Louis Vuitton On Pricing

What does LVMH say about pricing – make customers not think about it (article from The Economist)

“THERE are four main elements to our business model—product, distribution, communication and price,” explains an executive at LVMH, the world’s largest luxury-goods group. “Our job is to do such a fantastic job on the first three that people forget all about the fourth.” For decades LVMH’s formula has worked like a spell: seduced by beautiful status-symbols, perfect shops and clever advertising, millions of people have swooned forgetfully towards the firm’s cash registers. At Louis Vuitton, LVMH’s star company, the model’s pricing power has yielded consistent profit margins of around 40-45%, the highest of any luxury-goods brand.

Listening To Your Customers – Not For Luxuries

I do not understand luxury products and services but I understand the market and consumer behavior. In the spectrum of consumption, these fall in the hedonistic end and are more of conspicuous consumptions.  Do the rules of marketing – segmentation, market research, customer preference, willingness to pay. etc – apply to marketing luxuries?  No says Jean-Noel Kapferer and Vincent Bastien, co-authors of  “Luxury Strategy – Break the Rules of Marketing to Build Luxury Brands”  in their article in Financial Times.

Listening to the consumer is the best route to a lack of differentiation, and failure to inspire the dream – the two levers of desire that are the only paths out of the recession in the luxury world.