At a time when mass consumption remains one of the hallmarks of Commerce, the world of luxury has adopted a strategy based on a distinct rationale, where differentiation is the key. Who does not know the biggest names in this exciting universe? Prada, Manolo, Gucci, Jimmy Choo, Chanel, or Oscar de la Renta, are all talked about from Paris to Milan and from New York to Tokyo.
The LVMH group is not left behind, with more than fifty luxury brands. Louis Vuitton, Givenchy, Guerlain, and Moet are some of a long list of acquisitions made by the company which was born in 1987. It was founded by Bernard Arnault. Today, after nearly 20 years since its creation, LVMH manages a diverse and varied portfolio, and has nearly 59,000 employees working in 1,286 stores in the group.
The 5 DAS structure of LVMH: The Wine and Spirits division; The Fashion and Leather Goods division; The Perfumes and Cosmetics division; the watches and jewelry division, and finally, the Selective Distribution division. In what environment has the group been successful? How has LVMH planned its international development? What strengths based in society does it use to overcome its weaknesses?
Having completed an internal analysis of the group, we will endeavor to specify the characteristics of its environment. We will then notify the stock and how this group of internationally renowned brands can use its strengths to seize opportunities to protect its environment, and the main threats it faces.
Marketing tends to reveal the strengths and weaknesses of LVMH's market, through the analysis of its place in the luxury market, and the study of its marketing mix.
When we refer to the LVMH group in its entirety, we may find that it operates in diverse and varied areas. LVMH is divided into 5 major groups of activities that tend to target a customer with a single slogan: Welcome to the world of luxury.
In each group of activities, a multitude of brands are represented. These will be detailed in the following Business Domain. However, in a world that appears more and more global today, it is essential to note the differences in distribution of sales between geographic areas. This scheme serves to demonstrate the company's strategy. It can support two of the four existing divisions of LVMH.
Through its every day strategy, the group seeks to:
Expand the size of Technologies: This is the product development strategy of keeping the contract on which we perform, while creating new products.
Diversify: This covers both the dimensions of Technology and Consumer Groups, which are needed to venture into new markets with new products.
The group is careful to respect the image of each brand and corporate culture. It allows each company to operate relatively independently. This is essential since each brand must be as differentiated as possible to attract consumers who choose their products based on style, reputation and aesthetics, not on price.
LVMH is a reputed group of brands with very influential designers who embody the individual image of each brand. Therefore the group tolerates one area of activity which has very low performance: that of their sewing activities, since they play a role as a showcase for other activities which are more profitable.
Tags: luxury, Prada, Manolo, Gucci, Jimmy Choo, Chanel, Perfumes and Cosmetics, Fashion and Leather Goods, international development,
[...] Bargaining power of suppliers : Suppliers do not have a high bargaining power, as LVMH uses the services of common suppliers for its various brands, thereby creating synergy effects between different brands of the group to reduce costs. In addition, its bargaining power is increased, because of the large quantities ordered. Finally, suppliers are often highly specialized and have a low-cost (high fashion, for example), due to which they are highly dependent on luxury groups. This phenomenon is even stronger as relocations are becoming more frequent requiring training of staff abroad. [...]
[...] Evolution of the LVMH group 2004/2005 Goods Cosmetics Distribution Market segmentation and target. When we refer to the LVMH group in its entirety, we may find that it operates in diverse and varied areas. LVMH is divided into 5 major groups of activities that tend to target a customer with a single slogan: Welcome to the world of luxury. In each group of activities, a multitude of brands are represented. These will be detailed in the following Business Domain. However, in a world that appears more and more global today, it is essential to note the differences in distribution of sales between geographic areas Business Domain When speaking of a Business Domain, we must mention the 3 dimensions needed, namely: the needs of consumers, different technologies (products) and different types of consumers. [...]
[...] 1.2 Funding Functional assessment: ASSETS LVMH Gucci LIABILITIES LVMH Gucci Current liabilities At June Some significant figures: In millions of Euros CAF Turnover Net income Need working capital: (Stock + debt-short term debt) December 2004: 93,598 +1364- (2529 1581) = 652millions Euro June 2005: 4191 +1118- (2400 1446) = 1463 million Euro June 2004: 3726 +1086- (3312 1315) = 185 million Euro Overall net working capital: (Fixed capital - assets) June 2005 (9368 = 1569millions 11645-19444 Euro June 2004 (8265 = to 18,585 million Euro The group is known to deploy a sufficient funds needed to cover the requirement for working capital, which helps maintain a positive cash flow. [...]
[...] In 2002, LVMH has kept on this new course with success. External growth was minimal (an acquisition), while heavy investment for the growth was undertaken (opening new stores, launch new products in existing companies) the group went even further in streamlining its portfolio, and activities deemed non-strategic assets were sold Organizational Culture The Group has a decentralized organization that promotes efficiency and responsiveness. This type of organization is highly motivating and dynamic: it can encourage individual initiative and entrust each employee with important responsibilities to each. [...]
[...] distribution which Total devotion Little-market has been greatly of the employees competition in the affected by the in the group. segment of decline in air champagnes traffic: DFS -Few groups can stores (stores claim to be as "Duty Free"). diverse as LVMH -Highly developed network. Selective Distribution-servic e brands. Finally, we note that despite many external threats, LVMH succeeds in pulling ahead of the game, thanks to its powerful internal forces and the opportunities that the group is able to capture at the [...]
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