PRODUCT & MARKET EXPANSION:
Analysis and Integrated Marketing Communication
Plan
Presented by:
Alex Zadig, Kelsey Kurtz,
Jackie Gatewood, Nicoliina Potter
Louis Vuitton
Analysis & IMC Plan
1
LOUIS VUITTON
Established in 1854 in a small Parisian workshop by Louis Vuitton, himself, the
company was initially established on pristine craftsmanship and quality leather
trunks. After Vuitton’s passing, son George Vuitton took ownership and later
expanded the company globally, maintaining the company’s emphasis on quality
and luxury.
Since its establishment, Louis Vuitton has continued to develop and refine its
reputation for quality based on the “four main elements of the company’s business
model—product, distribution, communication and price,” explains an executive at
Louis Vuitton. The company currently serves 12 different countries, capturing 60
percent market share in luxury goods. With a brand valued at $19 billion and
annual revenue of $3.5 billion dollars, Louis Vuitton is positioned among the most
powerful and valuable brands in the world.
SWOT ANALYSIS
STRENGTHS



Brand name and brand recognition
Strong overall market share within
the luxury segment, with 60%
Products are viewed as an
exclusive status symbol
OPPORTUNITIES



Move focus from Japanese market
(over 50% of all sales) and develop
market share elsewhere
Capitalize on sales to “brand
aspirants” with slightly less
expensive products
New product line in Cosmetics
WEAKNESSES


Low/ limited production
capabilities; handmade goods
Most of budget spent pursuing
counterfeit cases; most
counterfeited brand in the world
THREATS


