Louis Vuitton Swot Analysis

S.W.O.T. ANALYSIS

Strengths Weakness

- Brand Identity through monogram LV on its products

- One of the world's leading international fashion houses

- Long history and patrimony, over a 150 years

- Named world's most valuable luxury brand for over 7 consecutive years

- Launched an online store, through its main website, as an authorized channel to market its products

- Manufacture still the same over the years, luggage is still made by hand

- The campaign cultivates celebrity following and has used famous models, musicians, and actors to market.

- Consumers are limited to the elite, the ones who can afford to buy it products

- Sales depend on economy. If economy goes through a recession, the sales of luxury items are likely to drop.

- Celebrities brand endorsement

- Development of new products

- Expansion of the brand in other countries

- Current Global Economy - financial crisis

- Luxury competitor brands: Channel, Dior, Prada, Gucci

- Counterfeit due the fact the brand inspires a status image among people all around the world.

- Constant change in market trends

Opportunities Threats

Louis Vuitton is positioned today as a leader in the luxury fashion industry. The Louis Vuitton brand and its LV monogram are placed today as the world's most valuable brand, established around 150 years, which has become a strength for the brand that continues to build market trends around the world. On the other hand, the fact it is a luxury brand limits its customer base to the elite class and those with high incomes that are able to purchase a brand product.

Furthermore, as it has been doing along the years, Louis Vuitton took the opportunity to advertise through celebrities' endorsements, which are great influencers to the consumers. Among the threats the brand faces is the constant change in market trend, which means there is a constant need for innovation. Also the large percentage of counterfeit around the brand, generated by the need of many consumers in purchase the product by a lower price and the need to generate more capital for the parallel market.

State of the economy

For several years, luxury brands faced a bad economy, with North Americans and Europeans not been able to afford such items. Today, the number of middle class purchasing a luxury brand is increasing with growth of sales especially in overseas market such as China.

One of the factors contributing to the growth of luxury brand products consumption is the increased urbanization in both developed and developing markets where consumer's preference is related to create a unique personal style mixing luxury products with more affordable ones.

Another factor that contributed to the industry growth is the increase of international travel, and according to Goldman Sachs, an American multinational investment banking firm, travelers purchases about half of all luxury goods sold in Europe.

Most of luxury brands emerged in countries among Europe and North America, but also several brands originated in other countries such as Brazil and Russia. Meanwhile these brands are facing a big challenge to reach a balance between exclusivity and accessibility to a broad audience.

According to a study by Millward Brown Optimor's 2012 BrandZ, "luxury is seen as a good investment with people increasingly buying classic pieces rather than high fashion". Accordingly to its manager director, Nick Cooper, the key factors for luxury brand success are the brand heritage, craftsmanship quality, and the company's history.

On average, the consumer's attitude towards luxury brands didn't change in 2011 when compared to the previous year, with variations occurring in each country. In the BRIC countries (excluding Brazil) there was an increase on consumers mind that thought luxury brand as an important item. On the other hand, countries such as US and others among Europe reflected the financial concerns that were coming from the recession.

In general, according to BrandZ data, luxury brand's value increased in the past year, but luxury consumption became more thoughtful and less conspicuous. Also the luxury market is expected to grow 65% by 2015.

Figure 1 - Percentage of importance in the consumption of luxury goods

2011 Survey

Competitors Analysis

Among Louis Vuitton, there are several luxury brands that compete for costumer's attention in the marketplace. Some of these brands are: Gucci, Hermes, Burberry and Prada. According to the new Global 500 study by Brand Finance, despite a troubled economy, luxury brands are not only thriving but also becoming the most wanted brands around the world, offering to consumer unequal quality in their products. Still according with the study and James Baker, head of communications in the company, "Consumers turn to these alpha brands because they are keen to cast aside their worries about the economic downturn and allow themselves an indulgence in a brand which they know, trust and admire." During hard times, people turn themselves into luxury brands to show and keep up with their peers they are still able to afford luxury goods.

Louis Vuitton is today the world's most valuable luxury brand for the seventh consecutive year; with a brand value estimated around 25.9 billion. The brand has been marketing online through an in-store experience among others. For example, Louis Vuitton designed a store in Singapore suggesting a cruise