Louis Vuitton in China

Louis Vuitton in China

Louis Vuitton in China

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Case Study : Analysis of the success of the brand Louis Vuitton in China.

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Louis Vuitton (LV) is the leading brand in luxury for the Chinese. Why and how the LMVH Group has succeed in China with a such strong brand in luxury field.

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The Louis Vuitton story

First Chinese consumers appreciate brands with a long history.

Louis Vuitton founded his company in 1854 in Paris. Few Chinese know that the starting business of Louis Vuitton was “The Luggage”  for travelers. After an innovation : the trunk, LV has the advantage of being flat and is able to stack some of the means of transport and to be sealed with a cotton cloth varnished.

The luggage was quickly copied that drives the firm to innovate in terms of design to achieve an unique product.
They invented the famous checkered canvas (1888) and Monogram (1896 by Georges Vuitton).

Nowadays, these are still the best-sellers of the Brand.

A century and a half later, the legend continues, coupled with an international reputation in the image of the Monogram canvas that since 1896 known unparalleled success and is one of the cornerstones of modern luxury.

Innovation and French know-how shapes the story of Louis Vuitton !

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A high penetration in Asia.

Louis Vuitton has already a good notoriety and strong image in Hong Kong, Taiwan and Japan. The penetration rate of LV bags among Japanese women in the 2000s reached 40%. The label LV was already a real social phenomenon in Asia (in France the penetration of Louis Vuitton bags is only 2%).

But Japan remains the number one customer of the brand, followed by the United States (47 stores in Japan and 96 in North America against 16 in France).
There are 3 major reasons for explaining the success of Vuitton in Japan:

  1. The monogram works very well in Japan during the strong growth of the country
  2. The Japanese consummers love the high quality products.
  3. Indeed, they generally have small flats to compensate for this and they love to wear quality items.

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A growing company and internationally oriented

Also, Louis Vuitton has opened 35 stores in China in 2010. Therefore their sales’ network covers most major cities in China.

LV is the first Global Luxury Brand

The Chinese like “Brand Leader”. Louis Vuitton is also won by the most profitable world’s number one luxury group LVMH (resulting from the alliance between Louis Vuitton and Moet-Hennessy in 1987), it contributes 60% to operational results.

Its sales reached $ 2.7 billion (est.) in 2008 with net income of $ 1,080 million (2008)

In 2008 the brand had 317 exclusive stores worldwide and 9,300 employees (3,720 in France, including 2,455 people in its 15 workshops). The financial power of this Group make the world wide  notoriety of LV.

In France there are five outlets while in China 11, in 2010.

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The flagship product: the bag

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Chinese appreciate  an item who will be never outfashion. The company wants to be always the top of the innovation, but in reality these bags and watches have not changed so much !

Unlike its competitors (Dior, Prada…) , which launch every year a new collection.

The Chinese upper class is able to bleed to afford an unique bag in their life, so no question of the change before 5 years.

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The bags still represent 95% of the business but this is expected to decline during the coming years.

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Exclusive distribution.

Controle the distribution is the Key to warranty the authenticity of your Brand product. The Chinese want to be reassured when they buy an expensive and luxury product, that’s why LV has launch his own retails every where in China. Most of them will be able to buy only ONE Louis Vuitton in their life.

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The Communication by Vuitton

Marketing is the core business of LVMH. The brand is quite discreet but present everywhere its target audience. In the Airport, clothe to the Shopping center, and on Internet (LV was the main topics of discussion in the chinese SNS Renren and Kaixin for 2010 in China)

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The brand represent the discovery, refinement, French elegance and creativity.

Louis Vuitton does not use media such as radio and television, media surely popular too. The company does not use either public display, except in places fréquetés airports by Claisse Chinese easy. Vuitton is very active in women’s magazines and in the Offline media, such as organizing and sponsoring events.

