The E-marketing strategy objective is to attract and retain the customer to visit the web site of the luxury brand. In contrast to traditional marketing which seeks to encourage the customer to make a purchase. Therefore the internet marketing strategy is more customer oriented rather then product oriented. We will discuss two main rules of the E-marketing. The six Ps of luxury branding [1] and the ten Cs of luxury fashion E-marketing. [2]
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In the luxury industry branding and marketing are closely connected. Branding is a core process of marketing which can only take place if there are products and services. On the other hand the marketing can gain from branding because a strong brand image augment the marketing strategy. In order to implement a competitve marketing stratregy the luxury brands should take into consideration the following six Ps of luxury branding.
1. The product
A product is “anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need”. [3] These includes physical goods an services. The need can be functional such as the need for a handbag to carry personal objects. Or it can have an abstract dimesion such as the need to carry a handbag with the Louis Vuitton logo in order to exhibit the status. This second level of need is fullfilled by, luxury goods since they carry a strong brand value.
Strategies behing the development of luxury goods place a strong emphasis on branding elements.Therefore Luxury products features include innovative, creative and appealing product designs and packaging, classic and timeless products, high quality materials, meticulous craftmanship, manufacturing precision and rapid design turnover. [4]
2. Pricing
Price is the first hint of a brand’s positioning to consumers. The luxury consumers are less price sensitive and expect luxury goods to be premium priced rather than economically priced. The high price enables the customer to evaluate the quality of the product, also called psychological pricing. [5]
3. Place of distribution
The place of distribution refers to the channels used to make product and services available to the customer. For luxury brands there is the additional task of brand protection. In order to maintain an exclusive brand aura, the luxury brand distribution channel is tightly controlled. As an example when Gucci licensed its brand to multiple manufacturers and distributors their brand value lowered.
4. Promotion
When it comes to design a promotional message, it is important to define and target the right audience. Luxury brand additionaly have to carry out the brands essence and all its elements in each communication. This means that the design itself has to be communicated. Effective promotional mediums for luxury brands are advertising, direct marketing,personal selling, public relations and sponsorship.
5. People
People in the luxury branding mix refers to everyone that is affected by the brand and everyone that affects the brand. Including those involved in the development of the product and services, brand management and all the employees staff involved in the daily business. People are the most important element of any service because the experience they have with the brand influence the way they transmitt the brand to customers.
The main strategy used by luxury brands is using Ambassadors. They are usually celebrities providing the brand with life and promoting the brand through giving it a face. For example Kate Moss was for a time ambassador of Dior. Though the danger is that those celebrities carrying out the image of the brand can affect the value brand in a negative way since they are the center of attention of the media. This happened to Dior with John Galliano who was accuses of “anti-semitism”, though LVMH managed to successfuly overcome it. “In the field of communication you’d better not make the same mistake twice” [6] .
6. Positioning
Positioning refers to the choice that a brand makes, which determines where and how it competes in its market. Since luxury brands have a clearly defined and specific market, the positionning strategy serves mostly as a strategic tool for sector benchmarking and external competitors intelligence.
Luxury brands have a hugh potential of being successful in the internet. When offering a website they get significant return on investment in terms of more spending since what luxury consumers value most in the internet is shopping at home and having wide selection of merchandise available online. [7]
A. The ten Cs of Luxury Fashion E-Marketing
As mentioned in the online versus off line part, the luxury customer is seeking for a high quality shopping experience. Many companies are still missing the E-touch to there website. In a recent survey about the luxury consumer behavior conducted by Unity Marketing [8] 35% of luxury shoppers are discouraged because of difficulties in returns and exchange of goods, 21% are afraid to make costly purchase due to security reasons. Following some main points how to overcome this problems.
1. Customer value
Customer value is the additional benefit a customer receives from a company to ease the shopping experience. Provide the customer with a large product range and equip the web site with the adequate tools to view the products, will delight the online customers shopping experience.
Many luxury brands offer narrow product range in the e-store or end of season products. Unfortunatly this lower the brands image to the customer. The luxury goods consumers are less interested in low price then in high quality.
