final submission marketing

7/31/2019 Final Submission Marketing

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MARKETING IN A

GLOBAL AGE

MARKETING PLAN FOR LOUIS

VUITTON PERFUME

BY 4039714


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EXECUTIVE SUMMARY

This marketing plan suggests a new product development for Louis Vuitton (LV).

This product will stretch the LV brand into perfumes. The perfume line will carrytwo products, A7 and A7-untitled. After a situational analysis, it was observed

that opportunities in the macro environment such as rising wealth in emerging

economies can set a platform for the success of this product. LVs internal

capabilities its strong financial position- can capitalize on these opportunities

to stretch the LV brand upwards. However, external threats such as changing

consumer value can potentially affect the success of the product.

A7 and A7-untitled will be positioned as a high-end luxury product with acorresponding premium pricing strategy. Geographic, demographic and

behavioural variables will be considered in the market segmentation, and the

target market will consist of upper class and the super -rich.

The 7 Ps will be employed in the marketing mix. Distribution of this product will

be through directly operated stores to maintain brand image and control

exposure of the distribution channels to counterfeits. Integrated marketing

communication (IMC) strategies will utilize different media for thecommunication of the product. The major media considered are television,

outdoor, press, and electronic. The marketing budget is highlighted in Appendix

2, marketing activities will be controlled using measures like Total Quality

management (TQM) and reviewed at intervals to ensure the effectiveness of

advertising campaigns and product quality. The balance scorecard in Appendix 1

illustrates the objectives, measures, targets, and initiatives of the four

perspectives- financial, customer, internal processes and learning and growth.This brief concludes that LV is poised to launch a successful perfume line.


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TABLE OF CONTENT

1 INTRODUCTION ............................................................................................... 5

1.1 MARKET DEFINITION ......................................................................................................................... 5 1.2 ORGANISATION AND PRODUCT ..................................................................................................... 5

1.3 HISTORY ................................................................................................................................................... 5

2 SITUATIONAL ANALYSIS: .................................................................................. 6

2.1 COMPETITOR ANALYSIS .................................................................................................................... 6

2.2 PESTEL ANALYSIS ................................................................................................................................ 7

2.3 SWOT .......................................................................................................................................................... 7

3 CUSTOMER DRIVEN MARKETING STRATEGY .................................................... 9

3.1 CUSTOMER SEGMENTATION ........................................................................................................... 9

3.2 CUSTOMER TARGETING .................................................................................................................... 9

3.3 MARKET POSITIONING ................................................................................................................... 10

3.4 BRANDING ............................................................................................................................................ 10

3.5 CUSTOMER RELATIONSHIP MANAGEMENT (CRM) ........................................................... 10

3.6 COMPETITIVE ADVANTAGE .......................................................................................................... 11

3.7 OBJECTIVES .......................................................................................................................................... 11 4 DEPLOYMENT OF MARKETING TACTICS ......................................................... 11

4.1 PRODUCT ............................................................................................................................................... 11

4.1.1 PRODUCT LIFECYCLE MANAGEMENT ..................................................................................... 12

4.2 PRICING STRUCTURE ....................................................................................................................... 12

4.3 DISTRIBUTION .................................................................................................................................... 13

4.4 PEOPLE ................................................................................................................................................... 13

4.5 PROCESSES ........................................................................................................................................... 14

4.6 PHYSICAL EVIDENCE ....................................................................................................................... 14

4.7 INTEGRATED MARKETING COMMUNICATIONS .................................................................. 14

4.7.1 KEY MESSAGES .................................................................................................................................... 14

4.7.2 ADVERTISING ...................................................................................................................................... 14

4.7.3 DIRECT MARKETING ........................................................................................................................ 15

4.7.4 PERSONAL SELLING ......................................................................................................................... 15

5 IMPLEMENTATION AND CONTROL: ................................................................ 15

5.1 RESPONSIBILITIES ............................................................................................................................ 15


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6 REVIEW AND MEASUREMENT: ....................................................................... 15

6.1 BALANCED SCORECARD STRUCTURE ...................................................................................... 15

6.2 BUDGETS ............................................................................................................................................... 15

7 EVALUATION AND CONTROL ......................................................................... 16 7.1 QUALITY CONTROL ........................................................................................................................... 16

7.2 RISK ANALYSIS ................................................................................................................................... 16

7.3 EVALUATION ANALYSIS ................................................................................................................. 16

8 BIBLIOGRAPHY .............................................................................................. 18


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1 INTRODUCTION

1.1 MARKET DEFINITIONThe luxury goods industry is characterised by consumer goods positioned in the

top-end of the market. For a majority of consumers, luxury brands are usually

perceived as being exclusive, represented by high quality, stylish and

extravagant. However, a few consumers perceive luxury goods to be lasting and

expensive.

