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Management of a luxury brand:

dimensions and sub-variables
from a case study of LVMH
RayeCarol Cavender
Human and Consumer Sciences, Ohio University, Athens, Ohio, USA, and

Doris H. Kincade
Apparel, Housing, and Resource Management, Virginia Tech, Blacksburg,
Virginia, USA

Management of
a luxury brand

231
Received 31 March 2013
Revised 23 June 2013
Accepted 13 September 2013

Abstract
Purpose The purpose of this paper is to develop industry specific operational definitions for
marketing dimensions and sub-variables in the luxury goods industry that will contribute to the
growing body of company-based research on luxury brand management.
Design/methodology/approach Case study of a leading luxury goods conglomerate provides
operational definitions and insight into best practices for management of a luxury goods brand
through an in-depth historical review and analysis of variables, measures, relationships, and patterns
that emerged throughout the study of the sample company.
Findings Successes and failures of brand management for the sample company for the umbrella
variables of brand strategy, growth trade-offs, and strategic planning, and their associated sub-variables,
were identified in the review of literature and were analyzed, adapted, and enumerated according to
findings from the case study.
Research limitations/implications Results limited to the study of one sample company. Common
themes were identified in the management of a luxury brand that can be used by researchers to study
other luxury companies.
Practical implications Variables and measures for luxury brand management were identified
throughout the review of literature and verified throughout the case study as being instrumental
in brand management success of a leading luxury goods conglomerate and may be relevant to other
luxury companies aiming to hone their brand management strategies.
Originality/value Luxury goods research is increasing in prominence, but the majority of this research
is consumer-based. This research contributes to the growing body of company-based luxury research.
Keywords Case study, Brand management, Luxury goods
Paper type Case study

Introduction
Many events in recent history (ca. 1990s-2012) have changed the landscape of the luxury
goods industry and have had direct implications for how a luxury brand must be managed
and marketed to consumers. Economic factors such as increasing size of disposable
incomes, lower unemployment rates, and growing numbers of wealthy consumers in
emerging countries (e.g. BRIC) have led to a more favorable environment for luxury
consumption (Truong et al., 2009). In addition, high entry barriers guarded for centuries
[have] been lowered due to advancement in business and management practices, driven by
globalization and the Internet (Okonkwo, 2007, p. 225).
During this time, the industry also experienced a significant increase in luxury
demand among aspirational consumers (Truong et al., 2009). This luxurification of
society (Yeoman and McMahon-Beattie, 2006, p. 320) increased financial and managerial
pressure to create relevancy to new consumer demographics and spurred the emergence
of new luxury brands (e.g. Jimmy Choo, Tory Burch). Many traditional luxury companies

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Management
Vol. 18 No. 2, 2014
pp. 231-248
r Emerald Group Publishing Limited
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DOI 10.1108/JFMM-03-2013-0041

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expanded their product offerings (e.g. cosmetics, perfumes) and vertically extended their
brand portfolios, driving profitability through increased accessibility (i.e. lower purchase
prices, higher profit margins; Truong et al., 2009).
In addition to specific changes in the luxury business environment, the turn of the
century marked a paradigm shift to an experience-based market. This shift resulted
in the need for luxury companies to develop experiential marketing strategies to
satisfy customers increasing demands for meaningful experiences (e.g. entertainment,
time-saving features; Atwal and Williams, 2009; Schmitt, 1999).
Navigating the intricacies of this dynamic, high growth industry to successfully
manage a luxury brand is a meticulous process requiring more strategic than
tactical decisions (Andal-Ancion et al., 2010). The purpose of this qualitative research
study was to identify the key dimensions of brand management operations for a leading
company in the luxury goods industry. Explicating these dimensions with sub-variables,
specific definitions, and measures, coupled with a discussion of supporting evidence
from the case study contributes to the growing body of company-based research for best
practices in luxury brand management. The following three research questions were
used to direct this case study:
RQ1. What are the indicators of brand management successes and failures for the
sample luxury company in managing the brand strategy dimension with
the associated sub-variables of brand identity and effective adaptation of the
companys strategic marketing vision?
RQ2. What are the indicators of brand management successes and failures for the
sample luxury company in managing the growth trade-off dimension with
the associated sub-variables of brand equity and brand architecture?
RQ3. What are the indicators of brand management successes and failures for the
sample luxury company in managing the strategic planning dimension with
the associated sub-variables of brand sustainability and effective response to
consumer market change?
Review of literature
Overview of the luxury goods industry
Although the luxury goods industry, especially in apparel, has existed since the 1850s,
few changes are noted in organizational or marketing structures until the 1990s when
rapid consolidation, initiated by the Louis Vuitton and Moet-Hennessy merger and
CEO Bernard Arnaults subsequent acquisition spree, resulted in the conglomerate
being the dominant ownership structure. These more recent changes coincide with an
unprecedented pattern of growth, averaging a 14 percent growth in sales annually
from 1996 to 2000, and an overall growth in the first decade of the new millennium
despite periods of global recession (Bruce and Kratz, 2007).
Although events in economic, social, and political environments (e.g. economic
downturns, terrorism, and natural disasters) have impacted growth in the industry,
in certain sectors (i.e. watches and jewelry, champagne and spirits, perfume, and
cosmetics), overall, the luxury industry is proving to be less cyclical than
analysts originally predicted. This factor may be attributable to star brands (e.g.
Louis Vuitton, Moet & Chandon, Parfums Christian Dior) with demonstrated resiliency
and leadership in the recovery from the most recent global economic recessions

