The Challenge of Adding a New Item for a Luxury Brand - Case Study Example

The Challenge of Adding a New Item for a Luxury Brand Introduction Shopping habits of the consumers are changing with the passage of time. Reasons for this change of shopping habits include but are not limited to the increased variety of brands, increased variety of products and services, and the amount of disposable money available. In response to the changing shopping habits of the consumers, luxury brands face the need to stretch their lines of sale and add new things and services to them. Understanding this need, many luxury brands have already started to increase the variety of products and services for the consumers. This is evident from the snapping up of the Hotel Saint-Berth Isle de France by LVMH, owner of Louis Vuitton in the Caribbean as well as launch of a customization service by Burberry for its well-heeled shoppers whom the company sends videos and sketches of manufacturing of their item over their cellphones after the customers purchase the item from Burberry (Wood). How Louis Vuitton Can Add Fragrance in its Line Louis Vuitton is one of the most popular luxury brands in the contemporary global market. The brand is currently working upon adding a new fragrance in its line of products. Launch of the Louis Vuitton fragrance was first announced in the year 2011. Louis Vuitton has approached Jacques Cavalier-Belletrud for this purpose who has already worked in the making of such popular scents as Jean Paul Gaultier Classic and Dior Addict (Niven). He said, “Joining Louis Vuitton is an honour and a pleasure…It is a unique and particularly exciting adventure, all the more so as I share the Maisons values: respect for expertise, craftsmanship and the choice of the finest materials. The Maisons Heritage is also an inexhaustible source of inspiration” (Cavallier-Belletrud cited in Niven). In order to successfully launch a new product, it is imperative that a luxury brand conducts a thorough research to investigate the current buying habits, trends, and taste of the consumer segment it particularly wants to make the product for. Some of the prerequisite factors that need to be researched are discussed as follows: Market Survey A market survey is crucial to deciding what product or service to add to increase the popularity of a luxury brand in the market. Market survey reveals important information about the latest trends, cultures, and buying habits of the consumers. For a luxury brand serving Chinese consumers, it is noteworthy that the Chinese luxury goods buyers’ favorite product categories over the last two years have been jewelry, watches, and bags and luggage with the money spent on each of these being CNY 573000, CNY 48800, AND CNY 29700 respectively (Wood). Louis Vuitton is the most popular brand among the Chinese customers, followed by Hermes, and then by Gucci (Wood). Consumer Behavior While making a fragrance to serve the needs and desires of its Chinese customers, Louis Vuitton should start by making a perfume for men. If the fragrance does good business and helps the brand achieve its goals, then Louis Vuitton should introduce another fragrance for women as well. This is a suitable strategy because there are more male buyers in the Chinese population of consumers than female buyers. Also, money spent by men on average is more compared to what is spent by the women. Forum for Launch The importance of correct forums for the launch of a new product cannot be overemphasized. For a luxury brand serving Chinese customers, it is recommendable to make the product available for purchase online in addition to in-store. Chinese customers find it convenient to be able to shop online and the trend of online shopping is on a rise among all segments of Chinese population. They also like to buy things online because it provides them with a facility to gather information about the price differences of the products between China and other countries. Not many luxury brands are presently aware of the value of providing the customers with the option of online shopping; “In spite of quickly adjusting to the changing consumption patterns, they still have an insufficient understanding of the preferences, price sensitivity and willingness to pay of the target group” (Chen cited in Wood). Pricing strategies of many luxury brands are developed in headquarters located in the West. The access costs and taxes increase the cost of luxury products by as much as 40 per cent in China compared to their prices in the home markets (Wood). This imparts the need for the luxury brands to provide the consumers with online access to shopping. Reduction in the cost of buying thus achieved will increase customers’ loyalty with the brand and increase the chances of success in the case of launch of a new product. Chinese consumers are aware of the added costs and hence have more tendency to spend on luxury goods outside China than within China. “Many firms are not aware of the fact that the customers’ perceived fairness of luxury prices in China is just as important as the absolute price level… Luxury firms need to work with dynamic pricing tools if they want to grow sustainably in a country market” (Crepy cited in Wood). In the Simon-Kucher’s short survey, it was found that 75 per cent of the respondents identified increased price as a potential hindrance to shopping in China (Wood). Taking this into consideration, it is advisable for luxury brands to try to manufacture the products at their industries within China rather than abroad. Digital Strategies In order to successfully launch a new fragrance, Louis Vuitton needs to do a thorough analysis of the willingness of the target group to pay and identify the target group’s needs and expectations. Chinese consumers are technology savvy. Louis Vuitton should try to develop new digital strategies that extend beyond website of the brand. An example of such a digital strategy could be cooperation with the platforms of digital media like video-sharing websites and social platforms to increase the exposure of the brand as well as to provide consumers with a platform where they can share their experiences. Louis Vuitton can greatly benefit from making a page about its fragrance on Facebook. While the luxury brand already has a page on the Facebook with several million likes, Louis Vuitton has not yet made a page about its fragrance. Making such a page would not only provide the luxury brand with useful information about the opinion of the masses about its fragrance, but also enable the company to interact with the consumers on a one-to-one basis to ensure the selection of right platform and strategies for the launch of its new item. Learning From Others’ Mistakes Adding a new product in line is a recommendable way of increasing profits, but a luxury brand should be able to identify the extent beyond which adding things would be overdoing. Louis Vuitton should be very choosy in the products and services it decides to add into its existing line with or after the launch of the new fragrance. Many successful luxury brands like Diane von Furstenberg, Pierre Cardin, and Gucci have at some point, lost their way by allowing the appearance of their logo and granting licensing agreements for non-luxury goods like cigarettes and books (Messina). Louis Vuitton is quite prudent with the launch of its new fragrance. While it was originally anticipated the luxury brand would launch its new fragrance in the year 2013, LVMH has plans of launching the fragrance not before 2016. Reportedly, the company will take the decision to launch the fragrance after its new creative director has been appointed and after it is done with a chain of events including the Foundation Vuitton’s opening that is due in September 2014 (“Louis Vuitton Delays”). Conclusion Louis Vuitton is a luxury brand that has already made its name in the market. It is recognized by and is popular among the elite all over the world including China. It is high time for the luxury brand to add a new product in its line, and a fragrance is a safe product to add because of its sophistication and success of other luxury brands with fragrances in the past. However, in order to achieve success by taking this move, it is imperative that Louis Vuitton conducts market survey to realize the needs and desires of its target market segment, and customizes the features and availability of the fragrance to them. Alongside, it is equally important for the brand to deter from adding non-luxury products and items in its line just to increase the profits. Consumers are eagerly looking forward to the launch of Louis Vuitton fragrance and the luxury brand seems to be taking the launch of its fragrance very seriously, which is one reason why its launch has been postponed till 2016. Bottom line is that Louis Vuitton needs to work with tools of dynamic pricing in order to administer the global competitor prices, gauge the price sensitivity of the customers, and tap into new opportunities provided by the increased brand loyalty of the customers and online sales. Works Cited: “Louis Vuitton Delays Fragrance Launch.” Pambianconews. 4 Nov. 2013. Web. 8 July 2014. . Messina, Bruna. “Fashion Brand Stretching: How far is too far?” 28 Jan. 2013. Web. 8 July 2014. . Niven, Lisa. “Louis Vuitton Confirms.” Vogue. 5 Jan. 2012. Web. 8 July 2014. . Wood, Zoe. “Super rich shift their thrills from luxury goods to costly experiences.” The Guardian. 30 Jan. 2014. Web. 8 July 2014. . Read More