1.2 ORGANISATION AND PRODUCT

Louis Vuitton Moet and Hennessey (LVMH) currently produce more than sixty

prominent brands in five divisions of activity; BBC (2010) claims that the LVMH

group is the worlds biggest luxury goods firm. The LV-A7 perfumes are a new

perfume line developed by the LVMH group to better suit consumers with the

needs exclusivity. The products (LV-A7 and A7- untitled) are a niche -luxuryand connoisseur luxury perfumes produced with superior craftsmansh ip for a

specific group of people, and people who want private worlds where intimate

connoisseurship exists (Focus, ND). LVMH will succeed in taking the concept of

exclusive -luxury to a new level with the launch of these products. The new

products have attractive bottle designs, base notes and scents that are

successfully differentiated from existing market options.

1.3 HISTORY

The LVMH group was formed in 1987 in a merger between Moet Hennessey and

Louis Vuitton. LVMHs divisions include: wines and spirit s, fashion and leather

goods, perfumes and cosmetics, watches and jewellery and selective retailing.

LVMH supports the growth of individual brands through shared resources whilst

recognizing their individuality and innovative positioning. Since its creation thegroup has had a strong dynamic, expanding retail network to the present 3,040


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stores worldwide. LVMHs core values border on creativity, innovation, and

product excellence. With more than 80,000 employees and revenue of

23,659million- 3,195million from perfumes and cosmetics- as at yearend

2011 (LVMH, 2012a), the group is poised to launch a new line of LV perfumes.The Louis Vuitton (LV) brand has recorded a steady growth, maintaining a stellar

course yearly in the fashion and leather goods divisio n. LVs loyal customers

demand the best possible quality, exclusive products and unparalleled level of

service (LVMH, 2012a). Therefore, extending the LV brand into luxury

perfumes will complement its existing brand value and the groups efforts in its

perfumes and cosmetics division.

2 SITUATIONAL ANALYSIS:

2.1 COMPETITOR ANALYSISLVMH major direct competitors in the luxury fashion goods sector in terms of

sales revenue are PPR group, Neiman Marcus Inc., Richemont and Hermes group.

LVMH still maintains a leading position in fashion and leather goods. The PPRgroup controls brands like Gucci, Sergio Rossi, YSL, Stella McCartney and

Alexander McQueen. In 2011 the group made a total sales revenue of

12.2billion (PPR, 2012). Its most profitable brand is Gucc i. The group is

increasing its presence in the Asian markets. Another major competitor,

Richemont controls leading brands like Cartier, Ralph Laurent, Mont Blanc and

Chloe. They recorded a total sales revenue of 6.7billion in 2011 (Richemont,

2012). Its main strengths are its wide geographical coverage and vigorousperformance supporting revenues and increasing margins. However, major

weakness such as its unfunded pensions scheme may compel the group to make

cash contributions to account for the gap in pension assets and liabilities. This

can limit the groups working capital, capital expenditures and store expansions

(Datamonitor, 2012). Hermes group is popularly known for its leather goods-

saddlery. In 2010, the group made 2.4billion in sales revenue. IBtimes (2010)

reports LVMH owns over 20% equity stake in Hermes.


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image. Furthermore, LVs advertising strategy is a major strength of the brand.

With few words in high-quality print adverts and A-list celebrity endorsement,

LV effectively engages its target market.

Weaknesses:

A significant weakness for LV is a limited customer base. Owing to its pricing

structure, selective retailing and absence of sales promotion, LVs customer

group is restricted to the affluent. Another weakness could be the brand stretch

into an unrelated market wines & spirits. Although there have been market

speculations of the sale of the wines and spirits division to Diageo, LVMH

chairman denies the divestment of this portfolio (FT, 2009)

Opportunities:

A major opportunity for LV is the rising wealth in emerging economies (Bain &

Company, 2011). Also, socio-cultural changes such as attitudes and values

present opportunities for LV. For example, more women in the workforce drive

demand for luxury goods. JMRN (2007) claim that working outside the home

drives expenditure on self -consumption. Additionally, Peopl e are always

attracted to luxury. It has a certain allure to it that is hard to describe, (Thomas,

H, 2010); consequently, as income increase luxury spending will increase

correspondingly.

