APRJ -699 Laura Patterson Luxury Fashion Brands and the Internet Word Count: 17, 050 January 22, 2012 Gord Sorli

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Abstract This paper examines challenges faced by luxury apparel brands in developing successful marketing strategies on the internet. Specifically, a paradox exists over demands to be present in the very public growing digital space while maintaining the exclusive and unattainable image integral to a luxury brand. Literature review was conducted to assess past approaches of luxury to the digital world. Research questions were developed from this primary research, questioning the validity of concerns over the internet, whether evolving market conditions have eclipsed them, whether changes in practice suggest a shift in how luxury and luxury brands are defined, and how present industry practice may be applied to formulate recommendations for future luxury apparel marketers. Research design involved literature review to identify top luxury apparel brands and select three for comparison of recent digital strategies. Louis Vuitton, Hermès, and Burberry were found to be present online in similar places with respect to corporate websites, e-commerce, and social media. What differed was the degree to which each was participating and the significance of digital in their overall marketing mix. The aggressiveness of each brand‟s online marketing seemed to be in inverse relationship to brand value and scale, with Louis Vuitton being the largest brand with most limited and less overt e- commerce and digital activity, while Burberry being the smallest, most niche brand with digital strategies strongly integrated into its marketing plan. Hermès falls in the middle, both in scale and digital activity. A successful company heavily associated with traditional discreet, ultra-exclusive luxury brand values, Hermès served as an excellent example of image conflicts with luxury online. The research showed that while concerns of luxury marketers remain largely unchanged, the digital space has evolved to become a legitimate medium, and therefore the imperative to preserve brand image online is not unlike the imperative in any other medium or brick-and-mortar space. The adoption of digital media into society creates a market condition shift rendering avoidance no longer a viable strategy. While the concept of luxury remains intact, luxury brands are increasing their reach, offering more affordable options for aspiring consumers, and ideas and expectations of accessibility are shifting in the advent of evolving technology such as social networking. Results were used to develop a strategy plan to leverage opportunities of the online world while utilizing technology and innovation to mitigate risks of brand dilution. Opportunities exist to utilize social media to speak to an audience already interested in the brand message. Metrics and analytics can be used to focus online efforts on target demographics creating exclusive events specifically for them. Marketers must be keenly aware of the dynamic nature of the online world and be on the forefront of technology to overcome limitations of digital brand experiences and remain leaders in the space.

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Table of Contents Abstract ...... 2 Table of Contents ...... 3 1.0 Introduction ...... 4 1.1 Application ...... 5 1.2 Scope, Assumptions, and Definitions ...... 5 2.0 Literature Review ...... 6 2.1 Luxury Brands & Internet Strategy ...... 6 2.2 Specific Challenges for Luxury Fashion Brand Management ...... 6 2.3 Changing Industry Attitudes ...... 7 2.4 Implications for Further Research ...... 8 3.0 Research Design ...... 9 4.0 Statement of Results ...... 10 5.0 Identification of Luxury Brands ...... 10 5.1 Louis Vuitton ...... 11 5.2 Hermès ...... 15 5.3 Burberry...... 19 5.4 Comparison of Digital Activity ...... 23 6.0 Application to Research Questions ...... 29 6.1 A Matter of Misperception?...... 29 6.2 The Four P‟s ...... 31 6.3 Luxury: Redefined? ...... 32 6.4 The Future of Luxury Brand Management ...... 34 7.0 Recommendations ...... 36 8.0 Conclusion ...... 37 References ...... 39 1.0 Introduction This paper will examine and analyze the approach of luxury fashion brands to Internet communication as part of the marketing strategy. Specifically, this paper seeks to answer the following questions: Were past perceived contraindications between the Internet and luxury fashion brands false, and have new market conditions eclipsed these concerns? Do recent changes in internet communication strategies of luxury fashion brands suggest a change in how such brands and the concept of luxury itself are defined? What implications for the future of luxury fashion brand management may be drawn from analysis of present practices in the industry?

The author has been involved in the fashion industry for her entire working career, focusing in recent years in the niche area of couture luxury bridal and social occasion accessories. She has witnessed first-hand the evolution of Web 2.0 technologies and their influence on the designer fashion industry, traditionally noted for placing high value on privacy, inaccessibility and exclusivity. While several factors suggest changes to the future of luxury brands, including changing societal attitudes, globalization and competition, the internet has particularly evolved as a key influence on how consumers experience and interact with brands today. Many view the evolution of the internet as a marketing instrument for products and brands as somewhat paradoxical for luxury fashion. Luxury and haute couture fashion has often prided itself on closely-guarded secrets, deemed necessary to prevent diffusion of original designs and concepts into the mass-market. Access to collections in development and runway fashion show presentations was closely controlled to ensure the right message was delivered at the right time through the appropriate venues. This is in sharp contrast to the present day when information is broadcast “live” from the runway with the assistance of smart phones and social media. Aside from privacy and intellectual property concerns, luxury brands, including fashion, thrive on the aspiration of consumers to attain the unattainable. The mass aspect of the internet poses risks of over-exposure and suggests anything but scarcity. A review of how luxury fashion brand strategists are approaching the internet as part of the marketing mix is important as there are conflicting views on the ability to maintain the elements of exclusivity and inaccessibility seen as integral to luxury brand status in the internet environment which is largely open to the masses. Preliminary research indicates a shift in attitude since 2008 – does this also indicate a potential future change in the concept of luxury itself? The author proposes that luxury brands may be defined differently when the digital native Patterson 5 millennial generation consumer becomes their primary consumer in coming years.

