Stakeholder Recommendation Report

Executive Summary
Report from IBISWorld (2019), indicates that “Australia’s Luxury Retailing industry has grown at a rapid pace over the past five years, with revenue expected to grow at an annualized 10.2 percent over the five years through 2017-18, to $2.1 billion.” Louis Vuitton is amongst the most valuable brand in the world with a brand value of about $ 28.51 billion U.S. dollars. In 2018, the group made a total revenue of $53.5 Billion. Louis Vuitton Australia Pty Ltd is a proprietary store that has about 10 stores located in various areas offering a wide range of products. Although widely recognized, Louis Vuitton Australia Pty Ltd is not the sole player in Australia luxury industry. The brand faces intense competition from well-known international luxury brands such as Channel, Gucci and Financière Richemont who enjoy wide recognition, customer loyalty plus broad network distributions. Because of intense rivalry, luxury brands use a number of strategies to distinguish themselves in the market place. A recent development has been in utilizing digital platforms as well as providing an Omni channeled platform that seeks to private a seamless and unified experience across all platforms. The aim of this report is to highlight advertising strategies that are utilized by Louis Vuitton in light of its external environment and make a stakeholders recommendation on the strategies that be capitalized on.
The purpose of this report is to analyses the advertising strategies of luxury brands in the light of Louis Vuitton Australia. It starts with an external analysis where the report looks at the industry the company operates in,its key customers, competitors as well as Current Major Advertising and Creative Strategies Campaign. Thereon the report goes on to analyze the issues or opportunities that relate to stakeholders diversity and then makes appropriate recommendations on the strategies to undertake.

  • Stakeholder and the Current Major Advertising and Creative Strategies Campaign
  • Analysis of issue or opportunity related to stakeholder diversity
  • Recommendations – Explanation of action/solution to address the issue related to the stakeholder via recommendations (Major Advertising and Creative Strategies Campaign)
  • Conclusion

