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Louis Vuitton A French Fashion House Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 3471 words Published: 1st Jan 2015

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In this particular case study, we are going to discuss the reason why people purchase luxury goods, especially is LV; and how the dichotomy between a high-end product and a low-income economy to be reconciled. Then, the report will be continued with the external factors that hindering the purchase of luxury goods in India, culture typically. After that, mentioned more in international marketing, we are going to find out the reason why luxury goods marketers form retail clusters, why certain luxury goods look for store locations in luxury hotel. And finally, the report will be ended with the way of a luxury mall work for luxury goods marketers.

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Nowadays, when the world becomes globalization, there are no more barriers in the integration process of every country. Therefore, people are entitled to purchase and use global products made by international companies. Not the same as consumer goods or necessity goods, “luxury goods are cyclical and correlate with GDP in specific regions, often exaggerating the up- and down-swings; in boom times, consumers’ demand tends to grow faster than the growth of economies (as measured by GDP)” [1] . More precisely, luxury goods are goods for which demand is not related to income. Basically, there are three main factors that lead people by luxury goods. Especially in today’s consumer-driven economy, people spend proportionately less on basic necessities and more on things based upon emotion and desire.

Firstly, they buy luxury good because of its superior functionality and quality. Most of them were old because of hard working time period, so they were wealthy enough that willing to pay premium for products that had enduring value. They usually conducted extensive pre-purchase research, then making logical decisions rather than emotional or impulsive. This action highlighted the messages of product quality. And that message were information-intensive appealed to them. Consisting of connoisseurs, this category was the largest.

Secondly, they are people who perceive luxury products as a reward. They saw these products as status symbols which make the personal statement that they had “arrived”. Highly driven, they were motivated by a desire to be successful, eager to showcase their success to others. They also were keen on appearing lavish or hedonistic. They wanted to make seemingly “smart” decisions that demonstrated the importance of their purchase while not leaving them open to social criticism of any kind.

Thirdly, this is the smallest and consisted of younger consumers, with a higher proportion of males than the other categories. They saw luxury products as a means of self-indulgence. They enjoyed luxury products for their feel-good factor. They were emotional in their purchase decisions and were not concerned with product longevity or its enduring value.

Particularly, in India, people who buy luxury goods fall into the second category. As we know, maharajahs are the most wealthy and powerful in India in the late 19th century. They are the one who prefer everything luxury to showcase their positions as “great king”. “It was the ongoing orders from Indian royal families, among other wealthy customers, that had helps Louis Vuitton survive the Great Depression of the 1920s” [2] .After that, although the changes in 1971, these maharajahs lost their traditional hold in post-independent India and their riches with the abolition of annual financial grants from federal government, many of them became entrepreneurs; but accidentally, the new generation of customers for LV was formed in India including start-up owners of myriad new businesses, professional CEOs in their thirties and early forties, non-resident Indian, small and medium retailers, big-brand franchisees, Bollywood actors and “closet spenders”. This new generation of customers could be the third category of who purchase luxury goods. They are new and not too many of them are really rich, but they still purchase LV as the feel good factor. Hence, they are very essential in long-term strategic development in Indian market.


Case Question 2

Louis Vuitton is a high-end product. India is a low-income economy. Can this dichotomy be reconciled?

“India, throughout history, has been a land of extremes and known for the indulgence of its opulent classes” [3] . Typically, there are more than 600 maharajahs existed that time. They are truly powerful and wealthy enough to be considered as “great king”. As a positive result, most of global brands were looking India as a market with long-term potential whereby there are high demands of luxury goods from Indian royal families. Louis Vuitton is also not excepted. Until now, almost luxury brands are still survived in Indian market despite of global economic crisis. Clearly evidences are the Indian market has increased a significant percent of consumption this year when customers are more interested in walking into the outlets and, importantly, buying rather than just looking.

Besides that, India is known as a low-income economy, but there are really have several wealthy people who are superior to the average population. Since Louis Vuitton made an important observation that “the rich in India were flying to London, Dubai, Singapore, New York, and Paris to shop because there were noting available in India for them to buy” [4] , the company has articulated the clear long-term goals in India that is open store in every Indian city so that the wealthy class can buy the needed items right in their home country. “The World Wealth Report 2005-06, published by Merrill Lynch and Capgemini, put the number of dollar millionaires in India at 83,000 in 2005. The report also said that India recorded the world’s second fastest growth in the number of HNW individuals, 19.3 per cent in 2005” [5] . Thus, we can easily realize the potential market of Indian consumers’ purchasing power.

