ARTD2040 DIGITAL MARKETING
PART 2
INTRODUCTION
The development of digital technology has changed the consumption model and the life style of customers, and as a result, luxury brands have changed from traditional high-end business model to a model which is more suitable for digital environment and consumers nowadays. This article will analyze the distribution of product based on the change of digital environment, and the impact of digitalization on the competitive environment of luxury industry, together with the sales and marketing mode of luxuries. It will demonstrate how to balance
the contradictory features of internet and luxuries by using digital methods and social media, as well as how to reduce the mismatching with consumers. And it talks about how the luxury brands utilize the widely-used digital advertisements nowadays to advertise and influence the consumers and how to make consumers possess the purchasing experience on the Internet with high enjoyment, and how luxuries use CRM to enhance the consumers' participation and to launch more personalized services. According to the trend of digital environment, predict the future situation and analyze how consumer behavior will change and exert an influence, as also summarize the characteristics of high-end consumers. Then finally summarize the effects of digital environment on luxury brands and the future chances.
DISTURIBUTION The biggest difference between the digital marketing and the traditional marketing is digital marketing's emphasis on establishing the relationship with individuals, rather than the market environment. Luxury brands could utilize digitalized tools to strengthen the tie between the 4p combination of the marketing strategy and the individual consumers, and provide
more targeted and optimized services compared with the traditional marketing.
To differentiate the prices,
luxury
brands
can not only be specified with
different prices
in the product category to cater more potential consumers, but also give some preferential prices to maintain customer loyalty to their brands. The most important thing is that you can utilize digital marketing to adopt one to one marketing model, through consumers' registration information, search behaviors and feedback of information to analysis the products they need, and then according to the final consumers evaluation of the product, price range of willing to pay and the consumers characteristic to determine the price. This individual customization price could better bond over the demands and favors of consumers. (Glover, S., Liddle, S. and Prawitt, D. 2001, p.67)
There are many mediums to choose in popularization. Luxury brands can integrate popularization plans, provide specific popularization using earned media, paid media and owned media, make paper magazines into E-magazines which is convenient for consumers to subscribe, and promote consumer
awareness and tell stories by combining digital media.
Network makes the consumers more convenient on the purchase funnels, and the manufacturers can also arrive in more areas and contact with potential customers through the network. Consumers now have a lot of ways to buy, such as mobile phone, web, tablet, TV. However, the physical store is more like a showrooming at present. Consumers will try on the goods in the physical stores, and then go back home to choose a purchase platform with price concessions, low transportation cost and time efficiency. Luxury brands such as Burberry open Maggic mirror in the flagship stores to attract offline sales through digitization and build excellent online and offline digitization atmosphere. Luxury brands can make the product packaging more personal through consumers' information. For example, granting gift note and delivering more high-end personal experience. Nowadays, the express is more convenient and faster. Many luxury
brands provide the customers the performance of quota with free shipping and being delivered to the home within 15 days, which makes online shopping more convenient and reduces the
cost.
SOCIAL MEDIA AND DIGITAL TOOLS
Digitization had already radically changed the competitive business environment, hence both sales and marketing changed greatly. Whether it is the opening of ecommerce or the increase of sales due to the digital platform, sales is on the way to a new era. In marketing, the permeability
of
the
global
smart
products has increased. Bishop, B. (1998) noted: “For example, according to the reports of the science and technology counseling agency business insider, 3% of the people out of the world's population will own one tablet PC, 6% will own one smartphone and 16% will possess one personal computer by the end of this year.�(1998, p. 15:7) And these data not only indicated the rise of mobile terminals, but also made the consumers have their own information platforms. The information-rich contents generated by subscribers also boosted the rise of a great deal of individual bloggers in the field of fashion on the Internet and comments about fashion that were given high praises by people.
