This research paper aims to discuss the company which declares itself as a world leader in production of luxury products. This is the indigenous Louis Vuitton Merchandize Group (LVMH), worldwide company based in Paris. The company is named after the legendary Louis Vuitton a trunk-maker from Paris who became a legend in the travelling art after designing luggage carriers, bags and accessories that were reputed for being innovative, trendy and practical at the same time.
The company was officially established in 1987 after a merger of LV fashion house with Moet Hennessey (wine products company) and was subsequently renamed to Louis Vuitton Moet Hennessey (LVMH group). After a series of mergers and acquiring other small companies and business, LVMH has tremendously grown and now boasts over 60 prestigious brands and branches worldwide. The Group specializes actively in five different sectors of economy, which include:
- Wines and spirits
- Jewelries and watches
- Leather goods and fashion
- Selective retailing
- Perfumes and cosmetics
Elegance, innovativeness and cultural diversity are the key factors in LVMH ways of operation. Its innovative products seek to blend in different cultural values, at the same time maintaining its reputed elegance and magnificence. The Group does not put much emphasis on quantity output-though a factor of production, but rather quality output. However, due to its numerous outlets/braches worldwide a high turnover is more favorable, since it eliminates possibilities of deficit in products as a result of poor/low staffing. It employs over a hundred thousand employees worldwide, with its bulk of experts based in its headquarters in Paris.
LVMH group practices cross merchandizing of its active specialties being, wines and spirits, jewelries and watches, leather goods and fashion, perfumes and cosmetics and selective retailing. The products are spread out in different sectors of LVMH and also franchised (recently re-introduced, it had been closed by the company as a way of tightening control on its patented products, but failed) to other companies.
Being a listed company, LVMH boosts of shareholders worldwide that cut across all the social and cultural divides. In January 2011 it had collected total revenues worth over €21 billion with a net income of approximately €3 billion.
As stated in its mission and objectives, the group offers luxury oriented products and services. Its major target customers are the affluent people who can afford such luxuries. These include prominent people, businessmen and women, uptown traders, rich families, politicians, celebrities, artists etc. However this is not to say that it does not factor in the middle class people in its market segmentation. It also offers products that are affordable to the middle income earners, as well as donating to poor people through corporate social responsibility.
It is the general idea that the choice of target audience augurs well with the products. However, a change of strategies and production of more goods that are middle-class oriented will be more fruitful, since the Market Hinterland will tremendously increase.
LVMH headquarters is based in French capital Paris, along the 30th Hoche Avenue in the 8th arrondissement. It operates over 2,500 stores that are distributed worldwide. The stores range from boutiques, beauty parlors, panning houses, leather shops, jewelry and watches merchandizes, to Wine distribution centers, among others.
Apart from selling its products through its own stores, it also uses the e-commerce section of its website. Customers are able to view product catalogues, make orders, payments and then wait for subsequent delivery.
The multinational luxury products conglomerate has undergone various mergers and acquisitions. In 1987, it merged as the original Louis Vuitton Fashion house with Moet Hennessey, a reputed wines company also based in France. Currently it controls more than sixty subsidiaries that deal with its products but are managed independently. It has partially acquired most of these subsidiaries. They include: Moet et Chandon Hennessey, Belvedre, Chateau d’Yquem (its first product), Louis Vuitton, Perfumes Christian Dior, Loewe and Celine etc.
Overall and as depicted in its objectives, the group is very particular about its image. Having taken many years to build this image, the group companies are keen to maintain and even improve it. They do this by employing stringent control over every minute details of its brands’ image. They recognize that only through sheer creative superiority and extreme quality of their products their brand will maintain the holistic reputation it has received worldwide.
The group shows prudence in triumphing about its achievements, while also expressing the fact that there is room for improvement in this already revered business. In this line, the company has earmarked certain factors as a key to ensuring customers receive the quality products and services. ICT, aesthetics, traditions blended innovation, subsidiary control and cutting production costs.
With regards to technology, the group companies roots their long run achievements in the forging in of artistic creativity with technological innovativeness. The group prides in its “innate tendency” to attract the best brains in terms of technology.
Being a worldwide business, its competitors are uncountable but the most notable ones are Calvin Klein, Italian &French wine companies, Jewelry dealers and the numerous US-Based designer lines. Calvin Klein brings on board the principal competition in the fashion sector, but the same cannot be said of other sectors that LVMH group engages in.
Louis Vuitton Moet Hennessey (LVMH group) does not have price point strategies. Their price structure is also random (based on individual product) rather than systematic. However, the importance of price point strategies in this business cannot be underestimated, and one would highly recommend its usage. This is because the group companies stand to benefit from these strategies. It is, however, understandable, as the affluent image the LVMH group has built for years does not augur well with such strategies.
During its early days of business, LVMH group operated on a strict policy of manufacture-and-export products. The products are manufactured at the headquarters in Paris and then are distributed to all stores worldwide. However, as operations change and the number of group companies increases, it has adopted more accommodative policy. This is where some products are manufactured and distributed, while others are manufactured by the independently ran subsidiaries’ at their premises. The group does not clearly elaborate where it sources its raw materials from.
Its obsession for aesthetic qualities of products and quality perfectionism is a very positive in an otherwise rigorous quantity and profit oriented business world. Emphasis on the “beauty” of the products is something new that plays a big role in enhancing the positive image of the group.