University of Economics, Prague International Business
Digitalization as the key to success in commercial communication of luxury fashion brands
Author: Sofia Kornas
Thesis instructor: Andrea Rios Escobar, Ph.D.
Scholar year 2020/2021
Declaration:
I hereby declare that I am the sole author of the thesis entitled: “Digitalization as the key to success in commercial communication of luxury fashion brands”. I duly marked out all quotations. The used
literature and sources are stated in the attached list of references.
In Prague on June, 2021 Signature:
Sofia Kornas
Acknowledgement
Firstly, I would like to thank my thesis supervisor, Ph.D. Andrea Rios Escobar, for her constant support and help throughout the writing of this thesis. Secondly, I would like to thank my family,
friends and partner for the support and creative ideas they have provided for this thesis.
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LIST OF FIGURES ... 3
INTRODUCTION ... 5
THESIS OBJECTIVES, RESEARCH QUESTION AND SUBQUESTIONS ... 5
METHODOLOGY ... 6
DATA COLLECTION ... 6
LIMITATIONS ... 6
I. MAIN MARKETING PHILOSPHY OF LUXURY BRANDS ... 7
WHAT IS LUXURY? ... 7
BRANDING ... 7
TARGET CUSTOMERS ... 9
II. FIRST STEPS TOWARDS DIGITALIZATION ... 10
FUNCTIONAL DIGITAL LUXURY (2003 – 2007) ... 10
SOCIAL DIGITAL LUXURY (2007 – 2012) ... 11
EXPERIENTIAL DIGITAL LUXURY (2013 – PRESENT) ... 12
MAJOR DRIVERS OF DIGITALIZATION ... 12
TECHNICAL DRIVERS ... 13
DEMOGRAPHIC DRIVERS ... 13
SOCIOECONOMIC DRIVERS ... 13
III. DEFINING NEW GENERATIONS ... 13
MILLENNIALS ... 14
GEN Z ... 14
IV. MAIN TOOLS AND WHAT THEY HAVE TO OFFER ... 15
WEBPAGES ... 15
INSTAGRAM ... 17
FACEBOOK ... 18
V. CASE STUDY: Gucci’s rise to popularity through a successful digital marketing strategy ... 18
VI. METHODOLOGY AND FINDINGS OF QUANTITATIVE RESEARCH ... 20
DEMOGRAPHICS ... 21
LUXURY BRAND AWARNESS ... 23
LUXURY BRAND PURCHASING HABITS ... 24
PERCEPTION OF LUXURY FASHION BRANDS ON SOCIAL MEDIA ... 28
SUMMARIZATION OF THE FINDINGS ... 33
VII. CONCLUSION ... 34
2 BIBLIOGRAPHY ... 35 APPENDIX I. ... 36
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LIST OF FIGURES
Figure 1: Dior website, SOURCE: https://www.dior.com/en_int ... 15
Figure 2: Gucci website; SOURCE: https://www.gucci.com/cz/en_gb/ ... 15
Figure 3: Hermés website; SOURCE:https://www.hermes.com/cz/en/ ... 16
Figure 4: Prada website; SOURCE: https://www.prada.com/ww/en.html ... 16
Figure 5: Louis Vuitton website; SOURCE: https://uk.louisvuitton.com/eng-gb/homepage... 16
Figure 6: Chanel Instagram page; SOURCE: author's screenshot ... 18
Figure 7: Gucci Instagram page; SOURCE: author's own screenshot ... 18
Figure 8: Louis Vuitton Instagram page; SOURCE: author's own screenshot ... 18
Figure 9: Dior Instagram page; SOURCE: author's own screenshot ... 18
Figure 10: Versace Instagram page; SOURCE: author's own screenshot ... 18
Figure 11: Age of respondents; SOURCE: author's primary research ... 21
Figure 12: Gender of respondents; SOURCE: auhor's own research ... 22
Figure 13: Gender of GenZ; SOURCE: author's own research ... 22
Figure 14: Gender of respondents above 35 years old; SOURCE: author's own research ... 22
Figure 15: Geder of older Millennials; SOURCE: author's own research ... 22
Figure 16: Gender of young Millennials; SOURCE: author's own research ... 22
Figure 17: Respondent's answers to the question "Which of these luxury fashion brands do you know?"; SOURCE: author's own research ... 23
Figure 18: Respondent's answers to the question "Have you ever bought luxury fashion items?"; SOURCE: author's own research ... 24
Figure 19: Respondent's answers to the question " Which of these brands have you ever purchased at least once?"; SOURCE: author's own research ... 25
Figure 20: Brands purchased by young Millennials; SOURCE: author's own research ... 26
Figure 21: Brands purchased by older Millennials; SOURCE: author's own research ... 26
Figure 22: Brands purchased by respondents above 35 years old; SOURCE: author's own research .. 27
Figure 23: Respondents answers to the question" Which brand profiles do you follow on social media?"; SOURCE: author's own research ... 28
Figure 24: Brands followed by GenZ; SOURCE: author's own research ... 29
Figure 25: Brands followed by young Millennials; SOURCE: author's own research ... 29
Figure 26: Brands followed by respondents over 35 years old; SOURCE: author's own research... 29
Figure 27: Brands followed by older Millennials; SOURCE: author's own research ... 29
Figure 28: Respondent's answers to the statement "I follow the posts of luxury fashion brands regularly."; SOURCE: author's own research ... 30
Figure 29: Respondent's answers to the statement " I have bought luxury fashion items because I felt inspired by their advertisement on social media"; SOURCE: author's own research ... 30
Figure 30: Respondent's answers to the statement " I am inspired by recent fashion trends from social media"; SOURCE: author's own research ... 31
Figure 31: Respondent's answers to the statement " I purchase or read magazines such as Vogue."; SOURCE: author's own research ... 32
Figure 32: Respondent's answers to the statement " I am informed about new luxury fashion collections through social media profiles of brands."; SOURCE: author's own research ... 32
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INTRODUCTION
Digital marketing strategies have started to trend in the world of marketing, mostly due to their relatively lower prices and because they are able to reach a broader group of consumers, therefore spreading brand awareness. However, luxury fashion brands have stayed behind with
accommodating new technology into their marketing strategies. A reason for this behaviour might be fear of loosing the exclusivity and position on the market by opening their doors to the whole world through the Internet. However, as any other businesses, even luxury brands have to adapt to new technologies to not fall behind and lose their position on the market that they are so proudly trying to keep. The question is, how do luxury brands open their doors to new technology and
communication outlets, without losing the exclusivity of their brands and products?
