Luxury Brands Essay

luxuriousness Brands What Are They Doing About societal Responsibility? David S. Waller, Marketing Discipline Group, University of Technology Sydney Anurag G. Hingorani, Marketing Discipline Group, University of Technology Sydney Abstract Although luxury goods whitethorn be synonymous with extravagance, lavishness, and even waste, it may appear to be a contradiction that a tally of companies that manufacture and sell luxury brands have also disc everywhereed the value of being kindlyly responsible. With festering criticism of the high costs and exploitation in the manufacture of luxury goods, some companies ar increase the extent to which corporate social responsibility and sustainability issues feature in their business practices. This paper volitioning ascertain at the issues regarding luxury brands and social responsibility, and will focus on LVMH Mot Hennessy Louis Vuitton, the worlds largest luxury goods conglomerate.Introduction Despite the recent global financial cri sis and continuing economic troubles worldwide, sales of luxury brands be growing. According to the Luxury Goods Worldwide Market Study, luxury spending in 2011 rose 8% to 185 billion ($US274 billion) in 2011, with growth in the US, Europe and China, which was after a fall in sales in 2008 and 2009 (Holmes 2011). Brand names ilk Chanel, Yves St Laurent, Louis Vuitton and Tiffany & Co. have become household names and brands that some good deal aspire to purchase and wear. However, luxury brands have also been often criticised for being extravagant, overpriced, exploiting third world suppliers, and inefficient when many people be struggling financially. As luxury brands promote themselves to the global audience, some companies are increasing the extent to which corporate social responsibility (CSR) and sustainability issues feature in their business practices.This paper will explore the issues related to luxury brands and social responsibility, with a particular focus on LVMH Mo t Hennessy Louis Vuitton, the worlds largest luxury goods conglomerate which includes internationally recognised brands such as Christian Dior, pass over Heuer, Fendi, Marc Jacobs, Guerlain, Kenzo and Givenchy. A discipline analysis of the 2010 Annual report will reveal the CSR initiatives/activities pressn by LVMH and some implications for CSR disclosure will be discussed.Background Since some embarrassing corporate ethical and financial disasters, many organisations are taking steps to improve their corporate governing, ethical practice and CSR activities (Agrawal and Chadha, 2005 Margolis and Walsh, 2001). There has been particular interest in CSR, in which there is a concern for the impact of all of the corporations activities on the correspond welfare of society (Bowman and Haire, 1976, p. 13). CSR activities and disclosure have increased with organisations identifying different types of CSR initiatives that they undertake, including those that relate to work output, HR a ctivities, social/community commitment, and environmental initiatives (Gray, Owen and Maunders, 1987 Luo and Bhattacharya, 2006 Waller 2009 Waller and Lanis, 2009). These CSR activities sess help promote a specific image that management would like to portray to its various stakeholders, and counter criticism for other issues that may affect the company.The luxury industry thrives on the creation of an image and the communication of brandassociations. This contributes to the interest in luxury brands by many consumers who might emergency to portray a particular image or feel a certain way by acquiring and consuming luxury goods and go. Not only consumers but also academic and industry researchers areinterested in luxury brands (Bendell and Kleanthous 2007 Fionda and Moore 2009 Kapferer and Bastien 2009 Phau and Prendergast 2000). Most consumers prefer to purchase a wellknown, reputable brand over a cheaper, unknown brand, especially when making highinvolvement purchases, or produc ts that reflect a buyers personality. Luxury provides selfexpression which reflects class, status, and quality. However, at a time when there is increasing unemployment, economic troubles around the world, and a downturn in sales, there is a concern that a luxury brand is elitist and uncaring for the wider community.In 2007, the WWF-UK measured 10 luxury brands on their environmental, social and governance (ESG) performance and the brands did not fair well (Bendell and Kleanthous 2007). In coitus to the marketing of luxury brands in a world of rich and poor, the report states Luxury brands are experiencing fast expansion in societies that contain both very rich and very poor people. Such societies tush view displays of conspicuous consumption as a threat to social cohesion. This is true, for example, in China, where the authorities in Beijing have banned the use of billboards to advertise luxury products and services. In this context, the credibility of luxury products and servi ces will be derived from their ability to generate wellbeing, not only for consumers, but also for those involved in (or affected by) their production, use, reuse and disposal.The report ranked the top 10 largest luxury goods companies on an environmental, social and governance (ESG) performance ranking. This was based on (1) what the companies report to the community and (2) what media and non-governmental organisations have said about the companies. The companies were given a score out of 100, and graded from A (the best) to F (the worst). Out of the 10 companies, none were graded more than a C+ with LOreal topping the ranking, followed by Herms and Louis Vuitton.By being more proactive in their civic responsibilities and keeping within government regulations in their business operations, an organisation can fix a reputation as a good corporate citizen. Some CSR activities that luxury brands can undertake include eco-friendly ingredient sourcing, fair pricing, eco-manufacture, a nd efficient non-wasteful distribution, as well as corporate sponsorship. This study will examine the CSR activities run by LVMH Mot Hennessy Louis Vuitton, the worlds largest luxury goods conglomerate, via a content analysis of the LVMH 2010 Annual Report. The main company information about LVMH is found in set back 1.Table 1 LVMH Mot Hennessy Louis Vuitton Company Information Luxury goods, retail Industry Founded Headquarters Products Brands 1987 Paris, France Clothing, cosmetics, sort accessories, jewellery, perfumes, spirits, watches and wines Includes Mot et Chandon, Hennessy, Glenmorangie, Fendi, Donna Karan, Givenchy, Kenzo, Louis Vuitton, Marc Jacobs, Parfums Christian Dior, Guerlain, Bulgari, TAG Heuer, Zenith, Hublot, DFS, Le Bon March 20.32 billion 3.032 billion 83,540 Methodology Organisations can communicate their CSR information through a variety of sources such as advertising, annual reports, public transaction and their websites. In this study, the annual report w as analysed as this is the only document produced regularly to comply with regulatory requirements and is interchange to the organisations own image (Gray, Kouhy and Lavers 1995). After finding the LVMH 2010 annual report online from the company website (www.lvmh.com), a search was made for a social responsibility section in the report.