On a global scale, Louis Vuitton is the most valuable brand in the world with a brand value of approximately 28.51 billion U.S. dollars.The company’s products are in its mature stage and expected to grow in the future because of favorable economic conditions which have stabilized the value and demand for luxury goods.
Report from IBISWorld (2019), indicates that the “The Luxury Retailing industry has grown at a rapid pace over the past five years, with revenue expected to grow at an annualized 10.2 percent over the five years through 2017-18, to $2.1 billion.”Deloitte’s (2018) projections estimate that the market of luxury goods in Australia is expected to grow by about 6 to 8 percent until 2024.
In recent years, Australia has been increasing an increased acceleration of the entry of luxury brands. This is a result of favorable macroeconomic trends such as growth in consumer population that have a strong desire for international products (Blake, 2018). Furthermore, Australia proximity to Asia makes a significant location for affluent inbound tourists who make up the largest customers.
Key Trends in the Australian Luxury Market
Growth of technology
The growth of digital platforms and next-generation consumers have prompted luxury brands to invest in online and digital platforms for advertising as well as e-retail (White, 2018)
The rise of Next-generation consumers
Millennial make a significant proportion of customers of luxury brands. These group also want to live in a sustainable environment and are also attracted to companies that take considerable efforts in upholding sustainable measures (Euromonitor International, 2018). Therefore, it is imperative to hold sustainable practices in targeting these segment of customers (Retail, 2018).
The rise of Chinese Customers
Chinese customers take the most significant proportion of Australians luxury customers. They contribute to 30 percent of luxury sales. This is attributed to the country’s proximity to Asia and particularly China (Carruthers,2018).
Although Louis Vuitton is the largest player in the Luxury industry, the company is not without competitors. According to IBIS (2018) report, Louis Vuitton Australia major competitors are Chanel Australia, Gucci Australia, and Richmont Australia.
Gucci which is part of Kering which is an international luxury group that is based in France. Gucci products include drinks, fashion, cosmetics, fragrances, watches, jewelry, luggage, and handbags. In 2018, the global revenue of the company was approximately $ 8.3 billion with the Asia Pacific region generating about 36 percent of the total revenues (Statista, 2019).
Channel which is also based in France is a fashion house that specializes in ready to wear clothes, luxury goods, and haute couture as well as fashion accessories. In 2018, Channels revenue grew by 11.5 percent to stand at $9.62 billion (Channel annual Report, 2018).
Richemont is a Switzerland-based luxury good thatsells jewelry, watches, leather goods, pens, firearms, clothing, and accessories. In 2018, Richemont revenues stood at €10.979 billion with a general increase in revenues due to the expansion of its retail businesses in South Pacific (Richemont Annual Report, 2018).
Interestingly, all of the fashion brands named above almost use similar the same strategies in marketing their products. Louis Vuitton and Gucci are increasingly using social media as a marketing tool. For example, Louis Vuitton has in place a virtual adviser on Facebook Messager that converses with consumers to help them identify their ideal items (Carruthers,2018). Channel is yet another luxury brand that utilizes social media for influence. The company’s Annual Report (2018), highlights that the company has dedicated about 40% of its advertising budget on engaging customers on social media platforms. Gucci, Channel, Louis Vuitton, and Richemont also utilizes print magazines, TV commercials, celebrities and fashion shows to advertise their products. Gucci and Louis Vuitton are known to limit their annual sales and exhibitions to raise scarcity and demand for the products (The Retailer, 2018)
Louis Vuitton is a luxury brand that essentially targets high-end customers who are rich, affluent and are of high status. The brand’s products are segmented in the following categories; young adults, baby boomers, Generation X, Generation Y and seniors along psychographic dimensions of socioeconomic factors, lifestyle, goals, and aspirations (Louis Vuitton , 2019).While age plays a role in target marketing strategies, customers buying behaviors are primarily driven by psychographics. With this said, Louis Vuitton essentially targets three main categories of customers which is the quality seeker, the self-indulger and the status seeker.
The quality seekers make up about 33 percent of the customers, status seekers 21 percent while the self-indulger take the biggest proportion at 46 percent (The Retail, 2018). Status seekers are mainly millennial who seek exclusive status to maintain high social status and also increase their self-esteem (Gil et al., 2012). In recent years, the Vuitton brand has been targeting young markets. For instance, the company has been making increased efforts to add items that appeal to the young such as the time it partnered with Takashi Murakami to create multicolored monogram canvas collection that was specific to the youth. In fact, (2019), estimates that the majority of Louis Vuitton customer is affluent younger female, age 18-34 with annual incomes of about $100,000 or more and from the Asian region.
Middle-aged individuals especially women seek quality, they look for luxury, durability, and craftsmanship in the products they buy. These customers are particular on the brand and are most likely to have products customized to her taste (The Reailer, 2018).
Lastly, the self-indulgers include highly successful entrepreneurs and CEOs who enjoy luxury wear that is easy to personalize and also convenient. This group of customers are likely to buy products throughout the year and have brand loyalty. They go for both cheap as well as high-end products.
Advertising primarily seeks to connect potential customers to the brand (Kapferer &Bastien, 2012). The customers are varied in demographics which also means that advertisement campaigns are also likely to be altered in line with the target group. Some of the conventional channels that Louis Vuitton uses include;

  • Print advertising and billboards. Fashion print magazines and billboards represent a majority of the advertisement budget for high-end luxury brands. Fashion magazines like vogue distinctly target specific customers while billboards have a wider audience. However the cost of advertising in these media is expensive (Kapferer & Bastien, 2012). 2) TV commercials target wider range of customers from both socioeconomic divides, and unlike print magazines, they are more visual and engaging because of the fact that they can capture motion (Atwal& Williams, 2009).

