Luxury is one of the fastest growing markets with an ever-increasing product offering of luxury goods. As customers become much more aware of brands and the symbolic and emotional value they carry, it is important for luxury brand companies to develop specific brand positioning strategies that distinguish and differentiates their prestigious status, reputation, brand promise and social contribution to communities where they operate.
This report aims to analyse the Louis Vuitton Moët Hennessy (LVMH) brand; a luxury brand considered to be a key in this market category. The report purposes to interrogate its brand positioning, ambitious brand strategy and brand reputation. While the Group is vast with a product offering ranging from luxury high end fashion, bags and the elite champagne brand Moët and esteemed spirit Hennessy, this report will only focus on the Louis Vuitton aspect of the business and not the beverage.
Louis Vuitton Malletier
Louis Vuitton Malletier, regularly alluded to as Louis Vuitton, or abbreviated to LV, is a French company (Wikipedia). Louis Vuitton is one of the leading extravagant fashion houses in the world, prestigious for its high-quality luggage, trunks, and handbags (Palmistessa,2012).
History & Background
Louis Vuitton originates from Paris, at 4 Rue Neuve des Capucines. It was founded in 1854 by Louis Vuitton (Vogue, 2018). Louis Vuitton’s creative abilities and originality developed a solid establishment for him to begin the Louis Vuitton empire. The first store was opened in London, England on Oxford Street in 1885 (Louis Vuitton,2018). Louis Vuitton passed away in 1892 and his son George Vuitton took over (Paul,2011).
George Vuitton designed the signature Monogram in 1896 in memory of his late father. From its handcrafted roots, the personal signature blossomed into an international symbol on language and handbags. The LV Monogram canvas speaks creativity, design and timelessness joined together with elegance of the House’s heritage of savior-faire (Louis Vuitton, 2018).
The Louis Vuitton building, which the biggest travel-merchandise store in world, was opened on the Champs-Élysées in 1914 and considered Coco Chanel a supporter (Vogue, 2018). Two decades later Georges Vuitton passed on, and his son Gaston Louis Vuitton, took over the management of the organisation. Post the war, the Louis Vuitton organisation started producing wallets, purses and different travel cases. In 1959, the organisation changed its monogram to make it more adaptable, which enabled it to be utilised in small pieces of luggage and wallets (Kasztalska, 2018). In 1977 Vuitton own two stores that acquired $10 (USD) annually. Today, the LV empires has grown into the US, Asai, Africa and Australia.
The fashion house merged with Moet Hennessy in 1987. Uniting with the famous maker of champagne, wines, spirits (Hennessey) and perfumes paved the way for LVMH, a multinational of immense brands in the luxury brand world (LVMH and Brand Management, 2015). The LVMH group comprises 70 exceptional Houses that create high quality products. It is the only group present in all five major sectors of the luxury market; Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry and Selective Retailing. LVMH currently employs 145,000 people across the world and reported sales of €42.6 billion in 2017 (LVMH,2018) Michael Burke is the Chief Executive Officer of Louis Vuitton (LVMH,2018).
The below is an image indicating other members of the committee;
Figure 2 derived from LVMH (2018)
Brand and Corporate Reputation
Many authors define corporate reputation in numerous ways but a common theme is “the accumulated impression held of the organisation”. Davies (2005) describes it stereotyping factors that affect and or influence reputation. (Davies, 2005) Furthermore, the reputation of a corporation affects the way in which different partners act towards it, influencing for example the workers retention, client satisfaction and customer devotion (Chun, 2005).
While LV as a luxury brand has benefitted from increasing affluence around the world and with immense brand awareness, LV has also been exposed to some reputational issues. Many consider the brand only accessible to superrich buyers but the Chinese of recent now regard the brand as one for ‘secretaries (Willet, 2017). Due to the influx of ‘fake LV’s) particularly in the Chinese market, the consumer perception is that it is now for everyone and has lost its exclusivity. “Louis Vuitton has become too ordinary,” a billionaire woman told China Market Research Group managing director Shaun Rein in 2011. “Everyone has it. You see it in every restaurant in Beijing. I prefer Chanel or Bottega Veneta now. They are more exclusive.” (Willet,2015).
This growing perception coupled with growing competition in this brand category has affected the reputation of LV which for many years prided itself with originality. As a result, LV is starting to lose market share in the Chinese market and required to get back their brand promise. In 2017, LV was faced with yet another brand reputation issue with their 2017 menswear collection that featured the Basotho blankets. This fashion line caused controversy in South Africa with accusations of cultural appropriation. It is important that in development of such sensitive cultural fashion line’s LV considers a more robust stakeholder engagement strategy that also benefits the origin of the concept and people of the land where cultural design comes from.
This was further exacerbated by the movies Black Panther and Avengers Infinity Wars with scenes of tribesmen appearing in the Basotho blanket. This cultural appropriation was considered inappropriate and caused controversy. For LV to continue to be considered a reputable brand it is critical that they refine their fashion concepts to be more socially acceptable and equitable. Particularly, since the LV business model is anchored in a long-term vision that builds on the heritage of their fashion Houses that stimulates creativity and excellence. This model is attributed to drives the success of LV while ensuring its promising future (LVMH,2018).
