Louis Vuitton Is the Worlds Most Valuable Luxury Brand - Case Study Example

The entity has a luxury and exclusive brand that seeks to sell itself through premium quality production rather than through mass marketing. The television, however, avails the brand to mass audiences thereby placing the audience in the clusters of brands such as Diesel and Karl Lagerfeld. Since the brand has loyal and a choosy customer base, its customers are highly likely to interpret such a move as a loss in the brand’s worth. The brand, however, may benefit from an increased presence in emerging high-income countries and unexploited markets such as India.

Case 11-17

At an exchange rate of $ 1.50, the value of $ 8, 000 is equivalent to 10, 000 euros. When the price reduces by 10 percent, the value of revenues in dollars becomes $ 7, 200. At a strengthened exchange rate of $ 1.25, this presents a value of 9, 000 euros. The company, therefore, loses 1000 euros at the new exchange rate. It is essential to highlight that when the exchange rate weakens, the company loses some money out of the current revenues.

Case 11-18

The demand curve of a typical Louis Vuitton customer shapes differently because of notable reasons. To begin with, it is essential to note that a normal demand curve should show an inverse relationship between prices and the level of consumption. This is because as prices increase, consumers buy less of given goods. After all, their budgets are constrained. Louis Vuitton, however, is different because it sells luxury products that entail superior craftsmanship. A knowledgeable and loyal customer, therefore, can face a premium price in purchasing a given item. Besides, the brand builds on exclusivity and classiness that it would always strive to drive away its goods from mass consumption (Haig, 2006). Loyal customers are willing to pay higher prices because such prices exclude other ordinary customers from accessing Louis Vuitton goods. Besides, the luxury market that Louis Vuitton exploits has wealthy customers whose demand curves are inelastic to price increases. In close relation to this, the performance of developed economies such as the US and Europe can withstand such price increases. When individuals face improved economic lives, there arises a new set of customers of Louis Vuitton who are enthusiastic to purchase luxury products for their esteemed social value.

Case 11-19