Chapter 5. Developing a Global Vision

 

Louis Vuitton started to expand since 1885. In that year the company opened the first store in London followed by other two stores in the next two years. In 1904 Louis Vuitton participated in World's Trade fair in U.S. trying to get the brand recognized by the Americans. In 1987 The brand established its presence in Japan, getting a share in Asian market, and also prepared the strategy to expand in China, and other Asian countries. With a well established presence in Europe and U.S. and Japan, and more than 1500 stores around the world and its e-commerce site, Louis Vuitton is a multinational corporation.
Louis Vuitton has factories in France, Italy, Spain, Switzerland and U.S. Its leather products are mainly made in France and Italy. The watches are made in Switzerland. The outsourcing of Louis Vuitton differs from the competitors because the company outsources  to enhance the product quality and prestige.


Louis Vuitton is one of the first luxury companies to see the potential economic growth of emerging markets such as China and India. With the rapid economic growth of the Chinese market Louis Vuitton saw the need of the people to show their social status. In fact today Louis Vuitton is number one luxury brand preferred by the Chinese.




Louis Vuitton uses the same quality of its products everywhere in the world. A bag sold in China or in India is the same quality of one sold in France. The company takes in consideration the cultural background and how people would understand better the concept of luxury. In Japan the company promotes its products through innovation and the involvement in the art and architecture scene associating its products with the art.
Louis Vuitton's products have the same price all over the world. The company adopted the dumping practice for the Japanese market as a strategy to have a greatest market share. In fact, about 90% of Japanese own a Louis Vuitton product.

Chapter 4. The Marketing Environment

Louis Vuitton is historically known to serve the powerful and the wealthy. Its target market is both men and women from 22 to 65 years of age. In its marketing strategy all the key factors play a very important role and are fully executed. Louis Vuitton offers to its customers a lifestyle experience, while analyzing the lifestyle components of its target market.
When Louis Vuitton opened the first store in China people asked: Why have you come here? We don't understand luxury - and the answer of Yves Carcelle the CEO of Louis Vuitton was: "No, you are sophisticated and one day soon you'll be the biggest superpower."
Louis Vuitton has pursued a consistent approach to developing the market, never compromising in the face of difficult operational obstacles, and, as always, controlling every aspect of the business. This unique approach has powered Louis Vuitton to its current position as the most successful luxury brand in China.

In India, Louis Vuitton will soon open its third store, which will be the second in Delhi. India has phenomenal potential and the growth has been exceptional. In fact, the volume of business in India is proportionally larger than when the company started in China. However, the market for luxury products remains marginal.

As the expansion of the brand continues in these new markets, Louis Vuitton is also adopting new ways of stimulating innovation in existing audiences. In Japan the company is introducing New- Generation stores, revolutionizing the ceremony that surrounds the sale of a luxury product. Architecture has become an integral part of the brand identity. This is manifested in the Omotesando building designed by Jun Aoki as a stack of trunks. A new era has begun where the in-store experience is almost as important to the customer as the product itself.
Louis Vuitton has a zero tolerance policy on counterfeit products. In 2012 Louis Vuitton won a U.S. Trade ruling that will help it keep knockoff Louis Vuitton handbags, luggage and accessories from entering the U.S. The order, which will go into effect in 60 days, directs Customs and Border Protection to turn away any products that are made in a way that is similar or copies the Louis Vuitton trademarks.
Louis Vuitton and the Recession
How did the recession affect Louis Vuitton? LVMH, saw it's stock  plummet from 40 to 10 at the end of 2008, but Louis Vuitton didn't change its message to fit with the time. Louis Vuitton refused to lower the prices and cheaper its quality products. A strong brand reduces its business risk because stands for something more than affordability.  Louis Vuitton has been very agile and sensitive with international expansion. The firm is aggressively expanding into the lucrative Chinese market but with the same exact standards that would befit a store in Milan or New York. In 2010  Louis Vuitton's net profit jumped to 73% led by the Asian market.

