Lvmh pricing strategy

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In recent weeks, analysts and industry observers have raised questions about the French firm's pricing strategy after Chanel increased price tags in April on a number of its iconic handbags in Europe while reducing retail prices in China, in a bid to eliminate a growing price gap between Europe and Asia caused by the weakened euro.

Though handbag prices have always been higher in markets beyond Europe's borders, the current differential is significantly larger than historical norms.

The price charged in any given country will depend on factors in play in that country such as ease of doing business, cost of production, labor costs among others. On this note, it is important noting that Louis Vuitton brands are charged differently in different countries.

Luxury pricing strategy

Luxury, however, is all about being a part of an exclusive club; be that at the high end of its products and pricing or low end entry level products. Guiony said that any decision regarding price policy for LVMH mustn't be rushed. Nonetheless Mr. At the time, Chanel's policy was seen as a possible precursor for the wider luxury industry as the drop in the euro against the dollar and other currencies has led the cost of brand-name accessories to vary greatly between Paris, Beijing and New York. China, for example, has low production costs resulting from low labor costs, which make the products being sold cheaper. Though handbag prices have always been higher in markets beyond Europe's borders, the current differential is significantly larger than historical norms. The price gap has also caused the parallel market to mushroom, with individuals reselling their oversees purchases through online on sites such as Taobao, a Chinese site that is similar to eBay.

Organic growth Open The LVMH group places priority on organic growth and commits significant resources to develop its Houses, as well as to encourage and protect creativity.

But what of diffusion ranges where the product is the same i. As a result of this, their products are more accessible to the consumer population. Nonetheless Mr. This was amply illustrated in when Chanel was faced with depreciation of the Euro.

On the other hand, Japan cost of production is high, due to a number of factors such as access to raw materials and labor costs, which make the products expensive.

Lvmh pricing strategy

The price of any product stemming from a luxury brand must reflect the key messages of any luxury brand; quality, heritage, and exclusivity. Guiony said that any decision regarding price policy for LVMH mustn't be rushed. This is different from premium brand pricing where the product is freely available to those willing to pay the price. For example, the Chanel and Dior luxury brand pricing strategy with watches being priced similarly to premium Swatch, but the consumer preferring the cachet of the luxury brand. Vertical integration Open Vertical integration fosters excellence both upstream and downstream, allowing control over every link in the value chain, from sourcing and production facilities to selective retailing. Nonetheless Mr. The price charged in any given country will depend on factors in play in that country such as ease of doing business, cost of production, labor costs among others. On this note, it is important noting that Louis Vuitton brands are charged differently in different countries. Maltz cites Vera Wang as an example of a successful diffusion range where the brand has not been damaged by the provision of a less expensive alternative. The price gap has also caused the parallel market to mushroom, with individuals reselling their oversees purchases through online on sites such as Taobao, a Chinese site that is similar to eBay.

This is different from premium brand pricing where the product is freely available to those willing to pay the price. China, for example, has low production costs resulting from low labor costs, which make the products being sold cheaper.

The price of any product stemming from a luxury brand must reflect the key messages of any luxury brand; quality, heritage, and exclusivity.

Creating synergies Open Sharing of resources on a Group scale creates intelligent synergies while respecting the individual identities and autonomy of our Houses.

Louis vuitton business model

Again, consistency in luxury brand pricing strategy needs to be applied. For example, the Chanel and Dior luxury brand pricing strategy with watches being priced similarly to premium Swatch, but the consumer preferring the cachet of the luxury brand. Creating synergies Open Sharing of resources on a Group scale creates intelligent synergies while respecting the individual identities and autonomy of our Houses. Brand is everything and pricing is just a component of that. The price charges are largely dependent on several factors ranging from costs of production, expenses incurred, and profit and among other factors. Consistency Consistency is important when luxury brands are playing globally. The price of any product stemming from a luxury brand must reflect the key messages of any luxury brand; quality, heritage, and exclusivity. In both cases, the message was clear to consumers and the intention of not replacing the primary luxury line was clear. At the time, Chanel's policy was seen as a possible precursor for the wider luxury industry as the drop in the euro against the dollar and other currencies has led the cost of brand-name accessories to vary greatly between Paris, Beijing and New York. This is affected by the cost of production in these countries and the overall demand for the canvas in the market. Chanel also found that within the Asian marketplace consumers from mainland China had realized that their domestic pricing was higher than the cost of flying to Hong Kong to make a purchase.
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Luxury Brand Pricing Strategy: Consistency is Key to Brand Success