An Analysis of the Principles of Success Strategies for Luxury Brands: A Study of Louis Vuitton

Abstract

Luxury brands refer to goods within a given consumer-facing category which seems to be price insensitive such that their expensiveness has neutral/positive effect on their image. In the past, the world was mostly merely concerned with the practicality, quality as well as style of goods/services with luxury brands only finding popularity among the affluent. However today, though luxury still means not all can afford them, global economic prosperity has given luxury brands a new wave of customers who can now afford a wealthy lifestyle. 21^st century has therefore seen many luxury brands, such as France’s Louis Vuitton, move to enhance their awareness and access to a wider market across the world. Many trades dealing in luxury goods have tried to develop them globally following of the effect of economic globalization with most of them striving to exhibit their status and power of discrimination with others. The luxury market therefore has great demand. This study explores Louis Vuitton’s unique features and strategies worth learning by normal brands wanting to develop luxury brands. It analyzes Louis Vuitton’s macro and micro international market in the face of today’s international marketing strategy with a close look at its strategy in the Chinese market.

Keywords: luxury brands, price insensitive, consumer facing category, Louis Vuitton, global economic prosperity, macro and microanalysis, Chinese market

Introduction

In 1837, horse-drawn carriages, trains and boats were the major modes of transport. However, due to several bumps on roads, the luggage was prone to tear and wear. This presented the passengers with need for artisans to build them quality bags .At that time, Mr. Louis Vuitton made use of his consummate skills to create a wide range of high quality boxes based on his customers’ specifications, with immense success (Bradford, 2010). After this success, Louis Vuitton proceeded to expand the business. In 1859, he established his first factory in Paris city center. This factory still exists today with craftsmen serving customers from around the globe in designing and fabrication of leather as well as many other customized products (Chesters, 2012). By 1896, the company already had one of its classic and very popular designs, the Monogram Canvas. LVMH’s graphic logo gives flowers and quatrefoils as the inspiration for this design out of the oriental culture of the ancient past (Bradford, 2010).

This Monogram Canvas is considered as a model for contemporary design. Its unique design has not only distinguished the LV brand and their other luxury brand, buts has also been in use until today. The company once said the monogram had become a great legend of LV not only in regard to updated design as well as launched customer customization services, but now the Company is expanding its range of products to include luxury leather products, fashion as well as jewelry accessories (Bradford, 2010). In its early stages of brand creation, Louis Vuitton, had its own unique features and know-how for promoting its brand. From the onset, LV was a pioneer in its particular line of business among luxury brand makers. Today, modern day celebrities frequently use the Louis Vuitton purses and bags as appears in various newspapers and magazines. “The Louis Vuitton brand seems like a cult to attract male and female clients around the world” (LVMH, 2012, 16). Afterwards, Louis Vuitton sought its own unique strategies of marketing their products to be the most popular among consumer of luxury brands.

To achieve this end, LV and the then famous Hennessy group of companies came together to form the “Moet Hennessy Louis Vuitton Group” (now known as LVMH Group). The new group of companies officially became a big luxury fashion brands and later taking on wines in 1987 (Bradford, 2010). LVMH then grew to become the largest luxury brands enterprise in the world by 2008. It boasted of well over than 60 brands in more than 3000 stores across the globe. Today, LVMH not only stands as the largest luxury brands company, but also by its retail brands, the company saves up to 30% of the business costs with an aim of obtaining greater profits than its opponent. By the final quarter of 2011, LVMH increases its overall sales around the world by 6.6 billion Euros; a significant 20% growth. This means that even in the face of the prevailing global economic downturn that negatively impacted growth of most world companies, the company shows no sign of deteriorating (Chesters, 2012).

The unique characteristics of the L.V. monogram belt and bag alone contributed about 37% of the group’s profits in 2011 (Chesters, 2012). This implies that L.V. brands are still having an irreplaceable status. The company’s products are sold through its own world stores in these years. This has not only enabled the company to control price and quality of its products, but also in effectively preventing the products from scrupulous sales channels that may result in production of shoddy/fake products (Pointe, 2009). Louis Vuitton has also been good at creating good cooperation and friendly relations with the world’s prolific actresses and supermodels whose endorsement of LV products has greatly expanded brand awareness (Economist, 2012). Meanwhile, Louis Vuitton has also been engaging widely in sponsoring world as well as individual nations’ sporting events in order to promote their brands, for example, the American Cup Regatta, often used to promote LV brands on magazines and print ads as well as billboards instead of television media (Chesters, 2012).

