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
[...] Employee cost/day vs. personal/department/store sales (vol&val) Promotion: Cost per people reach % Audience comprehension capacity/like mindedness /remind the audience of the message Reaction: discover/changed perception/consumption Increased % of sales Distribution: Repartition sales (vol&val): department/stores/cities Impact of logistic cost on revenue Finance Marketing costs repartition/impact/optimisation: people/promotion/distribution Profitability ratios costs&investments versus sales and value added Marginal profit analysis and optimisation Customers Number/rate of New & retention Loyalty rate Satisfaction rate D. References and Bibliography Allérès, D. ' Luxe Stratégies – Marketing ', Economica, Paris Blanckaert, N ' Les chemins du luxe ', Grasset 1996 Businessweek, 'Best Global Brand'; August 2007 Central Intelligence Agency: The World Fact Book, 2007;( accessed on, 18/11/2008) https://www.cia.gov/library/publications/the-world- factbook/geos/ch.html, Chambre de Commerce et d'Industrie de Paris : dossier Chine 2007 http://www.etudes.ccip.fr/dossiers/inde-chine/chine.html, accessed on 18/11/2008 Chen, S. [...]
[...] Ranked number it is also regarded as the leading brand of the LVMH group and the 1st world group of luxury goods produced and distributed. This brand was created in 1987. LVMH earned worldwide sales of € 16.5 billion in 2007 7.7 This achievement has ensured and conquered competition with its revenues being three times greater than its closest rival Richemont Group. The group has been split into five core activities with a rich portfolio of over 60 brands. Fashion and leather goods constitute € 5.6 billion sales which accounts for nearly of the group's turnover. [...]
[...] ▪ Originality = guarantee of quality ('made in') and authenticity (‘designed by') The emerging, dynamic, and fast moving luxury market in China is challenging in terms of cultural, demographic and geographic dimensions for the Louis Vuitton's Marketing strategy. C. Marketing Strategy Louis Vuitton has been one of the first movers among luxury brands by making its emphatic entry into the market in 1982. It established its first exclusive concept store in Hong Kong and then trailed on towards the continental side in Beijing's Peninsula Hotel in 1992. Hong Kong which was then under the British governance (until 1997) has been described by Carcelle, LV CEO, as a 'fashionita city' of high strategic importance. [...]
[...] This serves as the main factor of the purchasing decision of such luxury goods. ▪ Innovation and communication: Innovation and communication is essential to support the premium strategy and to increase the customer panel by taking advantage of globalization and the democratization of the luxury market. Resource-based analysis Resources Main Characteristics Tangible Financial - High sales revenue worldwide and a well-balanced and a developed situation versus emerging markets. (€ 5.6 billion) High growth rates 7.7 Financial resources and the capacity to support growth and investments (€ 246 million in 2007). [...]
[...] However, a global one is to be declined which is dependent on four criteria which are as under:. The big picture: 1 traditional + 3 emerging target: ➢ Traditional Business elite: ▪ Male participants over 35 years old ▪ Senior position and strong/broad/deep networks ▪ Experimented to luxury consumption which is not conspicuous, but more sophisticated ➢ New luxury business shoppers: ▪ Newly rich upper middle class ▪ In the age group of 20 to 40 years ▪ Disproportionate expenses ▪ Educated class ▪ Optimistic individuals ➢ Empowered women ▪ Growing social and economic independence (through education and exposure) ▪ In the age group of 20 to 40 years ▪ Self-oriented, academically skilled and career minded ▪ Increasing purchasing power, and a growing aspiration for luxury items ▪ Fashion and trendy lifestyles ➢ ‘Little emperors' ▪ Falling in the age group of 20 to 35 years i.e. [...]
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