Louis Vuitton in Japan Case Study
Louis Vuitton occupied fashion industry in Japan. Opening new stores, illustration of Louis Vuitton’s brand in mass media and popularity among customers prove about the right direction of the marketing policy of this iconic luxury company. Top quality products increase customer satisfaction and high demand at the Japanese market. A deep attachment to this market proves about its attractiveness and availability. However, Japanese business environment provokes some challenges for Louis Vuitton related to the internal and external factors. As a result, the organization demands implementation new marketing strategies, improvement the overall financial performance and maintaining a brand image.
The following essay intends to explain the key to Louis Vuitton’s continuous success in the Japanese market and the ways of bettering of the marketing due to the internal and external factors. As the thesis and layout of the study have been outlined, it is necessary to proceed to the discussion.
Analyzing the Case of Louis Vuitton in Japan
- Strategic problem statement:
After the September 11, 2001 Louis Vuitton suffered from the recession in demand in the Japanese market. As a result, the company faces with political, economic, environmental and legal challenges.
- Tactical problem statement:
Louis Vuitton demands innovation and improvement of marketing strategies to increase the rate of customers and profits. Declining sales and shifting consumers’ preferences put the company under the threat.
Identification of issues:
- External problems: political, legal, environmental, sociocultural, economic and technological challenges.
Political aspects of Louis Vuitton concern the situation in the country and the laws related to intellectual property. For example, the scandals with counterfeit were harmful to the reputation of the company. Economic aspects of Louis Vuitton deal with decreases in sales and profits and lowering of buying power of customers. Asian financial crisis left the negative impact on the economic state of Louis Vuitton. Sociocultural challenges relate to counterfeiting as an unethical issue of the organization. Brand dilution is another problem that diminishes the importance of this luxury brand. Technological factors of Louis Vuitton deal with the innovations in the products and presentation of the exclusive goods. Legal challenges of the company are related to the increasing of the taxes by the Japanese government. Environmental issues can also appear if the company does not regulate ecological norms while manufacturing.
- Internal problems: threats of substitutes, threat of new entry, power of buyers, competitive rivalry and supplier power.
As to the power of customers, it defines the success of Louis Vuitton. As its products are expensive, the number of consumers begins to decrease. Threat of new entry can also be dangerous for the reputation of the company as such brands as Hugo Boss, Versace, Gucci and Valentino can also win the Japanese market and interchange Luis Vuitton. Threat of substitutes can appear when other luxury brands will occupy the Japanese market. Versace and Gucci luxury items can be more competitive that Luis Vuitton’s. Competitive rivalry is a threat for this organization. Moreover, Louis Vuitton depends on supplier power that makes the company increase prices.
- The issues of internet shopping
Luis Vuitton’s shops are in duty free zones of the international airports and prestigious luxury destinations. Online shopping is also a way selling their goods. There are many customers who complained about poor online services. Luis Vuitton does not provide qualitative products through Internet. The picture online not always respond to the reality. Counterfeit bags were also offered to the customers.
- The issues with a special design
The special design makes Luis Vuitton’s bags easy for making counterfeit. Even the company offers fraud products.
- Reaching the target market.
The target market of Luis Vuitton includes people with high profits. However, the prices of this company are so scaring that customers refuse from buying their bags. There is a stereotype that everything that is expensive is qualitative. For many years, this myth has helped the luxury brands win new customers and markets.
- Sudden shift in customers’ preferences and increasing growth of competitors.
Customers’ preferences are changing due to expensiveness and poor quality. Increasing growth of competitors also shifts customers aside Luis Vuitton.
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Alternative solution proposals:
- To review prices. High pricing does not always prove about high quality of the item and brand name.
- Associate Luis Vuitton’s brand with any fascinating story. It is important to associate the name of the brand with some story. It helps the customer to remember this brand and provokes an interest.
- Satisfy the customers’ needs. It is important to explore the customers’ interests and needs in order to create suitable items for them. There should not be negative remarks and feedbacks from the customers.
- Provide a suitable placement. It is necessary to locate luxury stores in the places where there are many people not only in duty free zones of the international airports and prestigious luxury destinations.
- Open stores in the mid-size cities. It a well-grounded decision, as it will eliminate the dependence upon the tourists flow. Luis Vuitton should not limit their target market to big cities.
- Collaborate with competitors. Bulgari, Chanel, Coach, Gucci, and Tiffany & Co. boutiques represent the key competitors within the Japanese market. In fact, Louis Vuitton will manage to survive through proactive behavior of the competitors. Hence, the expansion of relatively smaller brands, such as H&M and Zara, on the Japanese market, however, caused the radical decrease in Louis Vuitton sales.
I recommend the first alternative because the company should implement the decision to sell the products at appropriate prices. It is well-justified action, as the organization might have lost a considerable percent of the target customers. As a consequence, establishing an average price was a strategic reaction to the external economic environment.
The second alternative helps to reinforce brand image. Louis Vuitton uses celebrities’ endorsement as it strengthens the company’s reputation and encourages customers to buy.
I recommend the third alternative because it aims to satisfy the customers’ needs. Exclusivity, creativity, precision, craftsmanship, innovation, premium pricing, and high quality are the main criteria necessary for choosing Louis Vuitton’s items. Apparently, Louis Vuitton needs to find a new way of communication with the target audience. With regard to the young generation, online-based shops would be a reasonable decision as long as Japanese young people are Internet-aware.
The fourth alternative will be efficient because it presupposes opening new stores and improvement of online services. It is worth saying that the fashion advertisement campaigns are larger and more numerous than the advertisement of medicine. The advertisement of Louis Vuitton, however, is minimal as they prefer spending money on opening new stores rather than promotion. On the other hand, opening many stores is another way of advertising as the more customers see the company’s stores, the more they are interested in the brand. I recommend the fifth alternative because it concerns widening of the target market. The sixth one is a way to reinforcing of strengths borrowing something in the competitors and overcoming weaknesses. The orientation on the Japanese art culture is a strategic tool to attract tradition-conscious Japanese people. For this reason, Louis Vuitton became focused upon the cultural peculiarities of the target segment while manufacturing the product line. Namely, it was essential to emphasize the cultural identity of Japanese customers, meanwhile preserving high quality and brand tradition.
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