As compared to other global luxury brands, firms are likely to be reduced to a given extent by the LV brand in terms of publicity. However, no one can deny that such a move is important in reducing expenditure on advertisement. The LVMH Group of companies is now getting itself prepared to make use of digital and social transformation of LV shops by creating online sites (Pointe, 2009). This is set to include the use of iPads by sales staff to introduce LV products to their clients as a means of enhancing their customer experience (Lydia, 2012). In short, this means that Louis Vuitton is now set to promote its brands using the very latest and modern technology. Furthermore, Louis Vuitton is now adding modern elements based on their original classic designs. In summary, from LV’s financial status, its product design and advertisement, global company distribution outlets and the use of technology its sales and marketing process, it is clear that LV is a successful case in luxury brands (Chesters, 2012).

Chapter1: Louis Vuitton Macro Analysis of the International Market

Geographical Analysis

This chapter gives a detailed macro analysis of Louis Vuitton’s international market outlets with reference to the various geographic, economic, cultural, as well as technological factors. Firstly, Louis Vuitton has so far established stores covering most of the major countries as well as regions across. In the year 2012, economic studies in United States of America indicated that the sales of LVMH Group of Companies increased by 18%. Such increases were also reported in Europe and in Asia at 12% and 10% respectively (Economist, 2012). For its luxury brands, LVMH have a global business base estimated at US $80-billion half of which is attributed directly to Asian countries (Chadha and Hushand, 2006). “The Asia’s emerging middle class has recognized classic European style luxury brand. For example, Louis Vuitton’s sales in Asia (excluding Japan) accounted for 27% of the total,” (Chadha and Hushand, 2006, p.5).

Louis Vuitton outlets are also present in almost all the cities of Japan. As far as from a decade ago, sales in Japan already accounted for about 15% of the company’s total sales. According to results of some statistics, it is in Japan where almost 85% of the women have their own Louis Vuitton product outlet (Economist, 2012). As a result, despite the fact that sales of the first quarter of the year 2012 indicated a slow growth in the Asian market, Asia has a great potential hence Louis Vuitton intends to pay much more attention to the Asian markets. This could pump in overwhelming profits in the near future (Pointe, 2009). Presently, following the effect of globalization, LV has a wide range of choices for consumers. Chinese consumers, for example, would opt to spend less money for the same goods in China when they travel to France (Economist, 2007). However, since Louis Vuitton’s handbags have just started gaining popularity in India and Indonesia, the company is not worried of this possibility. This also presents yet another side note of the significance of the vast Asian market for Louis Vuitton as well as its strategic plan for Asia in the near future (Pointe, 2009).

Other than the USA, Louis Vuitton products have also found overwhelming market in other Western countries. One such country is Britain where the Burberry is a popular product for quite a large number of British. The Burberry conquered the globe due to its special classic checks, but now it has evolved into a magic style with many young rowdy people wearing it all over Britain (Martin, 2009). Afterwards, this led to the beginning of its exclusion by some customers owing to the fact that its logo is said to be too conspicuous, a questioned that could not be neglected. This is how LVHM has been managing to put innovative aspects which have always been added to the basis of their original designs for brands as well as for their famous luxury brands at present. For all LV brands, the company has put a mass of products all of which are based on the design of a specific monogram. No one can deny that the monogram is a sure classical design which LV has used on both men as well as women’s handbags. It has helped Louis Vuitton in representing their brands unique in the international market resulting in tremendous sales as well as customer base for such luxury brands (Kotler et al. 2008).

Economic Analysis

Products can be marketed in consideration of procurement procedures, consumption and such that a demand can be fulfilled. This includes the core, the augmented and the actual parts of the product (Kotler et al. 2008). While people may have the desire to purchase a handbag since it can be used to carry stuff, it is important to note that the same people may want to purchase a luxury package for the purpose that is not so simple. This is because luxury brands could be used as a means of redefining people’s social class and status, to a given extent in modern life (Chadha and Hushand, 2006). Marketing of majorly considers specialty. In as much as their prices may be considerably higher, there are consumers who would prefer their design and brands which is different from other goods. This is the reason LV ensures that they have exclusive distributorships only in their brand outlets across the world. It is also because the goods possess more warily target promotions by both their manufacturers as well as resellers (Martin, 2009).

