Louis Vuitton in China - Luxury Transcends Borders

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Louis Vuitton In China Luxury Transcends Borders :

Louis Vuitton In China Luxury Transcends Borders

PowerPoint Presentation:

Sameer Mathur BuddingMarkets.com Asst. Professor (Marketing) 2009 – 2013 Ph.D. and M.S. (Marketing) 2003 – 2009

Outline:

Outline Louis Vuitton Background Business Model Chinese Market CAGE Framework Comparison with America/Europe Consumer Behavior of Wealthy Chinese Louis Vuitton’s China Strategy Little to No Adaptation Cultural Arbitrage

28% of Revenue is from Asia:

28% of Revenue is from Asia

Business Model:

Business Model Value Proposition: Luxurious handbags and briefcases Leather goods, shoes, watches, Jewelries Worldwide brand recognition

Louis Vuitton Handbags:

Louis Vuitton Handbags

Target Consumers:

Target Consumers Market Participation: Target Consumers Fashion-Conscious Brand-Sensitive Luxury-Craving Wealthy

Business Model:

Business Model Market Participation: Promotions Celebrity endorsement

Print Ad featuring Uma Thurman:

Print Ad featuring Uma Thurman

Business Model:

Business Model Value Chain infrastructure: Presence & Broad access to markets 150 years of prestige Added new product lines, but preserved the main focus Counterfeiting prevention measures

Production:

Production Value Chain infrastructure: Everything In-House No off-shoring or outsourcing

Differences between China and Europe/ North America:

Differences between China and Europe/ North America Europe / North America Acquainted with high fashion. Free and open markets, very easy to open store. Easy to expand , smaller country with better communication and transportation. Highly developed economy , with high per capita income but low economic growth. China Want to get accustomed to European Styles More difficult to open stores , government influence. Big country, tough to expand in all parts, many different weather conditions. Per capita GDP and economic growth not an issue due to target market of rich consumers.

China vs. Europe/ America: Cultural Distance:

China vs. Europe/ America: Cultural Distance M inimal when considering luxury goods Since China opened to foreign markets, there has been a thirst for foreign fashion Increase in overseas travel has exposed wealthy Chinese to Western fashion and luxury brands

China vs. Europe/ America: Administrative Distance:

China vs. Europe/ America: Administrative Distance Lack of effective, efficient enforcement against counterfeit goods. Major Challenge: dealing with the local production of seemingly identical and cheaper counterfeit Louis Vuitton products . Serious loss in Sales and damage to Brand Equity No easy solution to this challenge

China vs. Europe/ America: Geographic Distance:

China vs. Europe/ America: Geographic Distance Minimal, since modern transportation has made the physical distance between the two continents a small obstacle L uxury brands offer the advantage of having a low weight to value ratio compared to other exported goods

China vs. Europe/ America: Economic Distance:

China vs. Europe/ America: Economic Distance China has an expanding niche of wealthy consumers located in the top tier of the purchasing power parity pyramid . the number of wealthy Chinese has been multiplying each year Naïve, less relevant: China’s GDP is $4,300 while EU’s GDP is $35,000

Wealthy Chinese:

Wealthy Chinese China has +++ growth Wealth is concentrated in the large east coast cities

Wealthy Chinese Consumers: Limited Knowledge of Luxury:

Wealthy Chinese Consumers: Limited Knowledge of Luxury A market that has limited knowledge of luxury and that is ready to pay a premium for luxury branded products

Wealthy Chinese Consumers: Desire for Social Differentiation :

Wealthy Chinese Consumers: Desire for Social Differentiation Luxury goods in China act as a n intermediary for social differentiation

Chinese Tradition: Gift Giving:

Chinese Tradition: Gift Giving A historic tradition of gift-giving

~Identical Exterior => No Adaptation:

~Identical Exterior => No Adaptation Louis Vuitton, Beijing Louis Vuitton, NYC

~Identical Interior => No Adaptation:

~Identical Interior = > No Adaptation Louis Vuitton, Beijing Louis Vuitton, NYC

Product Adaptation:

Product Adaptation Limited to NO product Adaptation Almost the Same Products Worldwide

Arbitrage :

Arbitrage Cultural Arbitrage Wealthy Chinese Value Products made in China less than Products made in Europe

Summary:

Summary Louis Vuitton Background Business Model Chinese Market CAGE Framework Comparison with America/Europe Consumer Behavior of Wealthy Chinese Louis Vuitton’s China Strategy Little to No Adaptation Cultural Arbitrage

PowerPoint Presentation:

Prof. Sameer Mathur Viewed over 500,000 times Marketing and Strategy Concepts, Articles, PPT

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