Distributor of Luxury Products
LVMH moet Hennesly-Louis Vuitton in South Africa is the largest distributor of luxury products and brands internationally. The chairman of LVMH: Bernard Arnult has built the company into an empire of success in the marketing of luxury goods using several strategies evident in the case study. The first strategy evident is the assembling of diverse brands in the market. The company supplies more than sixty brands in the market hence they are able to increase sales.
For example, the sales in the year 2008 were worth $24.2 billion. Bernard has also employed localization as his strategy where he has opened several branches in different cities. He opened Sephora stores in Chicago, New York, and San Francisco. Today Sephora stores have expanded to more than on hundred stores in United States, and it also has branches in more than twelve countries in the world.Advertising is yet another marketing strategy that the LVMH Company has utilized.
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In 2008, the company management employed a branding campaign that would appear on satellite, and cable television, it was also to be shown in cinemas. The corporate advertisement ran for one and a half minutes in the media. This strategy serves to attract new customers to consume the luxury products, and maintain the product loyalty of existing customers. However, in using the TV adverting as a strategy in marketing the company exposes itself to several risks. The risks include; TV advertising is expensive and making the adverts does not guarantee an increase in sales thus the company would easily run into losses.
The 2008, global economic crises, affected all sectors of an economy luxury goods business were a victim too. Hence it was a significant risk to venture into TV advertising for a first time by LVMH. The dollar has appreciated, which means that the one requires fewer dollars to purchase a euro. Cutting the price of the Tweed suit to $7200 from $8000 requires that 1000 fewer Euros to purchase the suit compared to if the dollar had not appreciated.Louis executives raise the prices, but, sales continue to increase, this is because they are dealing with luxury goods. Luxury goods are Geffen goods, and they do not obey the law of demand that an increase in prices leads to a fall in demand.