The Vuitton’s Events

Vuitton was the sensation at the Shanghai Expo in the French pavillon
Creating a digital world, visitors had admired the wonderful world of Vuitton and was the star of the pavillon.
Advertisements published in its journals always have a particular theme (urban, fables, seven deadly sins)

The brand highlights the front of the stores being built to advertise like in Huaihai Street in Shanghai

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Staring

The French marketers using Staring Strategy, and do not hesitate to ask famous personalities to represent the company.
The LV parades are a way to make themselves known. The target is not only the public who watch the parade (a few hundred people) but people who hear about it in the press and other media.

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Made in France

LV communicates everywhere is the world about the “Made in France” and their know-how in luxury, it is an argument that the core audience appreciates in China. Their main customer of Louis Vuitton stores in Paris are Chinese Tourist. France is a shopping place for Chinese tourists and every year thousands of chinese invade Louis Vuitton’shops in Pairs .

In Paris, the first attraction for Chinese tourists is Shopping and specially Luxury shop like the Vuitton Shop in Champs Elysée. They are already the best buyer of items of the brand. They like buying in France because they have the guarantee that the bag is a “real” Louis Vuitton from France.
In any shop of LV in France, you will find 2 saleswomen speaking perfect Mandarin to communicate with these customers.

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Premium positioning

Louis Vuitton is positioned at the top “Upscale” by its price and it appeals to wealthy Chinese who are interested in purchasing this bag to identify themselves to the richest people in this world.

Be part of the elite, the need for recognition is already described by Maslow, and Louis Vuitton has exploited this need in the target Asian women.

The price of a bag starts from € 1000 and is therefore reserved for an elite class. The face is very important in China, and the image one vehicle is critical in society to be respected

A Louis Vuitton bag is a perfect gift for a man to his mistress. In China, a very peculiar phenomenon is the phenomenon of “ernai” (second wife or the mistress).

Rich chinese men like to collect mistresses, and offer to these young beautiful girls expensive gifts . Luxury cars, jewelry and Louis Vuitton bags. These beauties alone create a large part of the demand of luxury in China. And to his mistresses, rich business men and government official renounce to any sacrifice to offer the top fashion item : a Louis Vuitton bag.

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The mass effect.

Why LV is so popular in China, because it is the reference, victim of the mass luxury Market, the trends in China since 5years is to have a Louis Vuitton bag. That might change but this accessory is stil fashionable in Asia and continue to be the Reference in China. It is for me the main reason for this surprising success.

The Chinese will not recognize that the LV bag is the most aesthetic, or is it better quality than competitors, but it is the best because it is LV (Louis Vuitton)

The LV Magie :  LV bag is the top of the must, everybody knows everybody says but nobody can really explain why!

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=>Vuitton has realized the Best Marketing Success In China.

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Find the French Version Louis Vuitton en Chine

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Olivier VEROT

Marketing China

Written by Olivier

Olivier, Passionnated about Marketing and Chine. Already 30 years old and 6 years spending in China. I share my analysis about China, for almost 4 years via my french Blog marketing-chine.com.

3 Comments

  1. LV Bag or Bear’s Paw? | marketing to China · November 1, 2012

    [...] it is also difficult to people from another country that will spend several months’ salaries on a Louis Vuitton bag. Besides astonishing foreigners, eating bear’s paw and purchasing LV bag have another thing [...]

  2. Chinese Concerns “Gap of Wealth” Most, Poll Shows | marketing to China · November 12, 2012

    [...] A poll this month by “Xin Jing News” shows that the widening gap of wealth has become the number one concern for Chinese people. According to the development strategy made by Chinese government 30 years ago, some people are encouraged to get rich (or wealthy) first and then other people could benefit from them and get rich later. However, the first step in the strategy seems to work very well while the second step seems to be difficult to accomplish now. However, those getting rich first are not so welcomed by the others. The discontent among relatively poor increases greatly these years, especially after those people show their luxuries off. [...]

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