume brands.
2. Minimize the use of technology use more artisan products
3. Carter to all three markets segments, use Fusion Alternative - produce “accessible goods’ use the automation since this groups cares solely about the brand image. Produce absolute goods using artisan labour this group care are heritage and tradition. They look for excellent craftsmanship, the use of high-end materials and excellent buying experience.
4. Continue with regular practices with friendly acquisitions
Ramona the pest by Beverly Cleary is a silly, exciting and fun book to read. Ramona is excited about the first day of kindergarten. But when she gets there it isn’t what she thought it would be like. Ramona is distracted about another classmate’s hair and can’t wait any longer to touch her hair. Ramona gets in trouble a few times but then gets over it. Her sister Beezus (Beatrice) thinks that she is a pest and everybody in her neighborhood thinks she’s a pest. At first when she starts kindergarten she loves her teacher but when Ramona gets in trouble a few times she’s beginning to thinks her teacher doesn’t like her anymore.
By 2002, Moet Hennessy Louis Vuitton was the world’s largest luxury products company, enjoying annual sales of 12.2 billion euros. LVMH carries the most prestigious brand names in wine, champagne, fashion, jewelry, and perfume. Upon entrance of this luxury product industry, LVMH was aware that they produced products that nobody needed, but that were desired by millions across the world. This desire in some way fulfills a fantasy, making consumers feel as though they must buy it, or else they will not be in the moment, and thus will be left behind.
-Status symbols: Sophisticated customers who value the distinctive, exclusive collection seem to value the corporate-branded version of luxury. –Philip Martiz, chairman of the board
They effectively advertise their brand, quality, style and elite products, creating a useful image of confidence, sexiness and desire to its consumers, enticing both the female and male market segment. Knowing the exact approach it needs for the purpose of increasing sales and dominating its market. Victoria’s Secret is cleverly using its marketing tactics to keep its consumers engaged with the company and its products. Not all of the same products are offered in each outlet which will require its consumers to visit the store, review the catalog, interact on its social media and visit its website to stay on top of sales and
“Despite worldwide softness in the sale of luxury goods, LVMH has cemented its position as the world’s largest and most profitable player in the category. To stay there it must keep its customers loyal and its brand strong and find new markets worldwide” (Hazlett C. 2004). That is why in its mission they state to represent the most refined qualities of Western “ art de vivre” all around the world. Their objective is to be the leader in the luxury market, continuing to transmit elegance and creativity. This poses some major challenges, the main one is to keep being the leader in the luxury market through a sustainable growth. The main problem to achieve it is the high dependency on three main countries, France, Japan and USA. This becomes a threat because if there is an economic downturn in one country it affects LVMH directly that is why.
A private label company called “Louis Vuitton Moet Hennessy” or better known as LVMH owns the brand of Louis Vuitton. The Louis Vuitton brand combines both its vision and mission statement into one proclamation. The statements include: “The
A firm?s external environment is divided into three major areas : the general, industry and competitor environments. Below is an elaboration in further detail regarding the firm?s opportunities and threats in these three environments.
Dior uses different market segmentations to sell their product. First of all, there is a geographic segmentation. Perfumes are luxury products. Thus, they target wealthier areas like North America, Western Europe, Japan, etc. Since Dior is popular worldwide, we can obviously find it everywhere, but their market is based on these areas’ needs. Then, they use demographic segmentation. They target adult women who have quite high incomes. Perfumes are something not everybody can afford. This fragrance can be worn for any occasion, special as well as regular; it is light but demonstrates personality and feminity. They are trying to get a medium to strong loyalty status. As for any perfume, if a woman likes it; she will probably buy it again. It is a very accessible product. Any store like Macy’s, Nordstrom or Sephora in North America or “perfumeries” in Western Europe will sell J’adore. The segment is very large, because many people, even if they do not fall in one category, will buy perfumes for special occasions, like Christmas. This is a gift that always makes a woman happy, and Dior develops its marketing around that. Indeed, during Christmas, they make a lot of offers that combines a lotion with the perfume for example. Also, there are no separate segments between women; all women want to wear perfume.
Products are what the organization's sell to people. This area mainly focuses and concentrates on developing the right product or service for the target population. The product or service should always satisfy the need of the target population. That’s why it is very important to know the wants and needs of the target population and conducting the proper research should always be done before hand.
The high pressure luxury brand industry has evolved over the last few decades from a small and selective to a multibillion dollar arena offering significant potential and growth opportunity for the luxury brands that compete within its realm. With many luxury brands competing for over $225 billion (The Economist, 2009) in revenue each year it is easy to see how strategy plays an important role.
A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation sector:
This report analyzes the cosmetics retail industry in Hong Kong. There are many large-scale specialty cosmetics chains that are well developed in this market, such as Sasa, Bonjour, Colourmix, Aster and Angel, which are taking the lead. They mainly offer a wide range of international branded products and private label products to cater for customers’ special beauty needs, like make-up, fragrance, skincare items. With many dominant firms and a slowing growth in demand, the industry structure is being identified as mature.
Firstly, consumers buy the products of which they believe that will offer them the highest value (Kotler & Keller, 2012). However, these consumers cannot know before purchase what a product is exactly going to offer them. Therefore, consumers have to rely on promises of the selling company. These promises are invariably more than the tangible products themselves, focusing on the intangible benefits attached to the product rather than its distinctive features. In other words, the company concentrates its marketing activities on the intangible value of the product. In that way the company is able to get customer appeal for its products, and differentiate from its competitors (Levitt, 1981). Logically, because the intangible value is the main focus point of companies and of consumers in their purchase decisions, value has to be pre...
Managers are required to conduct an internal analysis in order for the strategic management process to begin. Internal analysis involves in determining the company 's strengths and weaknesses by analyzing its competencies. To have an effective strategies, the organization must exploit and expand on its strengths, as well as reduce or eliminate its weaknesses; thus furthering its competitive advantage, in order to achieve profitability (Hill & Jones, 2014).
With the rise of the economy, consumers have become more and more knowledgeable on selecting their favourable product as a result the organization cannot focus on what it sells but on the side focus on what the customer wants to buy.