Nonetheless, while there is a history of reputational issues and perceptive brand erosion, the LVMH Group has always been strongly committed to exemplary integrity and ethics in the conduct of its business and in its relations with all stakeholders. It has in place rules of conduct, principles and guidelines governing ethics and environmental and social responsibility for employees and partners.
UNIQUE OPERATING MODEL ANCHORED BY SIX PILLARS:
Figure 3 derived from LVMH website
LV’s structure and operating principles ensure that their Houses are both autonomous and responsive. This allows LV to be extremely close to their customers, to ensure that rapid, effective and appropriate decisions can be made. This approach also sustains the motivation of LV employees, encouraging them to show true entrepreneurial spirit.
A brand is a tangible or intangible perception that exclusively classifies an offering, providing symbolic communication of functionality and differentiation, and in doing so sustainably impacting the value offered (Jevons,2007).
LV brand positioning is the strong symbol of modern Style. LV generates innovation for elegant, Stylish, Value-for-money and practical modern luxuries with excellence image. Visual identity is Monogram Canvas on LV products brand (sanliebetong, 2009). LV’s customers are stylish, fashionable, alert of designer brands, and pays attention on quality and after sales services. Most customers are matured females with a steady working background (Ahuja,2014). LV customers are not concerned about price as most products are often used by the rich and famous, celebrities, and models all over the world (Ahuja, 2014). As such, LV has positioned its brand as one synonymous with prestige and wealth.
The brand positioning of Louis Vuitton in Singapore as compared to Hermès, Gucci and other fashion brands (based on pricing and exclusivity):
Presently, LV’s main competitors’ brands are Hermes, Channel, Gucci and Vertu. LV is recognised as one of the trendsetters and fashionable brand which uses a mix of demographic, psychographic segmentation, differentiating targeting strategy to satisfy the changing needs of its customers. Moreover, it has always positioned its products as a symbol of superiority and had built reputation over a period.
Brand Communication and Marketing
As part of their communication and marketing strategy, LV uses demographic targeting to approach its customers in the segments ranging from 22 to 65 years of age, and the target segment comprises individuals with income of US$5,500 or higher per month. The traits which make it a respected brand include the following: fashionable, durable, a quality legacy, a long product life, exclusivity, prestige and image, a high-class product demonstrating ego, and power and class. The company recognises the value of its consumer desires and communicates effectively with them through advertising. The visual brand identity captures the brand’s personality, mystique, and emotional values (Ahuja,2014).
Brand equity particularly in the luxury industry is of great signification. The ability to influence consumers to return to a brand again and again, even if it could imply higher costs than unbranded products builds into brand equity (Farjam ; Hongyi, 2015). Kapferer (2012:7) also addresses this phenomenon while studying several literatures to explain a contemporary definition of brands. In his definition, he describes brands an abstract term that is measurable.
LV has been successful in emerging as one of the best luxury brands. For 6 consecutive years, it has been named as the most valuable brand in the luxury segment globally. Some of the influential brand endorsers of LV are Michael Phelps, Angelina Jolie, Bono and the recent one is Will Smith’s son Jaden (Karnani,.n.d.). The brand LV has been valued $33.6 bn and it has been ranked at number 15 in the Forbes list of world’s most valuable brand (Forbes, 2018)
Social Responsibility as a Brand Component
Today, an organisation’s involvement in the community is very important. It is critical for a business to demonstrate their contribution to social investment, ethical and responsible operations, protection and conservation of the environment etc. LVMH prides itself in the involvement of the Green Lights project which uses advanced lighting technology where lighting can be produced using much less energy f the Light Emitting Diode (LED) light (LVMH,2018). The use of LED lights reduces energy consumption by 40% on average as compared to traditional lighting (LVMH,2018).
This is extremely important for LVMH, since 80% of the Group’s greenhouse gas emissions are directly attributable to energy consumption at its 4,700 stores, which span nearly 1.5 million square meters of floorspace – the equivalent of 200 football fields! And because half of a store’s energy consumption comes from lighting (the other 50% is mainly from air-conditioning and heating), resorting to less energy-hungry technologies is essential for LVMH, which aims to reduce CO2 emissions from energy consumption by 25% between now and 2020 (LVMH,2018).
Figure 4 (Louis Vuitton, 2018)
Moreover, as part of its social responsibility, LV is in partnership with UNICEF in ensuring a meaning World Children’s Day; an annual event held on November 20. This year LV launched the Silver Lockit bracelet designed by Sophie Turner. World Children’s Day marks the anniversary of the adoption of the Convention on the Rights of the Child in 1989. It is a day to honor children and mobilize people to help save children’s lives, fight for their rights and help them fulfil their potential. In continuation of its #MAKEAPROMISE campaign, Louis Vuitton, with the help of Sophie Turner, continues its commitment to raise awareness and funds for UNICEF to support the most vulnerable children around the world. Since the launch of the Silver Lockit in 2016, the partnership has raised over $6 USD million for UNICEF (LVMH,2018).