Louis Vuitton Counterfeiting Problem

Louis Vuitton has Adopted Several Strategies to Combat Counterfeiting in Various Markets

Louis Vuitton has experienced the major problem with counterfeit products bearing its name over the last several decades. So rampant was the issue that in 2004, for instance, the counterfeit Louis Vuitton products constituted 18% of all seizure counterfeit goods on the entire European continent. The company, being the leading luxury goods company in the world, is also one of the most counterfeited companies. This problem has not only led to massive losses in revenue but also denigrates the quality of the original Louis Vuitton products in markets, where customers are unable to distinguish between genuine and non-genuine products.

In the Canadian market, for instance, Louis Vuitton has experienced counterfeiting of their products that it issued notifications to the premise landlords to control the activities of their tenants leasing their property (Mull 2011). An Australian court identified the separate individual mandates of both tenants and landlords but also noted with concern that landlords, who received payments from landlords even with full knowledge of the illegal nature of tenant’s activities, might share liability. This issue has been replicated in European and Australian markets.

The Louis Vuitton Monogram

The Louis Vuitton monogram was designed by the LV Company in an attempt to combat counterfeiting. The monogram is engraved in the form of a signature canvas that is very difficult to counterfeit. Usually, this monogram is engraved on the side of the handbag that is easy to see and hard to remove the part. Every product of Louis Vuitton bears the monogram, and an extensive campaign to identify genuine LV merchandise has been ongoing throughout the market.

Legal Team

The other reaction was to establish an aggressive legal team for Louis Vuitton that would be responsible for protecting the intellectual property right of the LV products. The result is that vigorous legal implications are instituted for people, who have counterfeited LV products in any market both within Europe and all over the world.

Outlet Authorization

When Louis Vuitton discovered that any number of shops might be involved in counterfeiting, they moved to block the sale of their products from any third party discount store or merchandise. Instead, they have restricted the sale of products through only their authorized outlets in more than 400 outlets that they have. Moreover, LV has given exclusive stocking authority to a few distinguished merchandise stores and discount stores within large cities, whose integrity is outstanding such as Wal-Mart, the major establishments in airports among similar outlets. These measures are very effective for the company as they have helped reduce counterfeiting of a sizeable proportion, and Louis Vuitton is again on the path to regain its market share and brand integrity.

The Challenge of Globalization

Just like any other multinational company, Louis Vuitton faces the challenge of controlling and managing its international businesses. It is clear that the duty of managing a company with multinational operations usually presents challenges associated with product standardization, product adaptation, foreign government regulations, human resources management, and barriers relating to market entry among other notable problems (Smith 2007). Therefore, when a company decides to globalize, there is the urgent need to consider the market type, variables relating to market and potential differences in regard to the standard business procedure (Smith 2007). One of the countries where Louis Vuitton has faced major challenges as a result of globalization is Russia. CPP Luxury (2012) indicate that in Russia, Louis Vuitton can be regarded as one of the notable international luxury brands that have enormously succeeded in establishing a world-class retail chain, which is directly operated without any strategic alliances.

The firm has two strategic mono-brands in Moscow and other two stores in St. Petersburg and Yekaterinburg, and Louis Vuitton’s Moscow is also the one in charge of the Ukraine branch. However, with all this notable success, the firm faces the challenge of high employee’s turnover, bureaucracy as well as huge taxations and huge rents. For instance, CPP Luxury (2012) indicates that in Russia, luxury retail markets where Louis Vuitton operates face an enormous problem relating to real estate and human resource. The reduced number of highly skilled professionals in luxury retail has resulted in 30% surge in terms of salary and 50% increase in employee’s turnover (CPP Luxury 2012). Consequently, the high employee turnover has increased the training costs for Louis Vuitton as the firm aim to keep a high level of customer service in this region. In Russia, Louis Vuitton has faced the challenge of high rent, which average from 200 to 700 euros for every square meter. This factor lowers the profitability of Louis Vuitton, especially at this time when firms are aiming to reduce their operational costs (CPP Luxury 2012).

As a result of globalization, Louis Vuitton has largely depended on the prevailing economic conditions. For instance, if the global economy is in a depression, the sales figures will also be reduced for the firm as it happened in 2008. The reason is that the demand for luxury products and services decreases markedly in the case of depression or recession.

Solutions

One of the solutions to overcome the challenges associated with increased operational overheads resulting from aspects such as high rent and employee’s turnover in countries like Russia is through alliances with local firms, which sell the similar products. In such a way, the company will not face the high taxation rates as well as be able to reduce costs associated with employee’s turnover. With raised economic performance in Asian countries such as China, it is crucial to open more branches for the firm as well as invest in the advertisement, both online and offline, and, hence, higher profitability (Lee 2007). Other areas where the firm can open branches, directly or through strategic alliances, are the countries such as South Africa, Brazil and India where the number of young and rich is growing rapidly. In order to increase brand loyalty, the company should invest in TV and print Ads, thus raising sales figures even in the non-traditional markets such as Africa.