Question

The luxury good category is changing rapidly and siblings Jean Cassegrain, chief executive officer, and Sophie Delafontaine, artistic director, are working to clearly differentiate Longchamp, a brand launched by their grandfather in 1948, from accessible luxury brands such as Kate Spade, Michael Kors, and Coach that are encroaching on its position in the market. Longchamp’s 2014 growth of 8% outperformed the global personal luxury goods segment, which grew by 5%. But Longchamp is determined to achieve double digit growth in 2015 and the siblings are assessing their product portfolio to determine how to best grow while staying true to the brand’s heritage.

The siblings have been experimenting with its Le Pliage product, introducing new higher priced, leather versions of the iconic nylon handbag. Le Pliage is one of the fashion world’s most successful products, a cultural icon across the globe. But managing the low priced, nylon handbag is challenging as Longchamp tries to move its brand up market into higher priced, luxury leather goods. New product categories, including women’s ready to wear clothing and shoes, have been recently added to the product line, and others are under consideration, including menswear, eyeglasses, and fragrances.

Unleashing Le Pliage offers a quick path to growth, as does extending the brand horizontally into new product categories. But, both strategies risk moving Longchamp further away from its heritage and make the brand more accessible to consumers.

Case Discussion Questions:

1. Why has Le Pliage been so successful? To what do you attribute it popularity and longevity? What is the role of the Longchamp brand in its success?
2. How should Longchamp best manage its Le Pliage product line to ensure that it maintains its mythical status?
3. How strong is Longchamp's current value proposition in the marketplace? What do you think of its aspiration to change its position to move the brand up market and away from accessible luxury brands? Is this a wise move? Does the company have what it takes to do so? What defines a high luxury brand?
4. How should Longchamp manage its product portfolio and distribution strategy to best achieve its goals? What is the right mix of products and what is the right mix of distribution channels for Longchamp?

Answer 1

(1): Le Pliage has been so successful mainly because it has got its product positioning right. ‘Quality’ is the basis for its product positioning and this has resonated well with the end users. Le Pliage’s popularity and longevity can be attributed to a combination of factors which includes continuous innovation, durability and sturdiness of the product and ease of use for all types of consumers.

The role of Longchamp brand is significant in its success. Longchamp brand has given strength and vigor to branding aspect and focus on existential values by the Longchamp brand augmented the success of Le Pliage.

(2): To maintain its mythical status Longchamp should manage the Le Pliage in a systematic manner that gives tangible aspect to Le Pliage. To do this Longchamp will have to focus on constant innovation, make it relevant by constantly redesigning it with new colors, and take actions to ensure that its status is maintained in both the affordable and luxury markets.

(3): Longchamp's current value proposition in the marketplace is fairly strong as it is based on craft and history of the company. The company’s competitive advantage lies in its production – the handbags are produced in workshops all over the world. This gives it authenticity and herein lies the company’s competitive advantage.

The company’s aspiration to move the brand up market and away from accessible luxury brands is certainly a wise move as it will help the company create a niche and move away from the cluster. However to be successful while moving up the brand the company will have to start focusing on being fashion forward and not just on craft and history. The company has what it takes to move the brand up, it just needs to realign its processes and positioning with that of the customer expectations at the premium end of the market.

‘Image’ defines a high luxury brand. It is a perception, though a strong tangible perception that has to be created in the market. These images lies in the mind of the consumers and high luxury brands are associated with high level of price, aesthetics and impeccable quality.

(4): To best achieve its goals Longchamp should manage its product portfolio and distribution strategy to ensure that right mix of product and distribution channels is there. Customization should be the focus of product portfolio and steps should be taken to ensure that an experience is being sold to customers with the product. Distribution strategy should be streamlined so that waiting time is reduced even when customization is being given as the option. The right mix of distribution channels will focus on high end stores which are appealing as well as luxurious.