This thesis will try to find an answer to that question and build a set of tools, that have helped other luxury fashion companies build their successful strategies. Nowadays every brand has a webpage, without which the brand wouldn’t practically exist. The webpage serves the purpose of informing about the brand as well as offers the possibility to sell the brands product on-line directly to the customer, by-passing therefore any in-store direct contact with the customer. However, as social media rises in popularity as a marketing too, luxury fashion brands should learn how to use them as well, but with their own twist to still appear as luxurious as they always are. Luxury fashion brands have already started taking steps into a more digitalized communication with their customers, however, not all of the steps were taken in the right direction and therefore weren’t accepted by luxury fashion lovers.
Social media and all the other new digital outlets offer great tools to boost sales, engagement as well as brand awareness at very low costs, which is exactly what luxury brands need right now to stay relevant and gather the attention of generations of future consumers of luxury.
To understand, why it is so important for luxury brands to keep their status on the market, the thesis will begin by explaining what luxury is and what the branding of luxury products looks like.
Afterwards a description of the steps, that were taken so far towards digitalization, will be depicted, in order to asses how far have brands pushed themselves up until now. The thesis will then continue with chapters defining new generations brands should target in the future as well as new tools of digital marketing and all the functions they have to offer. A success story will be described in a case study about Gucci, as it was one of the first brands to effectively use social media to their advantage and build a very successful marketing strategy many other brands have adapted shortly after as well.
The primary research of this thesis conducted by the author will test the tools and strategies other brands have applied to find out, whether they in fact are useful tools to build a successful marketing strategy.
THESIS OBJECTIVES, RESEARCH QUESTION AND SUBQUESTIONS
The pressure to adapt to new generations is growing and brands need to find a way of using new technologies such as social media and e-commerce to reach new customers and not fall behind, as it could mean losing a large number of potential customers. The main objective of this thesis is to find the best strategy for promoting to new generations, so that the brand can come closer to potential customers while at the same time not losing its status of luxury and uniqueness that habitual
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customers have come to love throughout the years.
Having said that, the main objective of this bachelor thesis is formulated as:
To propose a digitalized strategy of communication for the successful adaptation of luxury fashion brands to new generations
Consecutively, the secondary objectives are the following:
- To analyse the recent changes in communicational strategies towards digitalization in the luxury fashion industry
- To determine brands that succeeded in digitalizing their commercial communication and determine key factors of their success
- To determine on-line trends that have influenced luxury fashion
The main research question this bachelor thesis will try to answer is the following:
“How can luxury fashion brands successfully adapt to new generations by using on-line tools?”
METHODOLOGY
As the main fields this thesis is operating in are marketing and marketing strategies, the standard way of primary research in these areas are marketing questionnaires. To reach the purpose of this thesis and find answers to secondary objectives, a quantitative research in the form of anonymous questionnaires has been conducted. This type of research will provide with information about specific consumer behaviour in relation to luxury fashion goods as well as the digital communication of luxury fashion brands on different platforms.
DATA COLLECTION
In the beginning of this thesis, in order to asses the history and recent developments in marketing strategies of luxury brands, secondary research has been conducted, in which data from different digital and paper-based publications, articles and other researches relative to the topic of interest has been collected. As part of secondary research, a case study based on the success story of one brand’s digital communication will be offered, to create more context for primary research as well as offer an outlook on practical knowledge from the field. After that, primary data has been collected in the form of anonymous questioning of target audiences from these data collection methods, the thesis will have coherence as well as answer questions that haven’t been answered before.
LIMITATIONS
As any research study, even this thesis will face some limitations. This research aims to get insight from a broad number of respondents in order to generalize the findings on consumer behaviour in the luxury fashion industry, however it would be impossible for the author to conduct such a survey, as it would mean to question a very large number of respondets. Another limitation is being posed by the possibility of dishonest or untrue answers given by anonymous respondents in the marketing questionnaire.
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I. MAIN MARKETING PHILOSPHY OF LUXURY BRANDS
In this chapter the concept of luxury will be examined from two perspectives – from the point of view of the luxury brands themselves by looking into the main idea of branding and marketing, as well as from the point of view of the customers buying luxury fashion items. I will examine the definition of luxury and how brands build their main marketing strategies on that as well as the main reasons that make consumers buy luxury items.
WHAT IS LUXURY?
Before understanding the main branding strategies of brands it is essential to define, what luxury actually is. Is there a precise definition that could be used?
Luxury is a very subjective topic for which each person is able to give a different personalized definition.
Some might define luxury as a high quality product with a high price tag and unique design, others might argue that luxury is an experience or a lifestyle. The perception of what could be deemed as luxurious may also differ as everyone has a different ladder of priorities and pleasures, therefore giving personal value to different things.
According to Batat1, “Luxury is not an essential quality of a product, service, or lifestyle but rather an experience. It is the combination of a symbolic meaning, subconscious processes, and nonverbal cues resulting from consumption and characterized by fantasies, feelings and fun.”
This definition gives a lot of importance to something called “luxury experience” rather than the luxury products itself. It is a specific type of experience that isn’t the result of a necessity but rather of something desirable or out of the ordinary, which creates a need for consumption of luxury goods and services. Without the creation of this need, there wouldn’t be luxury brands or a demand for luxury products.
Luxury could also be defined as a lifestyle, rather than just one experience. In this case the act of buying and consuming luxury goods creates the possibility to have a lifestyle that for most people is seen as exclusive and unreachable.
BRANDING
The branding strategies of luxury brands have changed through time as trends, ideals and technology changed and evolved, however the main message brands want to communicate to their customers has stayed the same.
When speaking about luxury as a form of lifestyle, brands want to communicate that, with the purchase of their products, customers are able to access this lifestyle. Through their marketing campaigns, exclusive products and other forms of statement the brands show the desired lifestyle to consumers, who are then hooked on the idea and later become customers.
However, to be deemed as a creator of luxury lifestyle and part of the luxury sphere on the market, the brand has to show some requirements to distinguish themselves from mass production fashion.
One of the most important one is the presence of some sort of heritage or history the brand carries. A large part of successful luxury brands have an interesting story to tell, which makes customers believe
1 Batat, Digital Luxury.
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they can own a piece of history by buying their goods.