2. Convenience
Convenience is the main advantage of e-retail. Customers can buy what they want when they want in an e-store open round the clock.
To make this experience complete for consumers luxury brands need to inter-related the off line retail offers with the e-retail strategy. Luxury consumers are multi-channel shoppers that might visit the web site and the store before purchasing. The convenience experience should also include effective website usability and streamlining the after sales service to include returns, refund and exchange of goods in physical stores even if the purchase was made online.
3. Cost
The cost of purchasing a product includes the price of the product and additional costs like transport cost and travel time to and from the store, time spent in the store and at checkout points… E-retailers enables the customer to save this time.
An additional cost issue for luxury brand is price discounting. Online consumers often choose internet as a discount destination due to the wide range of products that are often on sale. In order to meet customers expectations luxury brands have adopted the strategy of online discounting. This strategy neither enhances brand integrity nor sustains brand equitiy for luxury brands. Luxury brands should maintain a strict price policy on line and offline. As an example Louis Vuitton is followint a strict price policy with no discount and destruction of the unsold goods.
4. Communication
Communication is the equivalent of “Promotion” in the offline marketing. Communication focuses on exchanges which can lead to conviction. It provides access to feedback and consumers needs and expectations using emails or customer chat.
To enhance communications with the online customer, luxury brands can use internet toole like exclusive online clubs, viral marketing, email news and other techniques in order to keep in touch with the customer and fill the lack of human interaction.
5. Computing
Computer and logistic systems are essential for e-retailers. In order to deliver the right product, at the right time in the right location, computing systems must be put in place. Other issues such as online payment, security and taxation calculation can only be achieved through competent computing coordination. This can be done through creating computer networks between suppliers, manufacturers and retailers. Luxury brands currently have increasing product variety and decreasing product life cycle . This enlarged assortment of goods requires effective management online.
Luxury brands can also extend computing systems to empowe customers through providing tools for online order tracking and mapping for store directions.
6. Customer franchise
As a result of the experience with the brand online, customers develope a relation of trust, confidence, image and overall feelings with the brand.This is called customer franchise.The brand strength sustains the online experience with the customer, therefore a high customer franchise is important to develop brand equity and brand positioning.
7. Customer care
Customer care plays a huge role regarding the shopping experience of the customer. Effective customer care is extended to every aspect of customer’s contact with a brand. Luxury brands have long been criticized regarding the customer service whether online or off-line. This is because the brands were focusing more on product sales.
The main issue with internet is the lack of human interaction which makes it more difficult to provide a good customer service. Still it can be compensate through fast and reliable delivery of goods, quick return, refund and exchange of goods. Finally as discussed earlyier, the inter-relation with after sale service off-line and online.
Several other ways are possible such as online chat, extensive product view and description E-news subs etc. All those facilitation for the customer enhance and ease the shopping experience. Those programms also enable the retailer to develop a customer database and gather feedback from consumers.
8. Community
The online consumer are divided in several communities with shared interests. Through bloggs customers can share their positive or negative experiences with brands. The luxury brand Louis Vuitton created a website as a platform for its customer to discuss current issues regarding the brand. This platform sharing is an efficient tool luxury brands can use to build strong relationship with customers.
9. Content
The content of a luxury brands website reflects the brands image. Therefore it is very important that luxury brands translate the shop athsmosphere to the web through high definition videos images and sound. Nice colors and all the additional features discussed in customer care, to delight the customers shopping experience.
10. Customization
There is an increasing demand for customization of products on the internet. This is the consequences of individualization, customers desire to be recognized and provided with personal attention. A good example is Roberto cavalli that uses customization as a tool for providing a superior web experience. The web site offers customizable wallpaper and multiple background music options. But still in the luxury brand sector there is a lack of customization, since luxury brand only offer this possibility to “select customers”.
If following the ten Cs, luxury brand are able to provide their customers with high quality shopping experience and meet the most important features for luxury consumers such as flexible return policy, detailed product pictures and in depth product information and specification. [9]
B. The six Ps of luxury branding
In the luxury industry branding and marketing are closely related. Branding is a core process of marketing which can only take place if there are products and services. On the other hand the marketing can benefit from branding because a strong brand image enhances the marketing strategy. In order to implement a competitve marketing stratregy the luxury brands should take into consideration the following six Ps of luxury branding.
