Louis Vuitton Expansion Strategy

Operating in 59 countries, Louis Vuitton is the largest global luxury brand in the world. It is a member of the Louis Vuitton Moët Hennessy Group and the main business unit of the conglomerate ‘s fashion and leather goods segment. Louis Vuitton has been very successful in selling its famous handbags, shoes, suitcases and other luxury goods and generated revenues of about $ 4 billion in 2004. Louis Vuitton opened the first store in India in 2003 and one year later the second one in Mumbai, both located in luxury hotels.

2. Problem Statement

One main goal for Louis Vuitton is to acquire a customer base of one million Indians by 2010. In order to achieve that it is not only important to serve high-net-worth consumers, but it is also crucial to target the so called “cocooners”. It is therefore a necessary objective to make the new elite aware of the brand and increase their perception of Louis Vuitton’s exclusivity. Furthermore, ‘super rich’ are only willing to pay premium prices for those luxury products which clearly distinguish them from lower tiers of the population. In order to reach these the company can choose among three distinct strategies.

3. Alternatives

3.1. Louis Vuitton in Bollywood

In this alternative, Louis Vuitton would have Indian movie actors endorsing its products and a product placement in Bollywood movies. The target segment would not only be the Indian “super rich” society who is already familiar with the brand, but as well the so called “cocooners”. Since the Bollywood movies are very popular in India, this strategy would result in general brand awareness in the society.

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For the celebrity endorsement LV could chose Aishwarya Rai and Shahrukh Khan to be the face of Louis Vuitton India. The campaign would comprise posters, billboards and TV commercials with both actors advertising LV products (Exhibit 1). Since Bollywood actors are perceived as role models and have a great influence in Indian society, it is expected that brand awareness will increase while reinforcing the image of Louis Vuitton as a luxury and lifestyle brand.

In addition, Louis Vuitton will have its products placed in Indian movies, which depict wealthy and influential characters. This would include as well the characters shopping at the LV store in the new Emporio luxury mall in order to advertise the store itself.

Another positive effect would be increasing LVs market share in the long run. Advertising through Bollywood could help develop the taste of luxury and lifestyle in the so called “cocooner” segment.

3.2. LV Exclusive

Another alternative Louis Vuitton could approach would be to offer a special club card with mould-breaking exclusivity.

This special club card would be divided into 3 different levels, the LV Exclusive Silver Card (Exhibit 2), LV Exclusive Gold Card (Exhibit 3) and LV Exclusive Platinum Card (Exhibit 4), based on the amount of money the customer spent. The LV Exclusive Club Card provides the customer with exclusive, high-end services and luxury rewards.

After the first purchase of a Louis Vuitton item in one of its Indian stores, customers will receive a basic customer card in order to keep track of the sum of money they spent.

The targeted segment for this strategy would be the super rich, who seek exclusivity and are already familiar with the brand. This strategy would certainly increase the brand loyalty of the high-class society because of the unique offers provided by the LV Exclusive Club Card.

Additionally, Louis Vuitton will be able to track customer buying patterns and obtain key information about buying behavior through this special club card, which allows them to tailor their products to their customer’s needs.

3.3. Successful Indian Women

Another alternative for the company could be that it focuses on a certain segment in particular the women, who represent a vital part of LV ‘s customers. They are becoming more emancipated and as a powerful group have to be taken into consideration. Indian women need a role model to inspire them, so if Louis Vuitton shows them a successful woman wearing one of its products, the outcome would be inspired women, desiring to possess a LV item. Using such an approach they will target not only a segment consisting of individuals divided by their net income, but strong women that need to give utterance to their achievements.

In order to increase the brand awareness among this certain segment, the company should invest in advertising its products. The best place would be an elite specified magazine, dealing

with business and social issues, for example India Today, Entrepreneurs, The Business Enterprise ‘ ‘ and „ ‘Reading Hour ‘ ‘. The emphasis should be laid on the one side on a picture of a well-known woman like Indira Nooyi (Exhibit 5), CFO and president of PepsiCo, depicting a typical role model. She will represent the thousands of women in the Indian society who have silently overcome the limitations and stood out for better terms. Billboards and ads in online issues of established feminine magazines would support the idea of women power and that in a world ruled by men, women still can be successful and exclusive.

As a result, this strategy will help Louis Vuitton to increase brand awareness among all the Indian women and extend its customer database.