Several years ago, high-end luxury brands didn't trust any digitalized products, because digitization itself is featured by strong inclusiveness, high accessibility and high transparency. However, high-end brands constructed images with the sales methods that are unapproachable, exclusive, unique and rare with a sense of distance. However, along with the wide application of digitization by consumers, the luxury brands need to utilize social media and digital tools to reduce the mismatching interrelations and know about the current important consumers. According to Unity Marketing research (2012):, “50 percent have used social media to learn more about a brand or see new products. And a 2011 Digitas study notes over the next decade digitally entrenched millennials will become the next major luxury buyers—and should therefore be targeted now.� (2012,p3-4)
The luxury brands need to utilize digitalized methods and social media to create a luxury atmosphere, systematically delivering the offline value features of the brands. It also uses legend story to express the traditional exquisite production technology and history so as to arouse consumers' emotion and convey meaningful values. This way will not only add atmosphere of the prestige, scarcity and high quality position of luxury goods on the e-platform, but also help to deepen the personal relationship with consumers. Customers personally may not often go to the real stores of luxury goods but they will have a connection with one or two luxury brands because they think that they can reflect their faith or features.
Luxury brands need to establish a long, stable, good and loyal relationship with customers through emotional interactive marketing. For example, Burberry has official homepages in Facebook, Twitter, Instalgram and Youtube which can draw long term attention from customers and establish trust with them. Burberry pays close attention to the brand's content itself. It updates and releases topics with the sentimental value for public discourse rapidly, interacts with consumers and reprints.
DIGITAL ADVERTISING
The transmission of brand culture through the Internet can also promote the construction of brand images of luxuries, which can select communication media and highlight the characteristics of luxuries by making effective use of their media characteristics. The traditional advertising has already filled in people's life, and consumers try to avoid these advertisements, which have no novelty and attraction for them. They will look down at their cellphone screens when the TV shows are changed to advertisements, and when they are walking, they also stare at their cellphone screens and ignore the billboards they have passed by. With the surge of smartphone and people's demand for widescreen, the importance of the mobile video has been reflected. These target audiences, who focus on the screen, are more likely to pay attention to and accept the digital advertising. Thus, the digital advertising is a mode of life more
conforming to the luxury consumers.
Native Advertising Ian Schafer, CEO of Deep Focus, (2008) said, “This is a kind of way that the consumers themselves use this media and an advertising method to get in touch with the consumers.� (2008, p.35) The form of native advertising is not only more diversified, but a method for consumers to experience marketing as well. It not just seems to be harmonious; what's more, it provides valuable information, which easily makes users accept and spread it. Brands of luxuries can provide valuable content to satisfy consumers' life form and life style. Moreover, they can weaken the concept of sales in the content implantation and transmit ideas only, which have promoted brands or products virtually. (Chaffey, D., Ellis-Chadwick, F. and Chaffey, D. 2012, p34) Using Facebook, Youtube and other platforms to promote the motivation of the users, making them join and enjoy the interactions. It is especially fit for the people who are keen on mobile devices. Business information in conventional advertisements is not only difficult to be accepted by consumers living in the millennium, but also shortens the distance between consumers and luxury brands if it is repeated frequently. Hence, luxury brands make use of the fashion bloggers and celebrities who are popular to promote their products and thus overcome the consumers' inner obstacles, which can therefore increase the purchase rate. Luxury brands invite stars to participate in activities to create public opinion invisibly, thus catching consumers' interest and attention.
Traditional online Or
Tablet advertising Taking Internet as the carrier of the dissemination of luxury culture, the luxury brands are promoted by the use of many video materials such as vast video advertisements, new product promotion and fashion shows. To promote from fashion and value angle can strengthen the consumers' memory of the brand and maintain the loyalty.