(Galloni, 2004). According to Bain & Company, one of the worlds leading business
consulting firms, worldwide sales of luxury goods experienced a 10 percent increase
from 2010 to reach h191 billion (i.e. $261 billion) in 2011 (Rothery, 2011). In the long
run, continued growth in the sector is predicted due to emerging markets, a growing
number of wealthy individuals around the world, and growing demand among middle
market consumers due to luxurys aspirational nature (Truong et al., 2009).
Luxury and management of the brand
Marketing scholars have taken many approaches to the understanding of luxury
(Atwal and Williams, 2009). For example, extensive research has examined the concept
of luxury as related to consumer perceptions and purchase motivations (e.g. Phau and
Prendergast, 2000; Tsai, 2005; Vigneron and Johnson, 1999). Additional research
investigated luxury brand attributes that merit inclusion in a luxury brand framework
(e.g. Beverland, 2004; Fionda and Moore, 2009; Keller, 2009; Vigneron and Johnson, 2004),
and proposed specific components of successful luxury marketing (Atwal and Williams,
2009; Kapferer and Bastien, 2009; Phau and Prendergast, 2000) and management
strategies (Keller, 2009; Kapferer, 2012; Reyneke et al., 2012). The proliferation of verbiage
related to luxury marketing (e.g. masstige, hyperluxury, ultra-premium) added to the
complexity of luxury-related research (Kapferer and Bastien, 2009).
Other notable research has discussed the luxury brand in relation to marketing
practice in postmodern society, emphasizing that marketing was developed in
response to the industrial age [and] not the information, branding and communications
revolution we are facing today (Schmitt, 1999, p. 55). In the information age, luxury
companies must create pleasurable total experiences for consumers in addition to fulfilling
their functional and symbolic needs (e.g. Atwal and Williams, 2009; Schmitt, 1999;
Tsai, 2005). Additional research has examined the luxury brand in relation to the larger
business environment paying particular focus to contributors to success in periods
of economic recession (e.g. Andal-Ancion et al., 2010; Kapferer, 2012; Manlow and
Nobbs, 2013; Reyneke et al., 2012; Tynan et al., 2010). Still other research has investigated
the ephemeral and transitory nature of the luxury brand (Berthon et al., 2009;
Reddy et al., 2009) providing guidance for companies reconciling growth trade-offs
(e.g. brand architecture) while navigating markets of varying maturity levels.
McColl and Moore (2011) suggest that an appropriate strategy is to assume that
what constitutes luxury and the luxury brand is intrinsically linked to a companys
brand strategy and to approach luxury brand management from a company-based
perspective. Corporate branding, especially for a luxury brand, is often identified as
a precondition for successful communication between the brand and the public
market (Gapp and Merrilees, 2006). A commitment by senior management is required
to approach branding as an integrated business process, embedding the brand concept
in all company functions, not just marketing (Balmer, 2001; de Chernatony and Harris,
2000). With this integrated and inclusive strategy, companies reach a point where the
brand represents the core beliefs and values of the company as a whole (de Chernatony
and Harris, 2000; Urde, 2003). By aligning the elements of vision and culture within the
company, companies create a favorable image in the public market resulting in strong
brand identity (Hatch and Schultz, 2001).
Although many aspects of the luxury industry, both from the consumer and company
process perspective, have been researched, an operational and industry-based definition
of luxury management remains open for debate (Atwal and Williams, 2009). Many
studies have aimed to develop a luxury brand framework; however, few studies provide

Management of
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detailed, working definitions of the components for a brand management framework,

and none specific to the luxury brand industry. Thus, a noticeable gap exists in the
literature on this issue. Key dimensions of luxury management need to be explicated
using branding terminology, adapted from marketing literature, and validated through
actual company activities. Although luxury brand management continues to be path
dependent and centered on institutional issues (Beverland, 2004), specific components of
the luxury brand should be enfolded into and evaluated by the appropriate brand
management dimensions. The purpose of this research is to fill this definitional gap by
determining variables within brand management relevant to luxury brand operations
through a case study of a leading brand in the luxury goods industry.
Methods
A case study of a leading luxury goods company was selected by the researchers.
The paradoxical nature of these [luxury] brands [y] requires methods that develop
deep insights, as opposed to surface level observations (Beverland, 2004, p. 451).
A case study can be used for this purpose because it illustrates the complexities of
a situation, depicts how the passage of time has shaped events, provides vivid material
and presents differing perspectives or opinions (Rossman and Rallis, 2003, p. 104).
As seen in recent published research, the case study is a valid research tool for examining
business practices of luxury companies, especially those representing industry
leadership Gucci Group (Tynan et al., 2010) and the Louis Vuitton Moet-Hennessy
(LVMH)-Bulgari agreement (Kapferer and Tabatoni, 2013).
Sample company
The LVMH conglomerate, in which Louis Vuitton is a star brand, was selected as the
sample company for the case study. Although the study included an analysis of the LVMH
conglomerate and its portfolio of brands, special attention was given to Louis Vuitton the
company, and its brand. Louis Vuitton was the highest ranked luxury brand by two major
brand valuation reports in 2012 (i.e. Interbrand Best Global Brands and Brandz Top 100;
Interbrand, 2012; Milward Brown, 2012). The brands top ranking indicates that Louis
Vuitton is both a financial and marketing leader in the luxury sector of the retail industry
and, thus, representative of an archetypal luxury company. The possibility that business
practices of Louis Vuitton are emulated by other luxury goods companies and that further
research examining a larger sample of luxury companies would yield similar findings is
viable; therefore, increasing the external validity of the study.
Selection of the larger conglomerate for the study resulted from many factors found
in the initial phase of research, such as formation of LVMH in 1987 and the subsequent
consolidation of the luxury goods industry. The depth provided by an exploration of
brands, which have been brought into and divested from the LVMH portfolio, and the
fact that the conglomerate is now the predominant organizational structure, offered
a broader view of the luxury industry and more detail and variety of market and
operational strategies.
This research is focussed toward events in recent history (ca. 1990s-2012) for several
reasons. In addition to the general growth of the luxury industry, this recent period
demonstrates numerous changes in corporate structure and business strategies for
Louis Vuitton. The merger of Louis Vuitton with Moet-Hennessy (i.e. manufacturer and
retailer of wines, spirits, and fragrances) in 1987 formed Moet-Hennessy-Louis-Vuitton
(LVMH) and marked the ascension of Bernard Arnault to chairman and CEO of LVMH
in 1989. Arnaults visionary leadership style and ambitious growth and expansion

