Luxury Goods Market in China
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Table of Contents
Product
Price
Place
Promotion
Introduction
Luxury goods are products and services that are not considered essential and are associated with affluence.The concept of luxury has been present in various forms since the beginning of civilization. Its role was just as important in ancient western and eastern empires as it is in modern societies.on of luxury was limited to the elite classes.
This paper will discuss the development of luxury goods market in China and analyse the development and its future opportunities of Louis Vuitton, one of the worlds most successful luxury companies, in China. Because LV is one of the most popular luxury brands in China and it can also represent the current situation of luxury goods market in China.
History of Louis Vuitton
Louis Vuitton (LV) is the worlds leading luxury brand. It is ranked number 1. It is also regarded as the leading brand of the LVMH group and the 1st world group of luxurious goods which were produced and distributed. This brand was created in 1987.
LVMH earned worldwide sales of €16.5 billion in 2011 (+7.7%). This achievement has ensured and conquered competition with its revenues being three times greater than its follower Richemont Group. The group has been split into five core activities with a rich portfolio of over 60 brands. Fashion and leather goods constitute €5.6 billion sales which accounts for nearly 34 % of the groups turnover. It is also this sector that stimulates the groups growth engine. LV dominates the luxury segment by reaching a target of €1.659 billion turnover in 2006. Further, LV owns 405 stores.
Its mission focuses on aiming at being the ambassador of the occidental art of life, to be the symbol of elegance and creativity by realising its selling dreams crossing tradition and modernity. Hence, it frames its core values with concepts such as creativity and innovation, state-of-the art product quality, and an invaluable brand trademark appeal. The high dynamism of the global group is driven by the exceptional appeal of the LV branding, its efficiency in strategic development, and a long standing presence worldwide. Credit goes to factors such as the strong organic growth, innovative and creative product development, the influential and impact driven communication means and messages on luxury voyage and thematic ideas, the French prestigious lifestyles, the authentic know how and the well managed distribution network. All these factors have fuelled LVs dynamism.
The company founded in the late 19th century, manufactures luxury leather products throughout the world. The products that are sold have the very popular LV logo on the actual leather and makes it as popular as any brand name in the world. The company only markets its products through its own stores throughout the world, this helps control pricing, quality and profitability, it also helps eliminate copies or fakes to be sold in smaller boutiques. The company only has one retailer that it sells it products through, Neiman Marcus.The founder began by selling signature trunks in Paris, since then the brand is considered the symbol for status around the world, no matter if you are in Paris, Hong Kong or New York, it is the must have for the chic. The signature brown leather logo style is considered to the first designer label brand in modern history. In 1896 this design was credited by the son of Vuitton, Georges and original was used to avoid counterfeiting. As it turns out the Louis Vuitton brand is the most counterfeited brand in history.The LV company uses great marketing skill by using high profile models and actors to use in their campaigns. The Louis Vuitton company uses print ads in high fashion magazines, along with billboards in prominent cities.The bag usually called, “the it bag” has been seen on many celebrities from A-Listers to wannabes. The high gloss magazines you buy in your favorite store will have all of these people toting the most desirable of them all. The wealthy along with the celebrities have made this brand one of the most popular in all the world along side such brands as Hermes, Gucci, Prada and Fendi.
LV is at the high end of the leather and fashion goods market. However, it does not qualify for being at the top of the luxury market. Its leading position of being the first luxury global brand is also due to its not so high exclusivity and scarcity of its products. It has a well balanced marketing mix which is to be recognised as a luxury brand with the quality, its style, and its unique prestige accompanying it. It should be noted in this regard that it has not been over elitist in nature. This is mainly due to the fact that it needs to remain accessible to a broader panel of customers. This positioning as an intermediary luxury”[] item, enables or fuels increased sales and sustains brand awareness,. Thereby, LV attains the position of becoming the leader of luxury leather and fashion accessories in the industry.
Market trends
The three dominant trends in the global luxury goods market are globalization, consolidation, and diversification. Globalization is a result of the increased availability of these goods, additional luxury brands, and an increase in tourism. Consolidation involves the growth of big