1. Louis Vuitton Market Entry Strategy RTW in South Korea
Group B-1, RSM MBA FT2005
Mark Amritanand, Edo Avraham, Are Hofstad, Weiming Li, Kelly Pender, Stefan Salzer
Strategy Management Rotterdam,

2. Agenda Objective Global Luxury Goods Market
Louis Vuitton Moët Hennessy (LVMH)
The South Korean Opportunity
Market Segmentation
Competition
South Korean Luxury Goods Market
Louis Vuitton Analysis
Conclusion
Recommendations
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

3. Objective
Whether or not Louis Vuitton should launch its women’s ready-to-wear (RTW) clothing line in South Korea. Currently, Louis Vuitton has eighteen retail locations in South Korea, carrying only its luggage, handbags, accessories, and shoes.
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

4. Global Luxury Goods Market
Total market $66bn in 2000; expected $75 bn in 2004
Gross margins for clothing approx. 70%
Dominated by large luxury goods conglomerates
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

5. Luxury Goods Industry Trends
Horizontal consolidation
Reliance on one star brand
Professional management
Move away from licensing
Investing in multi-million $ stores
Recruiting international designers
Democratization of fashion
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

6. Louis Vuitton Moët Hennessy
Fashion & Leather Goods (14)
Louis Vuitton
Fendi
Kenzo
Wines & Spirits (13)
Moët & Chandon
Dom Pérignon
Hennessy
Perfumes & Cosmetics (10)
Guerlain
Parfums Christian Dior
Watches & Jewelry (5)
Tag Heuer
Chaumet
Selective Retailing (6)
DFS Duty-Free Stores
Le Bon Marché
eLUXURY.com
Other (2)
Media & publishing
33% of Revenue
66% of Profit!
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

7. The South Korean Opportunity
GDP: $425bn
GDP Growth: 2002: 6% : 3%
Population: approx. 50m
GNI per Capita: $9,800
Retail Sector: 2001: $99bn
Consumer Goods Imports 2002: $15.3bn
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

8. South Korean Developments
Decreased tariff & import restrictions
Reduced on luxury goods tax (11/01)
Influx of upscale shops & restaurants
Luxury goods lead consumer goods imports
5-day work week = more leisure time
Core inflation stable
Decreased regulation
Foreigner can now own land (1998)
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

9. Target Market Segment Women 25+ Early-adopter Urban
Medium/High disposable income
“LV sect”
Grow along product lines
In South Korea: Bohemian Bourgeois (BoBos)
High-spending, brand conscious
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

10. Competition FENDI Stores in SK Pricing Main Strength Main Weakness 24+
Cross-Selling
Allegra Beck Versace 18
=== 14
= / -
Product Variety
Giorgio Armani 12 +
Privately Owned
Couture Collection 11 +
Jean Paul Gaultier
Older Target Market 8 +
PPR Ownership
Tom Ford’s departure 8 +
Holds 42% of LVMH
Couture Collection
FENDI 5 +
LVMH Brand
Higher Prices
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

11. South Korean Luxury Goods Market
Players not yet in SK Market share of
existing players
No discounts or sales
Waiting lists
Emotional switching barriers
Rare brand-loyalty
Small Manufacturers
Reciprocal Benefits
Real Estate Owners
Noteworthy, but not fierce
Rivalry for design talent
No price competition
Haute Couture
Designer flight
Cars, Watches…
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

12. Louis Vuitton SWOT Analysis
Strong financials
150 years of excellence
Existing presence in SK
Marc Jacobs (designer)
Cross-sell from accessories
Clothing not as well known as handbags
Risk of brand dilution
INTERNAL S W O T
Most competitors don’t sell in their own stores
Strong SK economy
LV brand already popular
Young BoBos target market
Currency fluctuations
Political instability
Democratization of fashion
Counterfeiting & grey market
Marc Jacobs could leave
EXTERNAL
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

13. Conclusion Launch RTW Line in South Korea
Expand into new market to fight mature markets in Eur. & N. Am.
Complete distribution control in own stores
Leverage existing store investments
Grab mindshare before competitors
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

14. Recommendations Pilot Program Launch in Seoul flagship store
Market to BoBos
Cross-sell to existing customers
Use competitive intelligence from DFS stores
Evaluate results & roll-out nationwide
Maintain brand exclusivity
Knowledge transfer within LVMH to introduce conglomerate’s other brands
Group B1 – Final Strategy Project
MBA FT2005, Semester II,

15. ?
Any Questions