Some luxury brands however don’t have the heritage factor, for example because it isn’t as legendary as the ones of other brands or because the brand is fairly new. In this case brands tend to invent a backstory that allows them to incorporate some sort of importance to owning a piece of clothing from this brand. This invented heritage however still represents the main message and lifestyle the luxury
brand wants to communicate to the customers.
This narrative needs to be present in every element of the brand, from the design of the pieces all the way to the promotion, as it gives coherence to the brand name and makes the story more important.
It also shows that the brand really values the story and history that is behind it and that it is consistent.
It sometimes happens that the narrative isn’t created by the brand, but it merely shares ideas and
stimuli for the consumers to link with the brand.
A great example of this strategy is the brand Tod’s.2 Although not classifiable necessarily as luxurious, it is still valued by many consumers for the message they send. JP Tod’s name doesn’t have a complex history and there was no Mr. Tod that designed the first Tod shoe. The founder of this brand decided to give it an English-sounding name to make it sound more fashionable and avantgarde, even though the brand was based in Italy. However, as part of his marketing strategy, he managed to link the brand to important characters from the past, such as John F. Kennedy or Audrey Hepburn, by promoting his brand with black and white photographs of them. At the bottom of the image there was always an unmissable small Tod’s loafer, which connected the picture to the brand. The founder didn’t communicate that these people wore his shoes, however he managed to link his brand to the lifestyle these people had, which allowed the customers to create a narrative for the brand.
Luxury brands are eager about their main values and opinions they support, which they are happy to communicate in their marketing as well as in their clothing lines and models as well. Examples of these values could be inclusivity of all people, support for major causes as well as tradition in the manufacturing process of products. It is important for brands to communicate these, as it attracts customers who share the same values. In this case the purchase of a product could be seen as a social statement to show that the person shares the same values as the brand. It also gives the customer a sense of belonging to a community of people that share the same values.
Another factor that makes a luxury brand unique is of course the style, materials and designs used for their products. The most known example I could give is the Louis Vuitton monogram, which is something the brand is known for and uses on all of their products, either throughout the whole
product or as accents.
Luxury clothing items distinguish themselves from fashion wholesalers with unique designs, the use of expensive materials, curated packaging and small numbers of produced goods. This allows a luxury brand to give reason for higher prices, as each product is presented as something being made and curated very closely and with great attention to details. However, it is also important to be distinguishable from other luxury brands with specific designs that become part of the brand image or the use of specific materials for the products. An example here would be the classic Chanel handbag model.
The innovation and creativity of the pieces being sold must be portrayed in the marketing of the pieces as well. Designers often don’t take into consideration marketing agencies, as the creative ideas of the
2 Tungate, Fashion Brands.
9 designer are unique and nonreplicable. Therefore, the advertisement of luxury items is usually left in the hands of the designer himself, who probably has already figured out the way he wants to portray his piece while designing it.
TARGET CUSTOMERS
It is essential for brands to know what their consumer needs and expects, otherwise there would be hardy any sales. Therefore it is important to study the consumer behaviour and its changes in the following years to be able to define needs and exceed expectations not only in the meaning of products, but most importantly in the luxury experience.
Batat3 describes four main changes in consumer behaviour that have occurred due to digitalization and the evolvement of technology:
- Emotion - Empowerment - Postmodernism - Digitalization
Under emotions is meant the ability to build a strong bond between the brand and the consumer so much so that the customer decides to be loyal to the brand.
Emotions are know to be the main driver for impulsive purchases, which gains even more importance in the field of luxury fashion as it isn’t regarded as a need of first necessity but rather a pleasure.
Creating an emotional bond can therefore result to be crucial.
Due to the development of social media and other online outlets, consumers have become increasingly more empowered as brands have switched to a more consumer-centred approach and therefore need the consumers feedback. Consumers, even if unknowingly, have started forming the brands strategies through their published information and opinions.
Due to globalization, major technological developments and sociocultural transformations the consumers started living in a so called “postmodern era”, which is full of doubt, ambiguity and uncertainty. Luxury brands should understand the feelings a consumer has and offer products and their presentations that mend those feelings. An example Batat gives as a result of brands mirroring consumers feelings is the rise in neutral packaging, mixed perfumes and an increasing number of unisex perfumes.
New generations are starting to become luxury customers who are used to technology and expect for brands to have an on-line presence. This has put pressure on brands, as they have to find a way of communication with new generations without losing the trust of older generations.
According to a study issued in 20164 based on an inquiry on Chanel consumers, the most important reasons of why consumers buy luxury goods are the prestige of the brand and the attractiveness of the brand, however factors like age and gender are not relevant. The income has of course its
3 Batat, Digital Luxury.
4 Rodrigues a Costa, Why consumers buy Luxury Brand?
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importance, however it isn’t at the first place.
II. FIRST STEPS TOWARDS DIGITALIZATION
In this chapter the thesis will be looking into the beginnings in digitalization of luxury marketing and what the failures and issues were at the time as well as take a look at the main drivers for the need of digitalization before and now.
According to Batat5, the evolution of digitalization in luxury could be divided in 3 main timeframes:
- Functional digital luxury, which began in 2003 and ended in 2007 - Social digital luxury, beginning in 2007 and ending in 2012
- Experiential digital luxury, started in 2013 and is occurring until now
For the scope of this thesis this division seems to be the most fitting one, as it takes into consideration technological advancement as well as progressive changes in consumer behaviour.
FUNCTIONAL DIGITAL LUXURY (2003 – 2007)
The period of time between 2003 and 2007 marks an era of great technological development. With the first appearance of the Internet in the 1990s, people started to get progressively better and better at using new technology. On the other hand, the Internet as well as computers started to be user friendly and easier to use, as well as the pricing and physical aspect of computers. This allowed brands to start using the Internet to promote their products in the from of webpages. These however differed significantly from the ones we see today on our screens.
The main purpose of the webpages was not sale at the beginning, but rather the spread of information about the brand and its products. Webpages were meant to progressively substitute brochures and brand magazines presented in stores, as many customers did not have a store nearby.
The websites main page showed information about the brand and its story, however it was also possible to access to a map of store locations for the clients to find the one nearest to them. Later on information about products started to get included into websites, such as pictures of most sold and popular products as well as size and material of the product. This wasn’t meant to be used as a way of purchasing the item online, however it was supposed to mimic brochures and catalogues found in stores or that were sent by post to selected customers. This way the information about the brand and its products was accessible to anyone on the world and available at any time. However, prices were not included, as brand were afraid of losing the exclusivity and approach by making this information available.