1.1 Application

This paper will primarily apply concepts from the marketing management discipline, although it will also encompass application of some strategic management concepts such as Porter‟s 5 forces of competition, DEPEST, and VRIO analysis.

1.2 Scope, Assumptions, and Definitions

At the outset, the author accepts certain assumptions based on industry knowledge and anecdotal evidence: As a group, luxury fashion brands were slower to embrace the Internet than their mass market fashion brands There has been a shift in attitude since the economic downturn of 2008, with several companies increasing exposure via company websites, e- commerce and social media campaigns. Research will be conducted to establish a background history and support the assumptions above; however, the primary focus of this paper will be current practice of luxury fashion brands and future implications for the industry. Definitions of key terms used are as follows:

Luxury: a material object or service conducive to sumptuous living rather than necessity (Random House, 2011 as cited by Dictionary.com, 2011). Objects may be considered luxuries, while luxury may also be viewed as a lifestyle. Luxury fashion brand: this paper defines luxury fashion brand as an established apparel brand with recognized luxury status in the marketplace. Examples would be Gucci, Hermès, Burberry and Prada. Web 2.0: Dictionary.com (2011); cites Collins (2009) in defining Web 2.0 as the internet viewed as a forum in which interactive experience in the form of blogs, wikis, forums, etc. plays a more important role than simply accessing information. Social media: websites and other means of online communication used by large groups of people as a means of sharing information and to develop social and professional contacts (Random House, Inc. 2011, as cited by Dictionary.com, 2011). Patterson 6

2.0 Literature Review

2.1 Luxury Brands & Internet Strategy

Similar to many words and concepts, many definitions may be obtained for the word luxury. Despite slight variances, most definitions concur that luxury goes above and beyond that which is necessary in that luxury items are indulgences of sorts. Although literature also supports that value is placed on the high quality of luxury items (Keller, 2009); much of the value proposition of a luxury brand goes beyond tangible aspects of products, and rests in symbolic aspects such as status and exclusivity; supporting the notion of luxury as a way of thinking or lifestyle to which people belong (Keller, 2009). In and of itself this presents opportunities and challenges for the luxury fashion brand. On one hand, once a strong brand image is established, there is a perception of value by mere association with the brand. On the other hand, brands must guard their image carefully as any perception of loss of exclusivity and status will surely tarnish the brand, even if quality and service of products remains unchanged.

Herein lays the challenge for luxury brands in developing internet strategies. As Ortved (2011) notes, in the recent past luxury fashion was very distrusting of digital media. Concerns stemmed primarily over the inability to portray carefully designed image and brand experiences in an online format. In addition, the openness of the Internet is contrary to certain characteristics many luxury brands hold sacred: untouchable, unattainable and out of reach (Clark, 2010). Keller (2009) describes several intangible aspects as defining characteristics of luxury brands, such as status of association and sensory appeal- elements difficult to convey in online settings – and stresses consistency as a vital part of management strategy for luxury brands. Finally, possibly a legacy from earlier days of internet commerce (many consumer‟s first associations with e-commerce stemmed from E-bay [http://www.ebay.com/], closely related with discounted merchandise), many still consider the internet a place for finding a deal. These factors comprise the main sources of hesitation for luxury fashion brands to enter the online arena.

2.2 Specific Challenges for Luxury Fashion Brand Management

The challenges of translating products and services from traditional brick-and- mortar environments to the digital environment are not new. Marketers for most Patterson 7 businesses will experience a learning curve as they discover the unique behaviours inherent to an online environment. Some businesses utilize the internet as a means to provide information, with every intention to close the sale in a “live” environment (cars come to mind). Despite challenges, technological advancement and rapid acceptance from consumers to opt into the online world have made the digital domain an increasingly viable marketplace. For luxury brands the stakes have been perceived as somewhat higher. While all brands strive to create an online image that supports their brand identity and values, in the case of luxury, image is the essence of the brand. Okonkwo (2009) describes luxury as not a product, service or lifestyle, but as an identity, philosophy and culture. She also posits that the internet poses risks of overexposure to the masses for brands whose desirability depends in part on perception of limited supply. Okonkwo (2009) points to the sensory natures of luxury goods which rely on visuals, touch, smell and feel as part of the sales process. This further promotes the notion of incompatibility between luxury and the internet. While openly acknowledging challenges Okonkwo (2009) also asserts there is no longer any question of an online presence for luxury goods, it‟s rather an issue of taking a luxury merchandising mentality in developing virtual luxury brand experiences, and thinking strategically about what the evolving virtual world will mean to the future of luxury. Outlining ten defining characteristics of luxury brands, Keller (2009), describes management of luxury brands as a process of precision and control. The internet, where the consumer has the power and messages can go “viral”, taking on lives of their own, would seem to be the antithesis of control. Aside from exclusivity, luxury fashion brands are also defined by originality and creativity. In an industry which is traditionally very protective of design, limiting exposure at shows to a select few to guard against copy cats, the open nature of the internet presents additional challenges. The essence of many luxury brands‟ status is their position as leaders, and though copying has long been a fact of industry life, the digital age in a sense has empowered this threat.