SHOPPING EXPERIENCE High-end consumer groups are interested in enjoying the shopping experience when they purchase the luxuries, including service experience and product experience. During the whole process of luxury brands to make online shopping, the experience of luxuries is the basic element, but it also needs personalization and rather enjoyable shopping experience according with the offline shopping (Harris, L. and Dennis, C. 2008) Product experience-showing the aesthetic value In creating the theme website, consumers gain an enjoyable process by browsing websites. They experience the brand culture and fashion sense of high quality, as well as the latest videos of product display. It's a process to create beauty-appreciation and excellence. And present clear demonstration and exhibition of brand categories and clearly show the sizes and colors. The understock and reservation can show the rarity of luxury brands and enhance personal possessiveness. Provide safer and satisfactory logistics distribution and sound post-sales service as well as goods return and replacement. Personalized service experiences Customer service is no longer rear guard but vanguard, is changed from passive into active service and provides service of higher level. Luxury brands conduct the communication through customer service. They create comprehensive and professional consultants to provide the fashion guidance, matching suggestions and brand introductions, design concepts of the styles, and the care and maintenance. We provide exclusive and
exalted customization service, and build 3D models of the human body. Customers can select and mix the products on the Internet platform at any time, which enables customers to buy the products that they are most satisfied with. It solves the problem of no wear-on experience when customers buy fashion products online, and customers can also know the product information quickly.
CUSTOMER RELATIONSHIP AND ANONYMITY
“Online media fragmentation and the huge proliferation of product choice online has led to customer engagement being ‘marketing‘s new key metric“(Forrester 2007)
In the era of E-commerce, in order to maintain the leading status and ensure the future competitive advantage, the luxury brands turn the luxury customers and their needs into the center of the behaviors as opposed to previous product-centered way so they improve the consumers' participation by Social-CRM and E-CRM. And therefore they contact with the customers to understand them, provide them with personalized
services to increase customer satisfaction, and cultivate and maintain customers' loyalty. Luxury brands attach great importance to the value of customer resources and the digitized environment is also more conducive for them to directly or indirectly collect related information and interact with consumers, such as the questionnaire and social network monitoring Luxury brands hope to establish long-term loyalty relationship with customers. The first thing they need to do is to select target consumers, find the channel to get consumers, and eventually keep in touch with consumers and extend this link. The most important is to use network platforms to get consumers' attention and let them participate in it to create emotional connection. Firstly, customer identification refers to adopting the corresponding strategy according to the different needs of customers through the analysis of customers to collect customer information, integrate and manage by the use of customer relationship management system, find customers' dissatisfaction and take action in time. For example, LV introduces unique characteristic services and value-added services for VIP to differentiate consumers who buy handbags at the same time. Luxury brands choose the best ones by classifying customers. By knowing them, they implement oneto-one marketing to them effectively and provide the best products that meet their need. For example, offering some special allowances to strength the original customers' loyalty, to make them feel loved. And they increase engagement by interaction with clients. They express their feelings by media to make the consumers have a feeling, especially personal storytelling, and acquire customers' emotional loyalty by linking with their feelings. They introduce their products to clients and expand the client group during the interaction with them. The community of luxury brands should be set up through internet. The participation of customers and repeated interaction are important ways to maintain the customer relationship and to increase the loyalty of customers. To interact with the platform could observe comments of the consumers and understand clients' demand through individual publishing, so that clients' diverse personalized needs could be satisfied and their satisfaction could be increased.
FUTURE FORCAST CHANGING DIGITAL ENVIRONMENT With the arrival of the global digital age and the emergence of Internet Commerce, there are significant changes in the concept of consumption, mode, and consumer's status. Ten years ago, normally the high-end consumers that luxury brands faced were the western population aged 40. They had high purchasing power, but they received information passively. Besides, they were fond of noble and traditional taste. However, today's consumers of luxuries are mostly 30-year-old young people around the world, who are very active in the network and grasp the initiative of consumption. In the consumption of luxury brands, consumers take the initiative to obtain the commodity-related information through various possible network channels, which will be analyzed and compared. For example, consumer reviews, blog and comments all will ultimately affect their buying behavior, thus improving the status of consumers' sovereignty. And along with the huge information processing ability of the network marketing system, they have more space to choose goods, and it also makes the consumers more rational during purchasing In the digital environment, network marketing mainly aims at individual consumers. Every consumer is a small but important consumption market while independent personalized consumption becomes the main stream. Consumers directly take participation in production and negotiate with producers face to face, which will reduce the market uncertainty in the future For luxury brands, facing the completely different consumers today, what the brands will face more is to meet their individual changing needs and the network lifestyle.
