Luxury Product and Brand Management-Louis Vuitton - Case Study Example

Luxury Product and Brand Management-Louis Vuitton Luxury Product and Brand Management-Louis Vuitton Through breaking down the strategy of the Louis Vuitton luxury brand systematically in the four Ps of brand development (price, product, place, and promotion). The purpose of this work is to explain the rules of brand marketing that make a brand different from the rest of the goods in the market. In other terms, this work attempts to explain how Louis Vuitton applies successful brand management strategies that distinguish the firm’s product from other general consumer goods. As such, this work will demonstrate that the success that Louis Vuitton enjoys is a result of repeated strategizing activities. The strategies that the company employs in its brand development could as well give valuable lessons to other business on the needfulness for proper strategizing. The need arises from the fact that brands have an exemplary influence on the development of sales. Therefore, it is needful to recognize that the prominence of the luxury brands in the market is because of their ever-increasing demand (Kapferer 2012, p. 56). As such, luxury branding does not only entail getting the customers to choose one brand against another but also driving them into considering that the brand is their only solution. As much as luxury branding depends exclusively on the creativity of their designers, their prominence in the media has taken a slow course. Presently, brands included in the luxury spectrum mediate between the inclusivity required to attract customers and the exclusivity that protects brand desirability by use of social networks. Introduction Dubois, Laurent, and Cellar defined a luxury brand according to six perspectives (Nagasawa 2009, p. 21). The first one relates to brand quality for which their definition requires that such brands be of excellent quality. There is a strong association between luxury and quality in the minds of the users of a given product to a level that some people perceive the two terms as one. Another aspect of the definition is the fact that such products usually have very high prices. Such a concept depends on two issues, namely; the association between quality and luxury and the comparison between the products and others. The third aspect related to luxurious brands is that of their scarcity and associated uniqueness. The scarcity of luxurious brands has to do with their perceived excellent quality and their relative high prices. The fourth aspect of the same products is their distinctive esthetic appeal, which many consumers think that it should always be the case. The fifth element under consideration is the ability of luxury brands to anchor in the past. Such an argument means that the consumers need to have a long history with the brands. It means that the products that have such brand names should have had a history of long-time customer satisfaction (Kapferer 2012, p. 56). The last aspect entails the brand’s perceived moribund, which means that such brands are not necessary for survival. The development of successful brand names depends on the four Ps of brand development, which will form the core of this analysis to determine how Louis Vuitton managed to build one of the most luxurious brands. The Principle of Product General marketing practices seek adequate product quality. For this case, there is a need that the manufacturers consider providing the best quality products to their customers if they are to attract better sales than their competitors do. Quality control involves the fitness for use principle as well as the aspect of conformance to requirement. In such a context, it is needful to consider that excessive quality is undesirable because it raises the associated costs of the product. For instance, a handbag is easy to carry while items fit in it and the value that customers get out of its use is the value for their money on the same product. However, a handbag from Louis Vuitton gives a product of different quality and an addition to detail aspects, which entails an attached story to it. Contrary to general marketing practices that attach importance to quality, Louis Vuitton considers absolute quality (Nagasawa 2009 p. 21). Such a move makes the customers who purchase products in the luxury brands category to insist on their products. Most of the loyal customers of the corporation do not find any levels of comparison between the Louis Vuitton products and the rest of the market. Much of the definitions that the company has related to the quality of products provided to its customers began with the policies and preferences of the House of Louis Vuitton. There is also a need to consider that the creativity as an additional quality of the Louis Vuitton products relates to the works of Marc Jacobs, the artistic director of the company. As such, Louis Vuitton considers a number of principles for their products discussed below. The first principle is that of elimination of counterfeiting because of the continued product imitation in the market. Therefore, there is the need that Louis Vuitton protects its brand against the possibility of counterfeiting by competitors. The firm has a long history of fighting brand counterfeiting using a number of strategies. The first strategy is that of enlightened campaigns in Japan, which is the largest market for the corporation. The institution conducts regular seminars as well as symposiums targeting to educate the public about intellectual property laws. Another method that the company uses to fight product counterfeiting is the distribution of warning notices to