Sandeep Vyas Case Analysis # Longchamp

29-Sep-2017

Executive Summary

This case analysis describes the key issues and solution for an iconic fashion brand

‘Longchamp’. I would like to highlight them as follows-

Marketing issues- The recognition and global sales through the well-known product called ‘Le

Pliage’ has created a debate within the company as- How to position its affordable luxury and

premium luxury products in the market.

Production lead time and Competitive Issues - The brand follows a rigorous manufacturing

process with 250 different steps and mostly done by hand. This makes the scalability very

expensive and reduces the profit.

Organizational and financial issues- The difference of opinion between the founder family and

International director is another issue, which needs to be balanced else it can create delays in

long term strategies. This can hamper the organization plan for 1 billion euro company.

In order to address above challenges Longchamp should go with a brand extension. This should

be done to accommodate affordable luxury segment. This has been achieved by ‘Giorgio Armani

by introducing Armani jeans and exchange (Powell, 2005). It should also reduce the lead time by

automating certain redundant processes. This will help in quick scalability of its handmade

products and will free the man power for additional work. I also believe company should

consider the fashion extension suggested by its director.

SWOT Analysis-

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Internal Strengths

Quality, Innovation and Craftsmanship-The Longchamp history of business rely on quality,

sense of innovation and international perspective. The French heritage with its own

manufacturing and unique craftsmanship is a big plus to its brand value. The sense of innovation

comes due to grass root DNA of Longchamp family. It is also a privately owned company, this

makes it a risk taking entity and keeps it away from quarterly rush and allows it to work for its

true value system. I believe the biggest strength for any brand is to work for long term growth

rather than for short term gains which gives a real value addition to Longchamp in this case.

Detail oriented products- Another strength I see is to design and make products at your own

factories. This gives authenticity to the Longchamp products, which many companies don’t do

and dilutes the true sense of ownership. The Cassegrain family has always valued every single

detail about the brand, this can be illustrated with their decision to change earlier fashion icon

Alexa Chung due to her association with multiple brands (Bianca@DailyMail , 2017) .

New designs with Market expectation- I believe Longchamp has been able to continuously

change its new offering based on all category of women segment. It can cater to a college girl or

a mother or a grandmother. With every season, Longchamp refreshes its collection to meet the

market needs. Le Pliage is one of the exception which has sold and appealed to every segment.

The company has also explored new areas of accessories for men.

Internal Weakness-

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Product Segmentation- The ability of this company to venture into additional product segment is

weak. The competitors like Michael Kors, Tods and Herme’s were able to spread their business

in multiple segments already, this make Longchamp limited to its handbags, luggage’s and shoe

business. Longchamp is also confused about positioning its affordable luxury product like Le

Pliage in right way. This will be counterproductive for its own high end product sales. I believe

if Longchamp does not address this, the price perception will kill its own market.

Placement and Distribution- Another issue lies in product placement and distribution strategy of

accessible luxury and high end luxury products. Longchamp places all its products in the same

store, which can compromise its sales of high end segment. The customer paying for a 600 euro

bag may not like to stand in queue with a customer buying a 60 euro bag.

Leadership consensus- The clash of interest between the ‘Cassegrain’ and new international

director ‘Beraud’ is a matter of concern and is debatable under various points like- Should

Longchamp explore into fashion, perfumes and Jewelry markets, or should it distribute products

through channels like Retail , departmental store or whole sale.

External Opportunities-

Explore the new markets- I believe Longchamp needs to explore other market segments, as some

of its true competitors have done it successfully. Due to company’s strong French heritage and

self-made culture exploring new market is an opportunity for Longchamp. I think Longchamp

should go for new brand extension to expand its market share in affordable segment. I also think

Investing in new research and development is a good opportunity for Longchamp as it has a

healthy revenue within closed family group.

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Reducing Manufacturing lead times- Longchamp should reduce the lead time and man force for

its leather business and focus on new product segment. Currently, it takes huge amount of

manual processes to make its one product. I believe some of the non-value add work should be

automated.

External Threats-

Duplication of design- Imitation of product design is a big threat to company. Countries like

China have already sold thousands of imitated Le Pliage nylon handbags and premium leather

handbags (One of my personal experience where I have bought the same product during my

family travel to china last year).

Other Challenges-

The growth of Longchamp was 8% in 2014 which outperformed the global personal good

segment growth of 5%. It has plan to expand at a faster rate and with a double digit growth and

the company aims at becoming a 1 billion Euro firm in coming year. I see that as a challenge. If

company don’t ventured in to new product lines and reduce its internal cost, it would take a

significantly longer time. I also believe due to its privately own business, at times it does not

give the real image of the company health. I would recommend the company to venture into

brand extension (for its affordable luxury) and go for a new partnership and vendor licensing.

Strategies-

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Longchamp needs to expand its culture of innovation, it should venture into new distribution

strategies plus automation of its old manufacturing process. This will help in achieving the goal

of 1billion Euro Company.

Longchamp should work towards expanding its concession outlet where revenues were more

compared to wholesale distribution and services were better. The inventory levels need to be

tracked properly, which does not remain in control while selling products through wholesale

channels.

I also believe that marketing campaign would be the key for driving its high end shopping

customers. The approach of advertising a good fashion role model will always help Longchamp.

They have already done the successful campaign earlier with Kate Moss and Alexa Chung.

Product geography and customer base study will help in right investments. The example of china

flagship stores going empty due to high import duty shows the need of diversification of

products. It should be one of its bigger goal as currently women segment is the substantial end

customer base for them.

Recreating a success model like Le Pliage in affordable luxury segment will be a big plus for

Longchamp and I would recommend that strongly.

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References-

http://www.dailymail.co.uk/femail/article-4511532/Alexa-Chung-dropped-face-Longchamp.html

Advance in Luxury Brand management by Shaun Powell(2005)

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