Brand reputation must be
protected at all costs as
expansion occurs
Any new products must be
positioned carefully as not to
hamper the brand’s position as a
leader in luxury
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Analysis & IMC Plan
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EXTERNAL TRENDS: LUXURY GOODS INDUSTRY
As a result of the 2008 Recession, the past four years have been a gradual recovery
for most major luxury fashion brands. The following outlines key trends in the
luxury industry that have aided Louis Vuitton and others navigate the industry
reemergence in 2012.
Luxury and Technology
The intersection of luxury and technology is more pervasive and apparent than
ever within the luxury market. Today’s technology speaks to several pillars of
luxury: badge of importance, immersive experience and exclusivity. Global markets
are likely to represent at least 80 percent of the luxury industry’s growth by 2015,
(Capece, 2010). Attributing to massive growth in distribution and online sales for
multi-channel luxury retail brands. Luxury companies need to manage complexity
to a greater degree by using the Internet more resourcefully. Louis Vuitton will
need to be savvier in responding to social concerns, leveraging the uniqueness of
their brand and selling a sense of tradition and belonging.
The luxury industry is recognizing mobile applications as a channel to connect with
customers and build relationships. Louis Vuitton has done so by creating a number
of applications as well as a highly popular iAd called Amble, which acts as a tour
guide to all of the major cities and provides an immersive experience for users,
(Lamb, 2011).
Implied Value of Quality & Timelessness
Another trend is recession-proof luxury that focuses on timelessness and enduring
quality. Generation Y is most concerned with exceptional quality and regards
luxury purchases as an investment. Many high net-worth individuals are savvy
shoppers and are wary of spending superfluously, however, are interested in
investing in luxury. As luxury purchases become more deliberate, consumers
expect and desire an exceptional product. Luxury brands need to increase their
product longevity, both in quality and trends, to position the product as a long-term
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investment. Furthermore, there is a rising trend in luxury that stretches beyond
superficial, status symbols, and speaks to rejuvenation, personal energy, and
sustainability, (Capece, 2010).
Increased Brand Loyalty
Starting in 2012, luxury brands are implementing a more comprehensive
understanding of consumers by gathering more information from their target
market and developing more comprehensive brand strategies. These companies
will begin to codify their brand history and heritage, along with their mission and
values, in order to establish a compelling, actionable, credible and measureable
brand positioning. The luxury industry will see many brands establishing
personalized, customer-centric cultures in 2012, (Ransom, 2011). The increase in
brand loyalty also calls for a greater awareness of competitor pricing and
promotional activities.
COMPETITOR BRANDS
COMPANY
Gucci
TARGET MARKET
 Affluent women 20-30
 Actual or aspiring jetsetters
 Social Elites who are brand loyal
Prada
 Affluent women 20-30
 “Fashionista” seeking timeless
products
 Shop luxury brands and
carefully follow fashion trends
Hermes
 Women of all ages
 “Super Luxury” consumer
 Social Elite, shops Hermes
because all the women in her
family do
 Females 35-49, often married
 Heavy users
 Shop Chanel in all product
areas; shoes, clothing,
cosmetics
Chanel
PRODUCT POSITIONING
 Distinctive, high-end
products
 Compete on quality
 Target heavy users
 Market leader in
sunglasses
 Stylistically simple, highend products
 High price
 Best known for
accessories
 Target brand loyalists
 Compete on quality
 Expensive and exclusive
 High quality, hand-made
 Best known for specialty
silk scarves and their “H”
logo on leather products
 Chic & elegant product
 Timeless, exclusive
 Best recognized for
quilted leather bags,
lipstick and apparel
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CURRENT TARGET MARKET
Louis Vuitton targets consumers that value fine craftsmanship, tradition, style, and
above all else, exclusivity. More specifically, Louis Vuitton targets the following two
segments: wealthy middle aged women from 35 to 54 years old and affluent young
fashionable female adults aged 18 to 34 years old who have disposable income and
are brand aspirants.
The average Louis Vuitton consumer is a part of the upper economic and social
class and is fashionably aware. These consumers have the need to feel prestigious
and emphasize the importance of self-esteem and power.
SEGMENTATION STRATEGY
Demographic segmentation
Louis Vuitton segments the market demographically based on age, sex, and
disposable income. Specifically, Louis Vuitton targets women aged 18-54 with high
annual incomes of $75,000 plus, constituting high disposable income.
Psychographic segmentation
Louis Vuitton uses psychographic segmentations such as lifestyle and motives to
further identify their target market. For instance, Louis Vuitton targets jet setters,
trendsetters, and those who pursue prestige.
Usage segmentation
Louis Vuitton segments consumers by usage; specifically targeting heavy users.
Buyer information is collected at the point of sale and stored in a database. Heavy
users are sent seasonal catalogues as well as invitations to purchase exclusive
product collections to encourage repeat sales and brand loyalty.
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CURRENT COMMUNICATION TOOLS
City Guides
An interactive series of video guides are available on the Louis Vuitton website,
these city guides provide a mix of history and style tips for the contemporary
consumer. The guides focus on the traditional elegance of iconic cities such as Paris,
London, and Rome. Louis Vuitton’s City Guides tailor to their jet setting consumer
segment. These consumers travel frequently and seek entertainment. By providing
these city guides Louis Vuitton is providing their loyal customers an additional
service and reinforcing their brand as a staple in any large city’s history of fashion.
Louis Vuitton Cup
The 2013 Louis Vuitton Cup will mark the 30th anniversary of this esteemed event;
a yachting competition sponsored by Louis Vuitton in which the winner advances
to the America’s Cup. This sponsored event caters to the extremely wealthy, who
are traditionally loyal Louis Vuitton customers. The event reinforces Louis
Vuitton’s prestigious image and creates a sense of exclusivity that those who
participate in the event seek.
Advertisements
Louis Vuitton advertises through a mix of targeted mass media as well. Examples
include full-page ads in high-end fashion magazines such as Elle and Vogue, and
billboards placed in major metropolitan areas. These advertisements target the
younger, fashionable female adults who make up a significant segment of Louis
