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Discussion

Q. Bernard Arnault has built LVMH into a luxury goods empire by

making numerous acquisitions. What strategy is evident here ?

Answer :

A multi brand strategies, brand extension.

A Selective acquisition strategies -concentrating on external

growth.

Acquisition means killing of competitors i.e, lesser competition

Increase market share leads to monopoly

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DiscussionQ. How do LVMH executives adjust prices in response to changingeconomic conditions ?

Answer:

Raised wholesale prices in individual Asian markets .

There by discourage discount retailers from stocking up with

designer products and then selling them to down-market consumers.

Advertising expenses on perfume and cosmetics reduced.

Cancel plans of opening new store.

Raised prices to counteract the effect of currency devaluation.

When tourism is at peak, increase prices by 10-12%

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Discussion

Q. Do you think the high retail prices charged for luxury goods are

worth paying ?

Answer : YES

Affluent consumers eagerly seekout luxury brands such as Armani,

Christian Dior,gucci,louis Vuitton,Prada, and Versace etc

They are willing & able to pay high prices for top quality merchandise

from fashion houses whose names are synonymous with status, good

taste, and prestige

If the prices are diluted then every one can afford such goods as a result

there will not be any aristocracy,status, and prestige involve with it

Luxury goods are percieve not as a product , as an image- a Lifestyle.

In short if you want status symbol then if you have to pay more

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Discussion

Q. How will luxury goods marketers be affected by the slowdown in tourism thatfollowed the terror attacks of September 11, 2001 ?

Answer :

In Europe and USA , the economy plays a greater role in consumer behavior

Japanese tourists are significant factor

Heavy taxes are levied on luxury goods in Japan,making prices about 40 %

higher than in many other countries

So Japanese buy these goods abroad .

In the wake of Terrorist attack they were less keen to travel which affected the

luxury good sales

If Japanese will travel more then they spend more .

Local market sales in Japan picked up

Serious impact on sales to tourist in most countries .