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Louis Vuitton and the Local Adaptation Challenge

Imagine you are senior manager with the French fashion house Louis Vuitton Malletier. Innovation - blended with tradition - shapes the story of Louis Vuitton. This is true for its products but also for its communication. In 2011, Godfrey Gao, Taiwanese actor-turned-model, became the new face of Louis Vuitton: the first time the company has used an Asian man to showcase its products. With about a quarter of worldwide spending on luxury coming from China according to a HSBC report (compared to about 10% only three years ago), Louis Vuitton is addressing its new wealthy clientele. The Louis Vuitton man bag is a standard status symbol among men, especially middle-age ones, in China. Despite this huge buying power in Asian markets, adaptation of products and commercials to this market is rare in the luxury segment.

A major decision for each company offering its products internationally is whether to adapt products and communication locally or to standardize both product and communication globally. And this decision is even more crucial for luxury brands.

You are in charge to decide on the 5-year product and communication strategy of Louis Vuitton. What would you decide in terms of the local adaptation vs. global standardization of both products and communication? Would you adapt both, one of the two or nothing? Explain your decision. Please base your recommendation on a sound analysis of opportunities and potential threats of adapting products and communication locally.

In case you decide to locally adapt: How exactly would you proceed? What factors would you take into consideration?

In case you decide not to locally adapt: What would be your 5-year product and communication plan? What other measures can you think of to differentiate the brand by its products and communication? Do you think products and communication remain attractive for Asian customers in the long run - what would you suggest assuring this?

Solution Preview

The Asian markets are very promising economies in the world, due to burgeoning number of "riches" and spending capability more than ever before. Consumers from Brazil, Russia, India and China (BRIC) today account for approximately 18-22 percent of world's luxury market (Som, 2013).

With western luxury brands create flashy advertising campaign targeting the old money elite, the result is poor. This is because their target customer segment consists of people who travel often and prefer to purchase Western luxury goods abroad where they get wider choice, better customer service, and competitive pricing than what is available locally. Those who have recently become affluent lack the knowledge of luxury market to be able to drive the sales. The strategy adopted by most brands, including Louis Vuitton is that of establishing mass retail and back it up with traditional mass marketing.

In every country there are different requirements through which customers derive value for their luxury purchases. For example, Chinese luxury customers want their products to be status driven and outwardly visible. They like logos- bigger the logos, better it is. Indian customers want to balance their purchase and need. They are more value conscious. Russian customers expect ...

Solution Summary

The expert examines Louis Vuitton and the local adaptation challenges. The major decisions of each company are provided.