The websites of luxury brands have always put so much care in curating their stores in real life, which can also be seen in the design of the websites. What a customer would see is a website that offered perfect aesthetics that mimicked the brand store design as well as the information he looked for shown in an elegant but understandable way.
5 Batat, Digital Luxury.
11 However, the content created was not yet meant to be interactive, as it was supposed to only inform the client. Therefore, clients were still seen as passive actors, purely only buyers, and brands were yet unsure of what the client truly desired.
The Internet, however useful it seemed, had a few drawbacks that scared luxury brands away in the beginning. The increased possibility of finding counterfeits online was the first one, as there was no way of proving before purchase the product was a counterfeit. The Internet also allowed for people to compare prices of goods online, taking away the spontaneity luxury brands were counting on until now.
At the beginning it was very difficult to portray the exclusivity and detailing of the brand while keeping the website functional, therefore most of the first websites had difficulties with being user-friendly.
The insecurity of payments online was also a big issue, as people were sceptical about writing their
bank information on a website.
The lack of experience with technologies from the side of the customers as well as from the side of brands was one of the biggest brakes during this time, as it didn’t allow for the message to reach their customers at its full potential.
SOCIAL DIGITAL LUXURY (2007 – 2012)
With the development of a more interactive version of the Internet, people were able to communicate with brands as well as between each other. This had the preposition to create a positive environment
towards brands, however brands were even more sceptical.
With the founding and rise of social media platforms and forums, people were able to communicate and react to each others experiences, values and positions, which made a regular user newly a content creator on the Internet. This scared brands, especially luxury brands, as it was something they weren’t able to influence or control anymore – anyone could say their opinion about a brand without borders and millions of people around the world suddenly gained access to this information.
This however moved companies to change their strategy when creating and promoting products to something that was closer to their customer – a customer centred strategy. Brands started focusing more and more on what their customers wanted, liked and needed and in response to that created products that were actually demanded. A communication bridge between the consumer and the brand suddenly appeared, which made the consumer part of the co-creation of products, even if unknowingly.
The Internet allowed for people with certain opinions to find groups of other people from all over the world that shared the same opinions and values, creating somewhat of a worldwide community.
For brands that meant the founding of something called “brand community”, which batat defines as following:
“… a specialized community that is not geographically delineated but based on a series of structured
relationships surrounding brand admirers/enthusiasts”6
The internet basically allowed for people that fancied the same brand or a group of brands to find themselves and create a community of enthusiast. Usually this kind of bond is created over strong opinions which are connected to well known and famous brands that are able to create an emotional bond so strong that the customer wants to share it with people or that creates the need to find like-
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minded people that share the same idea or concept.
The creation of online brand communities brought many benefits with them, such as:
- Support for new products
- Stronger relationships between luxury businesses and their customers - Higher brand loyalty
- Co-creation of brand value
- Monitoring information exchanged between community members, thus the possibility of gaining feedback easily
One of the most important results of this era was the possibility of spreading e-WOM (online Word of Mouth) instead of passively consuming goods. This meant pressure for brands to create the best possible products while at the same time the possibility to gain feedback from their own customers and change their decisions
EXPERIENTIAL DIGITAL LUXURY (2013 – PRESENT)
In this era the main goal is the luxury experience and integration of customer in it. Luxury brands want to create a digital experience that is both fulfilling and entertaining for the customer by using newly developed technologies, like Internet of Things or social media.
It is essential for brands to introduce themselves in-line while at the same time keep the offline in- store communication and service impeccable as before. Technologies may help with this, as they can be used on-line while also in-store to create an even more fulfilling and memorable experience.
Nowadays brands are trying to be more connected to their customers, as the feedback is important for a customers-centred strategy. Technology in forms of an on-line presence or on-line tools ca help gather data as well as engage with the customer.
There are three main values that characterize this era:
- Immersion - Co-creation - Efficiency
Immersion is described as offering the possibility for customers to live virtual experiences and be immersed in the brands history and present. Brands use interactive tools that can link the physical environment of the luxury brand and the virtual context. This combination bring a realistic dimension to the online luxury experience. Customers can then interact with the virtual version of staff, sales- people or try on clothes in virtual changing rooms.
Co-creation is essential as consumers should be involved in the creation of luxury products, the marketing strategy and the communication of the luxury fashion brand. By giving their opinions, sharing values and comparing products, consumers are able to give feedback to brands for free.
Efficiency is meant in the way that the digital interaction with the customer should provide with a cognitive response (convenience, time-saving) while at the same time starting an emotional response (pleasure, socialization).
MAJOR DRIVERS OF DIGITALIZATION
13 Batat7 describes 3 main actors that drove to the digital transformation up until today:
- Technical drivers - Demographic drivers - Socioeconomic drivers
These are responsible for changing the consumption as well as creating new opportunities for luxury brands.
TECHNICAL DRIVERS
Under technical drivers are understood the mobile and Internet penetration, the larger number of connected devices, intense data collection and storage and interactive user-friendly interface with the
use of AI.
As technology has developed very quickly in the past 20 years it has become increasingly more lucrative for companies to use these technologies to their own advantage. At a visibly lower price point and higher impact, technology has made it possible for brands to reach more customers in less time and with a smaller investment. Moreover, the security of knowing that the message has the potential of reaching millions of people at once makes it possible for brands to make bolder moves and statements.
DEMOGRAPHIC DRIVERS
The process of urbanization made it easier for luxury brands to come closer to their customers and therefore deliver the desired supply of products. The possibility of having technology accessible as
never before allows brands to reach their customers faster.
Thanks to new ways of delivering products faster and at lower prices, brands are able to supply all the demand needed.
SOCIOECONOMIC DRIVERS
The rise of digital natives, young people born after 1990 who are used to new technologies, made changes in the consumption of goods creating big differences between older generations. These new generations, first the Millenials and afterwards the GenZ, are known to be empowered and digital experts, who use their knowledge and skills to change luxury consumption experiences as well as
influence their social life.
III. DEFINING NEW GENERATIONS
This thesis will be focusing on attracting the newest generations with the use of digital marketing, therefore it is needed to introduce the two latest generations that are very active in social media – Millenials and GenZ. Both are really close to each other, however there are big differences between them.