2.3 Changing Industry Attitudes Many luxury fashion brands have changed there approach to the internet and Web 2.0 technologies such as social media in recent years, with many major brands developing official Facebook pages and Twitter accounts. Some of the literature points to the economic downturn of 2008 as a catalyst in this regard (Ortved, 2011; Clark, 2010). With an eye on the bottom line, luxury fashion had to find growth somewhere, and with the digital universe untapped for many it was an obvious next step. With conspicuous consumption somewhat out of vogue in tough economic times, the anonymity of internet shopping was a perfect venue for those with the available disposable dollars for luxury goods. Luxury fashion e- tailer Net-a-porter (http://www.net-a-porter.com/) thrived during 2008, with sales increasing 53% (Grose, 2011). Patterson 8

Okonkwo (2009) points out that while some high profile brands entered the online world as late as 2007, some may only have done so as a response to consumer expectations, signifying a shift in the typical top-down relationship between luxury brand and consumer. Indeed, while corporate websites have been broadly accepted as part of marketing strategy for some time now, the more telling indicator of a shift in approach of luxury brands to the internet is the increased willingness to engage in social media environments. While the need for controlling image is evident, campaigns such as Burberry‟s Art of the Trench (http://www.artofthetrench.com/) (Ortved, 2011) and Coach‟s Poppy campaign (http://www.poppyproject.coach.com/) (Morrissey, 2010) are examples of creative tactics employed by luxury brands to reach out and engage consumers while staying on brand. It should be noted, however, that both initiatives were primarily aimed at introducing the brands to the entry level aspiring consumer. While the literature points to both hits and misses in the luxury fashion world, it is clear that luxury fashion brands are either seeing new opportunity in Web 2.0 technologies, or have simply accepted that presence online is no longer optional, and that at least by creating your own content and presence you have partial control over the message (online discussion of brands, luxury or otherwise, will exist even in absence of official company sites and campaigns).

2.4 Implications for Further Research

With the internet and digital technologies rapidly evolving into greater and greater sophistication, the subject of luxury brands in this domain is an equally evolving subject. Early literature on the topic suggests an attitude of avoidance from many top brands, though it is noted some in the industry such as Polo Ralph Lauren were leaders into the digital domain (Ortved, 2011). Other brands had interest but either did not know how to do it or did not know how to do it well. What seems clear is that there has been a significant shift from waiting on the sidelines to actively engaging on the internet and Web 2.0 technologies for many luxury brands within the past 3-5 years. While motivations will certainly vary among different companies, it is hard not to wonder if the shift signifies a change in the way luxury brands are identifying and positioning themselves in today‟s all- access, open world of the internet where it seems little is private and exclusive any more. Alternatively, have the technologies advanced to the point where some of the concerns of loss of image are now unfounded, or, have marketers come of age in understanding the power of digital media to the point that they can overcome these issues with cleverly crafted campaigns? While much is written about former attitudes and present action (and, on the part of some, inaction), there seems to be little material on the consumer side of the equation. One of the most powerful aspects of Web 2.0 is the interactive nature and ability to engage with consumers. Indeed, this has also brought about a major shift in expectations on the part of consumers and arguably society- when world leaders “Tweet” on a regular basis, it‟s safe to say that assumptions of accessibility are likely entrenched in our society; desire for the inaccessible is a Patterson 9 key driver for luxury brands. Is this the beginning of a new set of rules for luxury, or the end of luxury altogether? Okonkwo points out that the practice of distinction is prevalent throughout societies regardless of economic situation (2009); if this is true, it seems more likely that luxury brands may be re-defined but will still be present. It is also possible that the next generation of luxury consumers who have grown up with the internet may have unique ideas about how brands are accessed and what makes them more or less desirable.

3.0 Research Design To answer the research questions, a conceptual paper is planned. Additional research of literature on luxury fashion brands, their presence on the internet and use of Web 2.0 technologies is planned, particularly to draw comparison between brands with different strategies. The planned methodology is as follows: Engage in further literature review to establish the general background of the history of luxury fashion brands and the internet. Research and identify luxury fashion brands with high level brand value. Select 2-3 brands from this group, ideally with distinguishable strategies for internet marketing from each other; for example, participating/not in e- commerce, differing activities with social media. Compare and contrast digital strategies and activities of these brands within the last two years. Use online interactive sources to compare and contrast online perception of these brands in relationship to their online activities within the last two years. Determine any relationships or conclusions which may be drawn between online luxury brand exposure and perception of luxury brand status. Apply the findings to marketing and strategy concepts to derive implications or recommendations for luxury brand managers.

To date, several sources have been found using the database, Business Source Complete (http://www.ebscohost.com/), searching key words luxury, brand, fashion, internet, social, media. Searching some of these words with names of specific popular social media websites such as Facebook (http://www.facebook.com/), Twitter (http://www.twitter.com/) and Tumblr (http://www.tumblr.com/) is also planned, in addition to searches of luxury fashion brand websites and several social media sites. Additional research of brand ranking statistics is also planned, using Athabasca University Library and general internet searches for industry information. Data used for this paper will come from secondary sources, therefore it is not anticipated that ethics approval is required. Patterson 10

4.0 Statement of Results Upon completion of a thorough literature review, results are anticipated to take the following form: A brief background history and current situation analysis. An industry overview of top luxury fashion brands and current luxury brand digital media activity. An in-depth analysis of 2-3 luxury fashion brands, detailing their social media strategies, comparing and contrasting them, looking specifically for changes within the past 2 years. Application of marketing concepts and brand strategy to the findings of the analysis; what are the implications for luxury fashion brand marketing and how it is evolving in the online world? Conclusions and recommendations for how these results may be applied in future.