Threats:

A major threat could be changing consumer perceptions. Consumers increasingly

believe that they can derive more value in terms of functionality and quality from

mass-market products. JMRN (2007) claim that many consumers do not need

luxury brands to prove themselves as they acquire higher confidence levels. This

can trigger poor demand and sales of luxury products. Climate regulation laws

such as the Kyoto protocol can also be a source of threat to LV


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3 CUSTOMER DRIVEN MARKETING STRATEGY

3.1 CUSTOMER SEGMENTATION

LV will base segmentation strategies on geography; the main geographic areas

will be Europe, US, and Asia. Advertising, sales and promotional efforts will be

localised to individual regions without compromising on the product quality or

offerings. Additionally, consumers will be segmented according to demographics.

Socio-economic variables such as income and class will be considered in addition

to gender segmentation. Consequently, perfume range will carry women andmen lines. The female lines will have milder constituents designed with the

womans che mistry, packaging and advertisements will also be tailored to

strengthen the female image. Mens lines will be slightly more concentrated and

designed to appeal to the male senses. Segmentation will also address

convenience hence 30ml, 50ml and 75ml bottles will be introduced and the A7-

untitled will come in only a 100ml bottle. LV will also segment market according

to occasions and gifts sets will be launched prior to special occasions such as,Christmas, Valentines day and Mothers day.

3.2 CUSTOMER TARGETINGLV will use a niche marketing strategy to launch its perfume as a premium

product. A7 lines will be targeted at the affluent-the upper middle class.

However, a high- end limited edition product (A7 untitled) - targeted at the

capitalist class-will be introduced annually and available at selected fashionshows only for a premium price. Regular A7 lines will target individuals with a

net annual worth of between $500,000 - $1,000,00 while the limited edition

product will target individuals with a net annul worth of over $1,000,000. This

will include major CEOs, A-list celebrities, Ivy League education common, heirs,

and top politicians.


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3.3 MARKET POSITIONING

LVs strong heritage is built on critical foundations of uncompromising quality,

superior craftsmanship and the value of LVMH. Our businesses once again

showed excellent momentum in 2011. These excellent figures are a direct

consequence of our culture of innovation and creativity, as well as our obsessive

focus on the quality of our products (Arnault, 2011). A7 will be positioned as a

luxury product with a highly perceived value and a corresponding premium

price. Availability of the product will be through highly controlled selective

retailing signalling its exclusivity.

Positioning Stateme nt: A sniff of luxury

The A7-untitled will be positioned as a pure status product, limited and

restricted to the super-rich. With an accompanying positioning statement of

LuxuryUnfair!

3.4 BRANDINGBrands and brand image can be a source of competitive advantage and can serve

to improve profit margins for organisations. LVs strong focus will be to maintain

a premium image for the A7 lines. The brand elements of the name and logo is

linked to LVMH history and heritage. The logic behind the name: is A7 would

appear as an inverted form of LV. This product line will extend the brand

upwards and add prestige to LVs current products. In addition to the product

positioning, the brand will be strengthened by the integrated marketing

communication (see below).

3.5 CUSTOMER RELATIONSHIP MANAGEMENT (CRM)As part of its strategy to manage customer relationships LV will design

magazines that decipher a luxury lifestyle and updates about products. These

magazines will be sent to customers on the database for a fee. Additionally, LV

will create an invite-only social network (LV-ELITEs) that transcends the

Internet. Customers can only join this network by invitation from LV after

purchase of A7-untitled. The network will be closely monitored and controlled


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by LVs custo mer relationship managers. Members LV-ELITEs can have the

privilege of designing a customised scent with private noses available from LV.

The customer will patent customised scents. Furthermore, exclusive parties will

be organised for LV-ELITEs. Parties will feature auctions and fund-raising forvarious charities.

3.6 COMPETITIVE ADVANTAGELV fragrances last longer than the market alternatives. LV has built a remarkable

reputation over the years and also benefits from the reputation of its parent

company-LVMH. Another advantage is its retail network. With about 3040 stores

in 60 countries, LV can boast of a huge geographical coverage. Additionally, LVbenefits from other complementary products of the brand or its conglomerate

group.as customers may sometimes prefer to buy different products of the same

brand or group.

