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PRODUCT & MARKET EXPANSION:

Analysis and Integrated Marketing Communication Plan

Presented by:
Alex Zadig, Kelsey Kurtz, Jackie Gatewood, Nicoliina Potter

Louis Vuitton Analysis & IMC Plan 1 LOUIS VUITTON

Established in 1854 in a small Parisian workshop by Louis Vuitton, himself, the company was initially established on pristine craftsmanship and quality leather trunks. After Vuittons passing, son George Vuitton took ownership and later expanded the company globally, maintaining the companys emphasis on quality and luxury. Since its establishment, Louis Vuitton has continued to develop and refine its reputation for quality based on the four main elements of the companys business modelproduct, distribution, communication and price, explains an executive at Louis Vuitton. The company currently serves 12 different countries, capturing 60 percent market share in luxury goods. With a brand valued at $19 billion and annual revenue of $3.5 billion dollars, Louis Vuitton is positioned among the most powerful and valuable brands in the world. SWOT ANALYSIS

STRENGTHS Brand name and brand recognition Strong overall market share within the luxury segment, with 60% Products are viewed as an exclusive status symbol

WEAKNESSES Low/ limited production capabilities; handmade goods Most of budget spent pursuing counterfeit cases; most counterfeited brand in the world

OPPORTUNITIES Move focus from Japanese market (over 50% of all sales) and develop market share elsewhere Capitalize on sales to brand aspirants with slightly less expensive products New product line in Cosmetics

THREATS Brand reputation must be protected at all costs as expansion occurs Any new products must be positioned carefully as not to hamper the brands position as a leader in luxury

Louis Vuitton Analysis & IMC Plan 2 EXTERNAL TRENDS: LUXURY GOODS INDUSTRY As a result of the 2008 Recession, the past four years have been a gradual recovery for most major luxury fashion brands. The following outlines key trends in the luxury industry that have aided Louis Vuitton and others navigate the industry reemergence in 2012. Luxury and Technology The intersection of luxury and technology is more pervasive and apparent than ever within the luxury market. Todays technology speaks to several pillars of luxury: badge of importance, immersive experience and exclusivity. Global markets are likely to represent at least 80 percent of the luxury industrys growth by 2015, (Capece, 2010). Attributing to massive growth in distribution and online sales for multi-channel luxury retail brands. Luxury companies need to manage complexity to a greater degree by using the Internet more resourcefully. Louis Vuitton will need to be savvier in responding to social concerns, leveraging the uniqueness of their brand and selling a sense of tradition and belonging. The luxury industry is recognizing mobile applications as a channel to connect with customers and build relationships. Louis Vuitton has done so by creating a number of applications as well as a highly popular iAd called Amble, which acts as a tour guide to all of the major cities and provides an immersive experience for users, (Lamb, 2011). Implied Value of Quality & Timelessness Another trend is recession-proof luxury that focuses on timelessness and enduring quality. Generation Y is most concerned with exceptional quality and regards luxury purchases as an investment. Many high net-worth individuals are savvy shoppers and are wary of spending superfluously, however, are interested in investing in luxury. As luxury purchases become more deliberate, consumers expect and desire an exceptional product. Luxury brands need to increase their product longevity, both in quality and trends, to position the product as a long-term

Louis Vuitton Analysis & IMC Plan 3 investment. Furthermore, there is a rising trend in luxury that stretches beyond superficial, status symbols, and speaks to rejuvenation, personal energy, and sustainability, (Capece, 2010). Increased Brand Loyalty Starting in 2012, luxury brands are implementing a more comprehensive understanding of consumers by gathering more information from their target market and developing more comprehensive brand strategies. These companies will begin to codify their brand history and heritage, along with their mission and values, in order to establish a compelling, actionable, credible and measureable brand positioning. The luxury industry will see many brands establishing personalized, customer-centric cultures in 2012, (Ransom, 2011). The increase in brand loyalty also calls for a greater awareness of competitor pricing and promotional activities. COMPETITOR BRANDS
COMPANY Gucci TARGET MARKET Affluent women 20-30 Actual or aspiring jetsetters Social Elites who are brand loyal PRODUCT POSITIONING Distinctive, high-end products Compete on quality Target heavy users Market leader in sunglasses Stylistically simple, highend products High price Best known for accessories Target brand loyalists Compete on quality Expensive and exclusive High quality, hand-made Best known for specialty silk scarves and their H logo on leather products Chic & elegant product Timeless, exclusive Best recognized for quilted leather bags, lipstick and apparel

