Being the flagship group within Moët Hennessy Louis Vuitton (LVMH), Louis Vuitton was instrumental to the growth of the group in 2010 and 2011. However, doubts arose as to the sustainability of the recent growth and how should Louis Vuitton face and deal with future burdens. This case study analysis depicts the challenges that Louis Vuitton dealt with as it maintained its growth as one of the most respected brands in the world. It discusses the strategies it may and must undertake given its resources as well as its limitations.
Mary M. Crossan; Manu Mahbubani
Harvard Business Review (W13009-PDF-ENG)
February 04, 2013
Case questions answered:
- Which numbers would be the best indicators of whether LouisVuitton did or did not have a competitive advantage in the luxury fashion goods industry? (Note that these numbers may or may not be inthe case.)
- Which generic strategy(or strategies) did LV use in the luxury fashion goods industry? Defend your choice by a) applying Porter’s framework (as discussed in class and described in the readings) and b) using evidence and facts from the case. Describe the activities in Porter’s value chain which this generic strategy (or strategies) consisted of.
- Do you think LV had a sustainable competitive advantage at the end of this case? Why or why not?
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Louis Vuitton Case Answers
Which numbers would be the best indicators of whether LouisVuitton did or did not have a competitive advantage in the luxury fashion goods industry? (Note that these numbers may or may not be inthe case.)
Louis Vuitton (LV) enjoyed double-digit growth and healthy profitability in 2010 and 2011. However, these numbers are not the best indicators of whether LV had a competitive advantage in the luxury fashion goods industry.
The best indicators would be ones that show that LV earns superior returns on the resources it deploys in comparison with other players in the industry. Return on invested capital is an example of such an indicator.
Louis Vuitton followed a generic strategy of differentiation. It provided unique and superior value to customers by putting emphasis on product design and quality, the buying experience, and brand image.
Consumers were willing to pay a premium for high-quality and unique types of goods crafted by talented artisans. LV had considerable power to increase prices. Differentiation strategy was being executed throughout the value chain.
Inbound Logistics. LV focused on the quality of components and materials. They sourced only high-quality materials. For example, leather was sourced from Northern Europe as it had fewer blemishes from…
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FAQs
conclusion. In conclusion, Louis Vuitton is a luxury fashion house with a strong brand image and reputation. Over the years, the company has built its success on the foundation of quality and craftsmanship, innovation, diversification of product offerings, and investment in marketing and advertising.
Why is LV luggage so expensive? ›
Louis Vuitton Uses the Best Possible Materials
To begin with, the company is renowned for only using the finest exotic skins, leathers, and coated canvases to make their iconic handbags.
How can Louis Vuitton improve? ›
Looking ahead, the challenge for Louis Vuitton will be to balance its heritage and traditional values with the demands of a rapidly changing fashion landscape. The brand will need to continue to innovate and embrace new technologies, while staying true to its commitment to quality and craftsmanship.
What is Louis Vuitton weakness? ›
Weaknesses. 1. Overly expensive product prices. 2. Lack of product innovation over the years.
What is the conclusion of the case method? ›
Conclusions. The case study offers a method of learning about a complex instance through extensive description and contextual analysis. The product articulates why the instance occurred as it did, and what one might usefully explore in similar situations.
What is Louis Vuitton's success strategy? ›
Louis Vuitton employs a skimming pricing strategy, setting high initial prices for its products and maintaining them even as competitors enter the market. This approach allows the brand to maintain its luxurious image and appeal to consumers who value exclusivity.
Is buying a LV bag a good investment? ›
Louis Vuitton bags can be a great investment as they are one of a few luxury brands that hold their value well over time. Especially if you care for and store it correctly. Also, if you manage to get a rarer, more unique model, it can either hold or increase its value.
Why does Louis Vuitton never go on sale? ›
Louis Vuitton retains immensely tight control from production to distribution to sales. For example, once a product is taken out of production, it retires and does not go to a discount outlet or online discounter.
Why is LV cheaper in Europe? ›
The price gap for LV items between different countries can be attributed to various factors, including currency exchange rates, taxes, and import duties. For instance, a sudden change of the US dollar and Euro exchange rate can significantly impact the final price of the bag for international customers.
Who is Louis Vuitton's target customer? ›
In terms of demographic segmentation, Louis Vuitton targets individuals within a specific age and income bracket. Typically, the brand caters to consumers aged between 30 to 50 years - individuals who are established in their careers and have substantial purchasing power.
Gucci and Louis Vuitton are the most popular luxury fashion brand in the United States, followed by Chanel and Dior. Overall, Gucci dominates our KPIs of top luxury fashion brands, with 90 percent awareness slightly shadowing even Chanel and Dior.
Why is Louis Vuitton better than Gucci? ›
Some people might opt for Louis Vuitton because of its more traditional and classic designs while others may go for Gucci's more striking and colorful ones. Moreover, both brands have different target audiences, focusing more on rich and upper-middle-class people with extravagant lifestyles.
What is the controversy with Louis Vuitton? ›
There is no evidence Louis Vuitton ensures payment of a living wage in any part of its supply chain or that it implements practices to support diversity and inclusion. The brand has also taken insufficient steps to remediate its links to cotton sourced from Xinjiang, a region in China at risk of Uyghur forced labour.
Why does Louis Vuitton crack? ›
Cracks can occur for many reasons. Though they are most commonly the result of improper care and use over time, there are many vintage items that never crack. More recently, Louis Vuitton has changed its canvas, opting to use a less durable and more vulnerable variation.
What is the Louis Vuitton brand summary? ›
The label's LV monogram appears on most of its products, ranging from luxury bags and leather goods to ready-to-wear, shoes, perfumes, watches, jewellery, accessories, sunglasses and books. Louis Vuitton is one of the world's leading international fashion houses.
What is the summary history of Louis Vuitton? ›
Louis Vuitton was a French fashion designer and skilled craftsman and he established his eponymous brand in Paris in 1854. Vuitton started his career making trunks for Napoleon III's wife, Empress Eugénie de Montijo, and it was at the age of 33 that he opened his own artisanal workshop at 4 Rue Neuve-des-Capucines.
What is the impact of Louis Vuitton? ›
Louis Vuitton had a profound impact on the fashion and luxury industry. He was a constant innovator, introducing new styles and materials, such as the iconic "LV monogram", that became symbols of status.
What is the purpose of the Louis Vuitton Foundation? ›
The Fondation Louis Vuitton aims to promote art and culture and houses a permanent collection of works of art from the personal collection of Bernard Arnault, Chairman and CEO of LVMH.
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