Definitions of the approximate age groups these two generations might contain exist, however for the purpose of this thesis it is more important to understand the behavioural differences. These differences can occur during the time period the person grew up in, as there were differences in
7 Batat.
14 technology, trends and values. In this thesis I will be therefore differentiating based on other criteria than only age or date of birth.
MILLENNIALS
Millennials is what could be simply defined as the generation of people born between 1980s and early 2000s8, although most importantly it is the first generation with access to the Internet and early social media platforms. This advancement in technology wasn’t subtle, that is why this generation differs so much from the one prior (the so called “Boomers”). The mentality and behaviour changed due to the fact that people all over the world were more connected and able to share their lives and beliefs online for anyone to see.
As the first digitalized generation Millennials got to experience the changes in technology first hand, starting with objects like first notebooks, smartphones and tablets.
More than 9 in 10 Millennials own smartphones, which makes them connected to the world at all times with a simple touch of a screen. Compared to older generations, their adaptation to newer technologies is smoother and more natural, however it is the Millennials job to help the older generations adapt and understand.
When talking about specific platforms, approximately 75% report using Facebook and all Millennials now say they use the Internet. A large part of these (19%) say they use primarily smartphones to browse the Internet. This gives this generation the possibility to access information and data from wherever they want and whenever they want.
Having experienced a large number of life-changing global events, such as 9/11, millennials have shown to have a high sensibility for social issues and are not afraid to share their values on-line. However, this sensibility plays a role in their consumer behaviour as well – they tend to purchase products from brands even only because they like the message the brand is sharing. Millennials search for brands and events that have a mission or a good preposition, which is one of the main factors that moves them to buy the product in the end. An example would be the shoe brand Toms, of which the models of shoes are not regarded to be fashionable, however the promise of giving a pair of shoes to people in need with each purchase made these shoes a magnet for millennial buyers.
For luxury brands this translates to a need to focus on sharing their story and values on-line if they want to attract millennials, as well as offer the possibility to help a good cause with a purchase or charitable event.
GEN Z
Generation Z is understood as people who are freshly coming of age or are about to. They grew up with developed technology all around them, which makes them the most technologically advanced generation yet. This generation naturally used to have the Internet at all times and using not only computers, but other pieces of technology to finalizing their purchases.
Due to an exposure to the Internet at a significantly younger age, this generation seems to be more aware of what is happening around them and are able to form an opinion at an early age already.
8 Loeb a ContributorContributor, „The Mindset of the Millenial".
15 This can result in an extreme mistrust in products and companies that don’t share personal information, like values and opinions, or that doesn’t support a good cause. They are also aware of the faces and celebrities the brand might support and are able to destroy a brand even only by point out an action the supported person has done. Due to the exposure they are deemed to be the most open- minded generation yet, accepting and fighting for a large number of social causes. However, the fighting is for the most part done on-line by coming up with movements that anyone from around the globe can take part in. A great example was the Black Lives Matter Movement in late 2020, which fought against police brutality and race discrimination. Instagram user that wanted to partake had to post a black picture to their Instagram with the hashtag #BLM as a form of solidarity for the people of
colour that lost their lives.
This is only an example, but there were many events and movements similar to these that took place for other causes as well.
Endorsing and sharing their favourite brands is something GenZ like to do, as it is a form of activism as well as a way to share their opinion. This is something that could work in favour of brands, as e-WOM travels really fast on-line and can reach millions of people in a matter of a few minutes and if it is positive it can do wonders for a company’s sales and brand value.
IV. MAIN TOOLS AND WHAT THEY HAVE TO OFFER
This chapter will go through all the tools luxury brands have at their disposition and are used nowadays for marketing purposes and communication. Firstly starting with webpages and their form and look nowadays and continuing to social media platforms. In the end there will be a mention about the online presence if brand faces and brand associates.
WEBPAGES
Webpages were the first step brands took in digitalizing their communication and connecting further to their customers all over the world. Nowadays, any big brand that doesn’t have a webpages is regarded as non-existent, which makes it important to curate the websites design and looks to stand out of the crowd.
Luxury websites are expected to reflect the atmosphere of the shop and the design of the brand, however it is also important to make it easy to use and expose all the most important information on the main page.
Figure 1: Dior website, SOURCE: https://www.dior.com/en_int Figure 2: Gucci website; SOURCE:
https://www.gucci.com/cz/en_gb/
16 From browsing on all of the most known brands websites, similarities can be found. The first page is usually regarded as the first information the brand wants the customer to see. When looking at non- luxury brands websites, discounts, new collections or offers are what is shown firstly to grasp the clients attention. However, luxury brands have a different target clientele and message they want to communicate, therefore the first thing one can see is the name of the brand and propagation pictures of the latest collection fashion show or products. No pricing of the products is given on the first page, as that isn’t regarded as the most important factor when buying luxury for a habitual customer. Typical are announcements and slideshows of the newest collections that are about to come out, as can be seen on the current Gucci (Figure 2) or Dior (Figure 1) website. Prada (Figure 4) offers on the first page a countdown to their next fall winter menswear show, whereas Hermés (Figure 3) offers a link to a video presenting the newest collection ideology and inspiration.
All websites stride to be as interactive as possible whilst maintaining the elegance that would be requested from them. When scrolling down, the websites furthermore expand the communication with other news about new collections or events coming up. Some webpages offer the possibility to click on a category of clothing, which will automatically let the customer enter the e- commerce part of the website.
A study about the consumers perception of luxury fashion websites9 conducted in 2016 has found that most luxury websites didn’t include attributes that facilitated browsing and using the website for customers, such as a search engine, sitemap or browsing instructions. However attributes for customer service, such as order instructions, shipping and handling and return processing information were frequently available. One third of the analyzed websites didn’t have a size chart and goods information such as model measurement, larger views and closeups were lacking on most websites as well.
9 Kim a Kim, Luxury fashion retailers and consumers’ perceptions of luxury fashion websites.
Figure 4: Hermés website;
SOURCE:https://www.hermes.com/cz/en/
Figure 3: Prada website; SOURCE:
https://www.prada.com/ww/en.html
Figure 5: Louis Vuitton website; SOURCE:
https://uk.louisvuitton.com/eng-gb/homepage
17 INSTAGRAM
Although Instagram had its popularity boom after Facebook, nowadays it is one of the most used social media by brands all over the world in all branches. Some brands even decide to not have an official and rather use Instagram only to showcast their products as well as sell them, however that does work only for smaller brands. Bigger brands use Instagram to show share more content that on the website wouldn’t be fitting or would be easily overlooked by the customer.
