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What is your chosen brand’s category membership? Analyze its competition and list all its competitors. What are the points of parity your brand shares with its competition? What are the brands points of disparity


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October 18, 2007

  1. What is your chosen brand’s category membership? Analyze its competition and list all its competitors. What are the points of parity your brand shares with its competition? What are the brands points of disparity? Using the Ansoff’s Product Market growth matrix discussed in class, please suggest a strategy for your chosen brand for each of the quadrants. Elaborate.

The Louis Vuitton brand decreed its dominance in the luxury apparel category through years of precisely constructing and maintaining its brand equity as a fashion leader. The brands global dominance as a fashion innovator is recognized by its LV monogram branding, that communicates its prestige and elegance today even more than it did when created in 1896i. Louis Vuitton’s equity is the most valuable amongst luxury apparel brands. To maintain that stance, the brand must take aggressive marketing measures to compete with other recognizable brands. Using varied strategies from the Ansoff’s product matrix will aid the brand in sustaining its market share in this highly competitive market.

Louis Vuitton’s brand category is luxury apparel and accessories. They have a ready-to-wear line for men and women, shoes, watches, jewelry, and sunglasses. They are famous for their lavish handbags. Many people may not know this, but they also carry a line of world travel books and notebooks, along with pens. Personalization of their products is also a service they provide, through hot stamping and paintingii.

According to corporateaffiliations.com Louis Vuitton’s top competitors are Walmart, Sears, K-mart, the swatch group, and JC Pennyiii. Although these brands and retailers offer similar products, I disagree that these companies cater to the same target market and hold the same amount of prestige as the Louis Vuitton brand. Those retailers accommodate to consumers in the lower to upper-middle class income levels, where LV appeals to those in the upper-middle to upper class. Louis Vuitton’ s brand equity is more prestigious than the retailers mentioned. Dior, Marc Jacobs, and Fendi are luxury brands that LV’s competing for market share with, however are owned by Louis Vuitton Moet Hennessy. Dolce and Gabbana, Gucci, and Chanel are other rival brands that are owned by separate rival companies, which comparatively have esteemed brand equity. These competitive brands declare their dominance with emergent sales and popularity amongst global consumers. Sales figures report that in 2004 Chanel had $224,100, 000 in revenue, Marc Jacobs had on the high end $9.9 million, and Gucci demonstrated it’s prominence in the luxury goods industry with a staggering $3,134,881,724 in sales. Gucci is having overwhelming success in the fashion industry when it comes to sales and globalizing the Gucci brand, it had a twenty percent increase in sales in the first half of 2006iv. Gucci is finding success in emerging markets like China, where it saw a 65 percent increase in sales for that market, concurrently opening over 15 stores in only two yearsv.

The Louis Vuitton brand is in some ways competing with itself. Louis Vuitton counterfeit products accounted for 18% of the imitation goods seized by the European Union in 2004vi. LV has counterfeit products that are available in mass quantity and available to most consumers in many metropolitan cities across the world. Canal Street, for example, is infamous for being the location to find counterfeit handbags in New York City, many of which are LV counterfeits. Fake goods are pilfering sales and revenue from the brand. Counterfeit LV merchandise has the same brand elements that authentic LV products possess such as the LV monogram and the checkerboard print. Therefore imitation LV merchandise is also taking away from the equity and exclusiveness of the brand.

Comparatively, Louis Vuitton and its rivals share some of the same brand attributes. All resonate as fashion luxury brands, are apparel oriented, present customers’ a similar brand associations that symbolize wealth, social status, elegance, and a modish edge. Although the brand’s parity is recognizable, Louis Vuitton’s supremacy is due to LV’s highly recognizable branding; the LV symbol is branded on many of their famous handbags. A point of disparity is found in LV’s personalizing marketing. This is their hot stamping and painting. These processes entail authentic Louis Vuitton painters personalizing a customer’s purchase with a monogram of one’s initials or a specific painting. Their disparity is also found in their brand equity; Louis Vuitton is ranked highest amongst these competitors; ranked number 18 in brand value with a four percent increase in equity value from 2004 to 2005vii.

Ansoff’s product matrix is a fundamental marketing tool that sets the direction a marketing team plans to take existing and non-existing products into current and new marketsviii. The first quadrant of the matrix is market penetration. Earlier I mentioned that Louis Vuitton is fighting a widespread counterfeit market that is damaging the exclusivity and equity of the brand. To strengthen the exclusives of the brand and increase sales they could increase advertisements that focus on their hot stamping and painting services. Consumer awareness of this service is very low, and could serve as vital tool to continuing LV’s success. Advertising through vehicles such as Vogue magazine, depicting attractive models with personalized handbags could be their approach to informing the target market about these services. This would make the upper class target market that LV caters to less apprehensive towards spending money on LV products because the authenticity of their status symbol product would be known through personalization.

The Market Development quadrant involves taking an existing product and entering a new target market. LV should take their new sunglass line, which they created at the end of 2005 to a new target market. Sunglasses are emerging as a trendy status symbol. This market is saturated with designer brands like Dolce and Gabbana, Dior, and Fendi. Although these brands are marketed towards men and women, eyewear is increasingly popular amongst women. Taking a flank attack on its competitors and positioning its eyewear as the luxury eyewear for men would be profitable.

The product development quadrant is a strategy that involves creating a new product for a companies existing target market. LVMH owns the Dior brand, which in 2005 had an increase in market share in the fragrance business, their fragrance brands all together had a 15 percent increase in profits in the year 2005ix. I feel LV could capitalize on this market and introduce a fragrance line that would cater to the men and women who buy their existing luxury apparel and accessories.