strategies have been emulated by numerous competitors (e.g. Gucci, Prada) and have
been instrumental in securing LVMHs position as the largest and most profitable
organization in the luxury goods industry (Mintel, 2012).
Data collection and analysis
To explicate the three research questions, operational definitions and measurements
were obtained from the review of literature (e.g. Keller, 1993, 2009; Okonkwo, 2007).
These operational definitions from basic marketing and other business literature are
not specific to the luxury industry, which further indicates the need for the research.
This information was developed into a coding table of marketing dimensions used to
guide the data collection and analysis process (see Table I). The dimensions were
further explained with additional sub-variables.
One of the most common techniques to enhance the internal validity of a qualitative
study is triangulation in which a variety of methods are used to build the picture
that you are investigating (Rossman and Rallis, 2003, p. 69). To triangulate the study,
the researchers gathered general apparel business and company data through
a comprehensive review of available literature, including both primary and secondary
sources. Relevant articles from apparel industry trade publications (e.g. Womens Wear
Daily (WWD)), national newspaper publications (e.g. Wall Street Journal ), and leading
business magazines (e.g. BusinessWeek, Forbes, The Economist) were surveyed for
information relevant to LVMH and the luxury goods industry as a whole. Additional
data on LVMH was gathered from the companys web site and other company
documents (e.g. 10-K reports) were obtained from business databases (e.g. Mintel)
to identify, analyze, and compare financial data for LVMH. General business databases
(e.g. ABI/INFORM, Business Source Complete) were employed to identify additional
information on the companys corporate structure, business models, and marketing
initiatives. General and specific internet searches were used to identify pertinent resources.
Using the definitions in Table I, collected data were coded, grouped into categories,
refined, and condensed through multiple iterations. Finally, the researchers examined
relationships and patterns across categories to verify or modify the previously
identified variables and measurements for the case study. In order to demonstrate rigor
and confirm the validity and reliability of findings, the researchers used verification
strategies by consulting periodically with experts in the marketing and apparel fields
(i.e. a researcher who is knowledgeable about qualitative research served as a peer
debriefer) and with a community of practice experienced in the luxury industry
(Rossman and Rallis, 2003). This evaluation enhanced the researchers experiences in
the apparel industry and their personal consumer approach to luxury goods.
Findings
Indicators of brand management successes and failures for managing the brand strategy
dimension with the associated sub-variables (RQ1)
From the business literature, four goals were identified as being central to a companys
brand strategy and a basis for honing brand identity and marketing vision:
competitive and financial strength, strong brand performance, consistency important
in communication of the brand concept, and social and cultural responsiveness
(Heding et al., 2009). Using these goals as a measure of brand strategy, the two variables of
brand identity and marketing vision were investigated in the case study. Information from
the case study provided evidence that the brand strategy dimension and the two
associated sub-variables (see Table I) were pillars of the business practice within LVMH.

Management of
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JFMM
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Dimensions
Interpretation
process

Sub-variables

Brand strategy

236

Brand identity
Interpretation
process
Brand strategy
dimension and
sub-variables as
a measure of brand
management success
or failure (RQ1)
Marketing vision

Growth trade-offs

Brand equity
Interpretation
process
Growth trade-off
dimension and
sub-variables as
a measure of brand
management success
or failure (RQ2)
Brand
architecture

Table I.
Dimensions,
sub-variables, operational
definitions, and
measurements for the
study of luxury brand
management of Louis
Vuitton and the LVMH
conglomerate

Operational definitions
Unique to each brand;
a strategic, visionary, and
proactive approach to
enhancing internal and
external opportunities
of the brand (Heding
et al., 2009)
The identifiable attributes
and identifiable elements
that make up the brand and
how these are perceived and
interpreted by people that
come into contact with
the brand (Okonkwo,
2007, p. 110)
Top managements
aspirations for the
company (Hatch and
Schultz, 2001, p. 130)

How to attract new

customers without
alienating existing
customers in order to grow
(Keller, 2009, p. 300)
Marketing effects uniquely
attributable to the brand-for
example, when certain
outcomes result from the
marketing of a product or
service because of its brand
name that would not occur
if the same product or
service did not have that
name (Keller, 1993, p. 1)
Brand portfolios (in the
case of conglomerates)
or the brands a company
owns and the organization
and relationship of these
brands to each other
within the brand
portfolio. Includes
vertical extensions,
sub-branding, and
licensing (Keller, 2009)

