Luxury Goods Industry Situational Analysis

1. Luxury Goods IndustrySituational Analysis Presented by: Victoria Dinkins Trion King

2. Luxury Goods Industry • Definition of Luxury Goods Industry • Excellence, Superior Service • Elite Population • Fragmented Industry • 22% of worldwide industry sales • Major Competitors: • Louis Vuitton Moet Hennessy • Gucci • Richemont • Bulgari • Hermes Obsession with excellence in every luxury-goods company

3. E-Commerce/Net-Enhanced Organization Internet/World Wide Web • Makes it easy to market products overseas • Speeds up globalization • Aims to transform customers into “connoisseurs” • Allows for accessible information • establishes ties between consumers and a brand, and enhances persuasion Internet = Communication = More Informed Buyer

4. Threats & Opportunitiese-Commerce/NEO • Needs considerable local adaptation • retailing is still very localized • Informality, community spirit, openness – similar to flea market • position between mass advertising and personalization is a real challenge • Lacks necessary quality of attention to detail • Impersonal communication • Allows companies to build long run relationships with customers • converging possibility between internet user profiles and the luxury consumer

5. Economic Globalization & Outsourcing • Unconventional approaches to managing a multinational business • Manage business in various countries as a single system • International acquisitions • LVHM – U.S. fragrances and cosmetics • Less dependent on outsourcing or licensing • move production capacity to China • Emerging markets equal to 7% to 9% • Asian markets constitute 7% of global sales • Sales in Japan equals 38% of the industry

6. Threats & OpportunitiesEconomic Globalization/Outsourcing • Outsourcing labor has perception of cheaper products • Rising costs deteriorated margins • value-added taxes driving Chinese prices up 30% • high acquisition costs • Maintaining image and reputation • Threat of substitutes

7. QUESTIONS ?