Diversification is to develop and market a new product to an entirely new target market. A related diversification approach with the company would be to develop a children’s line. The company has already developed shoes for children. Louis Vuitton could profit from an entire children’s apparel line. In 2005 the census bureau determined that 19.01% of all household income exceeded $100,000, which is approximately 113,146,000 peoplex. In the United States roughly one in four households are made up of married couples with children. This demographic is more likely to be in the top 20 percent of income earners in America, college educated and affluentxi. The amount of households that can afford Louis Vuitton products and the majority of those households containing children make for market variables Louis Vuitton could use to gain market share in the children’s apparel industry. A flank attack strategy to launching this new line would be best way to distribute this product. Many popular children’s brands such as Diesel, Juicy Couture, and Christian Lacroix do not have the same luxury positioning that Louis Vuitton offers with its adult lines. This is why flanking their competitors with a high-end luxury brand that has the same equity as their adult line would be successful.

Louis Vuitton has maintained its prestige and equity even through years of varied market conditions, competitors, and counterfeiters. The brand must evolve their product offering, while maintaining its historical credibility. Using Ansoff’s matrix to appeal to its current and possible consumers will aid Louis Vuitton in keeping its prominence in the luxury apparel business.


i Louisvuitton.com, “Heritage: Timeline,” http://louisvuitton.com/web/flash/index.jsp;jsessionid=3XU33CBZMPQDUCRBXUFFAGIKEG4RAUPU?buy=1&langue=en_US

ii Louisvuitton.com, “Services: Special Orders,” http://louisvuitton.com/web/flash/index.jsp;jsessionid=3XU33CBZMPQDUCRBXUFFAGIKEG4RAUPU?buy=1&langue=en_US

iii Corporateaffiliations.com, “Full Profile: Louis Vuitton Moet Hennessy,” http://libproxy.uncg.edu:2354/Executable/cn_ss_fullcitation.asp

iv Davis, Mari, “Gucci Remains Italy’s Top Fashion Brand,” Fashion Windows, http://www.fashionwindows.com/fashion_designers/gucci/F061.asp

v Pasek, Andrew, “Gucci Sales,” Forbes.com, http://www.forbes.com/markets/feeds/afx/2007/09/16/afx4122333.html

vi Carvajal, Doreen, “European Trademarks vs. Google,” International Herald Tribune, http://www.iht.com/articles/2006/06/25/business/google.php

vii Businessweek.com, “Top 100 Global Brands Scoreboard,” Businessweek, http://bwnt.businessweek. com/brand/2005/index.asp

viii Tutor2u.net, “Ansoff's Product/Market Matrix,” tutor2u.net, http://tutor2u.net/business/strategy/ansoff_matrix.htm

ix Lvmh.com, “Key Figures: Fragrances,” Lvmh.com, http://www.lvmh.com/comfi/pg_repere.asp?rub=8&srub=5

x DeNavas-Walt, Carmen, et al, “Income, Poverty, and Health Insurance Coverage: 2006,” Census Bureau, http://www.census.gov/prod/2007pubs/p60-233.pdf

xi Harden, blaine, “Numbers Drop for the Married With Children,” Washington Post, http://www.washingtonpost.com/wp-dyn/content/article/2007/03/03/AR2007030300841.html

Bibliography


Businessweek.com. “Top 100 Global Brands Scoreboard.” Businessweek. http://bwnt.businessweek. com/brand/2005/index.asp (accessed October 15, 2007).
Carvajal, Doreen. “European Trademarks vs. Google.” International Herald Tribune. http://www.iht.com/articles/2006/06/25/business/google.php (accessed December 7, 2007).
Corporateaffiliations.com. “Full Profile: Louis Vuitton Moet Hennessy.” http://libproxy.uncg.edu:2354/Executable/cn_ss_fullcitation.asp (accessed November 27, 2007).
Davis, Mari. “Gucci Remains Italy’s Top Fashion Brand.” Fashion Windows. http://www.fashionwindows.com/fashion_designers/gucci/F061.asp (December 7, 2007).
DeNavas-Walt, Carmen, et al. “Income, Poverty, and Health Insurance Coverage: 2006.” Census Bureau. http://www.census.gov/prod/2007pubs/p60-233.pdf (accessed October 15, 2007).
Harden, Blaine. “Numbers Drop for the Married With Children.” Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2007/03/03/AR2007030300841.html (accessed October 15, 2007).
Lvmh.com. “Key Figures: Fragrances.” Lvmh.com. http://www.lvmh.com/comfi/pg_repere.asp?rub=8&srub=5 (accessed November 27, 2007).
Louisvuitton.com. “Heritage: Timeline.” http://louisvuitton.com/web/flash/index.jsp;jsessionid=3XU33CBZMPQDUCRBXUFFAGIKEG4RAUPU?buy=1&langue=en_US (accessed October 15, 2007).
Louisvuitton.com. “Services: Special Orders.” http://louisvuitton.com/web/flash/index.jsp;jsessionid=3XU33CBZMPQDUCRBXUFFAGIKEG4RAUPU?buy=1&langue=en_US (accessed October 15, 2007).
Pasek, Andrew. “Gucci Sales.” Forbes.com. http://www.forbes.com/markets/feeds/afx/2007/09/16/afx4122333.html (accessed November 27, 2007).
Tutor2u.net. “Ansoff's Product/Market Matrix.” tutor2u.net. http://tutor2u.net/business/strategy/ansoff_matrix.htm (accessed November 27, 2007).




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