An exclusive dossier by Patrizia Musso and Gabriella Vivaldi, Brandforum.it
Digital media have changed our lives radically, both as people and consumers and not only in the Western Countries. Despite some sceptics, this revolution had some consequences also on consumers’ habits toward luxury goods.Facing this scenario luxury brands are becoming “2.0” in their business and communication strategies.
The Internet – together with the whole world of digital media – has changed our lives radically, both as people and consumers and not only in the Western Countries.
Let’s consider Brazil for instance. It became the country with the highest number of “connected people” on Earth (Source: BrandZ Top 100, Most Valuable Global Brands 2012, page 22). Or let’s think about China. A recent study by iResearch showed a 68% growth in the e-commerce transaction volume in the first four months of 2012.
Despite some sceptics, this revolution had some consequences also on consumers’ habits toward luxury goods.
This is in fact a generation of “rich 2.0”, people who use blogs, e-commerce and social media.
In this regard, it’s interesting to have a glance at China, the third largest market of luxury goods in the world worth about $25 billion. It has been expected to grow by 20% in 2013 and to be the first world leading luxury market by 2015, passing Japan.
The Chinese case is highly remarkable also for the typology of consumers involved: 80% of people are under 45 (30% in the US, 19% in Japan – source: McKinsey Global Institute), 70% are highly educated male, specialized in business and finance; they are open to discussion with the Western countries and they buy luxury goods to feel good and be happy (Source: SMG China National Research & Insights 2012).
Moreover, they are social-media-goers (63% of population use the Net to gain info before buying products in boutique) and the Chinese e-commerce of luxury goods is constantly increasing (in 2011 the market value was over 10 billion yuan, $1.6 billion – Source: iResearch).
Neither the “Female Power” is to be underestimated: thanks to the recent socio-cultural changes, nowadays women are more and more educated and well-integrated in the working environment.
Their purchase power towards luxury goods is growing day after day, not only in well-established markets but also in the developing ones.
A good example comes once again from China: according to Nielsen data, Chinese women’s power was already growing in 2010, in all economic sectors, in education and inside their families too; moreover we have to consider the raising interest of younger women in buying luxury products, compared to men of the same age (Source: http://blog.nielsen.com/nielsenwire/global/below-the-topline-womens-growing-economic-power/; http://www.mckinsey.it/storage/first/uploadfile/attach/143022/file/30.03.12_sole24ore_moda24_cina_leader_online_entro_fine_2015_mazz_.pdf).
Facing this scenario, as well as their consumers, luxury brands are becoming “2.0” in their business and communication strategies.
From the business point of view, according to a research conducted by Fondazione Altagamma (this research was conducted considering the online activity of a sample of 187 luxury brands, from fashion to sailing, with a €60 billion revenue, in 7 different countries), the online selling of top-class products is destined to grow by 20% per year up to €11 billion in 2015.
The data (see http://pinterest.com/pin/110830840800559470/) about the inclination towards the use of the Internet are peculiar: they point out the supremacy of Ritz-Carlton and Savoy in hospitality, of Porsche and Bentley in automotive (compared to Maserati and Ferrari), of Riva and Benetti in sailing.
According to the words by Dario Voltattorni, membership manager of Fondazione Altagamma: “Italy shines in sailing and in design. In particular, the Italian design brands are those who have moved more forward at international level for what concerns their sensitivity in using the Net. They have been working coherently in this direction” (Source: http://www.luxrevolution.com/living/eventi/digital-luxury-experience-il-lusso-digitale-44848.html).
From the communication point of view, different digital strategies are pervading the world of luxury: from augmented reality to digital signage, from social networks to advanced portals.
We are going to analyse these aspects in detail, outlining two digital paths inside the world of luxury brands: the first one is the path of the well-established sector of fashion, the second one is the path of the emerging sectors (on the web) of automotive, jewels and hospitality.
2. The origins of the digital revolution of luxury brands: the fashion sector
Fashion is one of the most fast passed industries on the market: with catwalks, collections and special editions there is always something happening and attracting consumers.
In the digital age luxury fashion houses have embraced all the new possible outlets to efficiently interact with their consumers. From Facebook to Twitter and now Pinterest and Instagram, the iPhone, Android and tablets, the possibilities are endless giving a voice to brands but most of all to the consumer who is looking for a true luxury experience wherever he is.