companies. For instance, the company has a principle that reads; Louis Vuitton knock-offs? Unforgivable! Such warnings send messages of alarm to firms such as the Internet-based Rakuten in April 2000 (Nagasawa 2009, p. 20). Currently, all companies are conscious enough not to find themselves in a troubled relationship with Louis Vuitton because of the warnings that they receive against brand counterfeiting. Louis Vuitton also fights against brand counterfeiting using design and trademark registration. Such a move is an attempt to incline the activities of the company with the corporate law. In this case, the company researches on the best designs that are hard to imitate after which it registers them. Therefore, the company struggles to attain two aspects at ago. The first is that it tries to eliminate the possibilities of others copying its product designs. The second is the fact that the company also tries to keep authentic designs for its products and evolve its products away from counterfeiting. The last step that the company takes in the elimination of counterfeits in the market is through the activities of the Union Des Fabricants. The latter is an organization that fights against counterfeiting of products by the protection of trademark rights, as well as forgeries associated with the move. The second principle that Louis Vuitton uses to define its products is that prohibits appraisal of authenticity. The first tool under this principle is the fact that the company uses the second-hand store version. For this case, Louis Vuitton has the sole responsibility of verifying the genuine products of the company. It means that the company’s products only exist in those stores that the company certifies. Such a move is practical and useful in the process of fighting product counterfeits and false distributors. The company also has a firm regulation of the marketing activities that go through the media tools. Therefore, such a move will ensure that the information that runs in all the advertising tools that the company has are valid and certified. Another principle that the company employs is that of Yamaguchi-Style Retirement. There is notion developed among customers that limited edition products have some levels of effectiveness at the release of new products. However, the story changes when the concerned parties take the products under question out of production. Such a statement means that those products that fell out of production while still of influence on the customer preferences will continue to command the loyalty of their users. The principle of Yamaguchi-Style Retirement means that the company has a tendency of terminating the production of some of its products while they still have considerable levels of customer preference. The move helps in making the customer of Louis Vuitton yearn for more production and wish that the new product will be as equally beneficial as the old one. Louis Vuitton also employs the principles, which prohibit second-line operations. The first tool that the company uses for this principle is that of ignoring the demands of a mass of people. In such a circumstance, the company considers the best alternatives, measures that depict original artisanship and the continuity of its tradition. It also implies that the company does yield to the pressure of producing products on a large scale by the use of machines. The company does not compromise its principles through the production of goods for customers that cannot afford the usually expensive products. As such, the outcomes of such a move make the company have a selected cross-section of clients that prefer the company’s products (Chevalier & Mazzalovo 2013, p. 90). The focus that the corporation gets out of ignoring the demands of the masses helps the business that the company runs to develop specialty among the users of such products. Another tool that the institution uses the principle of prohibiting second-line operations is that of preventing downward expansion. The second-line operations mentioned in this section refer to the cheap alternatives for the company’s products. The products mentioned in the latter statement are equal to their prices, which Louis Vuitton does not engage in production. The cheap alternatives that customers have in the market do not have the same qualities like those, which the company produces. Therefore, it implies that Louis Vuitton does not produce cheap products that would otherwise compromise quality. The corporate institution also uses the principle that prohibits licensing as a method that preserves the status of its luxury brand. The move is a common practice at the firm considering that the business does not grant any production lines to any third parties regarding that the products should retain their aspired quality. Louis Vuitton has not had a single licensing agreement with any producer over the 156 operational years. The rationale for such a move is the fact that licensing has the effect of gaining brand values in the short-run and compromising the same brand over time. As such, the company maintains an excellent performance of its brand because it has the exclusive production rights, which is one of the best methods of guaranteeing quality. The eleventh principle that the company uses to define its products in the market is that, which prevents unfavorable comparisons that help other brands. By such a principle, it means that the company does not welcome moves that make it compromise its product quality in the way of supporting others. For example, soon after the company set the pace for the graffiti designs, the market soon flooded with products that mimicked the designs. As a result, the