How the Correct Balance and Level of Marketing Strategy can Ultimately Create Brand Power?
INTRODUCTION
I am choosing to analyse a luxury brands marketing strategy who I am very much interested in, and also the area of Graphic Design that I have covered in previous module tasks; fashion branding. Therefore this essay will cover how the rise of Louis Vuitton has been brought about through the correct marketing mix in relation to the four P's (Price, Promotion, Place and Product). I will also compare how Louis Vuitton's marketing strategy compares to that of a general consumer goods marketing strategy, by showing principles that Louis Vuitton applies to its marketing mix in order to achieve brand power. This will be done by separating the essay into four sections which will cover all of the four p's and analysing each one individually (Paul. A. Willax, 1985).
Ultimately from my findings i will hopefully show how by the correct usage and balance of the four p's brand power can be created and maintained.
The reason why I have chose my case study to revolve around Louis Vuitton can be seen in figure 1 below, showing the statistics for top brands;
(Figure 1 showing stats for the top 10 fashion brands, taken from a report on Top 100 Brandz by Millward Brown found on)
As you can see from the above table , Louis Vuitton has more than double the brand value of its next competitor, Hermes. Therefore it shows that Louis Vuitton has complete brand power when it comes down to the top 100 brands from across the world.
Price
The first part of the marketing mix that I will cover will be 'Price'. For general consumer goods the market often demands 'low pricing' this is to make the consumer happy and more susceptible to choose to buy that brand. Obviously Louis Vuitton prices its products very high in relation to general consumer goods. In order for them to then justify the price deference between a general consumer product and a luxury consumer product, comes down to the value for money and the quality of the item purchased.
The first of the principles that I have researched are therefore related to pricing and how they maintain their brand power through methods relating to pricing.
The first principle that Louis Vuitton applies to their brands is that they do not do bargain sales on any of their products. Louis Vuitton has evidently not once reduced its prices in the whole 154 years of its business history. The reason why this is the case can only come down to the commitment that Louis Vuitton has on quality within its products, and also the pricing strategy that Louis Vuitton holds in making sure that all of the customers buy the products at the same price.
Another principle that can be said about Louis Vuitton products are that they are equivalent to money due to the high trade-in price. Due to the high quality that Louis Vuitton puts into their products, even when the products are recycled the price does not drop. This means that if customers are to purchase the products then at least the price will not drop dramatically and again they will get excellent value for money.
The last principle that Louis Vuitton adopts within its pricing its products, is they do not conduct surprise price changes. When conducting my research I found that over the past 25 years Louis Vuitton has raised prices 14 times and only lowered them 11 times (Paul-Gerard Pasols, Lenora Ammon, 2005). This highlights the fact that Louis Vuitton does not like to change their prices at the drop of a hat, unlike companies selling general consumer goods. Furthermore if they do plan on a price change customers who are listed on the customer register are informed prior, and also advertisements are put up at store fronts indicating this in advance. Again these are all methods in which Louis Vuitton earns customer trust and loyalty through its pricing strategy.
Promotion
The second marketing mix that I will now discuss 'Promotion'. The general consumer goods brands strategy is mainly to mass advertise, this is a means to try and get themselves out there as much as possible in an effort to sell at high volume. Certain methods that these companies will therefore use will be such things as television adverts, Louis Vuitton however does not use this method of advertisement. Instead Louis Vuitton uses such methods as newspapers or magazines to advertise themselves, this method normally consists of just an image aswell as appose to lots of wording and sales gargon. This again stems back to the brand of Louis Vuitton being able to sell itself rather than the advertisement trying to sell it.
Within Louis Vuitton's advertisement strategy they emphasis on publicity, this is done through the above method mentioned; magazines and newspapers, more so than other luxury brands do. Yet again this is a tradition that Louis Vuitton has stuck to since the beginning and will continue to adhere to. Another method of how Louis Vuitton can gain mass media converge is by holding very extravagant parties. These parties are held at precisely the right calculated timing as part of a promotional strategy. By inviting celebrities to these events creates them to become a hot topic within the media and therefore promoting Louis Vuitton in a none direct way. So in a relation to the cost of direct advertising i.e TV adverts, this method far out weights it.
Place
The third 'p' in the marketing mix is 'Place', this can be also described as where the product is distributed to for its point of sale. General consumer goods generally look for broad distribution channels selling through non-department store to try and get as much volume retail as possible. This can be seen on the flip side with Louis Vuitton as they only offer their products through limited distribution channels. It may be seen that Louis Vuitton have created a method in which they can sell their products through controlled channels and not channels that they can not control. By using these controlled methods means that Louis Vuitton can make sure that their products are sold to the correct target market at the correct price and location. This will also try to limit any counterfeit products that may find there way into the system from using un-controlled routes.
The above two figures show where Louis Vuitton stores are situated around the world, as you can see the number of stores in relation to general consumer goods stores is a lot less. As my research for a general consumer store, such as Topshop, indicated with Topshop having over 300 stores in the UK alone. This again supports how general consumer goods stores attempt to get as much mass volume sales as possible by selling through any channel possible.