Measurement

Brand image associations

in the form of attributes,
benefits, and overall
consumer attitudes, and;
brand personality (Keller,
1993; Okonkwo, 2007)
Vision inspires all its
sub-cultures, vision is
effectively communicated to
stakeholders, and company
image is aligned with
stakeholders image of the
company (Hatch and
Schultz, 2001)

Corporate brand equity,

consumer-based brand
equity, digital brand equity,
and Young and Rubicams
Brand Asset Valuator
(Keller, 2009)

Growth in sales, equity

across multiple market
segments, and equity
across multiple price
points

(continued)

Dimensions
Interpretation
process

Management of
a luxury brand
Sub-variables

Strategic planning

Interpretation
process
Strategic planning
dimension and
sub-variables as
indicators of brand
management
success (RQ3)

Brand
sustainability

Effective
response

Operational definitions

Measurement

Useful tool in helping

companies continually
monitor the environment
and implement necessary
changes in business
strategies (Park and
Kincade, 2011)
The ability for brands to
last and recoup
investments (Wreden,
2005, p. 219)

Long-term return on
investment, and continued
relationships with
customers, supply chains,
and stakeholders
The constant monitoring of Evidenced in historical
data, financials, and brand
business action plans for
portfolio, adaptation of
their effectiveness in
marketing vision, strong
reaching company goals
and the implementation of brand equity, and brand
sustainability
changes addressing
potential challenges and
changes in the environment
(Park and Kincade, 2011)

Brand identity. The brand concept is the very basis of the brand (e.g. name, country
of origin, history, total offerings), and must be a solid building block for development
of the brand identity (Okonkwo, 2007). From the brand concept, the brand identity
is created and shaped as part of the brand strategy. LVMH boasts a portfolio of
brands with clearly defined brand concepts (e.g. Bulgari, Pucci, Fendi, TAGHeuer),
and has also chosen to divest brands in the past that have struggled to develop
fully their brand concept (e.g. Lacroix, Hard Candy, Urban Decay, Ebel; Gabriele and
Rosa, 2009).
For this study, brand identity, was measured by: brand image and brand
personality (see Table I). Brand image is the interpretation of a brand in the mind
of the consumer based on the way the brand projects itself and brand personality
is how the brand is created to be, or its true self, (Okonkwo, 2007). Brand
protection, a third measurement, emerged throughout data analysis of the case study
(see Table II). A paradox existing within LVMH, since the conglomerates inception,
has been how to integrate successfully new brands into the portfolio, transfer
added value to those brands, and initiate needed reorganization, while following
a brand protection strategy (i.e. the third measurement) in which acquired companies
remain mostly autonomous to preserve brand identity. Due to the fact that they
were shown to be highly interrelated, the three measurements are discussed
concurrently.
For LVMH, Arnault first demonstrated his ability to revitalize brand identity
through corporate restructuring with the Dior Couture brand. Dior Couture was once
considered Frances most prestigious fashion label, but was significantly diluted by
extensive licensing and widespread distribution in the 1970s. Arnault overhauled the

237

Table I.

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Dimensions
Interpretation
process

Sub-variables

Operational definitions

Brand strategy

238

Unique to each brand; a

strategic, visionary, and
proactive approach to
enhancing internal and
external opportunities of the
brand (Heding et al., 2009)
Brand identity
The identifiable attributes
Interpretation
and identifiable elements that
process
make up the brand and how
Brand strategy
these are perceived and
dimension and
interpreted by people that
sub-variables as
come into contact with
a measure of brand
the brand (Okonkwo,
management success
2007, p. 110)
or failure (RQ1)
Marketing vision Top managements
aspirations for the company
(Hatch and Schultz, 2001,
p. 130)

Measurement

Growth trade-offs

Brand equity
Interpretation
process
Growth trade-off
dimension and
sub-variables as a
measure of brand
management success
or failure (RQ2)
Brand
architecture

Table II.
Strategic planning
Revised dimensions,
sub-variables, operational
definitions, and
measurements for the
study of luxury brand
management of Louis
Vuitton and the LVMH
conglomerate

How to attract new

customers without alienating
existing customers in order to
grow (Keller, 2009, p. 300)
Marketing effects uniquely
attributable to the brand-for
example, when certain
outcomes result from the
marketing of a product or
service because of its brand
name that would not occur if
the same product or service
did not have that name
(Keller, 1993, p. 1)
Brand portfolios (in the case
of conglomerates) or the
brands a company owns and
the organization and
relationship of these brands
to each other within the brand
portfolio. Includes vertical
extensions, sub-branding,
and licensing (Keller, 2009)
Useful tool in helping
companies continually
monitor the environment and
implement necessary changes
in business strategies (Park
and Kincade, 2011)

Brand image, brand

personality, and brand
protection

Vision supports brand

identity and brand
positioning, is integrated
at all company levels, and
evolves with customer
change

Corporate brand equity

and digital brand equity

Diversity, brand extensions,

and sub-branding

(continued)

Dimensions
Interpretation
process
Interpretation
process
Strategic planning
dimension and
sub-variables as
indicators of brand
management success
(RQ3)

