Burberry SS12 advertising campaign
Louis Vuitton plans to reduce the visibility of its monogrammed products going forward. This is also the strategy that PPR/Kering has gradually been adopting for Gucci over the past few years. Once popular in their use as visual representations of luxury status, logofication boosted Louis Vuitton’s brand value from $6m in 2004 to $23m in 2012 (Interbrand).
Demand from emerging markets made the monogram so ubiquitous however, that it is now a symbol of accessible luxury rather than exclusivity. Indeed, a study found that the smaller the logo is on a luxury item, the higher the price it can command. This study carried out by the University of Chicago included over 400 products from Louis Vuitton and Gucci combined, and was also found to be true for Mercedes cars.
“ A study found that the smaller the logo is on a luxury item, the higher the price it can command ”
To prevent further dilution of its brand status, Louis Vuitton will therefore move away from its logo-ed handbags, which currently represent two-thirds of its product offering. They will shift emphasis towards a higher-end offering, with exotic skins and leather goods.
This is most certainly the right direction to take, but the question is whether Louis Vuitton already scaled itself to the point that it is synonymous with mass luxury. Will it be able to reclaim its position as an authentic luxury brand, alongside Hermès and Goyard?
There is no doubt that either way Louis Vuitton will remain one of the world’s premium brands. And, if executed well, we believe this strategy will put it in good stead to improve its perceived authenticity in the longer term. If the brand can create a clear separation between its lower-end canvas models and its higher-end products, truly
mature luxury consumers may begin to see that the brand is just as exclusive as other niche luxury brands.
“ The question is whether Louis Vuitton has already scaled itself to the point that it is synonymous with mass luxury ”
Burberry can be used as a case study. It transformed itself from a much lower base and put itself back on the luxury map in less than 5 years. The brand is still more accessible than Louis Vuitton would want to be, but it managed to shake off its mass/ fashion association and counterfeit issues by reducing the visibility of the distinctive check from 2006.
Simultaneously, it raised its average price point by developing the top end of its product pyramid with Burberry London, a smart wear-to-work collection, and Burberry Prorsum, a runway collection. The latter created a halo effect on all of the brand’s other products, and with the predominant material for its bags now leather instead of PVC, Burberry may have some lessons for its larger competitor.
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Published on May 6, 2013 under Analysis
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