1. The product
“A product is everything a consumer receives from a company in exchange for a cost” [10] . These includes physical goods an services. Products are designed to satisfy consumers needs. The need can be functional such as the need for a handbag to carry personal objects. Or it can have intangible dimesions such as the need to carry a handbag with the Louis Vuitton logo in order to make a statement of status. This second level of need is fullfilled by products that carries a strong brand value, like luxury goods. Luxury goods are used by consumers to project an image of themselves to the public. They are status symbol.
Strategies behing the development of luxury goods place a strong emphasis on branding elements.Therefore Luxury products features include innovative, creative and appealing product designs and packaging, classic and timeless products, high quality materials, meticulous craftmanship, manufacturing precision and rapid design turnover.
2. Pricing
Pricing is the first indicator of a brand’s positioning to consumers. The luxury target audience is less price sensitive and expect luxury goods to be premium priced rather than economically priced. Therefore many luxury companies have opted for a premium price strategy.
3. Place of distribution
The place of distribution refers to the channels used to make product and services available to the customer. For luxury brands there is the additional task of brand protection. In order to maintain an exclusive brand aura, the luxury brand distribution channel is tightly controlled. As an example when Gucci licensed its brand to multiple manufacturers and distributors their brand value lowered.
4. Promotion
When it comes to design a promotional message, it is important to define and target the right audience. Luxury brand additionaly have to carry out the brands essence and all its elements in each communication. This means that the design itself has to be communicated. Effective promotional mediums for luxury brands are advertising, direct marketing,personal selling, public relations and sponsorship.
5. People
People in the luxury branding mix refers to everyone that is affected by the brand and everyone that affects the brand. Including those involved in the development of the product and services, brand management and all the employees staff involved in the daily business. People are the most important element of any service because the experience they have with the brand influence the way they transmitt the brand to customers.
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The main strategy used by luxury brands is using Ambassadors. They are usually celebrities providing the brand with life and promoting the brand through giving it a face. For example Kate Moss was for a time ambassador of Dior. Though the danger is that those celebrities carrying out the image of the brand can affect the value brand in a negative way since they are the center of attention of the media. This happened to Dior with John Galliano who was accuses of “anti-semitism”, though LVMH managed to successfuly overcome it. “In the field of communication you’d better not make the same mistake twice” [11] .
6. Positioning
Positioning refers to the choice that a brand makes, which determines where and how it competes in its market. Since luxury brands have a clearly defined and specific market, the positionning strategy serves mostly as a strategic tool for sector benchmarking and external competitors intelligence.
Luxury brands have a hugh potential of being successful in the internet. When offering a website they get significant return on investment in terms of more spending since what luxury consumers value most in the internet is shopping at home and having wide selection of merchandise available online. [12]
C. Best practice and biggest failure of luxury E-retailing
We discussed several issues luxury brands are facing when going online and we evocated strategic possibilities in order to be successful. Even though many luxury brands are still struggeling going online, a few managed to successfuly take advantage of the cyber world. Among them Net-aPorter.
Net-a-porter is a luxury clothing and accessories retailer that carries some of the biggest brands in fashion such as Alexander McQueen, Stella McCartney and others. It sells designer clothing, lingerie, bags and shoes. It was created by Natalie Massenet in June 2010. Four years later the company was already profitable.
What makes the shopping experience so delightfull is that Net-a-Porter is adressing two key questions: [13]
How will the item look on a person?
What else can I wear this item with?
Furthermore Net-a-Porter is displaying its items in two different views. First you can view just the product, second you can view the product worn by a model. This allow customer to envision how they will look when they are wearing the item, which gives them a strong stimulus to buy.
Additionaly Net-a-Porter implemented an upselling strategy [14] which they achieve through including the name of the other items the model is wearing in the product description. And suggest what the product can be worn with labeled “Wear It with”.
This company is a good example for how to replace the lack of human interfaces through up to date technology, enabling the customers to enjoy surfing on the website and giving them an incentive to buy.
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