Pest, Swot and Competitive Analysis

PEST, SWOT AND COMPETITIVE Analysis.

After analyzing the factors as to why LVMH entered Japan, we need to assess the macro-environmental factors that favored the success of luxury brands in Japan. One of the factors that marked the success of LVMH was the first- mover advantage in leather luggage and flat-bottom trunks. The flat-bottom trunks with a different quality of canvases represented a revolution for travelling during the time period of 1850s as Louis Vuitton combined lightness and storage capacity. Also, Japan's economic success after the Second World War also contributed to the entry of luxury brands. Japan's economic growth grew by 230%. This indicates that people had disposable income to savor their fondness for luxury. On social front, Japanese consider possession of a luxury item as a mark of social esteem and status. They have huge affinity for European luxurious image and lifestyle. In addition, during the same time period the Japanese tourist shoppers in Europe grew by gigantic proportions. The Japanese were the driving forces behind the growth of luxury fashion retail all over and Asia and were responsible for the growth in duty-free luxury sales in all their travel destinations such as Europe, etc. The success with the Japanese generated extraordinary profits for the luxury fashion industry and encouraged the luxury brands such as LVMH to open their stores in Japan.

After assessing the macro-environmental factors of Japan, we will analyze the strengths and weaknesses of Louis Vuitton brand. LVMH has a very strong brand image with an extensive portfolio of prestigious products such as wine and spirits, Fashion and leather goods, perfumes, cosmetics, watches, jewelry, etc. In order to further attract consumers' attention and reinvigorate brand identity, LVMH appointed Marc Jacobs to guide Vuitton's shoes and ready-to-wear collection. At that point of time, Jacobs was already a highly successful and distinguished international designer. Marc Jacobs, in collaboration with another popular artist Stephen Sprouse, designed limited edition series of Louis Vuitton bags. All the bags in this series were made for LV' VIP list and were meant to be collector's items. This limited edition strategy boosted the sales as the customers didn't want to lose the chance of owning a limited series items and be part of the elite group. The brand started its first advertising strategy by handing bags to Hollywood celebrity actresses such as Audrey Hepburn and continued with celebrity endorsements. One of the main shortcomings of Louis Vuitton is that it serves a niche market of high-income consumers, which is a very limited target segment. Since Japan is the largest market for luxury brands, so there was a huge opportunity for luxury brands to take advantage of the consumer surplus. Because of the same reason, Louis Vuitton faces a stiff competition from other luxury brands