This Is Nothing – Lvmh
LVMH use premium-price and market skimming pricing strategy. Strategies are often part of deliberate attempt to reach a market segment that is willing to pay a premium price for a particular brand or for a specialized or unique product. LVMH acquired companies that have popular brand names and consumers are willing to pay more for its products. For example, Sephora is a Europe’s second largest chain of perfume and cosmetics stores.
Risks of Louis Vuitton’s first-ever- television ads are:
It is new in the luxury goods sectors, it does not have any company does that before.
Television ads are expensive, it is a big decision for a LVMH with a limited budgets.
TV’s status as mass-marketing medium can undercut a luxury brands aura of exclusivity.
In March 2008, $8000 equal to € 5333 ($8000/1.5). In November, tweed suit is $7200($8000, 10% off). Convert it to euro; it will be €5760 ($7200/1.25). Revenues of tweed suit sell in US are increased €427, even the price in dollars are 10% off. It is because dollars appreciate against euro from € 1=$1.5 to €1=$ 1.25.
LV products demand curve are same as normal products demand curve. Consumers demand more products when the price is higher.
Coach use different method to lower the price. For example, they develop a new line “youthful energy” to cut the production cost and keep sells price low. In contrast, LVMH raised their price on anytime even though the country is on recession.
Both companies used right strategies for themselves. Coach’s world brand awareness is a lot less than LVMH, therefore, Coach’s demand curves is not as much as LVMH. It is good for them to lower the price and create a new line to gain brand awareness and market share. On the other hand, LVMH had world