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Louis Vuitton Success: The Past, The Present, The Future

Essay by   •  January 13, 2012  •  Research Paper  •  7,191 Words (29 Pages)  •  2,826 Views

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Introduction

Thought-through strategy is an important part of each successful business no matter what the line of business and who are the target customers. By analyzing the company's business model and tracing its evolution through time it is possible to elicit the key factors behind the achievements as well as bring out the present weaknesses of the business. This may support the future development of the company by aiding the recognition of operations requiring change and optimization.

The present paper sets out to analyze the business model of Louis Vuitton, a company belonging to the LVMH Group, which produces and retail luxury goods under the Louis Vuitton brand. The aim of the paper is to study the evolvement of the company by dissecting the time starting from the establishment of the enterprise until the year 2010 into four time periods and framing the business model of Louis Vuitton for each of these time periods. Based on the conducted analysis the authors create a vision for the future business model of Louis Vuitton reckoning with the steps that the business has already taken toward its future development.

The research paper is divided into 3 main chapters. The first chapter introduces the reader to the concept of luxury goods and shortly elucidates the development of the luxury goods market as a separate industry.

The second chapter is dedicated to the analysis of the past and present of the Louis Vuitton business. This chapter contains 4 subchapters based upon the main periods of the business evolution that the authors have brought out upon the review of the timeline. The first subchapter describes the business model in the early days of the Louis Vuitton enterprise - that is from the establishment of the company in 1854 until the late 90s of the 19th century. The second subchapter addresses the evolvement of the business from the end of the 19th century until the beginning of the Second World War. The third subchapter consequently proceeds with the review of the business from the time starting from the war until the year 1996. The last subchapter is set to analyze the transformation of the enterprise from 1997 until the year 2010. Each of the subchapters presents the main facts concerning the growth and evolution of the business and draws up a whole overview of the business model of that time period.

The third chapter of the research paper is solely based upon the opinions of the authors as it contains the vision for the future of Louis Vuitton's establishment. The authors name the opportunities that the enterprise can seize in order to achieve greater expansion which may in accordance bring about higher revenues and greater profit levels.

1. Luxury market background

Luxury can mean many things according to one's point of view. In common usage it refers to an act where something is experienced infrequently because it is expensive or rarely accessible. Luxury is also highly associated with exclusivity (Tungate 2008).

Nowadays luxury is manifested in a wide range of products, fulfilling every imaginable need of the consumer. Although many products appear to be essential to their owners, the selection often has less to do with function and more to do with status (Bruce & others 2004). Thus the conspicuous ownership or usage of the luxurious products has become an indication of status. What the person chooses to own or not to own is now an important statement.

As brands govern the luxury market they are developed and built up like châteaux. Their thought-out elegant facades are equipped with impressive battlements maximizing the brands worth. Consequently, the identity of the luxury brands product owner is linked to brand values that have been communicated via marketing (Tungate 2008).

The modern luxury industry was established in the twentieth century. Several luxury brands (including Louis Vuitton) that continue to exist today, were created between the end of the 19th and beginning of the 20th century (Okonkwo 2007).

Leading luxury brands ¬- the icons of luxury - stand alone. Louis Vuitton (No.1 luxury brand in 2010 with brand value of $21.86 mln USD according to Interbrand) as well as other leading luxury brands is not stretched into brand architectures with an array of sub-brands following in their footsteps. And while sub-brands are a tempting offer for others in the broader category, the luxury brands do not compromise (Interbrand 2008). These brands have not only survived for more than a century, but have also maintained their core tradition and heritage while adapting the constantly changing fashion and business scenario (Okonkwo 2007).

2. Business models for different periods

The second chapter focuses on Louis Vuitton's business models through its existence, each period is characterized and analyzed. A brief summary is given below.

The founder of the company, Louis Vuitton, was born in France in 1821. His parents never knew the life of luxury, dealing mainly with farming in Jura, a forestry region in France. The family legend recounts that Louis wanted to run away from his stepmother and he took an uncommon route by travelling to Paris. He had the driving ambition and the will to forge a unique destiny (Pasols 2005). Young and gifted Louis Vuitton created the Louis Vuitton brand in 1854 as a leather luggage company in Paris (Okonkwo 2007).

Early days (1854-1892) started with opening Louis Vuitton's workshop. Vuitton innovated and simplified the trunks and boxes for personal items and people sought his know-how. The goods were sold in Vuitton stores, one opened even in London. The company's customers were travelers, mainly of high class and royalty.

Golden Age (starting from 1893) marks the era of enourmous success. Vuitton's trunks were copied throughout the world. Company expanded to America and opened stores in known resorts in France. Vuitton produced items that made travelling elegant and satisfied the luxury accessory addiction - boxes, trunks, travel kits, womens handbags, perfumes. Customers tended to be elite of England and Russia, aristocrats, artists, famous writers, cosmopolitan travellers, rich Americans. Vuitton products were known by high price, quality, security and repair service.

In Modern Age (1937-1996) Louis Vuitton continued with innovative approach and growth. Being disrupted by Second World War, company had to restore the former glory and conquer new markets (Asia, Europe). Vuitton ensured commercial viability and concentrated on diversifying products. Through merging with Moet Hennessy (birth of LVMH) a new era and strategy began - to grow faster than competitors. Through the initiated innovative policies the company became a global brand.

The Present era (1997 - ...)

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