Louis Vuitton in India - Situation Analysis

Situation Analysis

Founded in 1854, Louis Vuitton (LV) has stood as an icon of European luxury and indulgence for over a century. LV’s classic design and distinguished heritage contrasted the ever-changing fashion of the day. Its strong values, like never marking a bag down and promoting long waits one should expect for special orders, were part of its unique charm and exclusivity. LV’s niche value proposition would grow the company to develop over 60 brands in the luxury consumer market by 2000. The need to maintain this exponential growth, pressured by Wall Street, would push LV to consider new markets, outside their traditional focuses in Japan, Europe and North America. It looked to the exotic subcontinent – it looked to India.

The official launch of LV in India was a rocky one. While India had the modern desire for foreign luxury goods, its infrastructure and trade policies remained archaic. Heavy tariffs and duties made foreign imports in India extremely cost prohibitive. Foreign leather goods, LV’s staple, were also banned as imports until 2001. It would take several years of economic liberalization in the region to open LV’s access to the $4 billion luxury goods industry in India. In 2003, LV opened its first Indian retail locations in the confines of luxury hotels – the Oberoi Hotel and the Taj Mahal Palace and Towers Hotel. This move was in line with its familiar target audience who recognized the brand from their trips through Europe and North America. But as India’s policies on foreign ownership (the allowance of 51% foreign ownership of a single brand) changed, the road was paved to allow lucrative luxury malls to open. The rise of luxury malls was expected to grow to over 300 locations in 2010. This widespread model fit perfectly with LV’s long-term vision, which was to open a LV store in every Indian city with a population of 10 million plus. It would however force LV to reconsider targeting and promotion, as the untested luxury mall concept in India was foreign territory.

Decision Problem

In the experimental luxury mall market in India, LV is at a crossroad. Deciding which tier of luxury retail consumer to target, and what types of promotion will capture their hearts will be crucial to LV’s success in the luxury mall of New Delhi and in all of India.

Criteria

1) Targets Luxury Mall Demographics: A new landscape of consumers frequent Luxury Malls. LV must focus on being able to capture the hearts and minds of these specific consumers who will be most often shopping in Luxury Malls. Any alternative must be able to design its promotion to compliment the nuances of the luxury mall shoppers.

2) Fit with Brand Image: LV has defined its brand image as “exclusive luxury.” Uncompromising in its values, all business decisions are compared with these ideals

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