Introduction Marketing Communication Definition Marketing Essay

Belch defined Integrated marketing communication as a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs with consumers, customers, prospects employees and other relevant external and internal audiences (Defining IMC). On the other hand, Fill (2009) defined Marketing communications as a “management process through which an organization engages with its various audiences” (p. 54). According to Fill (2009), the use of the word ‘integrated’ refers to the use of various strategies in marketing communications.

What is marketing communication audit

A marketing communication audit involves the research of how successful are the company’s internal and external communications (Thomas, 2008) to enhance the performance of the organization by identifying weaknesses and ways to improve it.

Brief description of the company: Louis Vuitton

History of the company

Louis Vuitton (LV) is a luxury brand which was founded by Louis Vuitton in 1854 in Paris (Diniz, 2009). From then onwards, it has grown to become one of the most well known luxury brands in the world. Today, its product line includes luggages, bags, watches, shoes, jewelleries, and many more items (Diniz, 2009).

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Strength of the brand

Husic and Cicic (2009) claimed that the customers of today have more disposable income, making them more attracted to luxury products. This claim is supported by Kapferer (2012) who agreed, saying that the performance of LV has shown promising growth. Apparently, the company seems to have a lot of potential for further development.

The brand also has its own loyal customer base. These customers make decisions to buy the products of the company through a decision-making process which in theory is called the Consumer Decision Process Model shown below.

Need recognition

Search for information

Pre-purchase evaluation of alternatives

Purchase

Consumption

Post-consumption evaluation

Divestment

Source: Blackwell, Miniard & Engel, 2006

Figure 1 The Consumer Decision Process Model

Statistic /Plan

The economic downturn has affected businesses worldwide, especially those which are luxury goods (Berman & Evans, 2010). 56 percent of adults in a survey involving 2,700 consumers from Europe said that they would reduce optional spending by 12 percent on average (Berman & Evans, 2010). This can lead to a serious problem for LV if its customers are affected. On the contrary, a study by Nunes, Drèze and Young (2011) revealed the opposite, showing improvements in LV’s performance in the face of recession. This can be attributed to the company’s effective marketing communication strategies.

Context analysis

Internal Factors

Company analysis

LV has built an “international reputation for outstanding quality, creativity and craftsmanship” in the duration of five generations (Fujiwara, 2007, p. 1). Maintaining the authenticity of the past while at the same time forecasting the future has been pivotal in the company values (Fujiwara, 2007). Today, the brand has outlets all over the world (Kapferer, 2012).

Product analysis

LV products include handbags, luggages, purses, jewelleries, and others. The issue here is the vulnerability of its products to counterfeits. Almost 99 percent are counterfeits (O’Flaherty, 2008). Thus, the company has taken several steps to curb this problem by implementing the ‘Principle to Eliminate Counterfeiting’ which includes distribution of warning notices and registration of trademarks (Shiganawa, 2008). However, these strategies are not always successful because the root problems are not tackled.

External Factors

Environmental factors

Delpal (2011) reported an increase from 72 billion euros in 1994 to 168 billion euros in 2010 in luxury goods sales, making the yearly growth 5 percent on average. The growth of the luxury market has led to the entrance of many luxury fashion brands, increasing the competition (Kim & Ko, 2011). Therefore, LV should design competitive marketing strategies.

Competitor analysis

LV has many competitors such as Hermès, Dior, and Gucci. Hermès expanded its operations by employing more craftsmen and acquiring several companies of French origin (Delpal, 2011). On the other hand, Delpal (2011) reported that Dior, Gucci and Yves Saint Laurent eliminated most license agreements to have better control of its operations. Then, LV launched several production units to keep up with increasing demands (Delpal, 2011). These strategies employed by luxury brands show that the companies sometimes do replicate the marketing strategies of its competitors competitively.

Objective / Goal of the company

The goal LV is to be the “undisputed leader of the luxury goods sector” (LVMH Codes of Conduct, 2010, p. 5). This objective is backed up by the values shared by the company employees:

(a) Innovation and creativity: because our future success will come from the

renewal of our product offering while respecting the roots of our Houses.