corporate institution could not continue the production of such products because of the idea that continued production would continue to support others. Louis Vuitton also applies measures that prevent entry-level branding from benefiting using its prominence. The Set of Principles for Prices That Louis And Vuitton Employs in Pricing In the traditional marketing practices, there is a consideration that both the buyers and sellers of a given product have the lowest rates achievable. One of the ways that producers use to determine the lowest prices for their products is a comparison of the costs of production and the profits due. For this case, the lowest prices come with the lowest costs of production and the lowest profit margins. However, the development of luxury brands such as Louis Vuitton depends on high pricing. For this case, the branding process has more relevance to the quality attached to the products rather than the prices at which the clients obtain them. Most of the strategies that the company employs in relation to the pricing of goods are the efforts of Kyojiro Hata, who was the president of the company in Japan. Therefore, this section of the work analyzes the pricing strategies that the company employs as a way of developing brand superiority. The first pricing principle is that, which prohibits exorbitant pricing. The situations that resulted in exorbitant pricing and the associated prices per region and the stores made the former CEO of Louis Vuitton, Hata to formulate a pricing strategy. The move kept the prices in Japan 1.4 times lower than those in France. The move resulted in a 40% increase in the prices of the product in the Japanese market (Nagasawa 2009, p. 33). Most modern women in the Japanese market considered the move worthy in relation to the quality that the company gave through its products. Therefore, the company benefited a great deal from the increased loyalty of its customers, which was an essential step towards brand-building. The second pricing principle is that of proper pricing, which the company has held with the domestic prices in Japan being 1.4 less than those in France. The CEO achieved such a move through abolishing the parallel importers that used the prices, which were three times in comparison with the local rates. Therefore, Louis Vuitton has since adopted a proper pricing strategy that combines distribution costs as well as customs duty. The new policy is a reasonable pricing method that ensures that the customers have the trust of the company through the consideration that it does not exploit them. The company employs the third pricing principle, which attempts to ensure that there is no bargaining pricing. Some categories of products in the market have the history of negotiable prices, which has the effect of lowering the prices of the products. As mentioned in the previous section of this work, a luxury brand is one characterized by high prices and excellent quality of products (Kepferer & Bastien 2012, p. 67). If the company had permitted bargaining prices, the move would have resulted in the reduction of costs and break one of the requirements in the former statement. Consequently. Louis Vuitton has never run a bargain sale in its entire operational period but has instead shifted much focus on the development of quality. Louis Vuitton has another pricing principle, which prohibits sales in value sets. The statement implies that the company has strategies that ensure that the value of the products sold is the same as the attached quality. It relates to the idea that allowing a discount on the products has the effect of lowering the actual costs of the same items. At the same time, it is noteworthy that allowing bonuses for any costs of a product will also reduce the actual costs of one unit. For example, if a customer gets a bonus after purchasing one Louis Vuitton handbag, it would mean that the cost of the two items obtained is lower than buying each of the products separately. Such is the reason that the company does not have any discounts and bonuses for its product. As such, it retains the impression that its products are expensive, but with better quality than competitors. The fifth pricing principle is that, which prohibits surprises in price changes (Scholz 2013, p. 78). Moments that require the company to adjust its prices call for preparation. As mentioned in the previous section, the CEO of the company was responsible for the pricing strategies that the institution adopted, which began with price adjustments. Louis Vuitton has since adjusted its prices about 26 times. During these price changes, 14 of them involved lowering the costs of products while the remainder involved price increases. The company presents the price change labels at the front of stores and at the same time, the corporate institution sends postcards that reflect the changes to customers in advance. Therefore, the company does not conduct price adjustments without prior notice. Another pricing strategy for Louis Vuitton is the creation of the philosophy that the firm’s products are money. The company has convinced its customers into believing that the bags that the company makes have a high trade-in value, which is an equivalence of money. There is a notion that the prices of the products that the company makes do not collapse even while the company may recycle some of them. The reason for such a statement is the fact that the customers will opt for better options should the company lower its prices. The reputation that the products made by Louis Vuitton gives the company to maintain relative high prices because most customers consider that the higher the prices, the