Partnership with local artist and Limited edition products has demonstrated that Product Line up and innovation are very strong parts of ‘LV’ business model in Japan. Price – Market Demands “Low Price”, this is achieved by reducing costs and off-shoring production to China and elsewhere. Louis Vuitton handbags, on the other hand, are priced high. Such high prices are unnecessary for merely stowing and carrying things. In essence, the Louis Vuitton difference is value, not price—this being absolute value, not relative value.
Many of the principles for Price were innovations that came about after Kyojiro Hata became president of Louis Vuitton Japan and that subsequently went global. With the Yen getting strong ‘LV’ has reduced the prices between 1 to 4 folds over the course of last 4 – 5 years. This is in my opinion is correct or reliable pricing which earns trust of the customers. Place – In general more distribution channels the company have more sales potential is predicted. However, in case of ‘LV’ – they are selling only from few stores and started online (via web) presence in Japan after the new CEO.
The reason being, it’s easy to control few distribution channels then many. Control is the key in the business plan of ‘LV’. Also, as the products are fashion products, which needs lime light, and the availability of prime locations and possibility of having multiple ‘LV’ stores in same vicinity forced the company to have limited distribution channels. Promotion – Surely, it’s not common to see ‘LV’ commercial on TV even at primetime. This is not because ‘LV’ is tight with its advertising budget, but due to the fact that there philosophy is to give in depth details to the customers directly.
The most common used advertising medium used by ‘LV’ is print mass media like Fashion magazines etc. Also, considering this fact now we understand why customers are lined up in front of the inaugurating of a flag ship store J Q2. What are the opportunities and challenges for LV in Japan? Ans. SWOT of LV in Japan Strengths· Internationally recognized fashion Brand Image· High quality products achieved high quality control standards· Distribution is company owned· Collaboration with renaund Japanese Artists.
Attention to the distribution stores location, layout, architecture etc. | Weaknesses· Very High Reliance on Japanese market· Brand dilution· Challenges in controlling multinational business. | Opportunities· High disposable income of Japanese customers· Solid proportion of middle class. · Social and Cultural relations with fashion. · | Threats· Economic downturn and strong Yen against $ and Euro· Competition with other similar luxury brands or low range brands. · Counterfeiting items· Cyclic nature of the JAP economy. | Q3. How did LV entered the Japanese market originally?
What were the other entry strategies it adopted later to strengthen its presence? Ans. To me it appears that the entry was well planned by the Vuitton-Racamier family and the management. The rich culture and social habits of women to be distinctively beautiful and show me what have you got attitude was tempting enough. The ‘LV’ opted to go into the market without any local distributers and opening own distribution units and channels.
They exported products from France to Japan. ‘LV’ treated Japan as testing grounds of its strategies etc. and strengthened the brand identity by flawless gigantism architecture of the stores and celebration of Japanese artist in product designer and worldwide launch. Q5. Will LV have any new challenges arise due to the global financial crisis? How does it overcome these challenges? Ans. I believe that just like any other industry ‘LV’ has taken a hit from the economic melt down of last few years. Focusing to Japan, the strengthening Yen is the biggest pain for ‘LV’ as a gift of crisis. Few others are as follows: 1. Negative Price adjustments by competition to gain customers.
Low per capita income as Japan is export based economy- mainly to US and now in turmoil less exports to US, $ downgrading. No money to spend on luxury ? 3. Change in mindset. People are re-evaluating their need of Luxury items. 4. Increase in counterfeited items 2. Overcoming the challenges faced by ‘LV’: 1. Marketing champagnes to educate people about the counterfeited items 2. Paying Royalty to the Brand Loyal customers by some Memberships etc. 3. Dynamic positioning with slightly wider portfolio to meet the demand of below margin customers.