“LVMH: An Empire of Style and Luxury”
In this article Ashok Som analyzes the strategies of LVMH Group and Bernard Arnault and the group’s power throughout the world. Bernard Arnault changed the LVMH Group from a small clothing manufacturer and champagne producer to a great empire compromising 50 of the world’s most powerful brands. Some of these brands are CD, Givenchy, LV, Christian Lacroix, Kenzo, Celine, Emilio Pucci, Fendi, Loewe and Donna Karan. The secret to this empire he states as “ the ability to match effective executives with temperamental designers” . The key to success is also to remain deeply involved in the creative process and you must like to be with the designers and creators. Acting like a regular businessman with the creators will kill their talent.
The company employs over 56,000 staff and operates more than 1,500 stores worldwide. The majority of the sales are Fashion and Leather goods division, the most important region being Europe.
80% of LVMH's profit is form Louis Vuitton
The insiders from the LVMH group indicate that the management style is “constrained freedom”. Though his managers are given autonomy, Mr. Arnault has the final word in any case of conflict. Managers are supported as long as they make their numbers. The emphasis is on profit however this approach is said to be contradictory with the traditional and creative view of haute-couture, which tolerates losses while the market-place accepts its designs over a period of time.
Arnault defines a star brand as timeless, modern, fast-growing and highly profitable. He adds that there are fewer than 10 star brands in the luxury world. He believes that innovation is the ultimate driver for growth and profitability and says that they give their artists and designers complete freedom to invent without limits.
In the beginning the company had scarcity of executive talent in luxury goods so they hired them from outside the industry and gave them training programs. They emphasize that the awakening and education of young people to the company’s values has always constituted an essential part of the company’s goal.
As a complementary information from Wikipedia “According to Forbes Magazine, Arnault is the world's 7th richest person, with a 2009 net worth of $US27.5 billion. In 2007, Time Magazine listed him as one of the 100 Most Influential People in the world.”
“The Celebrity Endorsement Game”
The article written by Ruth La Ferla points out that fashion marketers nowadays believe that celebrities are more effective than models now in imprinting a brand in the customer’s mind. In the case of GAP, by hiring Sarah Jessica Parker as the brands face, it is said by the market researchers that “They fell into a real trap, and that trap was that they wanted to be something more than they were".
The key point to success is to creating a credible match with a celebrity endorser, one that forges a bond with consumers and pumps up sales. In the consumer's mind the two shall become all but interchangeable.
Age appropriate Kidman for Chanel #5 and Kiera Knightly for Coco Mademoiselle and below name appropriate Chloe Sevigny for Chloe
In order for a celebrity to appear as the ambassador of the brand, researches must be done among the targeted audience to understand whether he/she will have the expected impact on the consumers. Such as when Gwen Stefani was appointed to be the face of Hewlett Packard’s new Harajuku Lovers digital camera, researchers were sent to the malls around the country to ascertain the star's cool factor and study her record sales. It is emphasized that the companies are changing their endorsers so quickly that most of them can not hold on their positions as the faces of the companies for more than one year.
This turnover can be seen in LV hiring Jennifer Lopez and then less than a year later Diana Kruger, Scarlett Johansson and Uma Thurman.