Vuitton’s customers. These ads, often featuring popular celebrities such as Uma
Thurman, convey brand image of elegance and luxury that this segment seeks to
emulate.
[See APPENDIX I for visual examples of the above communication tools.]
NEED FOR PRODUCT DEVELOPMENT
In order to capitalize and further develop the Louis Vuitton brand, the company
must remain competitive within the luxury industry. Unlike Chanel, Dior, Gucci, and
Prada, Louis Vuitton has yet to establish a luxury cosmetics line. The development
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Analysis & IMC Plan
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of a Louis Vuitton cosmetics line will entice a profitable, new target market that
could translate into brand loyalty. By capturing this younger target market, Louis
Vuitton will ensure larger market share as their consumer matures and begins to
purchase other products from the company.
[See APPENDIX III for Product Mock-up.]
NEW TARGET MARKET
This cosmetic line will target the young, American female between the ages of 20
and 35 years old. This young woman is establishing or has established her career
and has a reasonable amount of disposable income. However, she cannot afford the
majority of Louis Vuitton products. As a brand aspirant, she is trendy and fashionforward, and admires the lifestyle and history of high fashion. She values what
brand her product is and is intentional about her cosmetic’s brand.
As a company that caters heavily to loyal customers, this “fashion-ista” serves as
both a relevant and profitable future market for Louis Vuitton. A recent study
conducted by Bain & Company in cooperation with Vogue magazine found that
women in the U.S. who consider themselves “stylish” and follow the latest fashions
spend three times the average on all apparel, accessory and beauty purchases,
(Horton, 2010.) Additionally, the 2012 Beauty Brand Index – based on a
combination of purchase incidence, share of wallet and brand loyalty – showed
Louis Vuitton in the top 10 brands for accessories. (Horton, 2010.) This positive
position will allow Louis Vuitton to enter the cosmetic industry with ease and the
trust of their new consumers. Louis Vuitton has the perfect opportunity to leverage
their brand to capture market share from competitors, creating brand loyalists as
either new customers or brand switchers.
Notably, recent study, “Why She Shops,” found that women in 2010 did not rate
“price” as a differentiator [in cosmetic purchases]. (Bain Company, 2010.) Based on
primary research conducted via a survey distributed to college students and recent
graduates, statistics confirm that this target consumer purchases makeup at least
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Analysis & IMC Plan
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once a month at department stores that offer luxury cosmetic brands (Nordstrom,
Sephora).
Additionally, the three most important aspects that influence purchase intent and
decisions were brand of product, quality and price. After analyzing the influencing
factors for 5 separate cosmetic categories (foundation, blush/bronzer, lipstick/lip
gloss, eyeliner/mascara and eye shadow) we found that while price was important,
the most crucial factor was the quality, implied through the brand of the product.
Conclusively, this new target market will be highly receptive to a Louis Vuitton
cosmetic line and will associate the brand’s reputation for quality with their future
products, despite the product category.
However, in reaching this new consumer and expanding their product offering,
Louis Vuitton must be very savvy in maintaining their brand image. The following
section will outline how Louis Vuitton will execute the promotion advertising and
release of the new Louis Vuitton cosmetic line.
CREATIVE DIRECTION
In order to maintain the brand image, the creative direction for the Louis Vuitton
cosmetic line will match the creative direction of current company advertising. The
marketing campaign will introduce and promote the new product line of cosmetics
by mimicking the brand image of prestige, simplicity, timelessness, and exclusivity.
Ads will be stylistically chic, with little text in a simple font and will rely heavily on
vivid imagery to execute the communication objectives. The advertisements will
intentionally emphasize the strength of the Louis Vuitton logo rather than product
qualities, results or slogans. The campaign will focus primarily on traditional media
and be supported by the company’s current social media channels.
In order to best reach the younger target consumer, the make up line will be closely
tied to a celebrity with whom this segment can relate. The brand representative
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and face of the cosmetic line will be 26-year-old American actress Leighton
Meester. Meester is predominately known for her role as Blair Waldorf, in the CW
television series Gossip Girl. She is a recognizable celebrity and represents, both in
her daily life and as Blaire Waldorf, the ideal fashion-forward and sophisticated
young woman Louis Vuitton is trying to reach. Lastly, product placement
throughout the Gossip Girl season will increase consumer association between
Meester and the brand.
COMMUNICATION OBJECTIVES
The objectives of this IMC campaign are to maintain the Louis Vuitton brand image
and communicate the following communication objectives: association, perception,
and evoking an emotion.
1. Create an association in consumers’ minds between Louis Vuitton’s current
status as a leading luxury brand, noted for quality and timelessness, and
their new product line.
2. Extend the perception that the brand is not only a clothing and accessories
provider but also a luxury cosmetic supplier.
3. Evoke the emotions that consumers already associate wit the brand. The
imagery, font, and copy must all provide consumers with a sense of
belonging, exclusivity, elegance and timelessness that Louis Vuitton is built
upon.
COMMUNICATION GOALS
1. Increase Louis Vuitton site traffic by 30 percent within the first six months
of launch.
2. Double the new target market’s current perception of how accessible Louis
Vuitton is to them after 24 months of new product release.
3. Within the first six months, following the February release, increase instore awareness of Louis Vuitton cosmetic line by 50 percent.
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Analysis & IMC Plan
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EVALUATION METHODS
To ensure that these goals are met, Louis Vuitton must carefully evaluate and
measure in store and online sales, as well as general brand and product awareness.
In order to effectively measure these areas, the company will conduct the following
evaluations concurrent to product launch. The evaluations will be executed at 3
months, 6 months and at the end of each year’s fiscal end for a minimum of the first
5 years to ensure reliability and consistency in data.
Evaluations:

