Louis Vuitton Case Solution

2. Introduction

Design management is a discipline that combines strategy, supply chain, project management, and design techniques to lead to a creative process. The term refers to the development of a structure for the organization that involves design. It includes managing all aspects that lead to creativity that includes employees as well. Its major objective is to develop a competitive advantage for the company that uses such techniques and lead it to success at three levels; economic, environmental, and socio-cultural. This means that the competitive advantage gained by the company through the phenomenon of design management should impact these three levels (Bohemia, et al., 2014). 

This report will assess design management based on the concept of branding. This will include all aspects to the branding of the company Louis Vuitton. The idea of this paper is to compare the branding aspects of two countries in which the company operates. China and the USA will be compared in terms of branding, and the aspect of design management will be used to assess the operations. The role that design plays in the development of the brand impacts the effectiveness of the brand. Design management adds the concept of strategy and creativity to the creation of brands that leads to the development of strong brands (Schroeder, et al., 2006).

3. SWOT Analysis

The SWOT analysis in terms of design management synthesizes the situation of the company and helps in determining the critical success factors that need to be considered in design management. Its assessment of the position of the company, internally as well as externally leads to the determination of the factors that can be used to foster creativity in the organization that is combined with strategic considerations (Mozota, 2003). This section will assess the organization critically based on its strengths, weaknesses, opportunities, and threats.

i. Strengths

One of the main strengths of the brand is that it has been a symbol of creativity and innovativeness. The French entrepreneur who began the company shifted the brand image of the company from being a storage box company to a luxurious brand for the elite (Biography.com Editors, 2015). It is classified as the most valuable luxury brand in the world and its logo having high brand recall value that gets the company as high as 40% profit margins (Forbes, 2015). It is recognized worldwide as a symbol of luxury that has been developed through the strong branding efforts of the company. Also, worldwide presence is a major strength for the company’s branding efforts (Thompson, 2011). 

ii. Weaknesses

Being a recognizable brand over the world, the consequences are that black-market industries produce replica goods with the Louis Vuitton logo that target the customers who want to gain a luxurious image without paying for it. Also, it captures the potential market by distributing the imitation good before the actual good arrives in the market (Ottley, 2011). Furthermore, in order to preserve the brand image, the target audience comprises of the elite class. Also, the economic situation in the country largely impacts the sales of the company. 

iii. Opportunities

The company has the opportunity to revamp brand image that matches the changing preferences and tastes of its target audience. The company also has the opportunity to expand the brand worldwide to markets that are suitable for the products. This means exploring markets that have a developed market for competitor branded products. 

vi. Threats 

One of the biggest threats to the brand image is the counterfeit products that cash on the brand image that the company has developed. The impact on the sales of the product because of these counterfeits can have a negative impact on the innovativeness of the company that is the factor that the company has been symbolized with since its inception. Also, the current financial recession presents a challenge for the brand to maintain its luxurious brand image. Another threat to the brand is the difference in fashion preferences in different countries. Animal rights groups also pose a threat to the company with their campaigns. Such campaigns might have a negative effect on the brand image (Christiansen, 2014). 

4. Target Market Comparison

i. USA

Those who are acquainted with high fashion are the target audiences for the USA. Fashion preferences of the west are taken into account for designing the products. The main reason for this is the perception of superiority of western preferences. The luxury brand category specifically derives design management from the Western preferences. European brands are also considered to develop a perception of self-esteem amongst the purchasers (Chadha & Husband, 2006). Also, there is a preference among American consumers to purchase products that are made in the USA. The perception of US made products is that of higher durability and quality (Farber, 2015). This has led to the factories expanding to western countries including the USA. Small components such as zippers are manufactured in Asia because of the brand perception attached to the manufacturing facility locations (Passariello, 2011). This shows that the target market for the USA is those who perceive quality to be associated with production facilities. To cater to such markets, the new manufacturing facilities have been opened.

Even though the economy is highly developed in the USA, the low economic growth does not have a wide potential audience for the brand. The brand image is characterized by the people who belong to the elite class because of the affordability that come with being elite (Deloitte, 2014). 

ii. China

The Chinese target market for Louis Vuitton is defined as those who want to adopt European styles. This is because of the increase of income in China. This increase in income has led to increased international travel giving rise to aspirations that are related to the western culture (Lui, et al., 2012). The brand’s mission is to represent the most refined aspects of western art showing the western influence in its design management process (Spulber, 2007). However, the change in the Chinese mind-set has allowed the company to target individuals whose choices coincide with that of the west. The threat of different fashion preferences across the globe is reduced because of the change in the Chinese lifestyle. 

With the developing consumerist culture in China that followed the increase in incomes, luxury products are gaining interest from Chinese customers. The history and culture of the country has led it to symbolize luxury with social class and status. This importance to luxurious possessions has also provoked this change in preferences with the change in income levels (Chen, 2013). With these economic conditions, the implication is that the target market for Louis Vuitton in China is wide. The progress of the country shows that the potential audience in China is greater than that in the USA. The target audience is not only the elite class, but other socio-economic classes also because of the affordability of other classes as well. However, even though the affordability of the people in China is high, the company limits opening up stores in third-tier cities. This is because of the risk of the brand image being changed to commonplace. So, the target market in China are those who belong to first and second-tier cities (Wendlandt, 2013).