Louis Vuitton in Japan

1. What are the key success factors of LV in Japan?

Since Louis Vuitton entered the Japan market in 1968, it became the most popular luxury brand in Japan by having 28 percent share in Japan’s market. The key success of LV in Japan is mainly contributed by the appropriate balance in keeping the brand globalized while localized at certain areas for the Japanese. To achieve this outcome, the consistency in product quality, fashion appeal and brand image were carefully controlled and ultimately the Japanese developed an obsession towards LV.

Being a world-class luxury brand having a long history, LV does not need to localize its brand image in order to be successful in Japan. What the Japanese consumers seek from LV is a European luxurious image and lifestyle which can enhance their status. Thus, LV uses the foreign consumer culture positioning as a European (or French) brand to market its products in Japan. In order to maintain its image, product quality is a basic requirement for consumers to recognize the brand’s value.

Therefore LV maintains high quality products and most of them were manufactured in France. In additional, the image of the brand is maintained by keeping up with the trends while enduring prestige of the brand’s culture. For advertising, as they understand the Japanese consumers, LV did not hire Japanese celebrities to be the spokesperson. They still use the international superstars like Jennifer Lopez and Madonna, top models like Naomi Campbell and Kate Moss to be the spokesperson in their advertisement. All these controls have emphasized LV’s consistent high-end image for the Japanese consumers.

Although LV remains globalization in Japanese market, it still has some areas that is localized and suit the Japanese culture. For instant, LV’s classic Monogram Canvas pattern was inspired by Japanese floral print and the collaboration with Japanese artist Takashi Murakami in designing the bag have let the patriotic Japanese to recognized LV as they appreciate their own culture and support their own country in a large extent. Therefore, Japanese consumers are more willing to accept the brand and have a positive attitude towards LV.

2. What accounts for the two tiered economy? Why are Japanese consumers (especially women) purchasing luxury goods during economically instable times?

The two tiered economy is a global phenomenon which is similar to the idea of M-shaped society in Japan. It refers to the polarization of the economy in two tiers. The two tiered economy was shown in this case by the increasing number of demand for the luxury product while the income of the Japanese was decreasing and the unemployment rate is increasing. Globalization is the main factor contributed to the two tiered economy as it stimulate the strength and speed of competition in different industries and also the shifting of wealth.

There are several reasons for Japanese consumers to purchase luxury goods during economic downturn. The first reason is that some of the young Japanese women who are living with their parents were given money to spend. They are not directly affected by the economic conditions and therefore they are still affordable for the luxury goods. Also, some of the Japanese women may have no faith in the future and believe that they should concentrate on fulfilling their current need only. Some Japanese consumers even purchase luxury goods to maintain their identity and status in groups and social contact. If everyone in a particular group owned a LV good and you belong to that group, typical Japanese will definitely own one LV bag also.

3. What stimulates such a high demand for LV in Japan? What puts Louis Vuitton over its competitors in Japan?

LV was demanded by a large amount of Japanese because it understands their consumers more. Japanese shoppers have a quest for perfection with their culture. LV providing high quality products which made it distinctive when comparing to its competitors thus fulfill the need of the Japanese consumers. In order to make sure the quality of the products, each product produced by LV must pass a rigorous control. They also have a perfect balance between mechanization and handmade. For the product design, not only the designer is responsible for this category. When the marketing team found that consumers have high demand for a certain product, they modified an existing bag and sent it to production later on. It is clear that LV response to their consumers more and quicker.

4. Was there any strategy undertaken by LV to enter the Japanese market?

When entering the Japanese market initially, LV is hoping to tackle the problem of counterfeit goods in Asia region. Therefore LV has not changed its image or localized itself in different aspects so as to attract the Japanese consumers. However, it is also a kind of strategy that is appropriate for the Japanese consumers. As the Japanese consumers thirst for a high-end European brand which is the image of what a luxury brand should be liked, LV entered the Japanese market successfully. Some examples included the globalization of the advertisements used and also the price in Japan was even higher than the one in Paris. In addition, LV stores are designed with sleek and modern interior design and become a landmark in Japan. Consumers will then feel more luxurious when shopping in the stores.

5. What are the challenges facing LV? And how should LV address them?

The main challenge of LV is the problem of counterfeit goods, loss of lead designers and the balance between expansion and protection in its own brand’s exclusive features. Indeed, counterfeit good is already a global problem for all the luxury brands. In order to tackle this problem, LV should restrict the information outflow of the production of its products. For instant, LV already closed down a huge factory in Guangzhou. Also, LV should be aware of the after sale service for the consumers, especially the Japanese consumers. When the consumers realized the quality and also services worth the high price, they will be encouraged to buy the real products rather than the counterfeit one.

For the problem of loss of lead designers, LV should train some young and talented designers (e.g. graduates from Central Saint Martins College of Art and Design where a lot of famous fashion designer graduated) to let them work for the brand and develop a deeper understanding in the brand. For the problem of balancing its expansion while keeping the brand’s own personality, LV is already doing a good job as it controls its own distribution network. Even when the economy is in its downturn, LV insisted not to mark down its product. All these have helped LV to protect its own image.