Evaluate annual sales relative to initial investment in the product line,
advertising spending and the sales of competitors.

Measure the activity on social media channels (Facebook, Twitter, YouTube
and site clicks) to evaluate consumer interest in the line.
o Based on site hits, “Hot Maps,” and page views
o Response/Sale Conversion

Conduct Memory or Recall & Recollection tests with magazine dummies

Conduct surveys of store representative across all of their retail locations and
other retailers carrying the cosmetic line, including, Nordstrom, Sephora, Sacs
Fifth Avenue, Bloomingdales, and Neiman Marcus. The survey will measure
customer awareness, brand preference and purchase intent.

Measure consumer awareness and preferences by having retailers send a
survey to their valued customers, evaluating purchase intent, brand/product
recognition, and awareness.
INTEGRATED MARKETING COMMUNICATION TOOLS
Based on total revenue earned by the LVMH Moet Hennessy Louis Vui. Group, 37%
constituted by the Fashion and Leather Goods group, the majority of which is
generated by Louis Vuitton. To estimate Louis Vuitton’s total advertising budget
per year it is best to multiply that amount of revenue by the brand’s total
advertising and promotion expenses. This calculates to approximately $1.3 billion
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for the entire Fashion and Leather Goods group. Between the months of June and
January Louis Vuitton spent about $22 million on advertising. However, this
spending almost doubles for the second half of the year. Therefore, the following
allocations will be based on the assumption of a $50 million annual advertising
budget.
[See APPENDIX V for financial documents.]
Additionally, initial investment in the new product line will require a larger portion
of the advertising budget. While the product may not be initially profitable, it will
be an investment in capturing the new target market and market share for Louis
Vuitton. The section below will outline the Integrated Marketing Communications
Tools used to promote and advertise the new cosmetic line.
[See APPENDIX II for a more specific IMC timeline.]
IMC PLAN & BUDGET ALLOCATION
Online:
Louis Vuitton has a well developed presence online – including mobile applications
with over 1,000 monthly users, a YouTube channel, a Facebook page with over
85,000 “Likes,” and a Twitter account with over 100,000 followers. To capitalize on
this strong online presence, the visuals, videos and advertisements for the cosmetic
line will be featured across all online channels.
Facebook: Incorporate Makeup line into current Facebook page. Include
promotional videos featuring Leighton Meester. Additionally the page will
include pictures featuring the makeup and press releases of celebrities
wearing the new makeup line.
YouTube: Attempt to create buzz around videos to stimulate curiosity
around the line. The videos will be vague and a call to action to visit the
website to receive more information about the line including the ability to
buy the product.
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Twitter: The Twitter page will include updates on the product line. The face
of the line, Leighton Meester, will promote the line through her account and
the tweets will be featured on the LV Makeup Twitter page.
Celebrity endorser: Leighton Meester
In June of the prior year to the launch of the campaign, Louis Vuitton will begin the
creative development of the advertisements, which will include negotiation of a
contract with Leighton Meester, estimated at $1 million dollars. The photos of
Leighton will be incorporated into each media vehicle of the campaign.
Product placement: CW’s Gossip Girl
The new LV cosmetic line in September will make a product placement agreement
with the television station the CW for the Gossip Girl season through February.
Leighton Meester’s character, Blair Waldorf, will be showcasing the cosmetic line in
to increase awareness and association between her and Louis Vuitton. Product
placement in Gossip Girl costs approximately $200,000 to $300,000 per minute per
episode. We will allocate $2 million dollars of the budget to product placement,
which is approximately 1 minute of footage for half of the episodes in one season,
constituting 10 episodes. This product placement will occur in the last 10 episodes
so that the product is top of mind and relevant to the launch of the makeup line at
Fashion Week in February.
Billboards:
Four weeks prior to the official launch of the Louis Vuitton makeup line we will
advertise in four major metropolitan cities across the United States using
billboards. These cities will include New York City, Chicago, San Francisco, and Los
Angeles. The advertisements displayed on these billboards will act as teasers,
hinting at the launch of a new product by Louis Vuitton, with the intention of
building hype leading up to Fashion Week. The only text in the advertisements will
be the date of the official launch of the new product line so as to build anticipation.
After the initial launch of the makeup line, billboard advertising will be extended
for another four weeks and will be expanded to transit shelter advertisements in
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key markets. There will be ads in 200 New York Subway stations and bus shelters
