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Establishment of LVMH in China: A case study

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  1. Environmental Analysis
    1. Internal Environment
    2. External Environment
    3. SWOT Analysis
  2. Market Analysis: The Luxury Market In China
    1. Customer and the emerging trends
    2. The why concept? (i.e. the study of new attitudes in luxury consumption)
    3. Key motivational concepts for luxury purchases
  3. Marketing Strategy: Louis Vuitton in China
    1. Marketing objectives
    2. Marketing strategy
    3. Segmentation / Targeting / Positioning
    4. Marketing mix
    5. Budget allocation / Control & Monitoring

We chose to study the different modes of entry used by the world leader in luxury, LVMH, to enter the Chinese market to the extent that the subject has many interests. Indeed, China seems to have become a key market for the luxury sector, which is now present and developed in all countries. Countries such as China are virgin markets for the luxury industry.

China has about 1.3 billion potential consumers with an urban population of 360 million souls. In addition China has experienced sustained growth of around 9% of its Gross Domestic Product, for over twenty years.

The sustained growth of around 9% of GDP has been the emergence of a middle class that has 150 million people who seem to be desirous of access to the consumption patterns of Western countries. However (according to a qualitative study conducted by Ipsos, "Luxury in China"), an estimated 1% of the total population of China, have the means of access to imported luxury goods, accounting for 14 million consumers.

The Chinese market is divided into four main areas: northern China where the economic center is the city of Beijing, eastern China represented by Shanghai (capital of fashion), and southern and central China. These regions are considered promising markets for luxury goods and bear specific characteristics.

These various attractions of the Chinese market are among the factors that played an important role in the decision of the LVMH group to enter this market. In addition, the group, which has set a mission to be the ambassador of luxury in the world, needs to win this type of emerging market to establish its status as world leader, and to exploit new sources of growth.Though the market presents attractive criteria, it is also full of constraints that we will develop throughout this research.

Therefore, we will try to show through the strategic choices made by the LVMH group, if the different modes of entry used by the group allow it to assert itself on the Chinese market, where the constraints are numerous, and generate significant competitive advantages.

In an attempt to address this problem, we will firstly identify the theoretical resources in order to generate analytical tools for establishing a strategy of internationalization. Subsequently, we will survey and collect information in order to develop a practical case, which will focus on the LVMH group and its determination to enter the Chinese market. Finally we will analyze the results obtained in the study of practical case, by comparing them with theoretical aspects of the internationalization strategy in order to identify the different contributions and limitations of this research.

LVMH group, with a portfolio of brands (over sixty brands) is the leader in the luxury industry. The group divides these activities into five different areas: Leather Goods, Wines and Spirits , Cosmetics, Watches & Jewelry and the division of selective distribution.

Keywords: wines, spirits, fashion, leather goods, perfumes, cosmetics, watches, jewelry, distribution, Bluebell, Louis Vuitton, Loewe, Carsac, Lanvin Hong Kong, local policy, Nanjing Road, China, WTO

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