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8B10M67
Teaching Note
LOUIS VUITTON IN JAPAN
Justin Paul and Charlotte Feroul wrote this teaching note as an aid to instructors in the classroom use of the case Louis Vuitton in
Japan, No. 9B10M067 This teaching note should not be used in any way that would prejudice the future use of the case.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written
permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies
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of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
CASE SYNOPSIS
This case study deals with the opportunities and challenges of Louis Vuitton, the leading European luxury
sector multinational firm, in Japan, the second largest economy in the world. The case illustrates the
business strategy of Louis Vuitton in an important market, taking into account the unique features of brand
management, and integrating culture and consumer behaviour in Japan. In the last decade, Japan has been
Louis Vuitton’s most profitable market, representing almost half of its profits, but it seems that the global
economic crisis has resulted in a decline in sales. Other European brands in the luxury and fashion sectors
have also been generating one third of their profits from Japan.
Louis Vuitton may be French, but Japan has become a land full of Louis Vuitton lovers. Over the years,
Japanese consumers have demonstrated fascination with and passion for the iconic brand. What have been
the keys to Louis Vuitton’s successful business model in the Japanese market?
CASE OBJECTIVES
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decision making.
This case can be used to discuss:
The complexity of multinational business, particularly the issues of:
– Brand management
– International marketing
– Marketing strategy for succeeding in East Asia
POSITION IN THE COURSE
This case brings insights on strategic decisions to survive and succeed in a foreign market. It can be used in
International business, to illustrate the complexities relating to managing global operations and the
challenges and opportunities in a foreign market
Brand management, to illustrate how to build a “top of mind” brand in a key overseas market
International marketing, to illustrate issues surrounding consumer behaviour and product adaptation to
local tastes and preferences
oriented and product-oriented approach
The case is also meant for business executives or entrepreneurs looking for thoughtful insights on the
strategy and development of a business model best applied to the luxury market in Japan.
SELECT MEDIA STORIES — VIDEO CLIPS
The Art of Travel by Louis Vuitton
www.youtube.com/user/louisvuitton?blend=2&ob=4
Louis Vuitton Core Values [where will life take you?]
www.youtube.com/watch?v=m5xCGZuvhWI
Louis Vuitton Spring-Summer 2009 Ad Campaign Behind the Scenes
www.youtube.com/watch?v=Avc_tFpXVww&feature=related
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Louis Vuitton commercial with Gong Li
TEACHING PLAN
This case can be taught in a 90-minute class. It can also be used for discussion-based learning in which
This case deals with the strategic marketing of a multinational luxury firm in Japan. It tackles the concept
of a multinational establishing a strong foothold in a new market. The firm tapped into the high-end
Japanese fashion luxury market, recognized as a specific and selective market. The case can be used to
discuss multiple issues in a number of courses. Therefore, a detailed analysis of various issues is presented
course.
A business model is the method of doing business by which a company can sustain itself, that is, generate
revenue. In that sense, the purpose of the case is to show not only how a European multinational firm
established its business model in Japan but also how it sustained growth for more than 30 years due to
The instructor may call a vote in the class, asking the participants whether Louis Vuitton will likely
continue to succeed in Japan or not. This will motivate students to think more about the viability of
marketing strategies implemented by the firm to overcome challenges.
SUGGESTED ASSIGNMENT QUESTIONS
1. What has made Louis Vuitton’s business model successful in the Japanese luxury market?
2. What are the opportunities and challenges for Louis Vuitton in Japan?
3. What are the specifics of the Japanese fashion luxury market?
it adopted later to strengthen its presence?
5. Will Louis Vuitton have any new challenges arise due to the global financial crisis? How does it
overcome the new challenges?
ANALYSIS OF ASSIGNMENT QUESTIONS
1. The success of Louis Vuitton’s business model in the Japanese luxury market
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income groups. The firm has focused on product development and brand management, while trying to
understand and adapt to the Japanese market. To do so, the firm has strongly invested in creativity and
cities is another factor that has attracted high-income customers Louis Vuitton products.
and a strong business model have made it possible for Louis Vuitton to be the incontestable leader in the
Japanese luxury market.
2. Opportunities and challenges for Louis Vuitton in Japan
The strength of Louis Vuitton in Japan can be broadly divided into two categories. The first one has been
the long attachment of Louis Vuitton to the country and its society, traditions, history, art and many other
Secondly, Louis Vuitton has formulated a wise marketing strategy in Japan. It came up with the idea of
special limited editions for the market. The collaboration between Marc Jacobs and Takashi Murakami was
the starting point of Louis Vuitton’s success in Japan. They created a colourful pop version of Louis
Vuitton’s monogram for the 2003 spring/summer collection. The collection showed the company’s
However, Louis Vuitton faces two serious menaces. Market dilution is the main threat to Louis Vuitton. As
thousands of handbags have spawned in the past decades, it seems that Japanese consumers’ preferences
are shifting. Mass expansion and mass distribution have become an issue as some specialists claim that
Louis Vuitton has entered an era characterized by disposable “it” bags with a shelf life of two fashion
Ultimately, the primary problem for the top luxury brand is counterfeiting. Counterfeiting has risen sharply
mainly because of China but also other Asian countries such as Korea and Hong Kong. Fake bags with the
Louis Vuitton logo are mainly exported to Europe and the United States but there have been cases of
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action against the people who are involved in counterfeiting.