(b)Excellence of products and services: because we embody what is most noble

and accomplished in the artisan world.

(c)Brand image enhancement: because our brands represent an extraordinary

asset, a source of dreams and ambitions.

(d) Entrepreneurship: because this guarantees our ability to react and our

motivation to create and seize opportunities.

(e) Leadership-Be the best: because it is through continually excelling that we

accomplish the best and achieve the best results.

Source: LVMH Code of Conduct, 2010.

What is the need for organizational objectives?

Yip (2007) mentioned that it provides a sense of direction and focus, maximizing the potential for long term success.

What is the promotional objective and strategies of the company?

The general promotional objective of the companies is to build a luxury brand image so that the brand is associated with luxury among its customers (LVMH Codes of Conduct, 2010).

What is the relationship of corporate strategy and promotional objective

The promotional strategy is closely related to the corporate strategy of LV because it is derived from the overall objective of the company which is to become the leading luxury goods company. The company utilizes the SMART (Specific, Measurable, Achievable, Realistic and Timely) (Yip, 2007) guidelines to create its five core values.

Budget and other resources

Finocchiaro (2010) reported that the company increased its total advertising expenditure in 2010 by 57 percent from 2009 to 2010. This major increase may be attributed to a rebound from the bad economic conditions in 2009. It was also mentioned that in 2010, from the month of January to June, $ 22 million was allocated for advertising, compared to $ 14 million of the last year (Finocchiaro, 2010). This is a promising development in keeping up with the competitive environment.

What are the differences between sales and communication-based objectives?

Sales based objectives are more concerned with the bottom line of the company and short term profits of the company whereas communication based objectives focus on building a favorable image of the company (Berman & Evans, 2010; Kotler & Armstrong, 2008).

Message Strategy of the company

LV utilizes newspapers and magazines to display image ads as a pull strategy rather than aggressive ads which uses the push strategy to attracts customers (Shiganawa, 2008).

Source: Kotler & Armstrong (2008)

Figure 3 Push versus Pull Promotion Strategy

The push strategy pushes the product to consumers while the pull strategy creates consumer demands for a product through marketing activities (Riley, 2012). Accordingly, LV has a principle of avoiding mass advertising such as television commercials to build its image as a luxury good (Shiganawa, 2008).

Target Audiences

What is the target market

According to Diniz (2009), the target market of LV is males and females between the ages 30 to 50 years old, with income of £35, 000 or more. The company also targets graduates and professionals with “sense of self worth and novelty seekers” (Diniz, 2009, target segmentation). Plus, the company focuses on people who value luxury brands as a symbol of status as well as those who respond to peer pressure (Nunes, Drèze & Young, 2011). Consequently, the feedback of these customers is important in order to evaluate the effectiveness of marketing efforts towards one of the most important goals which is customer satisfaction.

What is the feedback from customers

The figure below shows the least things that customers like about shopping at LV based on a survey of 2,318 respondents from all over the world (Lee, 2009).

Source: Lee, 2009.

Figure 2 What do you Like the Least about the Louis Vuitton Shopping Experience?

From the figure, service is seen as the least thing customers like about the brand while the second least liked attribute is the price-value relationship. However, Lee claimed that the satisfaction of LV customers has little to do with the price-value relationship as customers who purchase the brand value the prestige of owning the brand, not its economical benefits. The survey also outlined several interviews with the customers of LV to obtain their feedbacks. One customer said “I don’t look like a typical LV customer, so the salespeople were in a hurry to have me out of ‘their’ store as fast as possible” while another customer remarked “I guess I did not fit the image – I was not wearing all labels”(Lee, 2009, Voice of the Customer from Louis Vuitton Shoppers). Lee (2009) said that the brand focuses its promotional activities and services towards people who seem to embody the target market of the brand, which are people with high social status. Although this is a differentiation strategy which may benefit the company, it may have adverse effects in the long run if the company does not recognize that they have diverse clientele from various backgrounds, not necessarily high status. This may be because today, people who are average in terms of income level has changing needs and is moving more towards satisfying their wants for status rather than physiological needs.