5.0 Identification of Luxury Brands Researching luxury apparel brands brings Okonkwo‟s (2009) assertion of luxury as a philosophy and identity to mind: many brands identify their products as luxury goods. Although these goods can generally be classified as high-end, there is a wide range within the category to consider. Data from two leading authorities on brand value, Millward Brown and Interbrand; was consulted to narrow the focus specifically to top luxury apparel brands. Each company releases an annual listing of 100 top global brands. Ritson (2011) points out that many top luxury brands are privately held and do not publicize financial performance; moreover, even those that are publicly traded are often a part of much larger organizations which makes performance of individual brands within the portfolio difficult to assess. Ritson posits that Millward Brown‟s methodology of interviewing 600,000+ consumers for their annual brand ranking report yields results which are possibly the most insightful assessment of global luxury brands (2011). The Interbrand (2011) and Brandz (Millward Brown, 2011) reports rank the top 100 global brands, note the sector of each and assign a dollar value to the brand. Brandz also does additional sector rankings; specifically, a top 10 list of luxury brands, some of which did not make their overall top 100 global ranking. Interbrand does not publish a separate list of luxury brands but provides a chart for luxury brands within their top 100 for comparison of past performance of the brands. Patterson 11

Both companies list Louis Vuitton as the top ranked luxury brand. Brandz ranks Vuitton 26/100 and gives a valuation of $24.3B (Millward Brown, 2011) while Interbrand pegs it at 18/100 with valuation of $23.1B (Interbrand, 2011). Hermès was ranked 71/100, $11.9B by Brandz and 66/100, $5.3B by Interbrand. Burberry did not make the Brandz top 100, but ranked fourth on their list of twenty top rising brands, with an increase in brand value of 86% to $3.4B; and tenth on their list of top ten luxury brands. 2011 marks the first entry of Burberry on the Brandz report. By contrast, Interbrand ranks Burberry at 95/100 with a valuation of $3.7B. The notion of digital creating an entirely new playing field for marketers is reinforced by a brand ranking of a different nature. The L2 Digital IQ Index: Fashion report ranks the digital savvy of 49 fashion brands among 350 data points, classifying them into categories of genius, gifted, average, challenged, or feeble (L2, 2011). Metrics used include search engine optimization (SEO), leveraging the medium, brand translation and social media (LeGall, 2010).

Burberry scored the top spot on the 2011 Index, with a ranking of Genius, while Louis Vuitton is ranked at 9 (gifted). Although the specific Hermès ranking was not accessible, their digital IQ plummeted 35% from 2010, shifting from gifted to challenged (Wright, 2011). Other insights from the L2 Index include a disparity in the number of U.S. brands in comparison to European brands (Louis Vuitton is the lone French brand on the index), in addition to Kate Spade at the second spot, suggesting the time-honoured pillar of heritage in luxury branding may not be as relevant in the digital age (Wright, 2011). L2, as cited by Wright (2011), posits that Burberry‟s investment in digital has translated to shareholder value. Despite variances in ranking, the mention of Louis Vuitton, Hermès, and Burberry on all of these lists firmly establishes them as leading luxury brands for the purpose of this research. The three brands share richness in heritage associated with authenticity in luxury brands; each was established around the mid- nineteenth century. The brands also share many common product categories and similar target consumers. In contrast, Louis Vuitton and Hermès are both based in France and have a heritage closely associated with travel and leather goods; while Burberry is of British origins and is more closely associated with apparel. These three brands offer many points of comparison and similarity yet their L2 Digital IQ rankings suggest unique digital strategies, making them ideal subjects for this research.

