LVMH - Building Star Brands

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Case Details:

Case Code : MKTA016
Case Length : 15 Pages
Period : 1987-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Moet Hennessy Louis Vuitton (LVMH)
Industry : Luxury Goods
Countries : Global

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Business Model

Brand building in the luxury business was challenging. Effectively, customer desire had to be created for things that were not really needed.

LVMH's business model attempted to define sharply the brand identity or DNA by mining the brand's history and finding the right designer to express it. LVMH tightly controlled quality and distribution and attempted to create brand excitement among customers. Despite having made some mistakes along the way, Arnault had been highly successful in managing creativity to generate profit and growth...

Brand Management

LVMH owned several famous brands, covering various product categories - wines and spirits (Dom Pérignon, Moët & Chandon, Veuve Clicquot, and Hennessy), perfumes (Christian Dior, Guerlain and Givenchy), cosmetics (Bliss, Fresh and BeneFit), fashion and leather goods (Christian Lacroix, Donna Karan, Givenchy, Kenzo, and Louis Vuitton), watches and jewellery (TAG Heuer, Ebel, Chaumet and Fred). LVMH's retail division included Sephora cosmetics stores, Le Bon Marché Paris department stores and DFS duty-free shops (where it held a 61% stake)...

Louis Vuitton
In 2004, Vuitton was the most profitable luxury brand in the world. Relentless focus on quality (the robot made sure Vuitton rarely had to make good on its lifetime repair guarantee), rigidly controlled distribution network (no Vuitton bag was ever marked down), the efficiency of a finely tuned machine (fueled by ever-increasing productivity in design and manufacturing) and the ability to step up advertising and global expansion without denting the bottom line had contributed to the brand's success. With annual sales of $3.8 billion, it was about twice the size of its nearest competitors Prada and Gucci Group's Gucci division...

In 2000, Celine's sales were falling, and losses stood at $16 million. So Arnault named Jean-Marc Loubier, the No. 2 at Louis Vuitton, to head Celine. Loubier studied the brand's past, as Jacobs had done at Vuitton...

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