Management of
a luxury brand
Sub-variables

Operational definitions

Brand
Sustainability

Long-term return on
The ability for brands to
last and recoup investments investment, and continued
relationships with
(Wreden, 2005, p. 219)
customers, supply chains,
and stakeholders
The constant monitoring of Organization-environment
business action plans for their fit, environmental change,
and organizational
effectiveness in reaching
adaptability
company goals and the
implementation of changes
addressing potential
challenges and changes
in the environment
(Park and Kincade, 2011)

Effective
response

Measurement

brands management and implemented strategic goals aimed at regaining tight control on
production and distribution, calculated expansion of brand offerings (e.g. accessories),
aggressive global expansion, and infusing modernity into the heritage brand (Socha,
2007). Constant collaboration between the brands creative and business functions also
ensured that Dior Coutures brand personality was carefully conveyed through product
lines, marketing campaigns, and in retail spaces, to create a clear brand image in the
minds of luxury consumers.
The brand identity of Louis Vuitton, who experienced declining profits and
sales in the 1990s, was overhauled by Yves Carcelle, a visionary manager who
Arnault fully trusted with the brands management. As Vuittons CEO, Carcelle
capitalized on the brands indisputable reputation for craftsmanship to exploit the
companys potential (Pasols, 2005). By creating artificial scarcity through limited
production and release of products and diversifying product offerings to include
innovative design style and new materials, market ubiquity was remedied and
exclusivity restored.
The restructuring and revitalization of the Dior Couture and Louis Vuitton
brands identity confirmed two common measures for brand identity (see Tables I
and II). A third measure, brand protection was added (see Table II). For the most part,
Arnaults goal of brand protection worked well among acquired brands (Matlack
et al., 2004). No interaction occurred among acquired companies, and only minimal
interaction took place between acquired companies and LVMH; therefore, protection
of individual brands identities was easily achieved. However, as many of the newly
acquired brands were small in size, many of the brands managers did not have
the business capabilities to aid their brands (e.g. Hard Candy, Urban Decay, Ebel)
on a global scale. Thus, many of the brands failed to meet expansion and
development goals that LVMH had set for them.
LVMH did not begin to implement changes in its integration initiatives until it began
the back-to-basics approach in 2002 (Gabriele and Rosa, 2009; Galloni, 2004). LVMHs
strategic shift aimed to transfer knowledge, provide added value, and capitalize on
scale economies among brands in its portfolio with the goal of maintaining existing

239

Table II.

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(i.e. Louis Vuitton, Moet & Chandon, Hennessy, Parfums Christian Dior) and growing
potential (i.e. Fendi, Celine) star brands while instituting best practices from those brands
across the conglomerates portfolio. As the brand portfolio grew, LVMH slowly learned
that the communication between brands presented the opportunity to improve all
brands performances, and thus, brand equity across its portfolio (Gabriele and Rosa,
2009, p. 221).
Marketing vision. Hatch and Schultzs (2001) measures of a successful marketing
vision as a support to brand identity are used for the study (see Table I). After the
brand identity is established, a company must meticulously position the brand both
internally and externally. Brand positioning builds on the brand identity, helping
marketers to create the optimal location in the minds of existing and potential
consumers (Keller, 1999, p. 44). The fact that luxury brands are symbolic in nature and
enjoy high brand awareness that extends well beyond their target consumers creates
unique opportunities for companies in the development of their marketing vision.
Most consumers would immediately recognize advertisements featuring brown canvas
handbags with LV monograms, as Louis Vuitton. Recognizable design aesthetics, such
as the jungle-themed aesthetic of LVMH-owned Kenzo, are also useful in advertising as
they convey the brand personality to the consumer, sometimes in absence of the brand
name itself (Socha, 2011b).
Luxury marketers can leverage the high awareness of their brands to market to
consumers in a more abstract and avant-garde way. Instead of ads showing product, the
more abstract advertisements, such as those in Louis Vuittons Core Values campaign,
exude the brands essence and reflect the symbolic nature of the brand. By appealing to
consumers senses and transporting them to another world, however briefly, luxury
brands like Louis Vuitton are able to create much stronger, deeper associations in the
minds of existing and potential consumers, than the product-related associations created
by brands in less aspirational goods categories.
The second measurement of marketing vision involves integrating the marketing
vision at all levels of the company. In an interview for the Harvard Business Review,
Arnault stated that the last thing you should do is assign advertising to [a brands]
marketing department. If you do that, you lose the proximity between the designers
and the message to the marketplace. [LVMH] keeps the advertising right inside the
design team (Wetlaufer, 2001, p. 122). In addition, LVMHs tightly held distribution not
only helps to facilitate control of margins and quality, but also allows it to ensure that
those marketing decisions are adhered to (Gabriele and Rosa, 2009).
The third and newly added measurement, vision (see Table II), evolves with consumer
change, can be explained for LVMH by its brands ability to be reactive to changing
marketing orientations over time. The proliferation of imagery and the desire by
consumers in the 2000s for constant entertainment have resulted in the introduction of
a new marketing orientation, experiential marketing. Because luxury goods can be
experiential in nature, luxury marketers are in a unique position to apply experiential
principles to their marketing strategies with maximum results in the form of increased
brand loyalty (Atwal and Williams, 2009).
This newest marketing theme, as part of the marketing vision, can be seen across
each operating group of the LVMH portfolio. Many brands now offer personalization
services in their boutiques (e.g. Thomas Pink, Benefit), enhanced customer service
offerings utilizing digital features (e.g. Sephora), and special exhibits geared toward
consumer interaction and education (e.g. Fendi, Dior). Improved interactivity and
experiential features on company websites was also a theme in 2012 (LVMH, 2012).

