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LVMH, also known as LVMH Moët Hennessy Louis Vuitton, is a French company which has its presence in several nations. It is a conglomerate and corporation, which specializes in luxury goods. It was established in 1987 by merging Louis Vuitton and Moët Hennessy (LVMH 2023). It has its headquarter in Paris. Its valuation in 2021 was estimated to be $329 billion, and it is considered as one of the most valuable companies in Europe. It has 60 subsidiary companies under its control, which includes Christian Dior, Marc Jacobs, Givenchy, Loro Piana, Stella McCartney, Loewe, Tiffany & Co., Celine, Princess Yachts, Sephora, Bulgari, and TAG Heuer.
The vision statement of LVMH represents the family-oriented culture of the company which has been effectively maintained for years, while prioritizing long-term goals. Its mission is to support the growth of each House while preserving their individual identity and autonomy (Comparably 2023). They do this by developing, producing, and promoting their services and products through thoughtfully chosen distribution channels. Each employee at LVMH adheres to the three core principles outlined by the CEO, Bernard Arnault. These three requirements drive excellence and serve as the cornerstones of productivity and long-term success.
Despite the incidence of covid-19 pandemic, the LVMH group stood still and did not compromise on their quality.
LVMH has their reach in various sectors like selective retailing, watches and jewellery, fashion, cosmetics, and wines and spirits. Each company under this group operate on their respective principles and this decentralized structure helps in building effective relationships with customers.
The business model of LVMH is composed of 4 factors- decentralized organizational structure, that is, all brands under this group operates autonomously, as a result of which they can respond quickly; vertical integration, which integrates luxury with culture, heritage, and history of a city or a place; investment in innovation, young minds, and designers which fosters organic growth in the long run; and maintenance of a good international portfolio, which appeals to the elite classes of the society.
The decentralized and agile structure of the organization promotes responsiveness and efficiency. It allows all the brands to function on their own and the mid-level managers are given the responsibility to make decisions.
The unique strategies of LVMH have made it gain competitive advantage in the industry. Their hybrid competitive strategy of differentiation focus and differentiation leadership made it a fierce competitor in the market. Differentiation leadership includes using research and development and bring about innovation into their wide range of services and products that has greater appeal to its customers as well as provide them with higher quality. Differentiation focus includes utilising their role in an oligopoly industry with a niche market and their concentration on a specific customer segment. They are keen on constantly innovating their products, services, and distribution methods which includes celebrity collaboration, sustainable integration, and environmental impact, for projecting an image of elegance through their brand. The group has impressive marketing vision skills for adjusting to variations in marketing priorities over time brought on by changing consumer preferences. They now offer personalised services in their stores, enhance customer service with digital technologies, organize special exhibitions designed to educate and engage consumers, and boost interaction on the websites as its tangible proof. In order to compete with other groups in online sales post-pandemic negatively affected offline store sales, LVMH is boosting its promotion through e-commerce across all of its brands. This is beneficial for managing customer relationships and for tracking sales. In this new setting in which individuals should maintain social distancing, companies are striving to interact with their customers even more, for which they need to maximize their capabilities and resources through digitalization technology.
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LVMH group is present in several countries including France, Europe, Japan, the United States, and Asia. Thus, it has a huge customer base.
LVMH divides the market into demographic segments based on factors including disposable income, sex, and age. LVMH specifically targets women between the ages of 18 and 54 who have high yearly incomes of $75,000 or more, which corresponds to high discretionary income (Edrawmind 2023).
To further define their target market, LVMH uses psychographic segmentations including lifestyle and motivations. It caters to trend setters, jet setters, and people who value prestige.
Based on their usage patterns, LVMH separates its consumers into groups, with heavy users getting extra attention. Buyer information is gathered and saved in a database and heavy users receive invitations to purchase exclusive product collections and seasonal catalogues to encourage sales and brand loyalty in the future.
The current trends in fashion serve as the foundation for LVMH product positioning. Customers may discover the newest trend-based products and high-quality items. LVMH places a strong emphasis on quality and long-term user satisfaction.