An interesting example of the use of mobile devices in digital luxury approaches is the case of Chanel during the launch of its J12 Marine Series watch; it created an interactive iPad advertising campaign exclusive for The New York Times Editors Choice app. The app, which appeared on the bottom of the screen when visiting the The New York Times, allowed users to explore the watch collection on their iPad while a meter on the left side of the screen illustrates a sub-aquatic descent to 300 meters. The purpose of the ad is really to get users to spend as much time exploring the interactive method as possible. These evolutions in the advertising industry should be expected to increase in the near future, especially with luxury brands such as Chanel wanting to push hot new products, but wanting to keep the consumer interested and not annoyed.
Entertaining consumers is the main goal of luxury brands that explore and implement the digital universe in their strategies. Net-a-Porter, one of the first sites to sell luxury goods online, has boomed into one of the most respected e-commerce sites in the industry and has developed social strategies that engage consumers on platforms like Facebook, YouTube, Twitter, Instagram and Pinterest.
The site launched an on-online magazine that features products it sells, so consumers can easily purchase what they like. Most recently they also created Net-a-Porter LIVE, where the staff can see live what purchases are being made on the site and also where, so they can easily monitor trends and allows consumers to see what others from all over the worlds are purchasing, adding to their wish list or sharing with friends. Chairman and Founder, Natalie Massenet says, “While allowing our customers to see what items are being placed on wish lists and in shopping carts around the world, we are also giving them the ability to interact on a global scale. This is an incredibly exciting step forward and we cannot wait to see what unfolds".
The most relevant example of success in using digital outlets in luxury is Burberry who doesn’t think twice when investing in social media and has launched, successfully, numerous products and collections through Facebook (Burberry is the most popular luxury fashion brand on the site) and other channels. The brand’s digital and social activities include a Twitter stream with more than one million followers and an Instagram page to show its almost 500 thousands followers behind-the-scenes pictures.
Burberry used Twitter for its ‘Tweetwalk’ last September, where it showed pictures of clothes from its forthcoming collections – just before they were unveiled to the fashion editors sitting beside the catwalk. It also uses micro blogging site Sina Weibo in China and music network Douban. Meanwhile, its ‘Art of the Trench’ website encourages people to upload pictures of themselves wearing a Burberry trench coat. To do this, they must be signed into Facebook and allow the Art of the Trench application to access user information and post on individuals’ walls via Facebook Connect. This means that Burberry can see some information on who is engaging with the brand.
Offering interactive experiences through social networks is the most successful way to engage consumers and make them loyal customers. The case of Catchachoo by Jimmy Choo, is probably the most noteworthy. From April to June of 2010, luxury shoe vendor Jimmy Choo leapt into tennis-shoe production and social media with a splash: It created CatchaChoo, a "trainer hunt" that united the real and digital worlds on a quest to find Choo sneakers. People of London were invited to follow CatchaChoo on Facebook, Foursquare and Twitter where, an anonymous Jimmy Choo representative posted hints about her activities – and occasionally "checked in" at a public London venue. The objective was to find the representative, who'd be carrying a pair of shoes. The first to approach her and say "I've been following you" received a pair of Jimmy Choo sneakers. With this strategy Jimmy Choo interacted directly with consumers by answering their questions but it engaged them establishing a durable long-term relationship with them, which is crucial in social media.
3. Expansion in other luxury sectors: jewels and accessories, automotive, hospitality
Not only fashion brands have embraced the digital world.
In order to interact with consumers and offer a savvy point of view on love, luxury icon Tiffany has launched a website “whatmakeslovetrue.com”, that is a collection of real-life love stories, timeless advices for couples, the best date locations in NYC and an interactive map where consumers can submit their own special spots. Designed also for iPhone users, the website features a film by Edward Burns called, “Will You Marry Me?” created exclusively for Tiffany. Strong of its brand history among lovers and being the ultimate “engagement destination”, Tiffany offers a unique approach to communicating with its loyal and new consumers.
Louis Vuitton, for his part, well-known producer of luxury accessories, has activated two interesting international digital initiatives.