CONSUMER BEHAVIOR Self-expression
The consumers of network luxury goods have four characteristics. They focus on self-expression, in the society where the network is relatively more open and freer. They integrate social intercourse and life into the network completely. They like to let more people note their voices and have their own right to speak. So they enjoy sharing themselves and listening to others' opinions and ideas, and are more conceited on comments. Following the trend and analyzing rationally They like to go after new things such as the latest online articles and advertisements. And they are good at utilizing network to make contrast and rational analysis. Therefore in the process of mentality, they usually use the network platform to notice new products and generate interest. They search on Internet, make the filtered decision and finally purchase, write some comments to share with others. Lack of patience In today of fast era and large amounts of information, consumers would like to pay more attention to headlines and key words when searching for information. They care the search time, if the link transmission speed is slow, they'll leave the website immediately.
IMPACT AND OPPORTUNITY
To the consumers in the future, the luxury brands need to be in the high rank in the search engine to provide valuable content according to the consumers' characteristics listed above, showing the willingness to listen to the voices of consumers and providing a platform where the consumers can freely make comments and accept opinions and changes. For luxury, digital environment can not only optimize service in channel, but also improve sales and customer loyalty, which allows brands to cover some regions and customers that offline cannot cover for the long-term
development in the future, while online network can supplement it. In particular, expanding to the Asia region, especially China, it has huge consumers of luxury goods. It provides opportunities for the long-term development of the market.
Reference: B.V., ©. (2015). Customer Relationship Management[顾客关系管
理]. [online] 12manage.com. Available at: http://www.12manage.com/methods_customer_relationship_ma nagement_zh.html [Accessed 20 Mar. 2015]. Bishop, B. (1998). Strategic marketing for the digital age. Lincolnwood, Chicago, Illinois, USA: American Marketing Association. Alex, L (2015). Best Way To Attract Customers To Your Online Ecommerce Store Or Business. [online] Mywifequitherjob.com. Available at: http://mywifequitherjob.com/the-best-way-toattract-customers-to-your-online-business-or-ecommerce-store/ [Accessed 20 Mar. 2015]. Smith, H (2015). Best Way To Attract Customers To Your Online Ecommerce Store Or Business. [online] Mywifequitherjob.com.
Available at: http://mywifequitherjob.com/the-best-way-toattract-customers-to-your-online-business-or-ecommerce-store/ [Accessed 20 Mar. 2015]. Chaffey, D., Ellis-Chadwick, F. and Chaffey, D. (2012). Digital marketing. Harlow: Pearson. Finance.chinanews.com, (2015). . [online] Available at: http://finance.chinanews.com/cj/2014/03-22/5982358.shtml [Accessed 20 Mar. 2015]. Glover, S., Liddle, S. and Prawitt, D. (2001). E business. Upper Saddle River, N.J.: Prentice Hall. Harris, L. and Dennis, C. (2008). Marketing the e-business. New York: Routledge. Luxuryinstitute.com, (2012). Wealthy U.S. Smartphone Users Reveal Details on Shopping, Spending and Use of Mobile Apps; Facebook, Angry Birds and Words With Friends Top List of Favorite Apps ÂŤ The Knowledge of Luxury. [online] Available at: http://luxuryinstitute.com/blog/?p=1555 [Accessed 20 Mar. 2015]. Mathieson, R. (2010). The on-demand brand. New York: AMACOM.