5.1 Louis Vuitton a. Company Overview Based in France, Louis Vuitton originated as a custom luggage (travel case) maker in 1854 (LVMH, 2011). The company was family-owned and operated for three generations, eventually merging in 1987 with Moet et Chandon and Hennessy to create the present day LVMH Moet Hennessy Louis Vuitton SA (Wikipedia, 2008), a publicly traded company with revenue of €21.5B, net income Patterson 12 of €3.29B and close to 68,000 employees (Financial Times Ltd. [FT], 2011). LVMH encompasses many brands and product categories, including Fendi, Donna Karan, and Dior Cosmetics, a separate business group in spirits, and recent acquisition of luxury jewellery brand Bulgari (FT, 2011). Brand valuations and rankings from Interbrand and Brandz are specific to the Louis Vuitton brand, not the collective brand holdings of LVMH. Likewise, the L2 Digital IQ Index refers to the digital activities of Louis Vuitton, not the collective brands owned by the parent company. As suggested by Ritson (2011), however, it is difficult to extrapolate financial information specific to the Louis Vuitton division of LVMH from publicly available data. LVMH shares were trading at €116.25 as of December 4, 2011, down 4.87% over the year (FT, 2011). b. Corporate Website Self-described in a press release as pioneers in digital luxury, Louis Vuitton launched a corporate website http://www.louisvuitton.com/ in 1997 (Hannert, 2011). Twiggers, in an October 24, 2007 Purseblog.com (http://www.purseblog.com/) post, announced an update of the Louis Vuitton U.S.A. site to include e-commerce and price listing of all Vuitton products. At present, upon visiting www.louisvuitton.com, one is invited to choose location. In the U.S.A. section of the site, clicking on “stores” yields the question, “do you want to shop online, or find a store?” The online store is separated into product categories such as travel goods, ready-to-wear and accessories. It does not appear that ready-to-wear is actually sold online, and pricing is not shown for items in this section, though detailed views and style codes are shown and items may be added to a wish list. The “collections” section offers filtering options to view only items available for purchase online. One area of the site offers customization of Louis Vuitton leather products by changing accent colours and adding monogram details. Not overtly geared to e-commerce (one has to look to discover what is on offer online, and navigation is somewhat slow and confusing), the site hints at the inaccessibility associated with traditional luxury apparel marketing. The site offers much to explore, from look books to ad campaigns to runway shows, but presentation is subtle and a first-time visitor must invest time to find their way around unless they already know precisely what they are looking for. The site effectively sets an inspirational, couture mood befitting one of the most luxurious and esteemed fashion houses in the world. A section titled Savoir Faire (http://www.louisvuitton.com/front/#/eng_US/Journeys-section/Savoir-Faire) demonstrates the hand-craftsmanship and heritage behind the Louis Vuitton products. Another section, La Maison (http://www.louisvuitton.com/front/#/eng_US/Journeys-section/La-Maison) provides insights into designer Marc Jacobs and the creative process behind the fashion collection. Louis Vuitton has created an exclusive, luxury atmosphere on their website which is cohesive with their brand positioning. Although as an e- commerce platform the site is not particularly user-friendly, which may create a perception of lack of customer service; www.louisvuitton.com has successfully Patterson 13 created an online ambiance that supports their image as a leader in the luxury fashion world. c. Social Media Louis Vuitton is active in social media, with pages on Twitter for their worldwide digital media team (http://twitter.com/louisvuitton_hq) as well as other geographic divisions such as the U.S. and U.K. As of late November, @LouisVuitton_HQ had 7, 884 followers and 512 tweets. @LouisVuitton_US had 252,274 followers and 633 tweets. Most tweets on both pages are about celebrities spotted wearing Louis Vuitton products, store openings and/or events, behind the scenes at photo shoots and other company occasions. Essentially, the Twitter page is typical of the traditional top-down luxury marketing approach, used as a platform to send out sound bites, but without the social media element of directly engaging (interacting) with followers. One tweet invites followers to enter the Louis Vuitton circus with a link to http://www.louisvuitton.eu/front/#/eng_E1/Collections/Women/Handbags/stories/L ouis-Vuitton-Circus where the brick-and-mortar store‟s circus theme windows are re-created online. At http://www.facebook.com/LouisVuitton consumers are able to discover the Facebook fan page of Louis Vuitton. At end of November the page had over 4.5 million fans, with 54, 536 people “talking about this”, a Facebook measure of fans commenting, sharing or otherwise speaking about a page online. The company‟s wall posts mirror their tweets, announcing store openings, the launch of the circus themed store windows, celebrities wearing Louis Vuitton. Other tabs on the page show different product collections and videos, including a “core values” tab featuring celebrity ambassador Angelina Jolie‟s humanitarian voyage to Cambodia. Fans are able to post comments on the page but not photos. The vast majority of comments offer kudos to the brand, but there are also complaints, particularly about the company‟s most recent website update. Louis Vuitton does not respond to comments on the page or directly engage with fans on a one-on-one basis. In a February, 2011 press release Louis Vuitton proudly touts itself as the first brand to digitally stream their runway shows on Facebook in October, 2009 (Hannert, 2011). In May, 2010, Louis Vuitton used Facebook to design an innovative experience for fans of the page when it re-opened its Bond Street store (referred to as a Maison by the firm). A Facebook event was created and fans were invited to attend virtually via live streamed coverage on Facebook. A specially designed application on the fan page allowed the virtual “guests” to take snapshots from the live coverage which could then be included in personal status updates and albums to be shared with one‟s Facebook friends. From a marketing point of view this tactic showed an excellent balance between keeping the event exclusive and limited while also leveraging the power of social media to speak to the aspiring brand loyalist and create notoriety around the event (Lipp, 2010). Other social media efforts by the firm include pages on YouTube (http://www.youtube.com/louisvuitton) and FourSquare Patterson 14

(http://www.foursquare.com/louisvuitton), in addition to development of an iPad application called Amble (http://www.louisvuittonamble.com/). The company describes itself as being the first to develop an integrated digital media strategy entitled “The Art of Travel by Louis Vuitton” (Hannert, 2011). Indeed, it‟s difficult not to notice the travel theme throughout the digital activity of the company. Having roots as a luggage maker, the company has published print travel guides for many years, supporting the brand image as an authority for the chic luxury traveler. The brand‟s presence on Foursquare and its new Amble application further emphasize this image in the digital arena. Vuitton includes several tips from their travel guides on their FourSquare page, in addition to creating lists of spots to visit in the vicinity of new stores as they open, encouraging followers to come and visit their new locations by conveniently mapping out a day full of enjoyable experiences on the way. The Amble application is along a similar vein, except it adds a further dimension of interactivity. Consumers are able to download Amble for free and see tips of places to visit while in a particular city, in addition to celebrity suggestions of the best spots to visit. While travelling, those with the app are able to record their “ambles” via their iPhone as photos, videos, or notes and then upload them to the Amble website (http://www.louisvuittonamble.com/) where selected ambles are shared by the company in curated lists. The travel theme is strongly conveyed on the company website with sections classified as “journeys” and collections presented with travel and adventure themes. Louis Vuitton delivers a consistent message that the brand is the quintessential companion for the chic luxury traveler. LVMH, parent company of Louis Vuitton is also using social media as a means of keeping on top of trends and innovation. They recently launched “Exploring the Future of Tradition”, a contest on Facebook (http://www.facebook.com/lvmh) where contestants are invited to share their vision of the future world in which LVMH will operate. LVMH executives will select top entries and post them on Facebook for voting. Winning entrants will be invited to take part in special forums debating and sharing the ideas in key cities around the world (Wright, 2011). Wright (2011) notes that LVMH is actively engaging and responding to wall posts on the page, in contrast to their Louis Vuitton page, and even other posts on the LVMH wall where comments are not responded to. This point is interesting in that it suggests insight of LVMH executives in understanding the need to engage with their public to sustain leadership and fuel innovation, and yet not feeling the need to engage with the public as established brand leaders. d. Summary The Louis Vuitton online presence is well aligned with their established brand image. Louis Vuitton carefully leverages their heritage in their marketing strategy, trading on longstanding leadership in their field, never discounting, and strictly controlled distribution. Participating in the digital world earlier than some of their peers, Vuitton‟s online activity indicates acceptance of the need to be present, and yet, it still doesn‟t appear to be a key part of their distribution plan. Even the social marketing efforts seem somewhat underdeveloped, though the company has built a large Facebook fan base and strong following on Twitter. Patterson 15