better the quality. The Set of Principles for Place Place is the third of the four Ps of brand development. For this case, general marketing strategies target to create broad channels of distribution such as opening of new stores and selling through departmental stores. However, Louis Vuitton sells its products through a limited set of distribution channels. It is noteworthy that the institution adopted such a method of distribution of its products as a way of controlling place and not using uncontrollable channels. Similarly, most of the innovations related to place resulted from the works of Hata, the CEO (Nagasawa 2009, p. 34). The first principle that regulates place is that that ensures proper sales routes. The company considers high levels of observance of trading terms as well as the prices of its products as a method of ensuring proper sales routes. The move entails observation of the best practices for pricing and the methods of developing brands. Another principle is that of business practice reform, which the CEO established. The move sought to improve the trading terms that could result in intermediaries and useless price hiking. As such, Hata designed a method that eliminated the intermediaries for Louis Vuitton products in the Japanese market. The third principle is that, which involves establishment in prime locations (Reddy et al. 2009, p. 190). The CEO of the company considered that the best market could be that near urban centers because luxury products have an excellent relationship with the rich. For this case, the company opened stores in Aoyama, Ginza, and Omotesando because of their strategic location to the desired market. Another principle is that of retail store growth, which the company hopes to keep achieving with time. The concept of such a move is the idea that the company will make more profits because of increased sales from a large number of stores. The Set of Principles for Promotion Traditional development practices for goods target the use of mass media in advertising because businesses aim to make significant sales volumes (Nagasawa 2009, p. 30). The use of television is one of the most common approaches for promoting products. Louis Vuitton does not advertise on television, but does so in magazines and newspapers, which is not always aggressive in comparison with other firms. Therefore, the first principle of promotion that the company observes is that, which prohibits television advertising. As much as the television has a broad reach of the target market, there is a notion that the content of the adverts does not have rich information for the same group. Louis Vuitton uses the principle of emphasis on publicity because it has the influence of associating its brand with prestige. The firm develops and achieves public relations through the advertising channels such as newspapers and magazines. As much as the firm undertakes paid advertisements, there is a need to realize that the approach taken is different from traditional advertising. For instance, Louis Vuitton limits its advertising to particular people who are newsworthy. Such a move involves steps that seek to define the range of products, which Louis Vuitton does not produce. The move also seeks to outline a way that will pledge the allegiance of both customers and the company to the development of a successful brand. Conclusion The course of this work has been to describe how Louis Vuitton succeeded in the development of a successful luxury brand. The analysis considered the four Ps of successful brand development. For this case, Louis Vuitton is a successful luxury brand because of the principles that it employs in its pricing, promotion, product quality and place. There is a discovery that the brand does not take the traditional line of product development. For this case, Louis Vuitton attaches as much quality as it can to its products. The uniqueness of the brand, therefore, develops from the fact that it is expensive, yet customers prefer it to others. The company undertakes to protect its brand from counterfeiting by the help of various strategies. The development of the brand also relates to the fact that the corporation makes its products rare, yet in plenty supply to its customers. The meaning of unique is the fact that luxury brands are rare products, which give their users a value for their money. Therefore, from the perspective of Louis Vuitton, a successful luxury brand is one that is rare in quality. The brand is also that, which its makers protect from counterfeiting, highly priced and with the ability to convince its customers of value for their money. The developers of the brand should also seek methods that will avail products to its customers at their convenience in aspects of place and the continuous supply. Bibliography Chevalier, M., & Mazzalovo, G. (2012). Luxury brand management a world of privilege. Hoboken, John Wiley & Sons. Kapferer, J. N. (2012). The luxury strategy: break the rules of marketing to build luxury brands. Kogan Page Publishers. Kapferer, J.-N., & Bastien, V. (2012). The luxury strategy: break the rules of marketing to build luxury brands. London, Kogan Page. Nagasawa, S. (2009). Luxury Brand Strategy of Louis Vuitton - Details of Marketing Principles. Retrieved April 12, 2015 from https://dspace.wul.waseda.ac.jp/dspace/bitstream/2065/33717/1/WasedaBusiness%26EconomicStudies_45_Nagasawa1.pdf. Reddy, M., Terblanche, N., Pitt, L., & Parent, M. (2009). How far can luxury brands travel? Avoiding the pitfalls of luxury brand extension. Business Horizons, 52(2), 187-197. Scholz, L. (2013). Brand management and marketing of luxury goods. Anchor Academic Publishing. Read More