Sources: Bloomberg Business week.com LouisVuitton.com  Thealtantic.com LVMH.com

Chapter 3. The Concept of Ethical Behavior

LV as part of LVMH Group have adopted and promulgated the Supplier Code of Conduct which sets forth the Group’s requirements in terms of social responsibility (forced labor, discrimination, harassment, child labor, compensation, hours of work, freedom of association and collective bargaining, health and safety, etc.), the environment (impact reduction, use of green technologies, waste reduction, compliance with regulations and standards), and the fight against corruption. Relations with any partner necessitate the latter’s commitment to comply with all ethical principles enunciated in this Code. This Code of Conduct also sets forth the principle and procedures for the control and audit of compliance with these guidelines. Audits are also carried out on suppliers. In its supplier specifications documents, including clauses dealing with the individual rights of employees, child labor prevention, equality of opportunity and treatment, working time policy, and the protection of the environment. Louis Vuitton has put in place an ethical system of preliminary audits founded on compliance with local regulations as well as the SA 8000 social accountability standard, which is based on international workplace norms included in the ILO conventions: no child labor, no forced labor, providing a safe and healthy work environment, freedom of association and the right to collective bargaining, no discrimination, disciplinary practices, compliance with working hour and wage regulations. To ensure that they will be able to perform preliminary audits independently, Louis Vuitton’s buyers receive theoretical training covering the approach and criteria as well as practical training in the field in the company of an SA 8000 auditor. Specifically, Louis Vuittons suppliers must:

Share the fundamental values of the House 

Respect standing norms and regulations

Adhere to the ethical and social values of the House

Help protect the brands intellectual property and creativity

Protect nature and reduce the impact of its activities on the environment.

Louis Vuitton takes also preventive measures to ensure the application of the Code of Conduct some of them are the following:

Trace and protect all of the labor in its supply chain

Honor the role and voice of the worker as the best check on abuse

Provide for independent, unannounced, and thorough audits

Provide effective whistleblower and complaint procedures

Provide clear guidelines for security procedures throughout their supply chains to ensure that security

forces are not used to intimidate, hold, or abuse workers throughout their supply chains

Inform its shareholders and stakeholders on creation, maintenance and implementation of their related policies

Guarantee all workers mobility by strictly forbidding any holding of official documents

Ensure all workers are paid fairly

Comply with local laws related to slavery and trafficking in persons as well as ILO Conventions

Ensure that labor recruiters are fully licensed by their home government and do not engage in using fraud or debt to create a trafficking exploitation.

Louis Vuitton has always been conscious of the importance of respecting the environment and minimising its impact on the surroundings.
" Our culture is steeped in know-how, tradition and innovation. Such values naturally lead us to the respect of human heritage, and, first and foremost nature. The vast majority of the materials that we use in our products come from natural resources. We have a deep interest in committing ourselves to ensure that these materials remain available in the future." - Yves Carcelle CEO of Louis Vuitton.

Since 2004, Louis Vuitton has undertaken a Carbon Inventory every three years to continuously apply and improve innovative solutions across its operations and products around the world. Louis Vuitton voluntary actions not only encourage a collective commitment with suppliers and partners; they also raise environmental awareness and a sense of responsibility within the company. Louis Vuitton has fixed a “5R” rule : Renew, Recycle, Reduce, Review and Repair. Louis Vuitton craftsmen use renewable resources such as wood, cotton and leather wherever possible. Every member of the company is trained and made aware on how to recycle paper, plastic, leather off-cuts, etc. Louis Vuitton seeks to use the latest methods to reduce waste from packaging and to review the use of energy, products and employee transport etc. All stores further offer a repair service for leather goods and hard-sided luggage to ensure that the high-quality products, which are passed on from generation to generation, will last even longer.

Central to Louis Vuitton’s global commitment to local community initiatives is its long term partnership with global charity, SOS Children’s Villages. Louis Vuitton’s five-year partnership programme with the charity targets education, Partnership for Children’s Futures and learning support for disadvantaged children around the world 

Founded in 1949, SOS Children’s Villages supports orphaned and abandoned children and helps families in need to care for their children. Currently, there are more than 78,000 children and adolescents in some 500 SOS Children's Villages across 132 countries. Each SOS Village provides children with a home, a SOS mother, and a sense of belonging. In total, more than 900,000 beneficiaries receive services in more than 1,000 SOS educational, social and medical facilities.

In 2009 and 2010, Louis Vuitton supported the development of a multifunctional activity centre in the SOS Children’s Village in earthquake-devastated Chengdu, China. Louis Vuitton is also creating a university education programme targeting children from nine SOS China Villages who are particularly gifted or have shown high levels of scholastic aptitude and creative ability. SOS Children’s Village’s first-ever scholarship programme will also be launched and in its first year it will benefit 28 students from China, being renewed annually.

In 2009, Louis Vuitton celebrated the Red Cross’s 150 years of international activities in humanitarian aid as well as its own century and a half of savoir-faire in its Asnières workshops. The 150 years were celebrated by launching L’Excellence du Savoir-Faire, a special two-part charity project.