Prada

Affluent women 20-30 Fashionista seeking timeless products Shop luxury brands and carefully follow fashion trends

Hermes

Chanel

Women of all ages Super Luxury consumer Social Elite, shops Hermes because all the women in her family do Females 35-49, often married Heavy users Shop Chanel in all product areas; shoes, clothing, cosmetics

Louis Vuitton Analysis & IMC Plan 4 CURRENT TARGET MARKET Louis Vuitton targets consumers that value fine craftsmanship, tradition, style, and above all else, exclusivity. More specifically, Louis Vuitton targets the following two segments: wealthy middle aged women from 35 to 54 years old and affluent young fashionable female adults aged 18 to 34 years old who have disposable income and are brand aspirants. The average Louis Vuitton consumer is a part of the upper economic and social class and is fashionably aware. These consumers have the need to feel prestigious and emphasize the importance of self-esteem and power. SEGMENTATION STRATEGY Demographic segmentation Louis Vuitton segments the market demographically based on age, sex, and disposable income. Specifically, Louis Vuitton targets women aged 18-54 with high annual incomes of $75,000 plus, constituting high disposable income. Psychographic segmentation Louis Vuitton uses psychographic segmentations such as lifestyle and motives to further identify their target market. For instance, Louis Vuitton targets jet setters, trendsetters, and those who pursue prestige. Usage segmentation Louis Vuitton segments consumers by usage; specifically targeting heavy users. Buyer information is collected at the point of sale and stored in a database. Heavy users are sent seasonal catalogues as well as invitations to purchase exclusive product collections to encourage repeat sales and brand loyalty.

Louis Vuitton Analysis & IMC Plan 5 CURRENT COMMUNICATION TOOLS City Guides An interactive series of video guides are available on the Louis Vuitton website, these city guides provide a mix of history and style tips for the contemporary consumer. The guides focus on the traditional elegance of iconic cities such as Paris, London, and Rome. Louis Vuittons City Guides tailor to their jet setting consumer segment. These consumers travel frequently and seek entertainment. By providing these city guides Louis Vuitton is providing their loyal customers an additional service and reinforcing their brand as a staple in any large citys history of fashion. Louis Vuitton Cup The 2013 Louis Vuitton Cup will mark the 30th anniversary of this esteemed event; a yachting competition sponsored by Louis Vuitton in which the winner advances to the Americas Cup. This sponsored event caters to the extremely wealthy, who are traditionally loyal Louis Vuitton customers. The event reinforces Louis Vuittons prestigious image and creates a sense of exclusivity that those who participate in the event seek. Advertisements Louis Vuitton advertises through a mix of targeted mass media as well. Examples include full-page ads in high-end fashion magazines such as Elle and Vogue, and billboards placed in major metropolitan areas. These advertisements target the younger, fashionable female adults who make up a significant segment of Louis Vuittons customers. These ads, often featuring popular celebrities such as Uma Thurman, convey brand image of elegance and luxury that this segment seeks to emulate. [See APPENDIX I for visual examples of the above communication tools.] NEED FOR PRODUCT DEVELOPMENT In order to capitalize and further develop the Louis Vuitton brand, the company must remain competitive within the luxury industry. Unlike Chanel, Dior, Gucci, and Prada, Louis Vuitton has yet to establish a luxury cosmetics line. The development