L2, as cited by Wright (2011), gives the brand a digital IQ of 127 “gifted” in its 2011 Digital IQ index of fashion brands, lauding their Amble app efforts and leadership on FourSquare. Louis Vuitton‟s dominance as a luxury apparel brand may be partially attributed to their foundation in leather and luggage. Solca and Wing (2009) attribute 80% of total net cash for LVMH fiscal year 2008 to leather goods. They also note that leather goods are a significant growth area in luxury apparel, outperforming luxury women‟s apparel and the luxury goods sector by 5.5% and 4% per annum, respectively, during the period of 1998-2008. Handbags are a key component of the leather goods market, and also a key product for the aspiring luxury consumer. Unlike apparel items where brand identification is usually limited to small logos or inside labels, many designer handbags offer easily visible marks such as hardware, and nameplates or even the bag material itself stamped with company emblems. For aspiring luxury consumers this provides an instantly recognizable status symbol which may be worn often with different outfits. Louis Vuitton and some industry peers have been observed to “push the envelope” in the luxury handbag category, offering lower opening price points targeted at the aspiring customer, a growth area which outperformed elitist luxury growth by 80% from 1993-2008 (Solca & Wing, 2009). Luxury apparel does not want to dilute brand image or create an impression of over-accessibility. This is consistently stated in literature about luxury online, and continues to be a topic of conversation. Though the question for luxury brands no longer seems to be “if”, but rather “how” to develop their online worlds, Louis Vuitton exemplifies the caution with which luxury brands approach this medium. With that said, it is also likely true that the firm carefully weighs all marketing and brand image decisions whether off or online; clearly their name and image are valuable assets. What is difficult to gauge is how their presence online impacts this image either positively, negatively, or not at all. Research by A.C. Neilson, cited by Solca and Wing (2009) lists Louis Vuitton as fourth in a list of 24 most coveted brands, with 20% of respondents naming Louis Vuitton as their top choice. This and the Brandz and Interbrand rankings suggest that while their online presence may or may not be enhancing brand image, it does not seem to be negatively impacting it to any great degree.

5.2 Hermès a. Company Overview Hermès was founded in 1837 (Wikipedia, 2011), originally as a purveyor of saddles. Similar to Louis Vuitton, the company has a strong base in the leather goods product category. The Hermès corporate website, (http://finance- en.Hermès.com/2011/3RD-QUARTER-2011-SALES ) announced a 20% increase in revenue for the 3rd quarter of 2011, with a total revenue of €1.98B. Leather goods account for almost half of the firm‟s revenue. At one time following a strategy of franchising for increased distribution (Wikipedia, 2011) the company has steadily taken steps to regain control over its distribution channels Patterson 16 and “know-how” (Hermès, 2011). Though publicly traded, the company is over 60% family-owned (Wikipedia, 2011). Financial Times, 2011, quotes 2010 revenue at €2.63B, with net income of 518m, operating 317 stores with a staff of 8, 730 employees. b. Corporate Website The home page of http://www.Hermès.com features an animated sketched figure dressed in riding attire juggling various tools used in leather work. Similar to peer and competitor Vuitton, Hermès pays homage to its heritage, one of the pillars of luxury branding. On the same home page visitors find a list of countries where Hermès is sold. Clicking on most of them yields a page which offers options to visit the online store or “travel the world of Hermès” (Hermès, 2011). Hermès does not have an online store in Canada, so visitors are instead directed to a store locator page to find a brick-and-mortar outlet. Most of the other countries listed have online stores; a few announce the opening of online stores in 2012, with an option for visitors to enter their email addresses for notification of the e- commerce launch. The aesthetic of the site is uncluttered and almost simplistic, with a plain background, small text, sketched figures and some titles that appear hand-written. The store locator map also appears to be hand-drawn and hand- coloured. Upon electing to “travel the world of Hermès” visitors are treated to a brief animation after which the page loads with a grid of thumbnail images, each representing different aspects of Hermès, from product collections to inspiration to “Hearts and Crafts: the People who Make Hermès”(Hermès, 2011). The site has a left navigation bar which includes sections such as “cultural events” and “know-how” as well as “surprises” and “silk”. The site evokes a spirit of adventure, similar to the experience at Vuitton. Concepts are presented with a subtlety unique to websites for consumer product brands. Neither products themselves, nor information about them, are presented in an obvious or overt way. Instead, the site encourages discovery about the inspiration and heritage of Hermès. For example, when clicking on “Silk”, a grouping of thumbnail images appears, one of which is “Twillys”, referring to the brand‟s eponymous silk twill scarves. Clicking on this image leads to a page with draped silk twill scarf in full colour surrounded by line sketches. Clicking through the arrows and/or on the line sketches plays notes on a piano and changes the colour of scarf and/or displays its use related to the line sketches, as in a belt, a cuff, a hair band, etc. The message suggests both the artistry of the Hermès silk scarf and exploration and discovery of the many ways to enjoy one. The online Hermès store maintains the same aesthetic, providing a simple, clean background for the products to “pop” against. The site is easy to navigate and offers a range of products in different categories. Visitors can choose to navigate to a store locator from any of the product pages in the online store should they prefer to shop in person. Unlike Vuitton, Hermès does not appear to post their runway fashion shows or collection “look books” on their website. The site shares a sense of subtlety with the Louis Vuitton site; it conveys a purpose of Patterson 17 providing information, a sense of adventure and entertainment and a place to shop, but nothing is too overt or “hard-sell”. The online store and the site in general set a somewhat light, whimsical atmosphere where visitors are invited to “discover” different products. c. Social Media Hermès has official pages on Facebook (http://www.facebook.com/Hermès) and Youtube (http://www.youtube.com/Hermès). Official pages on Foursquare or Twitter could not be located. The company posts infrequently on Facebook, often with lapses of 1-2 weeks between posts. Unlike Vuitton, they do not post celebrities wearing their products; rather their content is strictly integrated with other elements of their marketing efforts. In fall 2011, Hermès Facebook posts fell into three main categories: Paris Mon Ami, Hearts & Crafts, and H Rocks. Additional posts included photos of store window displays and announcement of winners for a company foundation award. The Hermès Facebook page has 444, 975 fans and 5,553 people “talking about this”. Similar to Vuitton, the company does not engage with fans on the site by responding to comments. In contrast to Louis Vuitton, company posts do not encourage fans to engage. While Vuitton creates posts inviting fans to vote for their favourite items, Hermès posts are simple concise statements introducing new shop windows and Youtube videos. Paris Mon Ami is an interesting marketing campaign created by the firm for fall 2011. The campaign is centred upon four muses (models/actresses for the campaign), who are each given different backgrounds and characters. The premise of the campaign is that these four young women come from different cities and lives to experience Paris for the first time. Hermès introduces each of the four characters via Youtube videos which are also posted on Facebook. The company created product collections inspired by each of the four muses of the campaign. Each collection has a different colour scheme and design tendency which is portrayed in the personality of the character, graphics and images in the videos. Essentially, the viewer is invited to experience Paris through the eyes of these four adventurers. The campaign has a separate website, http://www.parismonami.com , a blog style site where visitors can view a digital magazine of the campaign, as well as find information on Hermès Paris Mon Ami events in different cities. Hearts & Crafts is a video series dedicated to the artisans behind the Hermès products. Each video features an artisan such as a leather cutter, glass-maker, etc. and provides a sort of behind-the-scenes look at what goes into the products. The videos are posted on the company‟s Youtube and Facebook pages. The company also has a website and film, Les Mains D‟Hermès (http://www.lesmainsdHermès.com), a compilation of the smaller video segments, shown at various screenings around the world. Both Vuitton and Hermès have made investments within their marketing plans to demonstrate the heritage and fine craftsmanship of their products, no doubt an effort to educate consumers on the value within their products and combat the barrage of counterfeit goods on the market. Patterson 18