Fifth-generation member of the Vuitton family and head of Louis Vuitton’s Special Orders department, Patrick-Louis Vuitton created a limited edition ―Red Cross Medical Kit. The carefully crafted trunk features a hand-painted Red Cross logo on its monogrammed front, while special editions of the humanitarian association’s iconic red and grey emergency supply boxes are housed in its interior. Patrick-Louis Vuitton also created customised pieces for distinguished ambassadors of creativity: a dog carrier for Marc Jacobs, Creative Director of Louis Vuitton; a camera bag for photographer and friend of the house, Annie Leibovitz; a trolley case with knife tray for chef Ferran Adrià; an instrument case for musician and composer Gustavo Santaolalla; and a butterfly armoire for artist Damien Hirst.The auction raised a total of $755,000. All proceeds from the sale went to the Red Cross’s Fight against Malnutrition programme in Niger. Louis Vuitton further donated a percentage of sales of four iconic pieces — the Keepall, Speedy, Noe and Alma — from their US website to the American Red Cross.

In 2007, Louis Vuitton reaffirmed its commitment to environmental stewardship by becoming an active partner in The Climate Project. Founded by former US Vice President and Nobel Laureate Al Gore, this global non-profit organisation works to educate the public about climate change.On Earth Day, April 22, 2009, Louis Vuitton further demonstrated its commitment to the environment by donating 15% of sales made on its US website that day to The Climate Project. The initiative was followed by a 40th-anniversary celebration of the lunar landing on July 14, when, for that week, 10% of the sales of all travel-related purchases made at its Fifth Avenue flagship maison were donated to The Climate Project.
In 2009, Louis Vuitton collaborated with Spanish actress and OrphanAid Africa ambassador, Rossy De Palma, to create a collection of handcrafted fans. All proceeds from their sale at auction were donated to OrphanAid Africa.
On September 7, 2009, the Louis Vuitton Forest by More Trees was launched in Komoro City, Japan. The 104-hectare forest was created through cooperation with More Trees, an incorporated association led by Ryuichi Sakamoto. The goal of the project is to promote Japanese bio-diversity, by focusing on reforestation and creating forests in which ―beauty and ―relaxation can be experienced with all five senses.
 “As leader of the luxury industry we believe that we naturally have a responsibility to the world around us. Louis Vuitton continues to preserve its involvement within the world of Art & Education and this tradition dates back to the very core start of the House. Over the years, Louis Vuitton maintained its kinship with the field of Art, Education and culture with global projects, such as Young Arts Projects in London, Arte Excellence program in Singapore and the art and educational projects in Dubai in collaboration with Start” - Yves Carcelle, CEO and President of Louis Vuitton.

Sources: Louisvuitton.com/values, Chainstorereaction.com/LuoisVuitton, lvmh.com

Chapter 2. Strategic Planning for Competitive Advantage

Business mission statement of  Louis Vuitton is to represent the most refined qualities of Western "Art de Vivre" around the world. LV must continue to be synonymous with both elegance and creativity. Our products, and the cultural values they embody, blend tradition and innovation, and kindle dream and fantasy.
- Be creative and innovate
- Aim for product excellence
- Bolster the image of our brands with passionate determination
- Act as entrepreneurs
- Strive to be the best in all we do

SWOT analysis:
Strengths: Louis Vuitton is one of the oldest fashion houses in the world, easy recognizable by its logo LV and monogram canvas. The exeptional high quality, innovation, craftmaship, the association with art and architecture define the strenght of Loui Vuitton.  The brand has an international wealthy clientele, including celebrities and VIPs. Its products are available in its own exclusive stores and through Luisvuitton.com, accessible  anywhere in the world. LV offers also services for custom made products.
Weaknesses: Louis Vuitton is the number one world's most counterfeit brand, imitations affect brand's sales. Another weakness is restricted retail opportunity, the company distributes its products through its own stores and doesn't have discount sales, which makes the business dependable on economic conditions. If a depression occurs, the sales growth slows down sharply.
Opportunities: Expansion in emerging markets, such as China, Russia, India, Taiwan, Singapore etc. Luis Vuitton has  been  focusing   on    increasing     its    investment   in    such   emerging    economies    where     high  growth rates can be experienced. Louis Vuitton World's cup coming up in 2013 is also an opportunity for brand's exhibition.
Threats: Increased counterfeit crime will hurt the brand image .The abundance of counterfeit goods is affecting the sales. It is estimated that a loss due to counterfeit products converts in 6 billion Euro ($8.5b). The global economy; economic depression or recession, affects the sales  as  happened in 2002 and 2008. 