3.7 OBJECTIVES

FINANCIAL

Achieve 15% ROACE

Increase earnings per share by 10% annually in the next 10 years

Increase sales revenue by 3 million in 2013

MARKETING

Achieve 90% brand awareness in target market

4 DEPLOYMENT OF MARKETING TACTICS

4.1 PRODUCTThis perfume is a blend of exotic and fruity fragrance with base notes of apricot,

sandalwood, amber, peach and musk. The Eau De Toillete fragrance is ideal for

all occasions. The Eau De Parfum is slightly more overwhelming therefore most


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suitable for daytime use. A7 lines provide the benefit of longer-lasting fragrance

and an association with the LV brand. The limited edition perfume arrives in a

rare L-shaped frosted glass box containing a V-shaped bottle carved from

polishes yellow gold, white gold and platinum. The bottle also features 100brilliant white diamonds inspired by Chris Aire.

4.1.1 PRODUCT LIFECYCLE MANAGEMENTOwing to consumers voracious craving for novelty and dwindling attention

span, fragrances now have a shorter lifetime than they used to. Consumers now

own many brands of perfumes and use them to suit moods, occasions and

seasons. According to MarketWatch (2006) report, "A few years ago, it used to bethat a fragrance would come out, slowly build up sales, and perhaps after three

or five years you would start seeing some attrition. Now a fragrance comes out

and often by the second year it's either off the shelves or posting double-digit

declines in sales." To mitigate this challenge LV will launch new product lines

annually in order to maintain a competitive advantage.

4.2 PRICING STRUCTUREThe pricing objective is to create exclusivity, signal extreme quality and also

serve to strengthening the brand position. Louis Vuittons pricing power has

generated reliable profit margins of around 40-45%- the highest of any luxury-

goods brand- (Economist, 2009). LV will pursue a luxury pricing strategy based

on the perceived value of the brand. Prices will be justified by the value of the

products and other aesthetics such as the packaging, personalised customer

service and generous return periods.Geographically segmented pricing strategy will be applied. A7 will be marketed

internationally; consequently, slight changes will be observed across regions.

Also, both feminine and masculine perfumes will be sold for the same price the

only difference will be observed in the volumes. The A7-untitled will be sold in

dollars across the globe and there will be no variation in price between regions.

There will be no sales promotion or discount pricing at any time so as to

preserve the brand value. As suggested by Keller (2 009) excessive pricemovements or volatility could send the wrong signal to the worth of the brand.


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The price summary can be found in the table below.

Pricing Structure for International Market

REGION 75ml 50ml 30ml 100ml

Americas $980 $950 $930 $250,000

Asia $1250 $1220 $1180 $250,000

UK 720 690 560 $250,000

Rest of Europe

950 920 890 $250,000

4.3 DISTRIBUTIONAlmost every aspect of the value-chain will be managed by LV. All material forthe production of the perfumes will be sourced centrally. The design will also be

by LVs designers, although the bottle design will be done by a design agency.

Manufacture, marketing and advertisement of products will be done In-house

and LV will spend about 10% of its sales revue on advertising annually. Product

distribution will be through 100% LVs directly operated stores (DOS).

Additional stores will be opened in Sephora, Harrods, and Bloomingdale and on

Saks Fifth Avenue. Whereas electronic media will be used to promote theproduct, actual sales will be restricted to physical stores. This strategy is

employed to increase the quality of LVs products and enhance brand image.

4.4 PEOPLEIn addition to LVMHs over 80,000 employees worldwide, LV will hire additional

800 staff that will be trained on the product benefits and effective customer

service.


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4.5 PROCESSESBesides the process undergone to bring a product to market processes that

interest customers will be properly managed. Customers will wait a maximum of one minute before getting served. They will be informed about product updates

thru LVs magazine and other promotional activities.

4.6 PHYSICAL EVIDENCEPerfumes will be displayed throughout LVs 3040 chain of stores. Each Louis

Vuitton boutique will display the product on counters and sections with different

"themes". These counters range from, men's fragrances, womens fragrances. The

store will be organised in a way that allows customers easily locate different

sections, helping to navigate through what could be very confusing.

4.7 INTEGRATED MARKETING COMMUNICATIONSHader (2008) suggests, to win over todays upscale customers, brands must

ensure a flawlessly engaging and emotional experience with every interaction.

The promotional objectives are: Increase traffic on LVs website, Reinforce

purchase decisions and Increase sales. The main media to be used are: television,

electronic, outdoor and press. The A7-untittled will be restricted to word-of-

mouth advertising.

4.7.1 KEY MESSAGESThe main messages will be the positioning statement (A sniff of luxury)

4.7.2 ADVERTISINGThe adverts will feature celebrity endorsements from Simon Cowell and

Angelina Jolie. Simon is a strong British personality and highly influential in the

entertainment industry. Television adverts will be placed on CNN.