LV interestingly noted that whatever the economic situation in the international market, there is still a particular segment of customers who will still display loyalty in buying products with particular specialty. Such customers always never have a comparison or an alternative for luxury goods regardless of the time that they may merely spend in obtaining luxury brands (Kotler et al., 2008). This is why LVHM has noted the existence of some up markets customers with specific passion for certain luxury brands across the world. this strategy has specifically been used by the LVHM group of companies to identify and explore markets in the Asian economy especially in India and Indonesia. Once they recognize the existence of such customers, the company moves in quickly to supply the particular brands of luxury products that will suit their interests. Nevertheless, some luxury brands have had to fall down in predicament especially where LV has to launch some brand extension strategies (Martin, 2009).

The 4P’s of Marketing: a Marketing Mix

This section considers the market strategies used by LVMH which enhance its outstanding as a top elegant brand among many. A marketing mix comprises 4 basic elements. These are the actual parameters used for estimating the business situation as well as to aid in implementing the appropriate marketing strategies. The objective of a marketing mix is to give a conception of a marketing plan focusing on the customers themselves (Kotler and Armstrong, 2008). The four Ps are: the product, price, place and promotion. “To begin with examining the differences between luxury brands and general consumer goods, it is evident that LV strategies are very interesting because its marketing strategies are different from other products. There are many questions pertaining to its uniqueness such as no price reduction, no premium gift, no outlet shop, no use machinery in the production process, and no advertisement on TV (not until recently). These are special features of LV. The questions above become reasonable to create a distinguishing brand image that lasts over 156 years,” (Kotler and Armstrong, 2008, p. 26).

Product

LVHM has a unique combination of products and services that maximize consumers’ satisfaction. This not only limits the physical products offered but has also included the entire experience of product related factors such as: appearance, services, product features, quality, warranty, installation, packaging, product lines as well as banding . LVMH operates along three main principles related to the product namely, “Absence of second-line operations, Absence of Outlet shops and the principle of special orders” (page number). In the general consumer markets, second-line products with lower than the main line cost are provided with an aim of responding to massive demands. In the contrary, LV operates highly priced goods in the luxury market and thereby ignores those customers who cannot afford to buy the highly priced products from the main line (Schmitt, 1997).

LV products are also traded on the basis of no outlet shops. Normal marketing strategies would aim at increasing sales in order to maximize profits by distributing products via every possible channel. However, LV doesn’t use this method even for the short run. This is because even though it can earn profits, such a strategy could impair the prestigious image of the brand in the long run. LV still cherishes the brand’s traditional method of luggage manufacture whereby each piece is made by hand. Furthermore, LV produces all its merchandise under the company’s control by giving out no licenses at all for others to do the same. As a result, a limited amount of their products are in supply to customers thereby ensuring that the products are all sold out without any of the remaining for bargained sales. On the basis of this principle, that although there could be LV’s outlet shops everywhere, not enough goods would be there for sales. Furthermore, establishing more outlet shops would tarnish LV’s image of luxury brands (Kotler and Armstrong, 2008).

Price

Product prices include direct/ indirect costs, opportunity costs as well as service costs. There are no bargain sales and sales are made in value sets. There is also no odd pricing. Fashion products are tremendously fast-growing and temporary since no products are fashionable forever. Therefore, each season often ends with promotionally priced goods. According to Kotler and Armstrong (2008), “bargain sales are temporarily priced products below the normal list prices and sometimes even below costs to improve short-run sales, to increase total sales revenue, and to reduce inventories” (Schmitt, 1997, p.106). However, a look at LV’s history indicates not a single incidence in which prices were reduced in 156 years. LV understands the negative effects of such price reductions. For example, the consumers will tend to wait in speculation of bargain prices which can potentially risk the value of the brand among customers. LV fixes its prices to stimulate consumer demands at the moment they have interest in the goods thereby preventing them from postponing their purchasing habit (Schmitt, 1997).

A sale in value sets is a product banding strategy is used to dispose a set of goods in the form of a combination of 2 or more goods. This method may appeal to customers’ who prefer grouped sale to individual items. Thus, addition of free gifts to the normal products in a set presents a similar way of offering price discounts. However, LV does offer such added gifts and has never done any set sales. According to Dibb and Simkin (2004) “if a product is an exclusive product, it should not be priced in an odd number. For example, what would customers think if LV was to suddenly cut its prices to end with odd numbers? They might think that quality had been reduced. The brand’s pricing policy and its image are usually closely connected. As a result, LV does not adopt pricing in odd numbers. Moreover, most of the other luxury brands follow this same practice,” (Schmitt, 1997, p.121).