Louis Vuitton Analysis & IMC Plan 6 of a Louis Vuitton cosmetics line will entice a profitable, new target market that could translate into brand loyalty. By capturing this younger target market, Louis Vuitton will ensure larger market share as their consumer matures and begins to purchase other products from the company. [See APPENDIX III for Product Mock-up.] NEW TARGET MARKET This cosmetic line will target the young, American female between the ages of 20 and 35 years old. This young woman is establishing or has established her career and has a reasonable amount of disposable income. However, she cannot afford the majority of Louis Vuitton products. As a brand aspirant, she is trendy and fashionforward, and admires the lifestyle and history of high fashion. She values what brand her product is and is intentional about her cosmetics brand. As a company that caters heavily to loyal customers, this fashion-ista serves as both a relevant and profitable future market for Louis Vuitton. A recent study conducted by Bain & Company in cooperation with Vogue magazine found that women in the U.S. who consider themselves stylish and follow the latest fashions spend three times the average on all apparel, accessory and beauty purchases, (Horton, 2010.) Additionally, the 2012 Beauty Brand Index based on a combination of purchase incidence, share of wallet and brand loyalty showed Louis Vuitton in the top 10 brands for accessories. (Horton, 2010.) This positive position will allow Louis Vuitton to enter the cosmetic industry with ease and the trust of their new consumers. Louis Vuitton has the perfect opportunity to leverage their brand to capture market share from competitors, creating brand loyalists as either new customers or brand switchers. Notably, recent study, Why She Shops, found that women in 2010 did not rate price as a differentiator [in cosmetic purchases]. (Bain Company, 2010.) Based on primary research conducted via a survey distributed to college students and recent graduates, statistics confirm that this target consumer purchases makeup at least

Louis Vuitton Analysis & IMC Plan 7 once a month at department stores that offer luxury cosmetic brands (Nordstrom, Sephora). Additionally, the three most important aspects that influence purchase intent and decisions were brand of product, quality and price. After analyzing the influencing factors for 5 separate cosmetic categories (foundation, blush/bronzer, lipstick/lip gloss, eyeliner/mascara and eye shadow) we found that while price was important, the most crucial factor was the quality, implied through the brand of the product. Conclusively, this new target market will be highly receptive to a Louis Vuitton cosmetic line and will associate the brands reputation for quality with their future products, despite the product category. However, in reaching this new consumer and expanding their product offering, Louis Vuitton must be very savvy in maintaining their brand image. The following section will outline how Louis Vuitton will execute the promotion advertising and release of the new Louis Vuitton cosmetic line. CREATIVE DIRECTION In order to maintain the brand image, the creative direction for the Louis Vuitton cosmetic line will match the creative direction of current company advertising. The marketing campaign will introduce and promote the new product line of cosmetics by mimicking the brand image of prestige, simplicity, timelessness, and exclusivity. Ads will be stylistically chic, with little text in a simple font and will rely heavily on vivid imagery to execute the communication objectives. The advertisements will intentionally emphasize the strength of the Louis Vuitton logo rather than product qualities, results or slogans. The campaign will focus primarily on traditional media and be supported by the companys current social media channels. In order to best reach the younger target consumer, the make up line will be closely tied to a celebrity with whom this segment can relate. The brand representative

Louis Vuitton Analysis & IMC Plan 8 and face of the cosmetic line will be 26-year-old American actress Leighton Meester. Meester is predominately known for her role as Blair Waldorf, in the CW television series Gossip Girl. She is a recognizable celebrity and represents, both in her daily life and as Blaire Waldorf, the ideal fashion-forward and sophisticated young woman Louis Vuitton is trying to reach. Lastly, product placement throughout the Gossip Girl season will increase consumer association between Meester and the brand. COMMUNICATION OBJECTIVES The objectives of this IMC campaign are to maintain the Louis Vuitton brand image and communicate the following communication objectives: association, perception, and evoking an emotion. 1. Create an association in consumers minds between Louis Vuittons current status as a leading luxury brand, noted for quality and timelessness, and their new product line. 2. Extend the perception that the brand is not only a clothing and accessories provider but also a luxury cosmetic supplier. 3. Evoke the emotions that consumers already associate wit the brand. The imagery, font, and copy must all provide consumers with a sense of belonging, exclusivity, elegance and timelessness that Louis Vuitton is built upon. COMMUNICATION GOALS 1. Increase Louis Vuitton site traffic by 30 percent within the first six months of launch. 2. Double the new target markets current perception of how accessible Louis Vuitton is to them after 24 months of new product release. 3. Within the first six months, following the February release, increase instore awareness of Louis Vuitton cosmetic line by 50 percent.