Currently, due to the capitalist mind set and growing young population, India offers to luxury brands favorable advantages such as more wealthy people, increasing awareness, increasing consumerism, and greater supply of luxury goods. Firstly, luxury product companies strategizing their entry into India were primarily targeting high-net-worth individuals because they are those with a million dollars or more in liquid financial assets. They are the largest category of spending on luxury goods as the number of them as well as their demand increased. Secondly, India young generation is now travelling abroad more than before, thus, the foreigner brand awareness is also increasing. The more they go out of the country, the more they exposure with international brands, especially luxury brands. Then, the demand of these kinds of global brands is increased in India but domestic market can not satisfy their demand. That is the reason helps luxury goods generally and Louis Vuitton particularly still existed and developed gradually in this market. Thirdly, there are also an increased numbers in consumption of non-essential items. The world is getting globalization day by day; the demand of human is not only the needs but also the wants, so that their life becomes more convenient and sophisticated. They don’t afraid of giving a large amount of money to spend on a luxury product that it is worth for and satisfied their wants. Of course, there is no more guilt feeling associated with spending on luxury nowadays. Finally, together with the boom of expanding global, luxury brands opened more and more outlets in as many countries as possible, including India.

Generally, in the world of opposition, this dichotomy entirely can be reconciled.


Case Question 3

What are the external factors hindering the purchase of luxury goods in a country like India?

Depend on several conditions of each country; the factors that are hindering the purchase of luxury goods are various. In this particular case study, we are finding out the external factors in Indian market.

Advertising platform: Nowadays, “Advertising is a service to the community” [6] . It is usually revealled the latest fashions and the new popular novelties on the market. Therefore, the effect of adverting to the community is essential. Advertising has the power of persuade and influence consumer. “Advertising has short-term power (conveying new information, building awareness, enhancing credibility, etc.) and long-term power (conveying brand image, attaching emotional values to the brand, building positive reputation, etc.)” [7] . Actually, there is lack of advertising platform in Indian market. No famous magazines or newspapers are found in India at that time. Hence, LV also faced with this situation of advertising. This is the significant factor that hindered the purchase of consumer in India, especially luxury goods.

Credit card issue: As a developing country, Indian financial industry has forced strongly for the last few years. The financial sector in India has experienced increased gradually. However, credit card is still a new type of banking in the country due to the young industry. Not the same with the US or UK, credit card in India has just launched in 2008. With two years operation and development, credit card is currently an issue that affects the purchasing of luxury goods. Simply knowing that luxury good is the type of expensive-cost good for sophisticated consumers, but credit card is not too popular in India. Without credit card, it is not convenient for them to carry a huge amount of money to buy luxury goods in home-country stores as well as abroad.

Place for distribution: This is one element of the 4Ps in Marketing Mix which is considered as the core way for passing product from production place to consumption place. “Effective distribution provides customers with convenience in the form of availability (what, where, when – the right product, at the right place, at the right time), access (customers’ awareness of the availability and authorization to purchase), and support (e.g. pre-sales advice, sales promotion and merchandising, post-service repairs)” [8] . While luxury brands, especially LV, usually look for store location mainly in luxury malls, luxury retail clusters and luxury hotels. And these luxury places are only located in the country capital or the most crowded city. It makes a difficult approach for consumers when they want to buy luxury goods.

Besides three main factors, culture is considered as the broadest and deepest factor influent on consumer behavior, including India. Culture is an important part in every society and effect directly to a person’s want and behavior. The international marketers, especially for luxury goods should understand the role of Indian buyer’s culture.


Case Question 4

Why do luxury goods marketers form retail clusters?

Luxury retail cluster (LRC) which is spread over several blocks, usually in a city’s downtown core, enabled a luxury products company to showcase its offerings in a manner that highlighted it brand personality. There are numerous of reasons for luxury goods marketers form LRC. Among the reasons, “customers are the retail cluster’s purpose – and its passion – with all products, promotions, distribution and servicing geared at profitability providing superior value for them” [9] . Retail’s determinations consider customers as their unrelenting and unremitting driving force. LRC also enhances access to customers by gathering products from different categories. On the demand side, a LRC gives customers chances to purchase several items that are related to each other in a single trip. Simply when purchasing a luxury dress, then, customers also want to purchase more luxury accessories such as leather bags or high heels shoes that suitable with the initial dress.

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On the other hand, an individual store was reinforced by an image spillover from other neighborhood stores inside LRC. Each luxury brand gains benefits for its own somehow when establishing LRC with well-known of high quality products and value chains. Additionally, on the supply side, “LRC could attract traffic large enough to give scale to individual store by the sheer number of shoppers” [10] . Certainly, a LRC can enroll customers more efficiently and cost effectively. Implementing new policies about finance or strategy for a LRC is considered as a key of success on saving costs and maintaining the stable level of customers.