Place

LV stores are sited in prime areas of luxury shopping all over the world. This strategy aims at maintaining the image of its brands its brands as a very unique luxury brand. This makes consumers feel proud to buy the products and they will be ready to pay their premium prices. LV also enhances its brands through flagship stores. These are larger stores than normal aimed at responding to the needs of a large number of consumers. This strategy has helped in more precisely identifying the brand to improve their perceived value as well as to induce their customers’ interests. In addition, a limited number of stores make it easier to control the operation of the company’s stores (Schmitt, 1997).

LV also esteems the principle of flawless repairs and it is among the famous of its strategies. There are also few other brands, apart from LV, which use this strategy. LV offers consumers a chance to have their products that are damaged. “This strategy has proven impossible in the real world because every product uses different materials and for old products, the materials used may be scarce in the market. However, LV has the ability to deal with this problem by producing reserved materials. As a consequence, this can develop the trust and competitive perceived values from customers. This suggests that LV tries to increase brand royalty and to sustain the strength of the brand.” (Louis Vuitton, n. d.).

Promotion

This is a series of activities aimed at informing consumers of the worth of goods as well as persuades them to buy the goods. Generally, almost all businesses need to promote their products and services to customers. In modern day, this could be effectively achieved by TV ads. However, LV has rejected mass advertising since they argue that “TV commercials are not suitable to luxury brand due to time limitation. The commercial time of 15-30 seconds cannot communicate all details with the target audience. In addition, advertising on TV could damage the views of customers on brand’s reputation. To illustrate the point, if the advertisement of LV is launched after that of another product, which is not as prestigious, the brand identity of LV can be tarnished.” (Creg, 2005, p345). Nonetheless, LV encourages publicity in magazines and newspapers only till recently when they have began to explore the TV option.

Cultural Analysis

In order to reach out to many more countries in the international market, Louis Vuitton also launched its cooperation strategies with a several international artists. This is based on the original pattern of the company of creating new products. For instance, Takashi Murakami is a Japanese artist who has designed popular monograms for the company (Creg, 2005). These include multiple-color bags as well as the cosmic blossom collection for Louis Vuitton. This means that the face of the different periods of the consumer market, luxury brands should change the market share of the original product or come up with new and innovative products such as the Louis Vuitton group has done in its attempt to encroach and dominate the global market. However, in the case whereby a particular monogram logo is possibly seen everywhere, the company noticed that this may cause considerable consumers fatigue. Accordingly, in such cases, Louis Vuitton moves quickly to reduce its possession of such products as happened in Japan with an aim of improving the products for the market (Economist, 2007).

Chapter 2: The Microscopic Analysis of the International Market for Louis Vuitton

As a matter of fact, in order for marketers to improve their marketing plans and strategies, it is important for them to have a clear understanding of their target market, consumers’ behavior process as well as the key influencing factors of the process (Creg, 2005). This chapter aims at providing an understanding of Louis Vuitton’s target consumer groups as well as the consumers’ purchasing process of LV’s brand.

Consumer Groups/Target Market

Two major target market segments can be identified for the LV luxury brands in the international market. These include: demographic market segment and the geographic market segment (discussed in chapter 1). Demographic marketing segmentation includes such components as: age, income, gender, occupation and social class of the target market. All across the international market, Louis Vuitton brand’s target market comprises of people who have relatively higher income levels. In fact, market analysts have shown that the propensity of individuals to purchase luxury goods increases with increase in their income (Louis Vuitton, n. d.). It is also evident that Louis Vuitton’s target consumers are those who can possibly identify with the various communicated messages associated with Louis Vuitton since LV has established images which are based on the theory of social identity (Creg, 2005).

Individuals are bound to take actions as well as to consume goods in order to abide by the ideas which are in consistence with their individual ideal-self image. They may also purchase the goods not for their personal use, but for gifts. As a result, for this particular market segmentation, LV’s targeted consumers are both sex. They also comprise of people between the ages of 25-50 years old. It is also important to note that most of the consumers are whose income levels range between 50,000 SGD – 200,000 SGD per annum. Most of these people are professional graduates with some sense of high social status as well as self-worth (Louis Vuitton, n. d.).However, their number of young users is also on the rise among trend-followers and people who want to be fashionable but often less concerned about prices. The products have also found popularity amongst rich famous models and celebrities across the world.