Louis Vuitton Analysis & IMC Plan 9 EVALUATION METHODS To ensure that these goals are met, Louis Vuitton must carefully evaluate and measure in store and online sales, as well as general brand and product awareness. In order to effectively measure these areas, the company will conduct the following evaluations concurrent to product launch. The evaluations will be executed at 3 months, 6 months and at the end of each years fiscal end for a minimum of the first 5 years to ensure reliability and consistency in data. Evaluations: Evaluate annual sales relative to initial investment in the product line, advertising spending and the sales of competitors. Measure the activity on social media channels (Facebook, Twitter, YouTube and site clicks) to evaluate consumer interest in the line. o Based on site hits, Hot Maps, and page views o Response/Sale Conversion Conduct Memory or Recall & Recollection tests with magazine dummies Conduct surveys of store representative across all of their retail locations and other retailers carrying the cosmetic line, including, Nordstrom, Sephora, Sacs Fifth Avenue, Bloomingdales, and Neiman Marcus. The survey will measure customer awareness, brand preference and purchase intent. Measure consumer awareness and preferences by having retailers send a survey to their valued customers, evaluating purchase intent, brand/product recognition, and awareness. INTEGRATED MARKETING COMMUNICATION TOOLS Based on total revenue earned by the LVMH Moet Hennessy Louis Vui. Group, 37% constituted by the Fashion and Leather Goods group, the majority of which is generated by Louis Vuitton. To estimate Louis Vuittons total advertising budget per year it is best to multiply that amount of revenue by the brands total advertising and promotion expenses. This calculates to approximately $1.3 billion

Louis Vuitton Analysis & IMC Plan 10 for the entire Fashion and Leather Goods group. Between the months of June and January Louis Vuitton spent about $22 million on advertising. However, this spending almost doubles for the second half of the year. Therefore, the following allocations will be based on the assumption of a $50 million annual advertising budget. [See APPENDIX V for financial documents.] Additionally, initial investment in the new product line will require a larger portion of the advertising budget. While the product may not be initially profitable, it will be an investment in capturing the new target market and market share for Louis Vuitton. The section below will outline the Integrated Marketing Communications Tools used to promote and advertise the new cosmetic line. [See APPENDIX II for a more specific IMC timeline.] IMC PLAN & BUDGET ALLOCATION Online: Louis Vuitton has a well developed presence online including mobile applications with over 1,000 monthly users, a YouTube channel, a Facebook page with over 85,000 Likes, and a Twitter account with over 100,000 followers. To capitalize on this strong online presence, the visuals, videos and advertisements for the cosmetic line will be featured across all online channels. Facebook: Incorporate Makeup line into current Facebook page. Include promotional videos featuring Leighton Meester. Additionally the page will include pictures featuring the makeup and press releases of celebrities wearing the new makeup line. YouTube: Attempt to create buzz around videos to stimulate curiosity around the line. The videos will be vague and a call to action to visit the website to receive more information about the line including the ability to buy the product.

Louis Vuitton Analysis & IMC Plan 11 Twitter: The Twitter page will include updates on the product line. The face of the line, Leighton Meester, will promote the line through her account and the tweets will be featured on the LV Makeup Twitter page. Celebrity endorser: Leighton Meester In June of the prior year to the launch of the campaign, Louis Vuitton will begin the creative development of the advertisements, which will include negotiation of a contract with Leighton Meester, estimated at $1 million dollars. The photos of Leighton will be incorporated into each media vehicle of the campaign. Product placement: CWs Gossip Girl The new LV cosmetic line in September will make a product placement agreement with the television station the CW for the Gossip Girl season through February. Leighton Meesters character, Blair Waldorf, will be showcasing the cosmetic line in to increase awareness and association between her and Louis Vuitton. Product placement in Gossip Girl costs approximately $200,000 to $300,000 per minute per episode. We will allocate $2 million dollars of the budget to product placement, which is approximately 1 minute of footage for half of the episodes in one season, constituting 10 episodes. This product placement will occur in the last 10 episodes so that the product is top of mind and relevant to the launch of the makeup line at Fashion Week in February. Billboards: Four weeks prior to the official launch of the Louis Vuitton makeup line we will advertise in four major metropolitan cities across the United States using billboards. These cities will include New York City, Chicago, San Francisco, and Los Angeles. The advertisements displayed on these billboards will act as teasers, hinting at the launch of a new product by Louis Vuitton, with the intention of building hype leading up to Fashion Week. The only text in the advertisements will be the date of the official launch of the new product line so as to build anticipation. After the initial launch of the makeup line, billboard advertising will be extended for another four weeks and will be expanded to transit shelter advertisements in