in San Francisco near the city’s central business districts. The combined effect of
this advertising, based on figures found on clearchannel.com, amount to over 10
million impressions over the eight-week period. The cost for this portion of our
advertising campaign, as calculated from 2010 rates found on clearchannel.com,
amount to approximately $411,450. The breakdown of this cost is as follows:
New York City - $162,000 for three billboard ads, $40,000 for subway
San Francisco - $31,200 for two billboard ads, $56,250 (thirty bus-shelters)
Los Angeles - $78,500 for five billboard advertisements
Chicago
- $42,000 for three billboard advertisements
Catalogs:
To coincide with our new product announcement we plan to giveaway 10,000 high
quality 6x9 booklets containing full page photos of the new makeup line. These
booklets will be included in the typical promotional gift bags, commonly known as
swag bags that are given away at Fashion Week. Based on figures found on
printingcenterusa.com, the cost to print these booklets will be approximately
$5,000.
Magazine Advertisements:
Full page, color advertisements will be printed in all major fashion magazines in
North America in which Louis Vuitton currently advertises. Print ads will be
consistent in message and imagery and will be uniform across all communication
channels.
Samples: Offer free samples to priority customers and with in-store purchases.
Additionally samples will be given out in special bags given out during Fashion
Week. Hopefully recipients will give powerful, free WOM advertising.
In closing, the initial investment in the Louis Vuitton product line will require a
large initial investment in development, advertising, and promotion. However, it is
a natural and strategic move for the brand and will allow Louis Vuitton to maintain
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a competitive edge in the luxury industry while capturing market and wallet share
from competitors.
APPENDIX I
Examples of current Louis Vuitton promotions
(City Guides online)
(Sponsorship)
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(Print Advertisments)
APPENDIX II
General Calendar for IMC, beginning with June of the prior year to launch.
CREATIVE DEVELOPMENT:
June (prior) - September: sign
Leighton Meester & develop visuals
PRODUCT IN MARKET
Post-release:
Continue promotions on social mediums
Stagger and integrate cosmetic ads into
Louis Vuitton general magazine ads
PRODUCT RELEASE:
Febrary: Release to all department and
retail locations following Fashion Week
Expand billboard advertisments to bus
shelters and subway stations
March: Product feautre in department store
catalouges
PRERELEASE:
December- Febrary: Product
Placement in CW's Gossip Girl
January 1- Febrary1: Release
advertisements across all
mediums
Febrary 17: Fashion Week
Louis Vuitton gift bags at show
and samples to exclusive guests
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APPENDIX III
Two mock-ups of Louis Vuitton Make up Line (Credit to Alex Zadig)
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APPENDIX IV
Graphical summaries of primary research conducted by this group of college and
recent graduates via a Qualtrics survey.
Participation:
#
Answer
Response
%
1
18-21
23
41%
2
21-25
27
48%
3
25-30
3
5%
4
30+
3
5%
Total
56
100%
Q: How frequently do you purchase makeup?
#
Answer
Response
%
1
2 or more
times a
month
6
11%
2
Once a month
29
52%
3
Every 6
months
17
30%
4
Once a year
4
7%
Total
56
100%
This trend reaffirms what secondary sources have stated that this target market,
fashion-forward, young women who follow trends spend money more frequently
than average consumers. Our survey shows that 52% of participants buy makeup
items at least once a month.
[Results continued on next page]
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Q: Where are you most likely to purchase make up?
Based on the below circle chart, the best and most relevant retailers are
department stores like Nordstrom and beauty suppliers that carry luxury products
like Sephora. These will be the best stores to conduct sale associate surveys and
have customer surveys distributed through, during evaluation.
Q: Rank the following Factors in importance for each of the following
cosmetics:
KEY:
Dark Blue: most important
Red: second most important
Green: third most important
Purple: fourth most
important
Teal: Least important
[Results continue on next page]
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FOUNDATION:
BLUSH/BRONZER
MASCARA/EYELINER
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EYESHADOW:
LIPGLOSS:
Across all cosmetic categories, participants ranked Quality, Brand of product, and
Price as the three most important factors. In foundation, brand of product
outweighed quality but the difference in importance across categories is not
significant. This confirms the importance of the brand of cosmetics products and
the quality implied by that brand.
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APPENDIX V
Luis Vuitton Financial documents used in estimating annual advertising budget.
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APPENDIX VI
Pricing for full, single page color magazine advertisements in 1 issue.
Allure: $147,453


