Struggling With LVMH Moet Hennessy Case Study?

LVMH Inc. Situation Analysis

Despite the incidence of covid-19 pandemic, the LVMH group stood still and did not compromise on their quality.

Industry Structure and economic feature

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.

LVMH Strategic

Business Level Strategies

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.

Corporate Level Strategies

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.

Competitive Analysis and Advantage in the industry

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.

SWOT Analysis

Strengths

• A strong international presence and unrivalled brand recognition (Business Research Methodology 2023)
• Tremendous amount of customer loyalty
• Given the presence of its emblem and monogram canvas on the majority of its items, LVMH is extremely easily recognised by everyone.
• Production of personalised goods for the selected group of Elite Clients
• Successful collaboration with renowned designers around the world
• It is only available in the majority of large shopping centres and multi-retail companies with 450+ outlets in 50 countries
• Outstanding marketing strategy that

Weaknesses

Opportunities

PESTLE Analysis

Target Market Analysis of LVMH

Geographic Characteristics of Market

LVMH group is present in several countries including France, Europe, Japan, the United States, and Asia. Thus, it has a huge customer base.

Demographic Characteristics of Market

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).

Psychological Characteristics of the Market

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.

Behaviours of the Target Market

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.

Strategies Appealing to Market

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.

Marketing Mix of LVMH

Product Strategy (Product Mix)-

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).

Pricing Strategy

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.

Promotional/ Advertising Plan

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.

LVMH Competitive Analysis

4Ps’ comparisons with competitors

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.

Strengths’ comparisons with competitors

Its strengths include high level of recognition, higher customer loyalty, celebrity endorsement strategies, and collaboration with leading designers.

Weaknesses’ comparison with competitors

Overpriced products, weak online presence, and limited distribution channel are the weaknesses of LVMH.

Organization’s Competitive Advantage

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.

Key success factors

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.