Louis Vuitton Analysis & IMC Plan 12 key markets. There will be ads in 200 New York Subway stations and bus shelters in San Francisco near the citys central business districts. The combined effect of this advertising, based on figures found on clearchannel.com, amount to over 10 million impressions over the eight-week period. The cost for this portion of our advertising campaign, as calculated from 2010 rates found on clearchannel.com, amount to approximately $411,450. The breakdown of this cost is as follows: New York City - $162,000 for three billboard ads, $40,000 for subway San Francisco - $31,200 for two billboard ads, $56,250 (thirty bus-shelters) Los Angeles - $78,500 for five billboard advertisements Chicago Catalogs: To coincide with our new product announcement we plan to giveaway 10,000 high quality 6x9 booklets containing full page photos of the new makeup line. These booklets will be included in the typical promotional gift bags, commonly known as swag bags that are given away at Fashion Week. Based on figures found on printingcenterusa.com, the cost to print these booklets will be approximately $5,000. Magazine Advertisements: Full page, color advertisements will be printed in all major fashion magazines in North America in which Louis Vuitton currently advertises. Print ads will be consistent in message and imagery and will be uniform across all communication channels. Samples: Offer free samples to priority customers and with in-store purchases. Additionally samples will be given out in special bags given out during Fashion Week. Hopefully recipients will give powerful, free WOM advertising. In closing, the initial investment in the Louis Vuitton product line will require a large initial investment in development, advertising, and promotion. However, it is a natural and strategic move for the brand and will allow Louis Vuitton to maintain - $42,000 for three billboard advertisements

Louis Vuitton Analysis & IMC Plan 13 a competitive edge in the luxury industry while capturing market and wallet share from competitors.

APPENDIX I Examples of current Louis Vuitton promotions

(City Guides online)

(Sponsorship)

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(Print Advertisments)

APPENDIX II
General Calendar for IMC, beginning with June of the prior year to launch.

CREATIVE DEVELOPMENT: June (prior) - September: sign Leighton Meester & develop visuals

PRODUCT IN MARKET Post-release: Continue promotions on social mediums Stagger and integrate cosmetic ads into Louis Vuitton general magazine ads

PRERELEASE: December- Febrary: Product Placement in CW's Gossip Girl January 1- Febrary1: Release advertisements across all mediums Febrary 17: Fashion Week Louis Vuitton gift bags at show and samples to exclusive guests

PRODUCT RELEASE: Febrary: Release to all department and retail locations following Fashion Week Expand billboard advertisments to bus shelters and subway stations March: Product feautre in department store catalouges

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APPENDIX III
Two mock-ups of Louis Vuitton Make up Line (Credit to Alex Zadig)

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APPENDIX IV
Graphical summaries of primary research conducted by this group of college and recent graduates via a Qualtrics survey. Participation:
# 1 2 3 4 Answer 18-21 21-25 25-30 30+ Total Response 23 27 3 3 56 % 41% 48% 5% 5% 100%

Q: How frequently do you purchase makeup?


# 1 2 3 4 Answer 2 or more times a month Once a month Every 6 months Once a year Total Response 6 29 17 4 56 % 11% 52% 30% 7% 100%

This trend reaffirms what secondary sources have stated that this target market, fashion-forward, young women who follow trends spend money more frequently than average consumers. Our survey shows that 52% of participants buy makeup items at least once a month. [Results continued on next page]

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Q: Where are you most likely to purchase make up? Based on the below circle chart, the best and most relevant retailers are department stores like Nordstrom and beauty suppliers that carry luxury products like Sephora. These will be the best stores to conduct sale associate surveys and have customer surveys distributed through, during evaluation.

Q: Rank the following Factors in importance for each of the following cosmetics:
KEY: Dark Blue: most important Red: second most important Green: third most important Purple: fourth most important Teal: Least important

[Results continue on next page]

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FOUNDATION:

BLUSH/BRONZER

MASCARA/EYELINER

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EYESHADOW:

LIPGLOSS:

Across all cosmetic categories, participants ranked Quality, Brand of product, and Price as the three most important factors. In foundation, brand of product outweighed quality but the difference in importance across categories is not significant. This confirms the importance of the brand of cosmetics products and the quality implied by that brand.