Average circulation is: 1,075,000.
Audience: Median age is 32.5 yrs., average income is $66,386, 68.3% are
college graduates, and 93% are female. (condenast.com: Allure, 2012)
Bazaar: $11,195
 Average circulation is: 714,249
 Audience: Median age is 44.8yrs., average income is $71,901, 78.5% have
some college, and 89.5% are female. (harpersbazaarmediakit.com, 2011)
Cosmopolitan: $244,100


Average circulation is: 3,032,000
Audience: 58.3% are 18-34yrs., average income is $26,613, 62.6% have
some college, and 84.8% are female. (cosmomediakit.com, 2012)
Elle: $141,210


Average circulation is: 1,124,569
Audience: Median age is 33yrs., average income is $76,596, 73.8% have
some college, and 92% are female. (ellemediakit.com, 2012)
InStyle: $160,500
 Average circulation is: 1,251,000
 Audience: Median age is 35.3yrs., average income is $81,434, 76% have
some college, and 92% are female. (instyle.com, 2012)
Marie Claire: $135,100


Average circulation is 963,305
Audience: Median age is 34.7yrs., average income is $78,015, 76% have
some college, and 73% are employed. (marieclairemk.com, 2011)
Self: $182,321

Average circulation: 1,545,247

Audience: Median age is 38, average income is $81,374, 78% have some
college, and 94% are female. (condenast.com: Self, 2012)
Vogue: $165,232


Average circulation: 1,248,121
Audience: Median age is 37.4, average income is $63,094, 64% have some
college, and 89% are female. (condenast.com: Vogue, 2012)
W: $101,361


Average circulation: 1,421,000
Audience: 64% of viewers are 18-49, average income is 155,215, 75% have
had some college, and 76% are female. (condenast.com: W, 2012)
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"Advertising Rates." Clear Channel Outdoor. Clear Channel Outdoor. Web. 26 Feb.
2012. <http://clearchanneloutdoor.com/rates/>.
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nsights/globalluxury
Bain & Company. (2010). “Why She Shops Study Report.” Bain & Company.
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p?ref=retailpage>
LVMH Moet Hennessy Louis Vui. (2011). “Financial Statements.” Luxury Institute
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Lamb, R. (2011). Louis Vuitton Drives App Downloads with Targeted iAd campaign.
Luxury Daily. Retrieved from http://www.luxurydaily.com/louisvuitton-drives-app-downloads-with-targeted-iad-campaign/
Ransom, C. (2011). Lucky Seven Wealth and Luxury Trends for 2012. Mosnar
Communications. Retrieved from
http://mosnarcommunications.com/2011/10/lucky-seven-wealth-andluxury-trends-for-2012.html