Louis Vuitton in Japan
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Louis Vuitton in Japan
What has made Louis Vuittons business model successful in the Japanese luxury market?
Japan is one of the most important market and sources of revenue for Louis Vuitton. Its more than hundred years of history has successfully captivated and created a fascination with customers. It had won their admiration. It is not only about the products themselves, the extrinsic factors but the history behind, the intrinsic factors also add value to the brand and increase attractiveness.
Louis Vuitton decentralized its subsidiaries giving them more power for decision-making on the basis that local managers have more knowledge about the local markets taste and preferences thus contributing towards localization strategy. Local managers know best about Japanese culture and what work best in terms of human resource management and products. Louis Vuitton understands that Japanese culture and wants are different from western culture and mentality and thus it needs to adapt if it wants to succeed. Louis Vuitton has convinced Japanese customers
Louis Vuittons products appeal to both older and younger customers. For older consumers Louis Vuitton offers some classic, timeless and elegant products which are of very high quality and craftsmanship in addition to the advantages of having free lifetime repairs. Moreover, the company also produces and sells travel bags which increases its customer portfolio. Japanese consumers in general are quite demanding in term of quality thus making it an important aspect of the product.
For younger consumers, the brand offers some very innovative and creatively unique design thanks to its numerous collaborations with famous Japanese and other artists which helps the brand to distinguish itself from its rivals and show its appreciation for Japanese culture and tradition which play an important part in Japanese society. Louis Vuitton successfully found the right blend between tradition and innovation through its numerous collaborations thus helping the brand to become a trend-setter and remain at the fore front of the latest fashion trends. For instance, its collaboration with the Japanese artist Takashi Murakami was a huge success worldwide. Considering that the fashion industry is a very dynamic and competitive one, this aspect gives Louis Vuitton a higher competitive edge.
Louis Vuittons products are produced in-house and mostly in France because quality was a primary concern and customers expected the famous refined French know-how. Thus, Louis Vuitton could choose the best production techniques that will enhance quality throughout the whole production process from the raw materials to the finished products. Quality control standards were very high in France where many extensive tests are carried out thus providing quality assurance. Considering that reducing costs is not a main concern this is a wise move and adds considerable value to the value chain.
What are the opportunities and challenges for Louis Vuitton in Japan?
Like all businesses, Louis Vuitton has to face challenges as well as take advantage of opportunities. A few challenges and opportunities have been identified and explained next.
Challenges
Counterfeit products
As mentioned in the case, many counterfeit products are coming from various parts of the world including Hong Kong, Tokyo, Los Angeles and Seoul, with South Korea being the largest producer of high quality bags. These high quality fake bags are identical to the real ones, making it hard for consumers to identify the real ones as well as attractive for those who cannot afford the real ones. Even customers who possess some authentic ones also possess some fake ones where genuine ones are used for special events such as wedding while fake ones are used on rainy days. Even though Japan has adapted western laws, the effects are fruitless suggesting more efforts should be done not only by the government but also from brands face that this problem. Louis Vuitton did take some steps to fight the issue, but still much has to be done.
New competitors
Louis Vuitton is facing new competition from cheaper brands such as H&M, Zara and Uniqlo. These competitors were not only selling affordable products but also high quality which enabled them to compete with luxury brands. These brands offered Japanese consumers what they wanted, very fashionable and trendy clothes at competitive prices. Quality coupled with affordability is a new concept that is seducing more and more Japanese consumers, especially in times of economic crisis and change in customer preferences.
Brand dilution
The perceived mage of Louis Vuitton has diverged to some extent from its original image, that of tradition and longevity throughout the years, which can create confusion among customers about the real identity of the brand. Through the several collaborations, the brand has evolved into an innovative and creative one, creating very unique products. Furthermore, mass expansion and distribution has hurt the reputation of Louis Vuitton as being an exclusive and luxurious. Louis Vuitton has to find the right balance not to confuse customers and adopt the right brand communication strategies.
Opportunities
Internet business
This creates the opportunity for customers to buy online if they do not have enough time to visit the store in addition to enabling to check the products at anytime and anywhere, providing fast and easy access to information. Creating one website is enough for its customers around the world and can attract new customers in places where the stores are not easily accessible. However, certain factors should be taken into consideration when creating a website. Louis Vuitton will need to be able to convey the essence of the brand through its web design and should not only focus on selling products but also the user experience and compensate for the additional service that are offered in store but not online, such as personal advice and being able to try the products. Selling luxury products online is more complex than normal goods and there is the preconceived notion that cheap products are sold on the internet.
Wealthier families
Until now, a large share of Louis Vuittons customers was middle class citizens, but targeting wealthier families would be one opportunity to increase its market share. In order to establish a strategy