Instagram is one of the most used platforms by luxury brands, as it allows them to keep their brand image whilst interacting with the customers. The way Instagram exposes their content on pages is similar to a photo gallery on a phone, which means that brands have to liberty to play with color plates and coherent themes. They can also keep their brand image when sharing photos with a theme that resembles the brand.
Apart from the posts and videos a profile can upload, Instagram offers a lot more features that can be used for marketing purposes10, most of which are already used by luxury brands.
• Augmented reality filters are filters users can apply while making Instagram stories. They can have many forms, ranging from beauty enhancing filters to funny animated filters and filters with images and backgrounds embedded in them. Many brands use filters to reach more customers and to attract attention to new collections or an upcoming fashion show.
• Instagram stories are photos or short 15 second videos that stay posted only for 24 hours.
Initially seen as a copy of Snapchat’s popular model, it has gained popularity in the past years and businesses are keen on using them as well. Stories help engage consumers more and are useful to showcase new products or releases, events in real time and workplace culture. This feature is particularly liked as it isn’t meant to be kept permanently and therefore isn’t
required to have editing done or be stylized.
Stories also offer the possibility of making quizzes for viewers, where the viewer can learn more about the brand and answer questions in a fun way.
• Stories highlights are a way of keeping important Instagram Stories on the page of the user.
Each highlight can be dedicated to a certain topic, like events, seasonal clothing lines or even promotions. Each person visiting the page then gains access to these, which makes them useful in showcasing the activity and events the brand has on the page.
• Instagram Live has gained popularity especially in during the trying times of COVID-19, as it helped people feel more connected while quarantining at home. Live allows the page to broadcast in real life and interact with viewers from all over the world through comments. It is also possible to invite a guest to the live, which attracts even more attention.
Brands can use Lives as a way to connect to their customers and interact with them while informing about upcoming events or collections.
• IGTV is a feature that offers to upload longer format videos on Instagram. These are useful to express longer or more complicated concepts. Brands can also upload interviews with important brand faces or even behind-the-scenes videos.
• Stickers are small images that can be used in Instagram Stories. They can be added to any part of the picture or video taken and add visibility to a brand or profiles. Brands have made in the
10 „The Complete List of Instagram Features for Marketers".
18 past Stickers for different causes or events coming up in order to wake excitement and anticipation.
Amongst the most followed Instagram profiles are the ones of Chanel, Gucci, Louis Vuitton, Dior, Dolce and Gabbana, Prada and Versace.
Facebook is a platform that has undergone the most change in the last years. Firstly starting as a platform to connect with people, now it’s also a platform for business and advertisement at lower costs. Brands can decide to push their advertisement here, as Facebooks algorithm will show the advertisement only to profiles that have certain criteria and could be interested in the brand. When a brand wants to target their advertisement, Facebook is deemed to be the best platform yet, as it keeps a lot of data from their users.
Facebook offers the possibility to businesses to open a so called “Facebook business page”11, which is similar to personal profiles, however it offers more tools.
A brand can lust their information, post updates, inform about events and engage with their customers. However, Facebook for Business includes tools to scan the demographic of the pages audience as well as see the most liked posts and events. Having a Facebook page can also boost traffic on the amin webpage of the brand, as viewers will check out the page if interested.
V. CASE STUDY: Gucci’s rise to popularity through a successful digital marketing strategy
12There is no doubt in the statement, that Gucci belongs to the most well known luxury fashion brands, alongside giants such as Louis Vuitton or Chanel. With its rich history, progressive designs and up-to- date pieces that follow current trends, their share on the market has always been large.
11 „How to Use Facebook for Business - Business News Daily".
12 Information for the case study was provided by a reliable source working for the company Gucci in the marketing department.
Figure 10: Chanel Instagram page; SOURCE: author's screenshot
Figure 9: Gucci Instagram page; SOURCE: author's own screenshot
Figure 8: Louis Vuitton Instagram page; SOURCE:
author's own screenshot
Figure 7: Dior Instagram page; SOURCE: author's own screenshot
Figure 6: Versace Instagram page; SOURCE: author's own screenshot
19 However, as new tendencies started to rise on the market, the brand decided to develop and adapt to them. In 2016 the new creative director of Gucci, Alessandro Michele, and the CEO of the brand appointed the year prior, Marco Bizzarri, started to see new generations, such as Millennials and GenZ, as a large consumer group that hasn’t been targeted by luxury brands yet. As the best way to reach such a vast group of consumers was through digital marketing, they introduced an aggressive digital strategy that made it a priority to address younger generations, understand their needs and act upon them.
The main goal of the strategy was to reposition the brand on the market and appeal to these younger generations, that build the future consumers of luxury. To achieve that, Gucci moved the luxury brand from the runaway to the internet, investing in digital marketing more than into traditional marketing (65% of total investments went into digital marketing in the first year). The main tools in the beginning, that received the most attention, were the Gucci website, the Gucci app and social channels, such as Instagram or WeChat. In addition to that, Gucci built a shadow board of Millennial advisors under 30 years old to discuss topics and strategy points with the executives and therefore allowing the brand to build an effective strategy through real-life insight.
The main concern with this strategy was, that younger generations are extremely digitalized, used to living and connecting through the internet from a young age, and therefore with high expectations and very low loyalty rates. However, they managed to lock in engagement by offering appealing targeted content, presence on the latest trending social medias, adherence to the newest trends and communicating that the brand shares the same views and principles.
Another valid concern was the purchasing power and spending potential of younger generations, which however proved to be the opposite, as they became the new spending force in the luxury world.
The strategy has shown great success in the time span of only 2 years, completely reversing the original
strategy and client baseline of the brand.
Before the strategy was applied, the main targeted segment and clientele of the brand were people above 50 years old who purchased mainly offline by going in-store. The predominant markets were Europe and the US, however Asia was gaining potential even though Chinese and Japanese clients
would mainly buy in Europe as part of touristic trips.
After applying the new strategy, the brand was able to reach more clients worldwide, therefore expanding their market reach, as well as gain more than 70% of new clients, almost all of which are Millennials or GenZ. Moreover, in 2018 55% of clients were aged under 35 years old.