Throughout the review of the case study, a clear marketing vision was determined
to be cohesive with and in support of a companys brand identity and brand
positioning. Additionally, the measurements explicated by Hatch and Schultz (2001)
were simplified and discussed concurrently for this research. Finally, in accounting for
changes in the consumer environment, a measurement was included to determine the
extent to which the case study company has adapted its marketing vision to changing
consumer needs. Therefore, the measurements of marketing vision were revised
(see Table II). This modification for the luxury goods industry more succinctly
addresses key goals pertaining to LVMHs broad marketing vision and the vision of
individual brands in the LVMH portfolio.
Indicators of brand management successes and failures for managing the growth
trade-off dimension with the associated sub-variables (RQ2)
Growth trade-offs or [h]ow to attract new customers without alienating existing
customers in order to grow (Keller, 2009, p. 300) is a key challenge of brand management
in the luxury goods industry. From the review of literature, the measurements of trade-offs
were clustered into two variables: brand equity and brand architecture (see Table I).
Throughout the case study, the researchers identified the presence of these growth
trade-off variables within LVMH; however, trade-offs were never addressed directly by
LVMH as either/or decisions. Rather, trade-off decisions were approached with the goal
of incorporating both components of the trade-off into LVMHs brand management
strategy to facilitate a balance among the items in the trade-off and required adjustment of
the variables measures (see Table II).
Brand equity. Three measurements for the brand equity variable were identified
from the literature prior to the LVMH case study (see Table I) and were modified
through the analysis of the case study data (see Table II).
For LVMH, corporate brand equity (CBE) proved to be the most important
measurement in the examination of the brand equity variable. In its loosest form,
CBE refers to creating added value. At its inception, LVMH created little added value
for its acquired brands. Arnault and LVMH opted for autonomy among acquired
brands to ease the acquisition process and preserve brand identity and creativity.
Through additional acquisitions, Arnault determined that in order to grow, economies
of scale and scope would need to be leveraged in the portfolio. To accomplish these
economies, Arnault, in the late 1990s, broke the LVMH brands into operating groups
based on product category. In 2002, LVMH began to focus on growth of its star brands
and further implemented integration strategies among the smaller brands aiming to
cut costs and position them for future growth. The conglomerate began to share
knowledge, management expertise, and best practices, across brands as a way to
create competitive advantage [y] and in 1999, LVMH House was founded as
a dedicated corporate development function [for senior level executives across the
brand portfolio] (Gabriele and Rosa, 2009, p. 21). Integration initiatives and knowledge
transfer are two ways that LVMH adds value to its brands, thus strengthening CBE.
In addition, LVMH hones the CBE of the conglomerate as a whole through its corporate
social responsibility (CSR) initiatives.
The other measurement of brand equity that became of primary importance to
LVMH is digital brand equity (see Tables I and II). LVMH capitalized on first mover
advantage on the internet in 2000, with the launch of its web site, eluxury. The US
based e-commerce site helped LVMH develop an online presence for brands in its
portfolio at a time when other luxury goods brands in the industry were uncertain

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about the role, if any, that the internet would play in their marketing strategies
(Kaplan, 2009). Many of the brands in the LVMH portfolio (e.g. Dior, Louis Vuitton,
Sephora) also embrace digital marketing through interactive websites, social media,
and mobile applications (Mintel, 2012). The LVMH conglomerate has also launched
NOWNESS, an editorial web site that offers a creative, interactive, and technologically
advanced way to experience the luxury lifestyle online.
From evaluation of the data in the case study, the researchers determined that
measurements presented for the brand equity variable (see Table I) merited
modification; therefore, the measurements of brand equity were revised by reducing
the number of variables (see Table II).
Brand architecture. The variable, brand architecture, was cited by Keller (2009) as a
critical area for luxury marketers and is defined as the brand portfolios or the brands
a company owns and the organization or relationship of those brands to each other
(see Table I). As data were collected for the case study, the researchers determined that,
although these measurements were relevant and valid, three other terms would serve
as more accurate measurements of brand architecture for LMVH. Therefore, the
measurements of brand architecture were revised to be: diversity, brand extensions,
and sub-branding (see Table II) and are discussed as their exemplification in LVMH.
The first revised measurement, diversity, was revealed as LVMH carefully
employed brand architecture in the development of its brand portfolios. During the
acquisition spree of the 1990s, Arnault was particularly interested in diversifying
the Perfume and Cosmetics Group with American start-up companies that would
appeal to younger target markets (e.g. Hard Candy, Urban Decay, Benefit; Diamond,
1999a, b, 2000). These brands complement existing brands in the Group (i.e. Guerlain,
Parfums Christian Dior, Parfums Givenchy) by increasing sales volume and catering to
a younger demographic, in a market that the Group had not yet saturated. Arnault has
also diversified the Fashion and Leather Goods Group, which comprised only French
brands until the acquisition of Loewe (i.e. Spanish brand) in 1996 (Mintel, 2012).
Through examining the second revised measurement, many examples of brands
that suffered from poor brand extensions or over-licensing (e.g. Dior, Donna Karen)
prior to being acquired by LVMH were identified. Since the negative effects of overlicensing on brand image can take years and significant amounts of money to repair,
Arnault and LVMH became very selective in entering license agreements.
The third revised measurement, sub-branding, was seen by the researchers as a
theme within LVMHs Fashion and Leather Good Group. Although other heritage
brands within the luxury goods industry (e.g. Chloe, Gucci) have had success in
sub-branding, LVMHs heritage brands are foregoing brand extensions in favor of product
line extensions (e.g. ready-to-wear, accessories, fragrances; MarketLine, 2010). However,
the younger brands within the Fashion and Leather Goods Group (e.g. Donna Karen, Marc
Jacobs) have successfully launched sub-brands without compromising brand image.
Indicators of brand management successes and failures for managing the strategic
planning dimension with associated variables (RQ3)
Strategic planning is used by companies as they monitor business and consumer
environments and consider appropriate responses to manage their resources (Park and
Kincade, 2011). The importance of strategic planning was obvious at all levels of
planning for LVMH, and its relationship and importance to brand management was
supported in the data analysis. Two variables and their explicated measures were
associated with this dimension (see Table I). The first variable, brand sustainability,