Further research that I have conducted has discovered that for luxury brands to succeed internationally they need to be successful in the market over in Japan; this is down to a large proportion of sales predominantly being achieved in Japan (Uché Okonkwo, 2007). Mostly all of Louis Vuitton's stores are located in prime locations, this is again part of their marketing strategy as to generate a huge profit from their products. This is down to the reasoning that brands do not open stores in prime locations when they have made a huge profit, this is a pre-determined decision in order to make a huge profit (Clay Andres et al, 2004). This can be seen when looking back up at Figure 1 showing the top 10 brands, with Louis Vuitton being at the top of the table with a brand value of 24 billion, ultimately showing complete brand power.
Product
The last marketing ingredient is obviously now 'Product'. The first statement that I can make about 'product' is that it most general consumer goods companies seek to achieve 'adequate product quality'. This is brought about by Louis Vuitton's quality control, making sure that their products are all 'fit for purpose and comply with the job they are required for'. Were Louis Vuitton obviously differs from that of general consumer goods, is that it strives for 'absolute quality' with all its products, and does not just stop at 'adequate quality'. Why all companies can not achieve this is down to cost, by paying as much attention to detail as Louis Vuitton does and finishing the products with as much quality as they do comes with a price. So therefore by raising both the quality and attention to detail prompts consumers to insist on either having a Louis Vuitton item or nothing. This also can relate to a social element that is triggered from Luxury Brands, 'Luxury brands are aspiring brands that trigger many social signals, such as success, wealth, sophistication…' (Kaled K. Hameide, 2011). This statement is then furthering the suggestion that luxury brands are somewhat different to general consumer goods, and also targeted at a separate target market than that of general consumer goods.
In order for Louis Vuitton to maintain brand power it has to apply certain principles for its products. The first principle that they follow and adopt is the need to try and eliminate all the products that are a counterfeit. The need for Louis Vuitton to adopt this principle is to ensure they protect the brand itself. This is a massive threat to Louis Vuitton, however they manage to police this issue of counterfeit products in a number of ways;
1) registration of its designs and trademarks, they have evolved their designs in such a way that makes it very difficult to forge.
2) Distribution of warning notices; if companies are fund to be selling counterfeit Louis Vuitton products they issue them with warning notices.
Another principle that Louis Vuitton adopts within their products, among other Luxury brands, is that they do not produce outlet products. Although again this increases the price for production, it pays off when considering the cost of maintaining brand power/value.
Louis Vuitton also only produces products with a name specific to that product, they will not let a product leave the manufacturing stage without having a unique name, these being names that have been copied form lakes or even mountains. This is to enable the end user to form an attachment to the product, again this is not seen with general consumer products. This is reflected in consumer behaviour studies that have been carried out on luxury brand customers, showing that the regular customers develop a strong relationship to the products. The relationship they develop with these products can be so powerful that in times of need they are often not the first thing that they give up. So for example in times of economic crisis, these devote customers would much rather sell their car in order to keep hold of these products (Kaled K. Hameide, 2011).
Conclusion
So by concluding all my findings around the marketing mix for Louis Vuitton (Place, Promotion, Price, Product) I can make the statement that Louis Vuitton has definitely had the correct strategy when it comes down to each element individually; in order to achieve ultimate brand power. From the research that I conducted into the market strategy and lectures that I attended, I can see the absolute importance to be able to address each one to the precise level that Louis Vuitton has. I can also see the outstanding difference between that of a general consumer goods market strategy and that of a luxury brands market strategy. In order to be a market leader and also have undoubtable brand power the marketing mix is an essential part of the market strategy when rangeing from tasks from as little as changing the price of an item to promoting the opening of a new store. With the ability to get this balance absolute precise and to the correct detail may require lots of background research not only into the market but also the customers to whom the product is aimed at; but ultimately with the correct approach and delivery of the strategy, it evidentially has the potential to be a Billion Dollar strategy.
References
1) Paul. A. Willax (1985). The Four "P's" of Marketing: product price promotion place. U.S.A: Empire of America Federal Savings Baank. 1-8.
2) Millward Brown (2011). Top 100 Brandz Most Valuable Global Brands.
3) Paul-Gerard Pasols, Lenora Ammon. (2005). Louis Vuitton (Firm) - History. In: Louis Vuitton: the birth of modern Luxury. London: Harry N. Abrams. 464-487.
4) Louis Vuitton. Store Locator. Available: http://www.louisvuitton.co.uk/front/#/eng_GB/Stores/Store-Locator. Last accessed 20th Jan 2012.
5) Topshop. (2011). About Us. Available: http://www.topshop.com/webapp/wcs/stores/servlet/StaticPageDisplay?storeId=12556&catalogId=33057&identifier=ts2-about-us&intcmpid=W_FOOTER_WK39_HP_UK_ABOUT_US. Last accessed 20th Jan 2012
6) Uché Okonkwo. (2007). Digital Luxury. In: Luxury fashion branding: trends, tactics, techniques. UK: Palgrave Macmillan. 202-203.
7) Clay Andres et al. (2004). Brand Recognition. In: Pat Matson Identity Design Sourcebook. China: Rockport Publishers. 110-125.
8) Kaled K. Hameide. (2011). Luxury Fashion Brands. In: Olga T. Kontzias Fashion Branding Unraveled. New York: Fairchild Books. 109-155.
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