Consumer Behavior

The consumer behavior process for LV luxury brands can be summarized into five major steps. The first one is problem recognition. A survey of 50 LV consumers indicated that most of their purchase recognition is influenced by the needs for luxury handbags to carry probably to enhance their social status or fashion-ability. It is followed by a stage in information search for products and services that can solve the identified needs. Attitudes and opinions from external sources may pay a key role. Information can easily be obtained from the internet where prices and product catalogues are displayed (Han, Joseph & Drèze, 2010). The consumers then get evaluating and select a given brand from the available alternatives. Marketing plays an important role increasing the likelihood of a given brand being part the consumer’s decision process. Buyers would evaluate the products in terms cost, color and the celebrities associated with an LV bag or belt. Research indicates that 60% of luxury brand users choose LV while 65% of past LV owners tend to shift brands (Ang, 2001).

The consumer the moves to the stage of outlet selection and product purchase although at times purchase intentions don’t necessarily result in an actual purchase. Louis Vuitton outlets are thus located in some prestige shopping malls in which consumers are served courteously when shopping. After making purchases, customers are prone to experiencing concerns on their purchase decisions, a concept called “cognitive dissonance”. Some customers may feel like they could have had a better alternative such customers may not repurchase instantly but are likely to shift brands in their next purchase (Han, Joseph & Drèze, 2010).Marketing teams have a responsibility of managing the post-purchase stage by persuading the potential customers that the brands purchased will satisfy their needs (Ang, 2001).

Consumer Psychology

Factors affecting consumer behavior include: demographics, knowledge, psychographics, motivation, attitudes feelings and beliefs. Consumer behavior concerns their needs and their actions are directed towards satisfying the needs. Thus, every person’s behavior will depend on his/her thinking. The marketing agencies should have a precise understanding of what exactly benefits consumers and which attributes are the most important for making a decision (Ang, 2001). “Perception is how we see ourselves and the world we live in. Buyer’s mind has been stored that the Louis Vuitton bag is a branded luxury item which shows the prestige and wealth for its owner. Consumers are also more likely to retain information if a person has a strong interest in the motivation. So marketers must be creative and use various means to deliver their message. Once the message reaches consumer, it must be interesting enough to capture their attention,” (Han, Joseph & Drèze, 2010, p.345).

Knowledge refers to the sum total of all that a person knows depending on the depth of his/her experience and strength of their memory. Knowledge of LV brands has been widely appreciated by most consumers who clearly understand the products as hand-made with rich history of success. Moreover, today, consumers may easily access all information about LV brands via the official websites. (Bils & Klenow, 1998). Another influencing factor is attitude, a person’s feelings/belief about something which one formed, may be very hard to change. Although LV is a prosperous brand, they don’t offer retail experiences that can satisfy customers unless one is or appears like a celebrity, a rich or a famous person. This is recorded as one of the major challenges LV marketers face today. The feedback of one customer plays an important role in shaping purchase decisions of many others. For instance, in Singapore, many responses of LV bag shoppers resulted from ill encounters with shop attendants making brand loyalty completely out of their mind anymore (Ang, 2001).

Motivation is an individual’s desire to achieve a given goal. Many of the internal factors discussed above can affect a consumer’s desire to attain a certain end. However, regarding the making of purchase decisions, consumers’ motivation may be affected by other factors like financial position, time constraints, overall value and perceived risks. “Highly motivated shoppers will want to get mentally and physically involved in the purchase process. As they consider the LV bag is a luxury items, therefore for those first –time buyer, the process will take longer along the higher perceived risk even though they have strong motivation to buy a LV bag” (Bils & Klenow1998). Other than the internal factors discussed above, consumer psychology and their subsequent purchase decisions are also influenced by some external factors. These are factors outside the consumers’ control despite affecting their purchase decisions and directly/indirectly impacting their lifestyle (Moor, 2007).