had limited change from the predicted measures while the second variable, effective
response, was modified extensively to fit evidence from the case study (see Table II).
Brand sustainability. The first measurement of brand sustainability, long-term
return on investment, is a goal by which LVMH monitors the brands in its portfolio,
but one that might not have been actualized without the back-to-basics shift of 2002.
During its early years, LVMH was buying growth (i.e. sales) through its acquisitions,
but profits (i.e. net profits) were slipping (Edmonson et al., 1997). This could be
attributable to the fact that, in the acquisition spree of the 1990s, LVMH was
overpaying for brands in an effort to outbid competitors. Further, many of the brands
were in worse financial shape (e.g. Donna Karen) than LVMH had anticipated.
These brands were not able to utilize LVMHs business capabilities in order to grow
and suffered short-term losses (Gabriele and Rosa, 2009).
In contrast to the strategies of buying new brands in the 1990s, in 2002, Arnault
implemented a back-to-basics shift at LVMH to foster internal growth and
concentrated on the development of star brands (e.g. Louis Vuitton, Moet & Chandon,
Hennessy, Parfums Christian Dior) for long-term growth. This strategy involved
constant creativity and sustained innovation, focussed investments, and disposal of
non-strategic assets. Annual results for 2002 indicated that the strategy was
effective, evidenced by improved profitability across groups, increased cash flow,
and reduction of debt (LVMH, 2003).
LVMHs slow and calculated approach to long-term profitability has resulted in
strong performance and growth across the brand portfolio. LVMH has also seen
growth despite challenging economic climates. For example, from 2008 to 2010,
LMVH increased its operating cash flow by 33 percent, lending greater stability to
the companys operations and allowing for further growth and investment
(MarketLine, 2010). The year 2011 was marked by a 20 percent sales growth in
the luxury goods industry, the largest growth rate in 15 years. The new normal and
dire economic growth prospects in the West did not affect high-end discretionary
consumption in debt-laden developed economies, as many commentators had
predicted (Socha, 2012, p. 2).
The second measurement of brand sustainability examined LVMHs relationships
with customers, supply chains, and stakeholders (i.e. employees, shareholders,
suppliers, general public). Analysis of data for LVMH indicated that, over time, it has
cultivated successful business relationships with its acquired brands (Gabriele and
Rosa, 2009; LVMH House, 2012). In the early years of the conglomerate (i.e. prior to
2002), acquired brands were allowed to remain autonomous, which eased stress of the
acquisition and preserved brands identity. In recent years, however, LVMH has
implemented integration initiatives to aid flailing brands and realize economies of
scale and scope. This strategy has allowed the conglomerate to increase credibility
with its brands, because it let its designers continue to design while providing
a structure and support system of back office efficiencies that many independent
luxury designers lack (Gabriele and Rosa, 2009, p. 220). LVMH has also employed
LVMH House, a corporate development function, which fosters working relationships
among brands executives (LVMH House, 2012).
With the brands (e.g. Louis Vuitton, Dom Perignon) placed first in emerging
markets, LVMH has been able to cultivate strong working relationships useful in
paving the way for its other brands (Passariello, 2007). As the luxury industry leader,
LVMH has also affirmed its self-proclaimed duty to give back, through numerous CSR
initiatives representing broad public interests.