Furthermore, all the stores inside the LRC are ongoing efforts to achieve higher value. If an individual store doesn’t do well on their performances, it will be left behind the others. Thus, each brand name and brand marketer has tried the best to maintain and improve the quality and its brand value. Besides that, “an LRC offered an opportunity for a brand to use its store design to create a unique image without interference from other stores in the same cluster” [11] .

Generally, luxury goods marketers are right in forming a luxury retail clusters in the purpose of sale and cost effectively.


Case Question 5

Why do certain luxury brands look for store locations in luxury hotels?

“The current luxury customer is highly sophisticated and brand literate” [12] . Therefore, the choice of location for luxury brands is more special than the others. There are two sides of benefits when certain luxury brands put store locations in luxury hotels.

Firstly for consumer, these retail locations aim to attract the customers’ awareness and make them feel special when purchasing the products. The atmosphere around the retailer is also important in the buyer’s attitude. More precisely, a luxury hotel is a gathering point for society and a hub for those who travel. Moreover, luxury hotel is a place that wealthy people would like to come and enjoy their wealthy life. They are affluence people, so the potential for them to buy luxury goods is higher than other places. Additionally, luxury hotels usually are the destinations of upper class on weekend or vacations. It is convenient for them to have both holidays and shopping at the same time. They consider it as a reward after hard-working time. Once relaxing and shopping are go together, customers are more satisfied on the worth services. Lastly, purchasing luxury goods of luxury brand in a luxury hotel can make the customers feel special as well as their lifestyle is proved somehow.

Secondly, for the brand itself, store locations in luxury hotel also support for the brand status. The original as the luxury brands with core products are luxury goods, they are trying to improve and develop their luxury image and status in the community. Furthermore, people’s awareness about store location of a luxury brands must be at a luxury place, can not equate luxury goods in other places such as supermarket or small mall. Simply, luxury usually goes with luxury. This becomes a normal consciousness of human when thinking about luxury. And more, it can help people identify luxury brands easily. Additionally, the brand itself is easily in targeting customers in this luxury location. The brand know about their highly potential customers, so it is more comfortable for them to have developed strategy or selling approach methods to these customers.

Besides that, there is also disadvantage of looking store locations in luxury hotels of certain luxury brands. Hotel is an establishment of lodging services. It is also the place for people enjoying life and relaxing themselves. Therefore, hotel is not a commercial place for buying and selling activities. Sometimes, people see that these buying and selling activities in a luxury hotel are inconvenient for them when they are in holidays.

In brief, there are both advantages and disadvantages of store locations in luxury hotels, but it seems that LV did make good use of advantages to be successful in Indian market.


Case Question 6

How does a luxury mall work for luxury goods marketers?

Luxury mall, “a collection of stores bonded by shared facilities and a common infrastructure”, is a best alternative for store location after luxury retail cluster. With the strength of gathering several different luxury brands in one place, luxury mall is the ideal choice for busy customers. Retail space is rented by the store owner, and they can design and layout the store followed to their standard quality. By setting these luxury brand closer to each other, the luxury mall attracts customers’ awareness. It is also worth for each store inside. Moreover, once the luxury mall is doing well, the luxury goods are known well too. Therefore, luxury goods marketers do not need to do many things on create awareness, develop strategy and promotion sales.

In term of 4Ps in marketing mix, there are clearly advantages that luxury mall brings for luxury goods marketers. “Marketing mix is tactical toolkit of product, place, price and promotion that marketers manipulate in order to satisfy their customers and implement their target market strategies” [13] . Firstly, luxury mall is usually located on the crowded area with highly selling potential, thus, with the retail space is offered inside the luxury mall, luxury goods marketers do not need to find the store location in the purpose of attracting customers and increasing sales rates. Secondly, pricing at luxury mall is determined at the same level already. Marketers don’t have to do market research in order to identify a suitable price at a special point. Thirdly, products at luxury mall are redefined as luxury goods, so, there is no more need on trying to create customer mind set about their luxury brand. Finally, related to the seasonal demand of customers, luxury mall already has various promotions that suitable for each season. As result, the luxury goods marketers just followed to the given promotions and adjusted somehow in order to standardize with the brand image.

In case of Louis Vuitton, after opening stores inside two luxury hotels in New Delhi and Mumbai, Louis Vuitton teamed up with other western brands to develop a luxury mall. Certainly, it’s playing an important role in the success of Louis Vuitton in Indian market. “India’s first luxury mall was to open in New Delhi in a few months” with total of 130 marquee brands, including of course Louis Vuitton. In the developing strategy of the luxury mall’s owner, LV is also involved with all of the projects in next five years without the hard efforts of the marketers. It is the significant success of any foreigner firm in Indian market, Louis Vuitton typically.





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