Marketing communication

The aim of marketing communication (Brief) and role

The aim of marketing communications is to engage the target audience in terms of processing rational information or emotional information (Fill, 2009). Dion and Arnould (2011) said that LV is more concerned with the emotional aspects of consumption, due to its association with luxury goods. However, Fill (2009) suggested that there should be a balance between both elements (rational and emotional) rather than focusing on solely one need.

The promotion tools

For LV, the focus of the promotional tools is more towards enhancing the brand image rather than directly generating sales.

Advertising

LV does not use mass advertising to create sales volume (Shiganawa, 2008). In fact, the company does not advertise in television commercials, which is one of the common ways of advertising. Television commercials are considered mass advertising. On the other hand, the company also uses magazines to display image ads. According to Laitinen (2009), this form of advertising is quite powerful because of its ability to be passed down to many people and retained in the magazine for a period of time.

Personal selling

According to Shiganawa (2008), LV values the richness of communication between sales persons and customers because then, they are able to communicate more effectively about the product information and other details which can’t be achieved through mass advertising.

Sales promotion

Sales promotions are focused on creating value for money which involves tools such as coupons, deals, discounts and other means which create quick sales (Kotler & Armstrong, 2008). However, LV has a principle of prohibiting bargain sales and selling in value sets due to its emphasize on quality rather than price (Shiganawa, 2008). This is related to the objective of LV which aims to become the leading luxury goods brand.

Public relations

Public relations are concerned with building trust of the public through sponsorships, events, features and others to form a good image for the company (Kotler and Armstrong, 2008). As Fujiwara (2012) reported, 64 percent of luxury goods customers are in favor of socially responsible brands. Thus, LV puts great importance in being involved with the community. This is evident through the company’s effort in constructing a forest in Japan, contributing scholarships in China, creating an arts course in London and making a playground in Russia (Fujiwara, 2007). The focus of its social responsibility activities towards local context shows how the company is aware of the needs of its local customers.

Direct marketing

The company markets the product by showing demonstrations on how to care for the products and providing relevant information face-to-face. This encourages feedback and enquiries can be made directly while receiving prompt responses.

Intercultural Marketing communication

It is advisable to take into consideration the local factors in carrying out marketing communication. LV demonstrated its ability to adapt to local context by organizing various marketing strategies to build public relations. For example, the company built 40 playgrounds in 30 Russian states through the Naked Heart Foundation, preserved the environment in Japan through the ‘Louis Vuitton Forest through More Trees’ program, participated in fundraising activities in South Africa through the Mandela Rhodes foundation and other social responsibility programs in Thailand, Spain, China, France, and many other parts of the world (Fujiwara, 2007). This shows that the company pays attention about the happenings in different parts of the world and takes part in helping as part of it public relations effort.

Problem statement of the “Company”

The LV brand has the potential to increase its performance through various marketing communication tools. However, several issues must be highlighted.

Nunes, Drèze and Young (2011) reported that the recession may have an adverse effect on the performance of businesses such as LV which emphasizes luxury. Another problem faced by the company is the wide availability of counterfeit products, an estimated of 99 percent which is a very high percentage of counterfeits (O’Flaherty, 2008).

Recommendation

During recessions, the company can temporarily change its marketing strategies to reflect the changing market situation. For example, instead of prohibiting the placement of ads in televisions to reach the mass community, the company can employ this method to increase awareness and create new trend towards better value. Plus, the company can be more flexible towards its target audience to include younger generations who has increasing buying power as well as having the ability to generate greater word-of-mouth communications. In terms of combating counterfeit products, the company should reinforce the ‘Principles Prohibiting Appraisal of Authenticity’ more strictly and adhere to the rules set by the companies themselves.

Conclusion

The LV company has a differentiated promotion strategy and is more selective in the way it conducts marketing activities such as ad placement, pricing, and others. This is important to build an exclusive brand image in line with its aim to become the leading luxury brand in the market. The company also avoids mass advertising to a certain extent and mainly aims to advertize to its target audience. However, the company still maintains good public relations through its socially responsible strategies. In conclusion, the planning of marketing communications is important and is mainly dependent on the key objective of the company. In the case of LV, it is to become the leading luxury brand.

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