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LVMH brands have also created strong relationships with their consumers through
continued creativity and innovation, exceptional service, and uncompromised
quality (LVMH, 2012). This factor is evidenced throughout portfolio as brands have
directed marketing efforts toward creating invaluable experiences for consumers.
By continuing to be responsive to changes in the consumer environment, LVMH brands
have maintained a loyal consumer base and more easily attracted new clientele in both
existing and emerging markets. Case study findings strongly confirm the measure of this
variable within LVMH.
Effective response. Based on case study information, the researchers revised the
measures that would satisfy the examination of effective response (see Tables I and II).
Organizational adaptability, which refers to the actual changes a company makes in
response to environmental threats, is discussed concurrently with the first two
measurements as issues and resolutions from the case study are presented.
The first revised measurement, organization-environment fit (see Table II), refers to
the degree of fit between the companys offerings and the environment, or its target
consumers. Brands in the LVMH portfolio, each with distinctive brand positioning,
know their target consumers, and are demonstrating success in providing them with
products that they do not necessarily need, but that they desire (e.g. Louis Vuitton,
TAGHeuer, Bulgari; LVMH, 2012). The talented creative directors employ their own
interpretation of the zeitgeist to develop each seasons collections. Through this
approach, consumers continue to be excited by the brands over time and are willing to
pay premium prices (Wetlaufer, 2001).
This strategy might not seem to be in line with a consumer-centric marketing
strategy, but ironically, the strategy continues to achieve results for LVMHs brands.
This finding is an example of a paradox of why consumers are so captivated
by luxury brands. Sometimes the brands know their consumers better than the
consumers know themselves, and by helping the consumer make sense of an
oversaturated marketplace, they facilitate repeat customers and eventually, brand
loyally. However, as with any business, LVMHs brands sometimes have missteps in
developing organization-environment fit, and therefore, must approach initial
changes incrementally. For example, in 2011, Louis Vuitton introduced select product
styles in luxurious crocodile leather, expanding its offerings only after favorable
consumer response (Socha, 2011a).
The second revised measurement, environmental change (see Table II), refers to the
companys ability to plan for and remain responsive to changes in the environment that
affect its fit with target consumers. LVMH and its companies have successfully navigated
numerous changes in the business and consumer environments such as the terrorist
attack in the USA on September 11, 2001. LVMHs response was a back-to-basics focus on
star brands, such as Louis Vuitton, because the more well-established brands in the
luxury industry were the only brands that were maintaining steady sales figures in late
2001 and early 2002 (Galloni, 2004). The fact that LVMHs brands operate on a global scale
makes them even more susceptible to unexpected cultural, social, political or economic
events. How the brands respond to such events, especially in new or emerging markets
(e.g. 2011 earthquake in Japan), has the potential to impact how the brands are perceived
in those countries among consumers.
In addition to addressing threats resulting from changing environments, LVMH has
also distinguished and leveraged marketing opportunities that have arisen as a result
of those changes. For example, improving the store experience through renovation,
personalization services, and implementation of experiential or interactive initiatives,

has helped brands across the LVMH portfolio maintain exclusivity by focussing on
depth of customer experiences through brand interaction (i.e. experiential marketing;
LVMH, 2012). This successful organization-environment fit is very important for
luxury brands that risk diluting brand image if they are too present in consumer
markets. The revised measures (see Table II) provide more targeted measures of the
brand activities for LVMH.
Conclusions and recommendations
Throughout the case study, the researchers honed the dimensions and sub-variables
based on the successes, failures, and lessons learned by LVMH and provided revised
measures verified by use in the premier luxury brand conglomerate, LVMH. For the
brand strategy dimension, the sub-variables were highly interrelated and were an
integral part of the restructuring that Arnault did to keep the brands competitive.
Success for LVMH was dependent on keeping brand image stable in the minds of
consumers and became paramount in each new strategy. Growth trade-offs for LVMH
were rarely about either/or decisions but more likely to be about growth and gain for
the conglomerate without loss for the brand. The strategic planning dimension
illustrates the importance of planning at all levels and the power that Arnault held over
individual companies, even when brands were allowed to operate with a sense of
independence. Even when the strategy was back-to-basics, the brands in the LVMH
portfolio were situated for growth and longevity.
This case study shows that, over time, LVMH carefully crafted a value strategy and
long-term vision for brands in its portfolio to leverage the conglomerates business
capabilities (e.g. skills, implementation strategies shared across brands) to foster growth
and development, while maintaining autonomy to preserve individual brands identities.
LVMH has also strengthened its ability to leverage its key assets (e.g. creativity, quality
and durability, heritage) as drivers of brand value. This has allowed LVMH to continue to
expand the breadth and depth of its portfolio, with the continued goal of helping its
luxury brands reach star brand status.
These variables and their revised measures, unique for the luxury goods industry,
can be used by researchers to study other luxury brand companies. While drivers of
brand value will be specific to each companys business model, these variables and
measures provide a relevant guide to manage, evaluate, and sustain those drivers over
time. In addition, the table of revised dimensions and sub-variables need further testing
and evaluation by academic researchers to establish more universal criteria for brand
management in the dynamic luxury industry. Finally, a stronger understanding of the
environmental factors directly and indirectly affecting the luxury goods industry and
how leading companies (e.g. LVMH) are adapting their strategic business plans to
leverage those changes is needed. Combining the dimension and their sub-variables,
with an understanding of variables present in the larger business environment
(i.e. consumer, globalization, technology), can contribute to the formation of a luxury
brand management framework in future research.
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About the authors
Dr RayeCarol Cavender, PhD, holds the BS in Merchandising Management with a minor in
Spanish from Virginia Tech and the MS in Consumer Affairs with a minor in International
Studies from the Auburn University. She holds the PhD in apparel, housing, and resource
management from the Virginia Tech with a focus on apparel business. She also has extensive
experience in customer service in the hotel and restaurant industries. Dr Cavender is an
Assistant Professor in the Department of Human and Consumer Sciences and teaches courses in
retail merchandising and fashion product development. Her major research interests include
brand management of luxury goods, experiential marketing, international marketing, and
customer relationship management. Dr RayeCarol Cavender is the corresponding author and can
be contacted at: cavendr1@ohio.edu
Dr Doris H. Kincade, PhD, is a Professor of Apparel Product Design and Merchandising
Management in the Department of Apparel, Housing, and Resource Management at the Virginia
Tech in Blacksburg, VA. She is a Faculty Fellow with [TC]2 at the National Apparel Research
Center. Her research, using both qualitative and quantitative research methods, involves the
examination of best business practices for apparel manufacturers and retailers with emphasis on
the strategies of quick response, rapid product development, and mass customization.

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