LVMH sells the best products in the market. It does not operate a second line of business to meet the mass need for less expensive products; instead, it concentrates its product lines solely on luxurious goods. This prestigious brand makes each piece of luggage by hand. Furthermore, it self-merchandises the items, which restricts their availability. Because of this, there are generally no price cuts, sales, or discounts for these different products. Additionally, they give make-to-order services, boosting their reputation as a premium brand by letting customers to choose things that are specifically tailored to their needs (Marketing 91 2019).
The cost of the products by LVMH is typically very costly since special attention is given to the manufacturing, design, and material of the products. Customers always remain are more than prepared to pay the excessive prices since they believe the products to be of high-quality. There are no end-of-season discounts or promotional pricing techniques applied. This boosts consumer demand and discourages them from delaying their purchase. Due to the company's focus on the elite class of people, premium pricing is used.
Print media is the main promotional tool for LVMH. Since it is a premium brand and seeks to target specific clientele, it does not utilize television as an advertising strategy. The elite class consumes fashion magazines, which portray the uniqueness of the brand. As a result, it can directly approach the target audience without the use of numerous channels. For its marketing initiatives, LVMH partners with well-known personalities including actresses, models, and celebrities. Another technique used by LVMH is to draw in the general public outside the offline store.
Product- It takes incredible care to avoid developing products that are easily imitable and only uses 100% genuine leather in their production. Only handcrafted goods, not machine-made ones, are manufactured by LVMH on purpose. Their products include exquisite watches, designer shoes, unique dresses, finest bags, variety of belts, briefcases, scarves, jewellery, eyewear, and wallets (Digiaide 2023).
Price- Customers are prepared to pay the premium prices because they consider the company's products as valuable and of high-quality. Thus, the company gives considerable attention in design and material of the products. As a result, the price of the goods goes very high.
Place- LVMH has an exclusive distribution channel. Its products are not available at departmental stores, as it prefers having its own stores. It trains its highly skilled sales staff to provide personalized care which attracts the customers even more. Due to the company's reduced distribution channel, it can lower its costs extensively.
Promotion- LVMH employs famous models, actors, and musicians such as Kate Moss, and Jennifer Lopez, in their advertising campaigns. Since LVMH is a premium brand, celebrities have a stronger emotional connection to the brand. Print media serve as its primary means of promotion. Billboards and magazines perform better for the business in cosmopolitan cities.
Its strengths include high level of recognition, higher customer loyalty, celebrity endorsement strategies, and collaboration with leading designers.
Overpriced products, weak online presence, and limited distribution channel are the weaknesses of LVMH.
The competitive advantage of LVMH is- the highly qualified research and development team which finds out the current trends in the market and surveys the likings of customers; its marketing strategy, that is, through print media only which targets the elite classes; and their pricing strategy that eliminates the other low-priced products in the market from the race.
The success factors include high level of recognition by a large group of elite population, higher customer loyalty, celebrity endorsement strategies, and collaboration with leading designers.
There are several issues that are faced by LVMH. Higher interest rates was made stronger by the U.S. dollar against foreign currencies. As a result, the value of LVMH's American depositary receipts fell more quickly (The Motley Fool 2022). It has also faced supply chain issues during the covid-19 pandemic. LVMH growth depends a lot on the Asian market but the slowdown due to the pandemic was tougher due to regional restrictions.
The leading luxury goods firm in the world, LVMH, reported revenue of €79.2 billion and profitability from ongoing business operations of €21.1 billion in the year 2022. 23% increase have been found in both sectors.The growth in revenue for fashion and leather goods, which hit record levels, was 20%. They held their operating margins steadily. Net profit for the group as a whole was €14.1 billion, a rise of 17% from 2021 (Market Screener 2023).
LVMH has its presence in several nations and though a luxurious brand which appeals to the elite classes of society, it has gained popularity among the masses across the world. LVMH operates in a range of industries, including fashion and leather goods, perfumes and cosmetics, watches and jewelry, and wine and spirits. The company is known for its iconic brands, such as Louis Vuitton, Dior, Bulgari, and Hennessy, among others.