Competitive advantage
Louis Vuitton is known for using high quality raw materials in all of its products, the company has an empowering position to  observe its products quality by marketing them through its own stores all over the world . Since the founding, the products are made by hand which differentiate the brand among its competitors in the industry. Before 2005, it took 20 to 30 craftsmen to put together each Louis Vuitton  bag. Over the course of about eight days, separate workers would sew together leather panels, glue in linings and attach handles. For years the company paid far more attention to product design, craftsmanship and image than to the mechanics of keeping their stores stocked.  With help from management consultants at McKinsey & Co., Vuitton set out to make its manufacturing process more flexible, borrowing techniques from car makers companies. Today, clusters of six to 12 workers, each of them performing several tasks, make  LV-logo bags in a single day. The new settings improved company's production and the sales rose to 9% from the previous method of manufacturing. 
The reorganization extended beyond the factory floor. A distribution center in France used to send products directly to Vuitton's stores around the world. Now, the company is building a global distribution hub outside of Paris that will ship to six regional distribution centers: two in Japan, two elsewhere in Asia, one in the U.S. and one near Paris for European orders. Within a week of a product launch, stores around the world feed sales information to France and production is adjusted accordingly. Factories work on a daily schedule, compared to a weekly one before the reorganization.
The final stage of the reorganization expanded to the boutiques and the stores for a better customer service and more efficiency in employees performance . In the past, salespeople advising customers would disappear into stockrooms when products weren't available on the shop floor. Now, Vuitton assigns a few employees at each store to the stockroom. At a large new store on Paris's Champs-Elysees, items are sent via service elevator from a basement stockroom to the cash register. They arrive wrapped in tissue paper.

Strategic Directions
Louis Vuitton is a cash cow. It accounts for 37% of its group sales, LVMH, and most of its profits. Along with its leather goods, through product development strategy, LV has increased the sales  by introducing products such as jewelery, watches, books, sunglasses and a clothing line. Louis Vuitton has always transcended barriers across artistic, technical, and intellectual disciplines. Inaugurated in 2006 on the seventh floor of the Champs-Elysees Maison, the Espace Louis Vuitton is a space of artistic and cultural expression. In the future, will open several Maisons Louis Vuitton, a truly unique concept that allies shopping, luxury, leisure, art, and culture.

Target Market
LV targets high-income costumers of both genders.

The four Ps.

Product 
Louis Vuitton does not  only offer to its customers unique designs and high controlled quality products, but also inducts  them  to form attachments by giving to each product a name instead of a serial number. The company has a special orders service for custom made products.

Place
Louis Vuitton retains immensely tight control from production to distribution to sales. It distributes its products in its own stores located throughout the world, which allows it to control product quality and pricing. It also allows LV to prevent counterfeit products entering its distribution channels. In addition, the company distributes its products through LouisVuitton.com

Price
The core of Louis Vuitton pricing strategy is to sell its products to the same price no matter the location. Discounted and bargain sales are prohibited, once a product is taken out of production, it retires and does not go to a discount outlet or online discounter.  Louis Vuitton has not had a sale in 156 years.

Promotion
Louis Vuitton promotes his product through multiple channels. In store promotion - trains the staff to tell the story of each product. It has also been trailblazing in the use of social media, online and mobile, while maintaining the highest standards in print advertising. The Louis Vuitton company carefully cultivates a celebrity following and has used famous models, musicians, and actors. Involvement in events such as Louis Vuitton's cup  gives the brand a global visibility and recognition. The commercial (90 seconds)  "Where will life take you?" and  translated into 13 different languages, was the first Vuitton commercial ad ever and was directed by renowned French ad director Bruno Aveillan.

Effective strategic planning
Louis Vuitton took the second place as the luxury marketer of the year, in  2010. The brand has continued its expansion in Asian markets as well as in emerging markets. Its sales growth increase it's steady at 15%.
"The fine equilibrium between tradition and innovation reflects the DNA of Louis Vuitton. Products such as the Multicolore Monogram bags, the fruit of a collaboration between Marc Jacobs (LV's artistic director) and the contemporary artist Takashi Murakami, received a fantastic welcome. LV will continue working with this same creativity and respect for quality. As a leader of the sector, the challenge is to continue growing and still preserve the exclusivity and great quality the company has always offered." - Yves Carcelle CEO at LV.

Sources: Businessweek.com bloomberg.com, dailynews, wikipedia, luoisvuitton.com lvmh.com