4. Issues

4.1. To what extent will Louis Vuitton’s marketing activities affect customer awareness in India?

Louis Vuitton ‘s targeted Indian customer segment requires a different strategy then the ones used by the company throughout the world. The three proposed alternatives provide different approaches as to how Louis Vuitton can service its new generation of customers.

“Louis Vuitton in Bollywood” targets both high-net-worth individuals and the rising “cocooners” because of the popularity of the Bollywood industry in India. This strategy, however, implies high advertising resources in order to be able to reach the desired segment through product placement and celebrity endorsement. The “LV Exclusive” club card targets mainly the high net-worth individuals by offering high-end services which increase the shopping-experiences of the customers. While the number of high-net-worth individuals increases by 19.3% a year, according to the “World Wealth Report,” it is questionable if this customer segment only will be sufficient for Louis Vuitton to reach the target of a one-million customer base by 2010. The third alternative is about targeting successful women. Concentrating on this segment would target both women from the high-net-worth individuals ‘ and the “cocooners” segment. The main disadvantage is to define how many Indian women are ready to break the cultural boundaries of the paternalistic family structures that still rule in this country.

What is the impact of of Louis Vuitton’s marketing activities on their brand image in India?

According to the purchasing behavior of India ‘s high class, consumers are expecting a brand that stands for exclusivity and provides the owner of a Louis Vuitton product with a powerful status symbol. Working closely with the Bollywood industry through product placement and celebrity endorsement will have a high magnitude on increasing customer awareness. While Bollywood celebrities are seen as part of the high class, Louis Vuitton may need to maintain a close look in what movies they will place their products in order to minimize the risk of a brand association with a common product. The “LV Exclusive” club card system could increase loyalty among already existing customers, offering the brand image a “crème de la crème” status thus underlining the exclusivity of Louis Vuitton items. Last but not least, by tailoring their advertising on women only will associate the brand with a women ‘s product, so Louis Vuitton products for men (i.e. dress shoes, suits, shirts) may suffer. Since India is a collectivist country, women usually buy clothes for the entire family, so the effect of the brand image being associated with a women ‘s brand will be minimal.

4.3. Will LV face a social-status conflict (conflict of interest) by targeting two different customer segments (i.e. HNW individuals and cocooners)?

Through the means of “LV Exclusive Cards” Louis Vuitton is trying to gain loyalty among super rich Indian customers. However, LV must consider the growing product awareness of the “cocooners” who are not the target group of the Exclusive Cards but will be of fast growing importance as customers. As positive as new customers are in general this also bears the risk of a conflict between the super rich and the cocooners – who are much greater in numbers. HNW consumers may start to perceive LV as a rather common brand and switch to different luxury products as cocooners step up the social hierarchy. Furthermore, the second alternative Louis Vuitton in Bollywood could also result in a conflict between those two segments. If the products’ popularity increases this may have a negative impact on the buying behavior of the HNW consumers. This would go along with the above-mentioned decrease in exclusivity. Finally, women may be an interesting target group as stated in third alternative but conflicts may also occur between the HNW women – who may be coming from rich families – and the self-made emancipated cocooner woman. These very different types of women will require different endorsing role models which may are perceived negatively by each other group.

How long will Louis Vuitton maintain a competitive advantage considering the proposed alternatives?

Louis Vuitton’s advance on the Indian market will not remain unseen by the competition. Other luxury goods producers could benchmark Louis Vuitton’s approaches. Companies such as Gucci, Prada and Giorgio Armani could easily copy LV’s Bollywood strategy as well as the alternative for attracting Indian women. It might be more challenging though to imitate LV’s Exclusive Cards approach successfully because Indian high-net-worth costumers will already be loyal to Louis Vuitton in the ideal case and will not be looking for substitutes or additional luxury products in the same segment.

5. Conclusion

All in all, while it may require more advertising resources than for example targeting emancipated women via print media, “Louis Vuitton in Bollywood” proves to reach the highest number of consumers, underlines the brand ‘s exclusivity, and the company will be able to increase its market share in the long run.

First, with the Bollywood industry booming in India, Louis Vuitton can reach a wide array of consumers and thus increase the overall customer awareness of Indians. Second, by using celebrity endorsement and selective product placement in movies, the company will be able to clearly communicate a brand image that advocates its exclusivity thus offering its potential customers a means to “showcase their success.” Last but not least, Louis Vuitton can educate the nouveau riche towards choosing their brand, which will considerably increase their market share in the long run.

It is therefore highly recommended that “Louis Vuitton in Bollywood” is the most appropriate and effective promotion campaign to reach and nurture the emerging new generation of customers in India.