Apart from changes in clientele, sales have witnessed a significant increase due to the new strategy, as they have doubled in first quarter of 2018. 2019 was the most profitable year yet for the brand, as the brand reached 9 billion Euros in sales, positioning itself as the second biggest luxury fashion brand right after Louis Vuitton. On-line sales have contributed greatly to that number, however a rise in in- store sales has been registered as well, showing the strategy doesn’t only affect the on-line environment.
So, what made Gucci’s strategy so successful and competitive?
In the last years Gucci has kept their competitive advantage in the digital world by continuously focusing on new digital trends, allowing them to keep the engagement of younger people. The brand continues to surprise new generations by creating digital buzz, showcasing in gaming communities and
20 creating inspiring and interactive content on social media outlets. The brand managed to build the engagement without the need of gifting their products to influential people or celebrities, therefore creating positive Word-Of-Mouth communication directly from the information they decided to share.
Moreover, the strategy gained different outputs throughout time, as new trends and technology was created. Heavy investments were redirected from traditional marketing to digital marketing.
The strategy began by starting a website and the Gucci App, however with time it expanded on to social media. A very important decision was the distribution of communication among the most effective media outlets. A great example would be the investment into the Chinese app WeChat, that allowed Gucci to create an online shop on this platform.
The active use of new technologies the moment they have been introduced to the market creates a large part of Gucci’s competitiveness. An example of such a quick reaction would be the use of Augmented Reality in their App, as it allows customers to try on the pieces virtually, play with combinations of garments to create a personalized outfit as well as have a closer look at the offered pieces. The app also uses Artificial Intelligence in the form of chatbots, offering 24/7 customer service.
Digital outlets also allow for the brand to offer customization of their pieces, giving the consumer more freedom to make the pieces more personal or to express their stylistic preferences.
Social media has allowed for the brand to communicate more directly with their consumers and connect with them by becoming active supporters of causes, that are important for younger people, such as inclusion, diversity or sustainable principles.
By opening digitally its doors to people of all social statuses and incomes, Gucci has changed the whole luxury market. Gone are the days, where belts, wallets and small leather goods were the only lower priced items meant for lower-income clients. Gucci created new products and ways to deliver them, so that almost anyone can enjoy the same experience, no matter the price tag.
VI. METHODOLOGY AND FINDINGS OF QUANTITATIVE RESEARCH
After secondary research in the form of a literature review offered in prior chapters, primary research has been conducted by the author. The findings of this research as well as a discussion of them will be offered in this chapter of the thesis.
The primary research has been conducted in the form of anonymous, self-administered questionnaires, that have been sent through social media outlets to gather respondents. This type of quantitative research has been chosen, as it offers the possibility to reach more respondents due to its easy access, simple answering and anonymity. Questionnaires are also helpful to find specific information, as the questions in it are set by the author and targeted at the need of the research.
The main topics of the questionnaire could be divided into the subsequent areas:
- General knowledge of luxury fashion brands - General purchasing habits of luxury fashion
- Interest in luxury fashion brands on social media and digital outlets - Consumer behaviour towards luxury fashion brands in the digital world
21 The questionnaire has been discussed with the supervisor prior to sharing it for gathering answers and all the proposed questions have been revised. The questionnaire doesn’t include any open-answer questions, as these would be difficult and impractical to analyse for the scope of the thesis. However, the Likert scale was used in two sets of questions to determine the respondent’s relationship towards targeted statements. The first section is targeted at consumer behaviour when purchasing goods, the second is used to determine the behaviour of users on social media regarding luxury fashion brands profiles and content. The questionnaire that was used for the primary research can be found in Appendix I. in English.
For the collection of data and its analysis, the method of simple random sampling is used. The most important factor in this study is the age of respondents (respectively the generation they belong into) and their behaviour withing the generation, therefore each generation will be analysed separately and afterwards compared to each other.
The number of responses gathered by the questionnaire is 119, which has overcome slightly the minimum goal of 100 responses. Such a sample size is enough to be analysed and for its findings to be considered accurate for the scope of this thesis.
DEMOGRAPHICS
In the demographics part of the questionnaire respondents were asked for their age and gender, age being the main selective criteria for this study. The age was not given specifically, as that wasn’t needed for the scope of this study, however they were asked to choose one of the following age groups:
- 15 to 20 years old - 21 to 27 years old - 28 to 35 years old - Above 35 years old
Age groups were chosen in coherence with the above mentioned generations this thesis is investigating – 15 to 20 year old people are part of GenZ, whereas 21 to 27 year olds are younger Millennials and 28 to 35 year olds are older Millennials. The age group of “Above 35” was included as it is needed to create a comparison between the behaviour and outlook of younger generations and older generations.
Figure 11: Age of respondents; SOURCE: author's primary research
22 The largest number of respondents (50,4%) is in the age group of young Millennials, 20,2% of respondents are in the age group above 35, whereas 16,8% of respondents were in the age group of GenZ. The smallest number of respondents (12,6%) were part of older Millennials.
Figure 12: Gender of respondents; SOURCE: auhor's own research
When the gender of participants is examined, large majority of responses came from female respondents (76,5%), a smaller part from male respondents (22,7%) and 1% from non-binary respondents. A large imbalance between the genders can be seen in the total responses, however for this study the age of respondents has more importance than their gender, therefore gender will not be taken into consideration as a factor of influence on the questionnaire’s findings.
F 80%
M 20%
21-27 YEARS OLD - YOUNG MILLENNIALS
F 100
%
28-35 YEARS OLD - OLDER MILLENNIALS
F 83%
M 17%
ABOVE 35 YEARS OLD
NB 5%
F M 40%
55%
15-20 YEARSOLD -
GENZ
Figure 13: Gender of GenZ;
SOURCE: author's own research
Figure 14: Gender of young Millennials; SOURCE: author's own research
Figure 16: Geder of older Millennials; SOURCE: author's own research
Figure 15: Gender of respondents above 35 years old; SOURCE: author's own research
23 As for the difference in gender representation for each group, all groups except for one have different genders represented. The age group of older Millennials has only female respondents, which will be considered when analysing subsequent data.
LUXURY BRAND AWARNESS
In this part of the questionnaire respondents were asked to choose from a set list of luxury fashion brands the ones they know. This question was used to test the respondent’s knowledge about luxury fashion brands, as well as to note the brands that are the most known amongst the sample.