The first one – supporting the traditional print advertising campaign – was launched on June 13th with a peculiar teaser, firstly only on the tablet version of the web site and then also on louisvuitton.com. It is a film that shows the most memorable moments of Muhammad Ali’s incredible career. The boxer was chosen as testimonial and living icon of the new campaign “Core Values” (photos by Annie Leibovitz). The next step, scheduled for the end of July, will provide another campaign featuring the rapper Yasiin Bey and the graffiti artist Shoe: each of them will reinterpret Muhammad Ali’s immortal words with their own personality and these videos will be shown on the company website.
We’d like to point out that long before this campaign, in 2010 LVMH had launched the online platform NOWNESS.com: this is an independent editorial website with daily publications of stories – often as preview – about contemporary art, fashion, cinema, music, architecture and design, travel, sport and gastronomy.
British automaker Aston Martin implemented a digital approach to market its new Vanquish model and saw a more than 100% increase in visitors to its Web site from social media channels among users in Germany, the United States and its home country.
The digital campaign that spanned Facebook, Twitter, YouTube and the Aston Martin Web site began June 20th and centred on a digital car configurator, images and a video. With multiple daily posts of images of the new model, compared with the same period seven days earlier, the automaker saw a 216% increase in visitors to the site.
Aston Martin proves that engaging consumer on digital platforms and offering them relevant content entices them to “like and share” and consequently establish an emotional connection with the brand.
The hardest challenge ever is communicate feelings and “memories” through digital media. In this sense companies has the need to combine tradition and digital innovation.
With the branded digital movie “Odyssée” (see http://www.brandforum.it/papers/801/il-lusso-digitale-odyss%C3%A9e-il-brand-movie-di-cartier) Cartier seems to have found an effective solution that wisely combines the history and the heritage of the brand with the modern technological progress.
In the experiential luxury segment, the case of Four Seasons represents a remarkable example. The company has apparently found the right way to promote the ‘digital wellbeing’ with photos and videos that makes you willing to leave, with charming stories by satisfied customers, with intriguing recipes and advice that enrich the brand experience.
According to what claimed by Felicia Yukhic, Social Media Marketing Manager of Four Seasons Hotels and Resorts in a recent interview: “Digital media is now 50% of our brand’s marketing efforts, with a strong social media presence that facilitates engagement and encourages loyalty. (…) From virtual wine tastings on Twitter to a vibrant Facebook presence awash with visitor images and timely conversations, to active participation in location-based apps such as Foursquare and Gowalla (…) Four Seasons has its finger solidly on the pulse of the modern traveller”. (Source http://pursuitist.com/travel/luxury-hotels-social-media-four-seasons-hotels-and-resorts/).
All of these examples show how luxury seems to have found the right – but delicate – balance in order to keep its values and exclusivity while entering the digital world.
We talked about this with Marie Pierre Schickel, Director of the Master in Marketing of Luxury Goods of Domus Academy (http://www.domusacademy.com/lp/luxury-en/) who pointed out that “the objective – and then the challenge – is always the same for each luxury brand in every sector: trying to overcome the traditional dilemma between accessibility and desire on one end, and exclusivity on the other end. The digital media are democratic by definition and make a dream accessible to everybody, but while many people share the same dream just a few has actual access to products or services. It’s all about something that represents a very important theme for me: that’s why this Master will let students work on concrete examples, on how a luxury brand can surf in this fragile area”.
The most typical concepts of the digital world – such as engagement, emotional connection, experience and interactivity – seem to have found their way in the luxury world too. Compared to other brands, the digital contents offered by luxury companies surely must have ‘something more’ to be really outstanding and different.
At the same time they must have particular features shareable with other people, as the rules of social networks impose.
Dunhill's Day 8 is a very good example in this sense: it is a lifestyle channel created by retailer Dunhill (see link http://www.brandforum.it/papers/925/il-reloading-del-lusso-ii-puntata), linked on its website, that covers news and info about creativity, travel, culture and elegance. On the basis of this project there is obviously a preliminary research about potential and existing consumers’ interests and preferences.
In the last part of our dossier, published online by the end of August, we will resume some topics linked to the digital world narrowing our attention on the new targets of luxury brands: first of all, the youth, deeply linked to technological innovations.
In the meanwhile, feel free to send us your suggestions and comments or to report other interesting cases about luxury brands that you may like to read on our next dossier: email us at email@example.com
Mirko Olivieri, Junior Editor di Brandforum.it
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