Branding Louis Vuitton: Behind the World's Most Famous Luxury Label

You know the bag. The chocolate-brown leather canvas emblazoned with quatrefoils and the LV monogram is immediately recognizable as the international symbol of globetrotting luxury. The Louis Vuitton brand is the most valuable brand in luxury, according to a new study from Millward Brown, says Derek Thompson an associate editor at The Atlantic. But in a world with knock offs on street tables from New York to New Dehli and rappers like Kanye West pronouncing himself the "Louis Vuitton don," how does the world's most famous luxury brand protect its image?

Colin Mitchell oversees Ogilvy's Global Strategy and Planning Group, which handles some of the world's most famous brands, including Louis Vuitton. Walking me through the basics of brand management, he told me the firm's signature framework for building brands is called The Big Ideal.

"We go through the exercise, where we complete the sentence 'The world would be a better place if ...,'" Mitchell said. "The thing that finishes the sentence gives us a big ideal."

The Big Ideal doesn't have to be noble. For the fruity, fizzy soft drink Fanta, the company designed the ad campaign "More Fanta. Less Serious." around the ideal of play. For Louis Vuitton, a travel company with its 19th century origins on Rue Neuve des Capucines in Paris, the ideal that centers the LV brand is journey.

"We say that travel has lost its romance," Mitchell said. "It's become an onerous duty rather than a pleasure. When there's tension like that between ideal of travel as romantic and the reality which falls short, that's an opportunity for brands to come in and make a statement."

One of the biggest losers in the global recession was luxury and travel, which threatened to strike the heart of Louis Vuitton's business. LVMH, the holding company that owns Louis Vuitton and other luxury brands like Dom Perignon, saw its stock plummet from 40 to 10 at the end of 2008. But Louis Vuitton didn't change its message to fit with the time.

"It's crucial for luxury brands to be consistent and authentic," he said. "They become cultural reference points as the world shifts. It's not that they don't take account of cultural forces, but they can't react. They have to be beacons of a certain point of view."

LVMH's stock has recovered to the high 30s, a few points from its all-time pre-recession high. In 2010, Louis Vuitton's net profit jumped 73% led by the Asian market. A strong brand reduces business risk precisely because it stands for something more than affordability. Companies without focused brands -- Mitchell named Oldsmobile -- are in danger when affordability is the only selling point, because "somebody builds a cheaper or more convenient product, you're irrelevant."

As China and Brazil lead the race among emerging nations to enter the global middle class, Louis Vuitton suddenly finds itself with millions more potential customers outside its typical market of Europe and North America. "These people are very interesting because they're arriving in massive numbers and in a single lifetime they've made transition from villages to cities," he said. "They're looking for brands as signifiers to make sense of a new world."

The new world in advertising is moving away from the glossy magazine pages that often make a home for thickly coiffed men in shades and a Vuitton bag slung over their shoulder. The ad world has become a hectic, decentralized ecosystem of apps, targeted Web ads, and Facebook pages. After surviving the recession, Louis Vuitton's next challenge is to navigate the narrow channel between mass market technologies and a high-culture message.

"We talk a lot about roots and wings," Mitchell said. "We need roots, a back story, but also we need wings to stretch forward into the future. Managing that tension is what agencies are supposed to do." Louis Vuitton still banks opulent photographs on wide magazine pages. But its newest creation is Amble, a mobile app that lets users follow celebrities' favorite city experiences or create their own online journals with photos, videos, and notes.

Will Kanye West, the Louis Vuitton don himself, someday make an appearance in an LV advertisement? Don't count on it. "We can't be opportunistic about whoever endorsed us this week. I think Cristal champagne, Tommy Hilfiger and Burberry, all hurt their brands with overexposure to celebrities. We use Sean Connery, Keith Richards, Bono. These are famous travelers. They're more aligned with where we want to take the brand."

Customer Segmentation and Predictive Modeling Improve the Results of Marketing Campaigns

There’s an important concept in marketing that you’re probably already familiar with called Customer Segmentation.
Here’s why it’s important:

• The more you segment your target market, the more you can customize your marketing materials;
• The more you customize your marketing materials, the more meaningful they become to your prospects;
• The more meaningful they become to your prospects, the more stuff you’ll sell. 

The more you know about Customer Segmentation and Predictive Modeling, the more stuff you'll sell. And that would be a good thing.

The bottom line — Customer Segmentation is an important concept because it can help you sell more stuff to more people. And that would be a good thing.
What are the different kinds of Customer Segmentation? Glad you asked. Here’s a summary of how Dr. George Belch and Dr. Michael Belch break things down in Advertising and Promotion.

Demographic Segmentation: This is pretty straightforward and something you’re probably doing already. Essentially, it’s dividing your target market on the basis of demographic variables such as age, sex, family size, education, income and social class.
You want to focus attention on the specific demographic groups that drive large chunks of your revenue. For example, when Ikea found out that 70% of their shoppers were women, they enhanced their store environment to be more “women friendly.” The results speak for themselves.

Psychographic Segmentation: Dividing your target market on the basis of personality and/or lifestyles is called psychographic segmentation. There is some disagreement as to whether a personality is a useful basis for segmentation, but lifestyle has been used effectively by the majority of sophisticated marketers.
The determination of lifestyles is usually based on an analysis of the activities, interests and opinions of consumers. These lifestyles are then correlated with the consumers’ product, brand and/or media usage. For many products or services, lifestyles may be the best discriminator between use and non-use, accounting for differences in food, clothing and car selections among numerous other consumer behaviors.

Behavioral Segmentation: Dividing customers into groups according to their usage, loyalties or buying responses to a product is called behavioral segmentation. For example, product or brand usage, degree of use (heavy vs. light), and/or brand loyalty are combined with demographic and/or psychographic criteria to develop profiles of market segments.
In the case of usage, the marketer assumes that non-purchasers of a brand or product who have the same characteristics as purchasers hold greater potential for adoption than non-users with different characteristics.

Benefit Segmentation: In purchasing products, consumers are generally trying to satisfy specific needs and/or wants. They’re looking for products that provide specific benefits to satisfy these needs. The grouping of consumers on the basis of attributes sought in a product is known as benefit segmentation.
Consider the purchase of a wristwatch. While you might buy a watch for particular benefits such as accuracy and water resistance, others may see a different set of benefits relating to style and prestige. Those different customer groups would be broken out using benefit segmentation.

Going Deeper with Predictive Modeling Customer Segmentation was just the starting point for marketing analytics. Demographic, Psychographic, Behavioral and Benefit Segmentation are important foundations, but they’re just the beginning. If you’re really going to get deep into this kind of stuff, you’ll want to get into  Predictive Modeling.
Predictive Modeling is used to describe the likelihood that a customer will take a particular action, usually in the form of a purchase. For example, a large telecommunications company will have a set of predictive models for product cross-selling, product deep-selling and churn.

Data, or different criteria, is used to analyze and predict how certain customer segments would respond to the marketing initiatives. The starting point might be to use Segmentation to develop your overall strategy and to use Predictive Modeling as a way to analyze transactional and other data to predict the likelihood that customer segments will respond to marketing messages.

Action Steps for You:

• At a minimum, you should have a good grasp of your different customer segments.
• You should also be customizing your marketing materials based on which customer segments will be receiving them.
• Ideally, you’ll also use sophisticated techniques like Predictive Modeling to super-charge your efforts and to improve the efficiency of your marketing programs.