Respondents had the option to choose more than one brand according to their experience.
The list of brands was chosen in coherence with the brands mentioned in the thesis, as these are the
ones being analysed in this research.
The list of brands is the following:
- Versace - Dior - Gucci
- Louis Vuitton - Prada - Chanel - Hermés
An option of “others” was listed as well for respondents to name other luxury fashion brands they know or see as luxury. The answers to the last question varied from respondent to respondent, however some responses will not be taken into consideration, as those brands could not be classified as traditionally high-end luxury brands and don’t fulfil the definition of luxury set in the first chapter of this thesis.
Figure 17: Respondent's answers to the question "Which of these luxury fashion brands do you know?"; SOURCE: author's own research
24 All of the brands listed were known to most of the participants, demonstrating that these brands are truly the strongest ones on the market. Out of the brands, Hermés was the one with the least responses (100 out of the total 119 knew the brand), which shows, that Hermés is one of the more niche brands with higher price tags than the other brands listed, which is less targeted on younger generations with both their marketing strategy and product designs.
As for the other brands chosen by respondents, the most mentioned ones were Bulgari (2 people), Fendi (2 people) and Armani (3 people). A few respondents also mentioned Bottega Veneta, Dolce and Gabbana, YSL and Longchamp.
LUXURY BRAND PURCHASING HABITS
In this part of the questionnaire the purchasing habits of the respondents are analysed. The first question in this part is asking, whether they have ever bought a luxury fashion item. This question was used to select only those respondents, who have bought luxury items to proceed to the next questions.
Those that have answered they have never bought such an item would skip this part of the questionnaire and were redirected to the next set of questions about luxury brands on social media.
Figure 18: Respondent's answers to the question "Have you ever bought luxury fashion items?"; SOURCE: author's own research
53,4% of respondents have answered that they have bought luxury fashion items, therefore this part of the questionnaire is answered by a smaller sample (64 respondents).
In the next question participants were asked to choose from a list those brands they have purchased at least once. The list of brands offered is identical as the last one, as those are the brands being examined. Respondents were again offered the possibility of “others” to add other luxury brands they have bought as well and aren’t on the list.
25
Figure 19: Respondent's answers to the question " Which of these brands have you ever purchased at least once?"; SOURCE:
author's own research
From Figure 19 it can be seen, that the most purchased brand is Gucci (with 38 responses), on second place is Louis Vuitton with 30 responses and on third place Prada with 27 responses. The least purchased brands are Versace and Hermés. These results are not surprising, as one can clearly see the leaders on the market, Gucci and Louis Vuitton, being the most sold ones. Hermés is yet again to be seen in last place, which is surely influenced by a comparatively higher price point of their products then other listed brands.
As for other luxury brands participants have mentioned, the most purchased one is Fendi (3 respondents), however other mentioned brands are Thom Browne, Armani and Marc Jacobs.
When observing the differences of purchased brands between age groups, the overall results become more clear.
The least represented age group is GenZ (15-20 year olds) with only 6 respondents. This can be explained by little financial independence of the age group and therefore lower purchasing power until they gain financial independence. The most purchased in this group is Louis Vuitton (2 respondents), other purchased brands are Dior, Gucci, Versace and Thom Browne.
The age group of younger Millennials (21-27 years old) is, on the other hand, the most represented group with 24 respondents answering they have bought luxury fashion products.
26
Figure 20: Brands purchased by young Millennials; SOURCE: author's own research
From Figure 20 it is clear, that the most purchased luxury brands of this age group are Louis Vuitton and Versace, together being almost half of young Millennial’s purchases, followed by Gucci and Chanel.
The next age group is the one of older Millennials (aged 28-35 years), where 14 respondents have stated they purchase luxury fashion goods. It is important to state, that all the respondents of this category are of female gender when evaluating purchased brands. In this age group, all the respondents have stated, that they have purchased Gucci products, however Louis Vuitton and Prada was picked by more than half of the respondents as well. Other purchased brands are Dior and Chanel.
Figure 21: Brands purchased by older Millennials; SOURCE: author's own research
The last age group is people above 35 years old. In this age group 20 participants have answered yes to purchasing luxury fashion at least once.
Dior 10%
Gucci 14%
Louis Vuitton 23%
Prada 10%
Hermés 6%
Versace 23%
Chanel 14%
BRANDS PURCHASED BY YOUNG MILLENNIALS
Gucci 41%
Louis Vuitton 24%
Prada 26%
Dior 3%
Chanel 6%
BRANDS PURCHASED BY OLDER MILLENNIALS
27
Figure 22: Brands purchased by respondents above 35 years old; SOURCE: author's own research
It is important to note, that the majority of respondents (13 out of 20 respondents) chose more than 2 brands. This insinuates a higher purchasing power, however age and financial stability in this category may have influenced this fact. Just as older Millennials, older generations have stated they purchase the most Gucci products, followed by Prada, Chanel, Dior and Louis Vuitton. An increase in purchase of Hermés products can be seen on comparison to other generations.
In the next section of the questionnaire, participants were asked to answer questions using a Likers scale. In the first three questions they were asked questions regarding how often they purchase goods in store or on-line. The Likert scale had 5 points they could choose from, ranging from number 1 representing low frequency of purchase to 5 representing high frequency of purchase.
To the question “How often do you purchase luxury fashion items?” respondents of older age groups, older Millennials and over 35 years old, have stated they purchase more often than younger generations, which have predominantly answered they purchase luxury goods rarely.
When asked, in the next two questions, whether they purchased more in store, before the COVID-19 pandemic hit, or whether they tend to purchase on-line, almost all have answered they did not purchase in-store very often, however the age group of older Millennials has stated the contrary,
therefore tending to purchase in store more.
It is important to consider the COVID-19 pandemic as a factor influencing purchasing behaviour, as stores were closed for longer period of times in most European countries, therefore obligating
consumers to use on-line stores for purchases.
However, it is important to note, that all age groups stated they either don’t at all or very rarely shop on-line for luxury fashion goods.
In the next section of questions participants were given certain statements and had to mark on a Likert scale, whether they agreed or disagreed with the statement.
Dior 16%
Gucci 21%
Louis Vuitton 12%
Prada 17%
Chanel 16%
Hermés 14%
Versace 4%