3) High profile individuals including You Tubers, bloggers and celebrities are also a major advertising strategy. These individuals although expensive, they already have followers of fans and are shown in red carpets. They can help increase brand awareness as well as increase brand popularity (Senft, 2008). 4) Department stores typically have images of selected top brands in the world in displays and exclusive fashion events that encourage customers to order for similar items.
5) Fashion runaways are also common strategies that are used. The event attracts thousands of fashion moguls from around the world. However, it takes up significant costs to have such events organized. Last but not least is the 6) use of social media and digital advertising. Social media platforms such as Facebook, Pinterest, and YouTube provide platforms that fashion brands can use to promote their campaigns as well as to connect with their target customers. Brands can save a considerable amount of cost with social media as they can reach masses more cheaply than print media (Godey et al., 2016). Recently, more fashion brands are taking up interest in digital platforms. Louis Vuitton is also increasingly utilizing digital channel, a report by Deloitte (2018) shows that the brand has millions of followers on Twitter, Facebook, and Instagram.Using a metric called the “Earned Media Value,” (EMV), Tribe Dynamics a marketing firm estimates that luxury brands save up to $33 million by using social media for advertising.
Undoubtedly, the future success of the industry is pegged on its ability to reach to younger generations proactively. This calls for a communication channel that can easily reach this group. Typically, luxury brands base their identity on prestige and exclusivity which is achieved by maintaining a distance between themselves and the consumers (Kapferer & Bastien, 2012). However, to increase sales, fashion brands are compelled to engage with young customers through appropriate channels such as social media, the use of you tubers and young celebrities.
Retailers are increasingly shifting from multichannel retailing to omnichannel retailing model. According to Rigby (2011), “Omnichannel advertising approach that seeks to provide a seamless experience to customers. It primarily “seeks to provide the customer with integrated customer experience, the customer can be shopping online from a desktop or mobile device, or by telephone, or in a brick and mortar store and the experience would be seamless.” The demand for Omnichannel advertising continues to grow as the demand for digital technology and e-commerce continue to accelerate (Atwal & Williams, 2009).
A report by Tourism Australia (2018) estimates that Chinese tourists collectively “spent over $10.3 billion in Australian retail over the year ending 2018.” This is spent on niche brands and flagship stores such as Chanel, Louis Vuitton, and Gucci because of the popularity and prestige that is associated with the brand. Because of this, many outlets are increasingly changing their offering so as to capitalize on inbound tourists in Australia.
The rise of social media has also created the concern of compromising exclusivity by increased visibility. Scarcity is relevant in this industry as it helps to maintain the prestige that is involved with the brand (Kapferer & Bastien, 2012). However, too much scarcity will make the products unavailable for the customers. As such, there is a need to adopt strategies that will make the products available to potential customers.For example, there has been an increased influx of high spending Chinese tourists who shop and visit luxury shops in Australia. For this reason, it is crucial that the brand should have retail stores in peak tourist areas as well as international airports to target these customers’ based on their travel time and destinations Carruthers, 2018).
Following the above discussions it is recommended that;

  • Considering that a majority of the costumers are millennial, it is advisable that the stakeholders look into advertising platforms that can target youngsters. A report from PEW on internet usage highlights that about “69 percent of US adults from varying demographics except for those 65 years and older have access to social media” (Smith, 2015). With this said, stakeholders should consider investing you tubers, bloggers and celebrity who have a large following and influence (Senft, 2008).
  • Apart from reaching youngsters, it is essential to consider digital platforms for advertisements (Zhu & Chen, 2015). Social mediaprovide an inexpensive strategy for a brand to engage with customers as well as gain insights into their customer’s behavior through web listening data analytics
  • Customer’s preferences continue to grow and evolve on each day in line with changing mobile technologies. Such changes necessitate that Louis Vuitton Australia should consider implementing secure digital supply networks that can provide seamless experiences to their customers regardless of the point of sale.

The stable economy, as well as the rise of Chinese tourists, has accelerated the demand for luxury brands in Australia. As more luxury brands hit the Australian market, players are forced to differentiate their marketing strategies so as to gain a competitive edge against its competitors.With the rise of digital platforms, a luxury brand marketing strategy seeks to create the highest price value and brand by leveraging on multiple factors including scarcity. Advertising that emphasizes on holistic integration of aspects that emotionally appeal to the customers in terms of convenience have the capability of reducing advertising costs significantly. With this said, marketing strategies should be varied relative to behaviors of demographics of the target market as well as the industry trends.
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