LMVH in China: Building its empire of desire

1. Why is LVMH so successful in China?

In my opinion LVMH is so successful in China first of all because their prices and glamorous prestige is reflected onto its customers and the Chinese luxury customers value being recognized as wealthy elites having a high social status. Secondly, ever since their opening LVMH had an exclusively unique heritage and craftsmanship, that made the brand so attractive for the customers. Another reason why the Chinese people love Louis Vuitton is the fact that having an overcrowded and communist society they feel the need to be noticed, to be perceived as different. That is the point that Louis Vuitton knew how to exploit in order to make them feel unique and special, feeding their ego and self-esteem.

The Louis Vuitton success in China is reflected by the survey that was held regarding the luxury products, where it was place either on the first or second place of the tops, but also from the fact that more than a third of the revenues comes from Asia. Not in the last line it is mentioned in the given text that Asia sales registered a huge raise of 27 % in time of only 4 year, starting 2008.

2. Louis Vuitton is LVMH flagship brand. Much of Louis Vuitton’s appeal is that it bestows exclusivity on its owners. In the last few years, however, the Louis Vuitton logo has been applied to handbags and accessories at an unprecedented rate. Discuss the challenges to the value of the brand as LVMH responds by introducing more luxury handbags and accessories without displaying the logo. In my opinion the response of LVMH by not displaying the logo of the brand any longer is a really good one, because the main reason why its customers stay loyal to the brand is the feeling that by wearing their products, they become part of the elite, the have a higher social status and they can be perceived as different, unique entities. Being in the possession of a LVMH product means having an added value, being different, unique in comparison to the others, feeling of self-esteem and pride that is really important for the Chinese people, being given their society.

If the logo of the brand started to be applied on so many counterfeiters, the value of such products decreased, so the customers are not so interested in having such a product in order to differentiate them any longer. Changing the method of making them still feel unique is in my opinion a very intelligent move that LVMH made so that to both keep its customers satisfied and stop the counterfeiters at the same time. The LVMH customers can still trust the brand for giving them their whole attention and interest in order to offer exclusively unique products and full satisfaction. 3. LVMH is also confronting the problem of proliferation of the LV logo through excessive counterfeiting activity. How can LVMH use its strength to overcome threats from counterfeiting? I think that LVMH customers are really experienced customers when it comes to luxury and quality standards. Even so, it is LVMH responsibility to assure the exclusivity and unique nature of its products and accessories that are more and more often threatened to be counterfeited.

Besides the fact that they can clearly post an official list on their web page with all the official stores where the original handbags or accessories can be found, they could give up the logo the was so much used in counterfeiting and use some other methods of differentiating their luxury products. One of these would be to use only certain types of materials certified of having a superior quality or maybe have a preferential, unique partnership with some suppliers that could give the certain raw materials that would differentiate the products only to LVMH, so that there will not be so many threats from other competitors or counterfeiters. Also another policy that they could use would the one of producing unique products, so that there would be never 2 exactly same models of the same handbag or accessories, at least not in the same country.

This is a really difficult and probably costly method to use, but I think it could guarantee the unique nature of their products that would make the Chinese luxury hunters to be fully satisfied and proud of their new acquisitions. 4. How does LVMH encourage Chinese customers to purchase LVMH products in China rather than abroad? Do you think that these strategic initiatives will be successful? Why or why not? What other ideas do you think LVMH should pursue to encourage Chinese customers to purchase LVMH products in China? One of the main reasons why Chinese customers prefer to shop abroad is the fact that it is seen as a better show off and also the prices tend to be lower due to the taxes that are applied for luxury products in China. No matter the fact that the sales of their products in other locations than China bring them important profits in Europe, LVMH is still trying to redirect the Chinese people to buy their products in China. One of the measures they took in this aim was to limit the number of leather products available on the LVMH European market and also limit the working hours in their stores in certain European locations such as Paris, which is one of the most wanted and perceived as the most preferred shopping destination.

On the other hand, they are doing all their best to assure premium services in the Chinese stores, so that no matter the price differences that may interfere, the customers would still be satisfied with the special treatment and attention they receive in the stores and also with the guarantee that the products they just acquired are at their best quality and standards. 5. Given the backlash in China against conspicuous consumption (the spending of money on luxury goods to publicly display wealth and status) what recommendations would you give LVMH? I think that as long LVMH does nothing more than satisfy the needs of a certain market segment that has a larger appetite for pride and self-esteem, offering them exclusively unique, high-quality products, they should still focus on the certain market segment assuring that their needs are fulfilled at the highest level.

In my opinion LVMH identified a certain need on the market for high-quality luxury products and as long as they are able to satisfy it, they should carry on. Of course my recommendation would be to stay focused on the changes in the buying behavior of its customers and also on the preferences that may change or vary, so that to maintain or even strengthen their brand image and trust. Of course, up to now LVMH already developed an image as an empire of desire and exclusive characteristics, which almost everyone especially in China wants to possess in order to differentiate themselves in the society. I would definitely recommend LVMH to keep up with their standards and brand image, being synonymous with a high-class unique way of expressing high, differentiating standards. 6. Other luxury brands such as Chanel, Burberry and Gucci are building a presence in the large luxury-goods market in China. What actions should LVMH take to sustain its strong position on the market?

In my opinion LVMH does not need to make a presence on the luxury-goods market in China as its competitors, because by having sometimes less or maybe even limited products to offer, or having only a few places where their products are available can be seen as a feature of being special and unique. I think the strategy that LVMH developed to establish, grow and maintain in top on the market is a very good one and should be kept further on. Regarding the actions to be taken, of course that they should pay attention not only to the customers’ requests or preferences, but also to the strategies implemented and products made available or particularities of the competitors’ products. They should definitely try to always improve not only the quality of the offered products, but also be sure that their services and personnel are always premium quality and their customers are always more than satisfied with what they receive.