One fashion house that is changing with the times is LVMH Mot Hennessy Louis Vuitton SA, the

One fashion house that is changing with the times is LVMH Moët Hennessy Louis Vuitton SA, the largest marketer of luxury products and brands in the world. Chairman Bernard Arnault presides over a diverse empire of products and brands, sales of which totaled nearly $15 billion in 2002. Arnault, whom some refer to as "the pope of high fashion," summed up the luxury business: "We are here to sell dreams. When you see a couture show on TV around the world, you dream. When you enter a Dior boutique and buy your lipstick, you buy something affordable, but it has the dream in it." The company's specialty group includes Duty Free Shoppers (DFS) and Sephora. DFS operates stores in international airports around the world; Sephora, which LVMH acquired in 1997, is Europe's second-largest chain of perfume and cosmetics stores.
1. Bernard Arnault has build LVMH into a luxury goods empire by making numerous acquisitions. What strategy is evident here?
2. What are the possible risks of Louis Vuitton's first-ever television advertising campaign
3. In March 2008, the euro/dollar exchange rate was €1 = $1.50. By November, the dollar had strengthened to €1 = $1.25. Assume that a European luxury goods marketer cuts the price of an $8,000 tweed suit by 10 percent to maintain holiday sales in December. How will revenues be affected when dollar prices are converted to euros?
4. Louis Vuitton executives raised prices in 2008, and sales continued to increase. What does this say about the demand curve of the typical Louis Vuitton customer?
5. Compare and contrast LVMH's pricing strategy with that of Coach (chapter 6).