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4.7.3 DIRECT MARKETINGLV magazines will be sent to customers on the database quarterly. Also Parties

and events will be communicated to the LV-ELITE network through direct

marketing.

4.7.4 PERSONAL SELLINGProducts will be sold by personal selling to encourage consumers establish

contact with the brand through the sales force.

5 IMPLEMENTATION AND CONTROL:

5.1 RESPONSIBILITIESOgilvy public relations will be contracted to create buzz for the product and

manage social media, blogs and other electronic media. The graphic design willbe done In-house and photography by Annie Leibovitz. Marc Jacobs- LVMH

creative director will direct all these activities.

6 REVIEW AND MEASUREMENT:

6.1 BALANCED SCORECARD STRUCTURERefer to Appendix 1 for details of BSC

6.2 BUDGETSRefer to Appendix 2 for marketing budget


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7 EVALUATION AND CONTROL

LV pride themselves on high levels of control and evaluation methods. The

company in extensive quality control has depicted these, risk analysis and

evaluation.

7.1 QUALITY CONTROL

LV will undertake an on-going quality assurance process to ensure Total Quality

Management (TQM) is met. LV will work in accordance with government and

industry regulations in order to meet international standards. Such standardswill be met through checking every product going to the market for 100%

accuracy in design, functions and brand image. Through internal audits,

management will document progress in order to continually improve quality of

all production.

7.2 RISK ANALYSIS

LV employs a 24hr security system to secure the Louis Vuitton warehouse. LV

also theft and breakage insurance with AIG insurance LTD for equipment,

vehicles and warehouse facilities. Furthermore, employee safety will be of

ultimate importance; consequently, plants will be immediately shut down should

a machine malfunction occur. Personnel Protective Equipment (PPE) will be

enforced in plants to avoid casualties. LV will keep a record of receipts of deliveries in order to ensure that purchasing is performed correctly.

7.3 EVALUATION ANALYSISLV will base evaluations primarily on meeting financial and marketing

objectives. Sales analysis will be conducted bi-annually and promotion budget

adjusted accordingly. Furthermore, key performance indicators (KPI) will be

assessed in all employees through an appraisal method in order to support a


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high standard of achievement. Promotional schedule will be reviewed quarterly

to ensure compliance with deadlines.


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marketing management [online]. 20(4):26-31. Available from: Business Source

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Accessed 20 th March 2012.

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APPENDIX 1 BALANCED SCORECARDFINANCIAL PERSPECTIVE

Objectives Maintain abalanced cashflow

Increase grouprevenue

EnhanceShareholder long-term value

Measures Cash flowstatement

Sales income Return on averagecapital employed(ROACE)

Targets Surplus cash flowstatement throughbusiness cycles

10% organicgrowth by 2014

11% ROACE by2014

Initiatives Improve cost-efficiency throughvalue chainsynergies

Effectivelyexecutecampaigns

Use technology toimprove supplychainmanagement


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CUSTOMER PERSPECTIVE

Objectives Expand market share

Customerretention

Customersatisfaction

Measures Customer focusgroups

Customer life-time value

Customersatisfactionsurveys

Targets 90% awarenesslevel among target market

90% retentionandrecommendationrates in 2013

100% customersatisfaction in2012

Initiatives Initiate referralprograms Justify price inproduct quality Use segmentationstrategies tobetter understandconsumerbehaviour


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INTERNAL PROCESSES

Objectives Manage growththroughInnovation

Achieveoperationalexcellence

Drive demand

Measures EFQM model Incident occurrence levels

Delivery rate

Targets Launch newproducts annually

90% reduction incounterfeits indistributionchannels

80% demand rateby 2013

Initiatives Increase R&Dbudget Implement qualitymanagement systems

Effectivelymonitoryinventory


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LEARNING AND GROWTH PERSPECTIVE

Objectives Develop strategiccapabilities

Build learningculture

Expandcapabilities withtechnology

Measures Competitiveadvantage

Skills set ratio

Targets Gain 20% of themarket by 2013

90% skills set ratio amongemployees

Initiatives Encourage teamsand collaborationamong employees

Develop technicalproficiency amongemployees

Deployinformationsystems in supplychainmanagement


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APPENDIX 2 MARKETING BUDGET

Marketing Budget for LV for 01.

Jan-12 Feb-12 Mar-12 Apr-12

Budget Tot 0 0 0 0

Personnel

Marketing Budget for LV for 01.

Jan-13 Feb-13 Mar-13 Apr-13

Budget Tot 48 47 40 42

Personnel

final submission marketing

Documents