Louis Vuitton Case Study Example | Topics and Well Written Essays - 500 words

Louis Vuitton - Case Study Example Since the brand has loyal and a choosy customer base, its customers are highly likely to interpret such a move as a loss in the brand’s worth. The brand, however, may benefit from an increased presence in emerging high income countries and unexploited markets such as India. At an exchange rate of $ 1.50, the value of $ 8, 000 is equivalent to 10, 000 euros. When the price reduces by 10 percent, the value of revenues in dollars become $ 7, 200. At a strengthened exchange rate of $ 1.25, this presents a value of 9, 000 euros. The company, therefore, loses 1000 euros at the new exchange rate. It is essential to highlight that when the exchange rate weakens, the company loses some money out of the current revenues. The demand curve of a typical Louis Vuitton customer shapes differently because of notable reasons. To begin with, it is essential to note that a normal demand curve should show an inverse relationship between prices and level of consumption. This is because as prices increases, consumers buy less of given goods because their budgets are constrained. Louis Vuitton, however, is different because it sells luxury products that entail superior craftsmanship. A knowledgeable and loyal customer, therefore, is able to face a premium price in purchasing a given item. Besides, the brand builds on exclusivity and classiness that it would always strive to drive away its goods from mass consumption (Haig, 2006). Loyal customers are willing to pay higher prices because such prices exclude other ordinary customers from accessing the Louis Vuitton goods. Besides, the luxury market that Louis Vuitton exploits has wealthy customers whose demand curves are inelastic to price increases. In close relat ion to this, the performance of developed economies such as the US and Europe can withstand such price increases. When individuals face improved economic lives, there arises a new set customers of Louis Vuitton