Hermès Rocks are music videos in which the musicians are wearing various Hermès products such as shoes, belts and jewellery. The videos deliver a subtle yet artful advertising message, primarily showcasing the music with brief, close focus shots of the products throughout. The brand associates itself with art and music in a similar way at www.Hermès.com. The four muses of Paris Mon Ami were first introduced by Hermès in its J‟aime Mon Carre campaign. Widely thought to be inspired by the popular Burberry Art of the Trench effort, J‟aime Mon Carre (http://www.jaimemoncarre.com) was launched in October, 2010 featuring photos of fashionable women from around the world wearing the coveted Hermès scarf in many different ways. The site also offered “knotting cards”, step-by-step instructions on how to tie and wear the Hermès scarf. Portraying young, fashionable women, the campaign was thought to be an effort to rejuvenate the brand, whose heritage is both an asset and possible liability in the sense that younger consumers who will be the next generation of luxury buyers may associate the brand as something their grandmother wore. While the campaign received kudos as a leap for the brand into the age of digital marketing, the campaign was also criticized for not allowing user-generated content (UGC), widely believed to be a critical component of successful digital media integration (Koifman, 2010). An essential element of social media is the ability for users to engage with the brand and feel like they are part of it; enabling UGC greatly facilitates this (Koifman, 2010). The J‟aime Mon Carre website is no longer active; typing in this URL leads one to www.ParisMonAmi.com, where the four muses created in the J‟aime Mon Carre campaign are reunited for their adventures in Paris. Possibly as a response to criticism of J‟aime Mon Carre, or possibly a signal of a change in digital strategy, the company launched “Scarf in the City” on September 29, 2011, via the Paris Mon Ami website. “Scarf in the City” is a game where visitors are invited to upload images of themselves wearing/using their Hermès scarves in their cities. The Paris Mon Ami muses then curate and publish selected photos and videos. Other than provision for comments on their social media pages and Paris Mon Ami website, “Scarf in the City” appears to be the only opportunity for UGC in the Hermès digital strategy. d. Summary Hermès appears to be following a digital strategy which mirrors many of the traditional tactics of luxury fashion brands. They are clearly trading on the heritage and craftsmanship of their brand, and present a very controlled, careful image in their social media efforts. Hermès has successfully created a unique, luxury experience for visitors to www.Hermès.com. While they have a significant number of Facebook fans, they trail Vuitton by a factor of 8. The 2008 AC Neilson report, as cited by Solca and Wing (2009), shows that 8% of respondents indicated Hermès as their most coveted brand, as compared to 20% for Vuitton. Obviously, Hermès is a much smaller company than Louis Vuitton. Their products very much have an air of exclusivity and inaccessibility, with waiting lists for the coveted Birkin bags a matter of common knowledge and even Patterson 19 documented in popular culture via the television series Sex and the City. With that said, with their social media efforts clearly aimed at younger consumers it is suspected the firm recognizes that they cannot chart their future relying solely on those who already know about them; and digital media must be part of the strategy for cultivating the next generation of Hermès consumers. Interestingly, Hermès‟ L2 digital IQ ranking plummeted 35% between 2009 and 2011. In 2009 they were 4th within the top 10 of luxury apparel with a digital IQ of 121 and “gifted” classification (LeGall, 2010). In 2011 they had the dubious distinction of highest loss of digital IQ within luxury apparel and were classified as “challenged”, with the statement “playful side continues to deliver on brand translation, but technology and functionality have become dated as peers have innovated” (Wright, 2011).