Finally, purchase decisions are strongly affected by the situation in which consumers find themselves. Generally speaking, a situation here would refer to the circumstances one faces while in the decision making process for a purchase. Situational factors include: nature of the physical environment, emotional status and time constraints. Not all these situations can be controlled. This means that consumers are not likely to abide by their normal decision making processes for a purchase. “For instance, if a person needs a product quickly and a store does not carry the brand they normally purchase, the customer may choose a competitor’s product instead of reserving the LV boutique stores. Therefore the efficiency of the staff’s professionalism and the handling skills are very important in serving customer’s request. They can politely talk to customer and persuade them to wait for the stock from another store,” (Ang, 2001, p.24).

Chapter 3: Louis Vuitton to Face the International Market Sales Strategy

In the past 40 years, one of the most pervasive issues that captured most companies’ attention is branding. The companies are interested in how to build successful brands, how they can make their brands resonate among customers in time and space, and the main success factors that would enable brands to dominate and maintain a global loyal customer base. This chapter presents LV’s 5 main steps by which it has managed to penetrate and maintain a vast loyal customer base in the international market (Holt, 2004.).

Identification of a Niche Segment

One of the basic principles of creating effective brands is to diligently choose a lucrative market segment then target it by enticing positioning. Luxury brands are established by giving great symbolic value to a selected segment of customers who highly focus on status associations rather than price. As such, the initial step for building a successful luxury brand is identifying some niche segment comprised of affluent people then devise brands which would be of high value to them (Chernatony, 1992). LV has a global recognition for its extremely high-end handbags for women. Even though the brand started by particularly targeting “the ultra high-end, mobile professionals who cared for a high-quality product”, it has gradually expanded over time with various products for broader consumer segments (Elliott, 2007).

Positioning on the Basis of High Differentiation Levels

Global brands may follow a differentiation or a cost leadership strategy in order to strategize on their competitive moves. All luxury goods assume the differentiation strategy. However, luxury brands ought to differentiate their product experience aggressively as opposed to normal brands (Chernatony, 1992). Unlike the normal mainstream brands, luxury goods associated with high degrees of customer loyalty, a major feature which defines their identity as well as and powerful connections with some central market intermediaries for luxury brands. LV is a top luxury brand which has always been consistent with a set differentiation strategy. Its differentiation is based on overall cost structure as well as corporate culture (Elliott, 2007).
Emphasis on Symbolic Value

The most significant element in building luxury brands is the ability of the brand to establish and convey symbolic to customers. Brands offer 2 kinds of value, functional and symbolic value. The brands features and its potential use define functional value which highlights the primary value customers anticipate the brand. On the other hand, symbolic value results from the brands’ social standing. Brands intending to create luxury brands ought to carefully devise methods of emphasizing symbolic value. Over the years, LV brands have strived to create a great sense of social standing for its consumers such that they never mind their prices (Holt, 2004.).
Creating Perceptions of Exclusivity

All luxury products try to build a sense of exclusivity for the customers. This can be achieved by unattainable prices, restricted geographic availability, possession barriers as well as limited supply. “These mechanisms not only build a pseudo sense of demand for the brand in the eyes of the observer but also enable those who patronize the brand a sense of special status” (Chernatony, 1992, p.243). Furthermore, it also allows the brand to maintain its positioning in the case of massive external shocks. As such, LV brand managers strive to create a sense of exclusivity for their luxury brands (Elliott, 2007).
Uncompromising Delivery on Superior Brand Promises

Many brands face the huge challenge of consistently delivering on all their brand promises. Successful brands create supportive operational and organizational structures to facilitate implementation of strategies of delivering on promises. However, delivery on promises entails multiple dimensions with luxury brands including the need for consistent delivery on promised symbolic value as well as to project continuity and consistency at each possible touch point. LV, in the line of luxury fashion brands, has taken tremendous efforts to make sure that every touch point of their products is effectively met across its worldwide operational system (Holt, 2004.).

Chapter 4: Louis Vuitton’s Marketing Strategy in the Chinese Vs UK Markets

The Chinese Market

Since the 1990s, China has witnessed a relentless increase in consumer purchasing power. The Chinese consumers have become wealthier there highly accepting retail formats of the West. Today, various global supermarket chains, mass retailers and departmental stores have paved the platform for luxury brands. Louis Vuitton is among the top luxury brand companies that have invested in the vast Chinese market. The others are: Bally, Gucci and Ferragamo. Today, with the rapidly escalating consumer purchasing power in China and reduction of restrictions by the government, the foreign luxury brand companies are facing pressure to strengthen their engagement with the mainland or face the risk of losing market to their rival companies. The Luxury brands presently moving in the Chinese market are of European origin and operate along the lines of fashion accessories and apparel, cosmetics and perfumes, footwear, automotive, jeweler and liquor (Matlack, 2009).