It is also worth noting that the firm cashed in on the opportunities of the economic boom in Japan in the
1980s, with maximum sales of more than five million bags at premium prices. Louis Vuitton’s
Opportunities and Challenges for Louis Vuitton in Japan
Opportunities
Challenges
1. Consumers’ loyalty in Japan
1. Market dilution
2. Consumers’ long-time attachment to
the Louis Vuitton brand
2. Counterfeiting, i.e., fake bags
3. Strong presence of Louis Vuitton
stores in Japanese cities
3. Challenges arising out of global
recession and impact on Japanese
customers
3. Specifics of the Japanese fashion luxury market
When it comes to competition, Japan is the world’s most concentrated source of revenue for luxury brands
(refer to Exhibit 6 in the case). No other country in the world is such a concentrated source of revenue for
so many luxury brands. The success of luxury firms in Japan can be explained by the demand by Japanese
customers for quality products. But times have changed and new challenging brands such as H&M and
competitive prices.
Japan has always been known for group-oriented culture in which the pressure to own iconic brands is
huge. Successful brands such as Prada, Hermès and Louis Vuitton have been successful in formulating
strategy based on the cultural norms of the Japanese luxury market. The Japanese way of consumption is
influence of friends and relatives.
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4. Louis Vuitton’s entry into Japan
expansion. In 1981, Louis Vuitton opened its first exclusive retail store in Japan in Ginza, Tokyo. By 2007,
the brand had more than 50 exclusive stores, most of which were owned by LVMH’s Japanese subsidiary.
export its products from Europe to Japan to sell to customers in the country. It does not have a production
unit in Japan or neighbouring countries. Even though the cost of transportation is high, this business model
5. The new challenges brought about by the global financial crisis
The global financial crisis of 2007–2010 has had an adverse impact on the Japanese economy and the
purchasing power of the Japanese people. Appreciation of the yen (more than 15 per cent against the U.S.
dollar and roughly 12 per cent against the euro) during the last three years has also fuelled the fire as Japan
has been dependent on income from exports. Foreign companies including Louis Vuitton responded
quickly by marginally reducing prices to retain market share during the crisis period. Louis Vuitton did not
lose by way of doing this, and still got the benefits of an appreciation of the yen, being a foreign firm based
in France.
There is still room for Louis Vuitton to grow in Japan. The Japanese market is not considered saturated yet.
The strength of Louis Vuitton has been its high recognition among the middle- and high-income-group
Japanese customers. Therefore, the strategy of opening more shops in middle-size cities makes sense. The
brand will have to introduce new products and review the range of products to overcome the challenges
brought about by the global recession.
Louis Vuitton’s Internet business and a foray into children’s wear have been among the growth vectors for
the brand. Newer product categories such as jewellery, watches and eyewear are growing rapidly and
overwhelming expectations. Ready-to-wear represents another category to grow. An expansion of Louis
Vuitton’s Internet business strategy for ready-to-wear could be the next possible approach. As Louis
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A broader challenge still remains in Japan’s population, which has been in a long downward spiral, with an
It would be ideal if Louis Vuitton focused more on brand management by expanding its product portfolio
to related items, introduced new models by differentiating products further, and focused more on “value for
money” theory, to overcome the challenges brought out by the global economic crisis originating from the
United States in 2008, which in turn has led to a depression in many countries including Japan. Since
Louis Vuitton has always opened up its stores in the prime areas in each city where high-income groups
visit. This seems to have helped the firm to attract the target segment. The location of stores is an important
factor for luxury sector brands like Louis Vuitton. The firm should continue its location strategy while it
expands to other cities.
RELEVANT READINGS
http://fashiontribes.typepad.com.
“Japan’s luxury-goods market: Losing its shine,” The Economist, September 18, 2008,
www.economist.com.
Carol Matlack, “The Vuitton Money Machine,” Business Week, March 22, 2004, www.businessweek.com.
Glenn Smith, “Luxury sector loses its recession-proof status,” Media, February 12, 2009, p. 19.
Miles Socha, “Vuitton, Dior to Lower Prices in Japan,” Women’s Wear Daily, February 12, 2008.
Phillipe Adam, “La passion japonaise de Louis Vuitton,” International Commerce, July 9, 2007,
www.actu-cci.com.
www.bain.com/bainweb/home.asp.
Sally Williams and Mona Sharf, “The Brooklyn Museum announces the inclusion of an exclusive Louis
Vuitton store within the retrospective of Japanese artist Takashi Murakami,” March 21, 2008,
www.brooklynmuseum.org.
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Velisarios Kattoulas, “Counterfeiting bags of trouble,” Far Eastern Economic Review, March 21, 2002.
Kenji Toda, “Mobile-phone auction sites flooded with fake brand products,” Nikkei Business, August 20,
2008.