Company Name: Louis Vuitton.

Topic of the Week: Louis Vuitton in Japan Case Study Analysis

Synopsis of the Situation

Louis Vuitton Malletier is a French fashion firm founded by Louis Vuitton in the year 1854 (Nagasawa, 2009). It is popular for its craftwork leather bags and trunks. Japan appeared to be a potential market for Louis Vuitton to enter. Louis Vuitton (LV) opened its first store in Osaka and Tokyo in 1977. LV did not need a local distributor to enter the Japanese market. In 2002, the company experienced a reduction in sales in luxury items. The situation forced the company to adjust its products offering and strategy to local market. Louis Vuitton changed its management in 2006, and this led to the establishment of an internet business and expansion of the product range for children. In 2007, the company expanded and controlled 54 stores through direct ownership (Nagasawa, 2009). Japan implemented different approaches such as market dilution and 7% price reduction after the 2009 global economic crisis. Louis Vuitton faces stiff competitors from other firms thus making the market saturated.

Key Issues

According to the SWOT analysis report, the key issues that are critical to LV include the following. First, the customer base for Louis Vuitton is limited to high-class people. Second, Louis Vuitton charges a premium price for its products. The products are expensive for the new generation (Kapferer & Tabatoni, 2011). Similarly, with the current economic condition, the new generation finds it expensive to buy high priced products. Third, Louis Vuitton sells its products in its own exclusive stores. Other potential customers around the globe can only buy Louis Vuitton’s products by visiting their stores.

Alternative Solution

First, Louis Vuitton should decrease the prices of its products and add discount policies. The problem that Louis Vuitton is facing includes unit sales. The company charges premium prices with no discount policies. Moreover, the products are limited to high-class individuals. By reducing the price and enacting discount policies, the company will increase the number of items sold.

Second, the company should make the products available in other stores rather than its own exclusive stores. Although Louis Vuitton has more than 460 exclusive stores worldwide, most of the consumers like to visit shopping malls since they can locate a variety of items.

Third, Louis Vuitton should increase its products range. Due to the dynamic nature of fashion industry, Louis Vuitton should adopt a new fashion trend to compete with other firms.

Selected Solution to the Problem

The best solution for Louis Vuitton is to make the products available in other stores rather than its own exclusive stores. Louis Vuitton has a competitive advantage over its rival firms; therefore, the company can focus on increasing its product accessibility by making them available in other stores.

Implementation

Louis Vuitton can make its products available in the market by following the below strategy. First, Louis Vuitton can partner with online websites such as Amazon, Theleesshop, and Jabong to sell their products. Second, the company can decide to contact other fashion stores to sell their products and offer the incentives for each product sold.

Recommendation and Conclusion

My recommendation for Louis Vuitton is to lower the prices of its products so that both the middle class and lower class people can afford to buy them. Reduced prices will help the company to increase sales and widen customer base (Keller, 2009). Additionally, the company should make the products available in other stores to increase accessibility. In recent years, customer preferences in Japanese market have shifted. Also, due to the financial crisis and economy of the country, it would be appropriate for Louis Vuitton to change its market strategy.

References

Kapferer, J. N., & Tabatoni, O. (2011). Are luxury brands really a financial dream? Journal of Strategic Management Education, 7(4), 1-16.

Keller, K. L. (2009). Managing the growth tradeoff: Challenges and opportunities in luxury branding. Journal of Brand Management, 16(5-6), 290-301.

Nagasawa, S. (2009). Marketing Principles of Louis Vuitton-The Strongest Brand Strategy. Graduate School of Commerce Waseda University.

Appendix

Figure 1. SWOT Analysis based upon the topic of the week for the company case.

Strengths

1. Consumer loyalty
2. Strong presence of Louis Vuitton stores in Japanese market
3. Successful advertising strategy

Weaknesses

1. High prices
2. Limited customer base.
3. Challenges in controlling multinational business

Opportunities

1. Louis Vuitton internet business
2. Wealthier families and more purchasing power
3. Global presence

Threats

1. Change in consumer preference
2. Smaller purchase
3. Continuous counterfeits from competitors due to technological know how

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