Louis Vuitton - LVMH and Luxury Goods Marketing
Case 11-2
LVMH and Luxury Goods Marketing LVMH Moet Hennessy- Louis Vuitton Societe Anonyme is the world’s largest marketer of luxury products and brands. The French company, headquartered in Paris, has been built into a worldwide, billion dollar company with the help of Bernard Arnault, “the pope of fashion.” Arnault said of LVMH, “We are here to sell dreams. When you see a couture show on TV around the world, you dream. When you enter a Dior boutique and buy your lipstick, you buy something affordable, but it has a dream in it.” The companies that today comprise LVMH focused on prestige rather than profit, being family run enterprise, and this prestige continued throughout the decades as the company grew.
Arnault acquires many different brands, and his portfolio approach would reduce the risk exposure to fashion cycles; if demands for watches or jewelry declined, clothing or accessory sales would offset any losses. Arnault is also able to cut costs by eliminating redundancies in sourcing and manufacturing, his list of stable brands is able to translate into stronger bargaining positions when negotiating leases for retail space or purchasing advertising.
There are high margins associated with the LV handbags, gun cases, and luggage. The prestige of the Louis Vuitton luggage and leather fashion goods are thirty five percent of the company’s revenue. The Louis Vuitton brand itself accounts for sixty percent of LVMH’s profit. The company holds many other luxury brands such as Christian Dior, Givenchy, and Kenzo, whose perfumes and cosmetics generate nearly twenty percent of LVMH’s revenues. Givenchy and Christian Dior’s Dune fragrance are two of the luxury brands that are diverted from authorized channels for sale at mass-market retail outlets. In March of 1995 the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount store chain from selling Givenchy perfume without permission. Some discount stores such as Wal-Mart and Costco cannot
LVMH and Luxury Goods Marketing LVMH Moet Hennessy- Louis Vuitton Societe Anonyme is the world’s largest marketer of luxury products and brands. The French company, headquartered in Paris, has been built into a worldwide, billion dollar company with the help of Bernard Arnault, “the pope of fashion.” Arnault said of LVMH, “We are here to sell dreams. When you see a couture show on TV around the world, you dream. When you enter a Dior boutique and buy your lipstick, you buy something affordable, but it has a dream in it.” The companies that today comprise LVMH focused on prestige rather than profit, being family run enterprise, and this prestige continued throughout the decades as the company grew.
Arnault acquires many different brands, and his portfolio approach would reduce the risk exposure to fashion cycles; if demands for watches or jewelry declined, clothing or accessory sales would offset any losses. Arnault is also able to cut costs by eliminating redundancies in sourcing and manufacturing, his list of stable brands is able to translate into stronger bargaining positions when negotiating leases for retail space or purchasing advertising.
There are high margins associated with the LV handbags, gun cases, and luggage. The prestige of the Louis Vuitton luggage and leather fashion goods are thirty five percent of the company’s revenue. The Louis Vuitton brand itself accounts for sixty percent of LVMH’s profit. The company holds many other luxury brands such as Christian Dior, Givenchy, and Kenzo, whose perfumes and cosmetics generate nearly twenty percent of LVMH’s revenues. Givenchy and Christian Dior’s Dune fragrance are two of the luxury brands that are diverted from authorized channels for sale at mass-market retail outlets. In March of 1995 the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount store chain from selling Givenchy perfume without permission. Some discount stores such as Wal-Mart and Costco cannot