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APPENDIX V
Luis Vuitton Financial documents used in estimating annual advertising budget.

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Louis Vuitton Analysis & IMC Plan 22

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APPENDIX VI
Pricing for full, single page color magazine advertisements in 1 issue. Allure: $147,453 Average circulation is: 1,075,000. Audience: Median age is 32.5 yrs., average income is $66,386, 68.3% are college graduates, and 93% are female. (condenast.com: Allure, 2012) Bazaar: $11,195 Average circulation is: 714,249 Audience: Median age is 44.8yrs., average income is $71,901, 78.5% have some college, and 89.5% are female. (harpersbazaarmediakit.com, 2011) Cosmopolitan: $244,100 Average circulation is: 3,032,000 Audience: 58.3% are 18-34yrs., average income is $26,613, 62.6% have some college, and 84.8% are female. (cosmomediakit.com, 2012) Elle: $141,210 Average circulation is: 1,124,569 Audience: Median age is 33yrs., average income is $76,596, 73.8% have some college, and 92% are female. (ellemediakit.com, 2012) InStyle: $160,500 Average circulation is: 1,251,000 Audience: Median age is 35.3yrs., average income is $81,434, 76% have some college, and 92% are female. (instyle.com, 2012) Marie Claire: $135,100 Average circulation is 963,305 Audience: Median age is 34.7yrs., average income is $78,015, 76% have some college, and 73% are employed. (marieclairemk.com, 2011) Self: $182,321
Average circulation: 1,545,247

Audience: Median age is 38, average income is $81,374, 78% have some college, and 94% are female. (condenast.com: Self, 2012) Vogue: $165,232 Average circulation: 1,248,121 Audience: Median age is 37.4, average income is $63,094, 64% have some college, and 89% are female. (condenast.com: Vogue, 2012) W: $101,361 Average circulation: 1,421,000 Audience: 64% of viewers are 18-49, average income is 155,215, 75% have had some college, and 76% are female. (condenast.com: W, 2012)

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BIBLIOGRAPHY:
"Advertising Rates." Clear Channel Outdoor. Clear Channel Outdoor. Web. 26 Feb. 2012. <http://clearchanneloutdoor.com/rates/>. Atsmon, Y. & Pinsent D. (2010). Five Trends that will Shape the Global Luxury Market. Mckinsey & Company: Consumer & Shopper Insights. Retrieved from http://csi.mckinsey.com/Knowledge_by_topic/Consumer_and_shopper_i nsights/globalluxury Bain & Company. (2010). Why She Shops Study Report. Bain & Company. Retrieved from <http://www.bain.com/bainweb/publications/why_she_shops_report.as p?ref=retailpage> LVMH Moet Hennessy Louis Vui. (2011). Financial Statements. Luxury Institute "Booklet Printing Prices." PrintingCenterUSA. PrintingCenterUSA. Web. 27 Feb. 2012. <http://store.printingcenterusa.com/booklet-printingquote.aspx>. Capece, D. (2010). 2010 Luxury Trend Report. Sparxoo. Retrieved from <http://www.slideshare.net/sparxoo/2010-luxury-trends>. Horton, S. (2010) Bain & Company. Nearly Two-Thirds of Purchases by StyleConscious Consumers Favor Durable, Timeless, Classic Styles Over Trendy, Contemporary Styles. Retrieved from <http://www.bain.com/about/press/press-releases/styleconsciouswomen-actively-spending-in-2010.aspx>

Louis Vuitton Analysis & IMC Plan 25 Lamb, R. (2011). Louis Vuitton Drives App Downloads with Targeted iAd campaign. Luxury Daily. Retrieved from http://www.luxurydaily.com/louisvuitton-drives-app-downloads-with-targeted-iad-campaign/ Ransom, C. (2011). Lucky Seven Wealth and Luxury Trends for 2012. Mosnar Communications. Retrieved from http://mosnarcommunications.com/2011/10/lucky-seven-wealth-andluxury-trends-for-2012.html

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