In the year 2006, TNS carried out a study among about 830 Chinese consumers concerning their spending attitudes as well as spending habits towards luxury brands. The respondents were selected on the basis of age and their places of residence. All of them were in the age bracket of 20 – 45 years and were residents of some first or second class cities in China. These respondents’ monthly earnings ranged from a minimum of RMB 3000 with 75% of them married and 77% of them educated to university or college level (Moor, 2007). The survey indicated that luxury brands were rapidly gaining popularity among China’s middle class consumers. For instance, majority of them regarded luxury brand owners as being successful and with perfect taste with only less than 2% regarding them as superficial. More than 50% of them also indicated a longing to purchase luxury brands even if they could not presently afford them (Creg, 2005).

Positive attitudes towards luxury brands were also noted among different income segments and age groups. Those with high income levels, however, laid claim of their likelihood to purchase luxury brands as a way of self-reward. Shanghai residents were the least positive in their attitudes towards luxury brands with a majority of them least likely to buy luxury goods for a status symbol (Matlack, 2009). However, in a general sense, the outlook for luxury consumption remains positive in China with consumers showing strong intentions to buy luxury brands in the next one year. The urge to own luxury goods was relatively uniform among Chinese residing in the three major cities and the 2^nd tier cities. This survey also pointed out those Chinese attitudes towards credit remains reasonably conservative with a low willingness to buy luxury brands on credit except for bigger-ticket products such as jeweler (Moor, 2007).

LV has developed highly innovative strategies of strengthening its relationship with the high-priority Chinese customer groups. In Shanghai, there are 3 LV stores that exemplify its consumer segmentation as well as targeting strategy: “The LV flagship on bustling Huaihai Road attracts young, aspiring buyers and prominently displays lower-priced “accessible luxury” items. Across the river in Pudong, LV’s location in the main business and financial district has a “more masculine décor,” as described by some LV employees, and caters more directly to businessmen shopping for gifts,” (Matlack, 2009).LV is also putting up its largest store worldwide in Plaza 66, a premier luxury shopping mall in Shanghai, to focus on educating buyers. This features the 1^st LV workshop outside France which provides ultra-premium shopping services and demonstrations by LV craftsmen from Europe (Moor, 2007).

The UK Market

Unlike China which is the largest LV consumer market, LV presents the UK luggage market as its leading manufacturer. This market has witnessed a compound annual growth at a 4% rate in 2012, a marginal rise on the 3% realized in 2007 – 2012. Growth in value sales in UK improved due to numerous reasons, “including manufacturers pushing higher manufacturing costs onto consumers, as well as consumers continuing to opt for more high-end brands with better quality” (Dishman, 2012, p.16).In 2011, LV was the top manufacturer the UK with a 6% market share. LV continues to be recognized internationally and tourists, mostly from Asia, are driving the brand’s sales UK. In 2012, handbags recorded the growth in the UK luggage market with a 6% value sales due to more customers buying the brands. “UK consumers view the purchase of a handbag as an investment, since a quality bag can last them a number of years. Handbags are also perceived as a fashion statement whereas the manufacturers and brands of other bags and luggage segments are less important” (Matlack, 2009).

Consumers increasingly seek convenience by buying bags as well as luggage. Cross-body bags are now very common among UK consumers since they give added convenience of being hands-free hence they never have to worry about the risk of theft. This sector exhibited a 1% growth in volumes in 2012. However, the luggage market had adverse impacts following economic crisis due to decline in tourism and travel (Dishman, 2012).

Conclusion

In the past, the world was mostly merely concerned with the practicality, quality as well as style of goods/services with luxury brands only finding popularity among the affluent. However today, though luxury still means not all can afford them, global economic prosperity has given luxury brands a new wave of customers who can now afford a wealthy lifestyle. Louis Vuitton was ranked as the top luxury brand by Inter-brand international in 2008. A macro-analysis of LV’s international market reveals its wide market in USA, Britain and Asia with Asia now providing the largest consumer market. This is attributed to the rapid growth of Asian economies with China overtaking Europe to become the 4^th largest world economy. A microscopic analysis of LV’s market indicates its popularity among affluent professionals aged 25-50 years old. While China provides the largest market for LV brands, the UK still maintains a leading position in the manufacture of LV brands.

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