5.3 Burberry a. Company Overview Burberry Group PLC is publicly traded on the London Stock Exchange with shares trading at £1323 as of October 14, 2011 (Microsoft, 2011) and revenue of £1.5B for year ended March 2011 (Burberry PLC, 2011). Burberry‟s share price has increased 80% in the past five years (Financial Times, 2011). Both revenue and profits have significantly increased since 2007, with annual gross profit almost doubling to £1.009B between end March 2007 and end March 2011 (Microsoft, 2011). According to the Financial Times (2011), the company has 6, 681 employees and distributes its luxury men‟s, women‟s and children‟s products through two channels, wholesale/retail and licensing. Founded in 1856 by Thomas Burberry; the company‟s claim to fame was developing the trench coat, used by WWI British officers. The famous Burberry check, trademarked by the company, was created in 1920 as a lining for the trench coat (Burberry Group PLC, 2011). Authentic British heritage is considered a pillar of the brand (Burberry Group PLC, 2011), which is less known as a couture fashion leader than as a staunchly reliable label. Burberry suffered some missteps along the journey to a powerful global brand when in 2005 the famous Burberry check came into favour with what was seen as “the wrong crowd” by the luxury world. This spawned numerous knock-off efforts and also made Burberry the butt of many fashion industry and tabloid jokes to the point where the company severely limited use of the check and struggled to disassociate itself from the undesirable crowd who had adopted the check as a uniform (Bothwell, 2005). Thus the company was faced squarely with any luxury brand‟s worst nightmare, an image tarnished by being too common and accessible to the masses. Despite these challenges, the 2008 AC Nielsen report on the world‟s most coveted brands cited by Solca and Wing (2009) ranked Burberry ahead of competitor Hermès with 10% of respondents naming them as their most coveted, suggesting the brand‟s successful navigation through the luxury world‟s minefield of image concerns. Patterson 20 b. Corporate Website Similar to Louis Vuitton and Hermès, visitors to http://www.burberry.com are asked to choose their locale and directed to the appropriate site for their country. Unlike the Vuitton and Hermès sites, Burberry has a dedicated Canadian site, including an online store with prices in Canadian dollars. The site also features a section entitled “Burberry Bespoke”, where consumers are able to design their own customized version of the iconic Burberry trench coat (Louis Vuitton also offers customization options to some leather products on its site, while customized products were not found on the Hermès website). Other sections on the site include “Experiences”, a more inspirational area with features such as gift packages to be “opened” online containing featured products; “Foundation”, which details the mission and fundraising activities of the company‟s charitable foundation; “Shows”, where video coverage of runway collections may be viewed; “Heritage”, an outline of the company history; “Acoustic”, featuring music videos of British talent; and “Art of the Trench”, a link to the company‟s website for the Art of the Trench social media campaign. The site is somewhat more intuitive and product/sales driven than the Vuitton or Hermès sites, although it is executed with a very high-end, classy aesthetic, and, like its competitors, Burberry has included several elements on the website which cater to experiential versus strictly transactional interaction. Burberry also has a corporate financial site http://www.burberryplc.com where investor information can be found. c. Social Media Burberry is notably active in the digital arena. Their Facebook page, http://www.facebook.com/burberry, boasts almost 10 million fans with over 127,000 “talking about this”. This is more than double the Facebook following of brand giant Louis Vuitton, and several hundred percent ahead of Hermès. The company also has pages on Twitter, http://www.twitter.com/burberry, and YouTube, http://www.youtube.com/burberry. On Twitter, Burberry had 643, 612 followers as of November 20, 2011. The firm‟s YouTube page has over 26, 000 subscribers and contains videos of runway shows, product collections, makeup and beauty tips and tutorials and the Acoustic series of music videos. Burberry has Foursquare pages for some of its retail store locations, including four in New York City and one in London, England, although the site does not appear to be a significant part of the brand‟s social media strategy at present. Burberry‟s Facebook page is similar to Vuitton and Hermès in that it does not directly engage with fans on the page. Posts are primarily invitations to view/purchase products or view videos, as well as postings of additional photos to the company‟s albums. Announcements of new ad campaigns are posted with details on names of the models, in addition to some behind-the-scenes info. The page has tabs for both photo and video albums, as well as a page for the Acoustic music videos. The Burberry Body tab is an innovative element of the page. Burberry launched the Body fragrance collection via Facebook, offering fans the first opportunity to experience it through a “tryvertising” store offering free samples (Marsden, 2011). The move by Burberry chief creative officer Christopher Bailey demonstrated a certain digital savvy, since it placed the first Patterson 21 opportunity to experience the product directly in reach of the company‟s already loyal following. Instead of a sample campaign directed through demographic profiles, fans had to opt in by ordering the free samples; driving greater ROI potential for the campaign by giving the product to those that wanted it via a medium that facilitates talking about and sharing the experience with friends (Marsden, 2011). Aside from ordering samples, fans are able to purchase the product line directly via the Burberry Body tab on the Facebook page. Burberry uses Twitter to tweet about celebrities wearing Burberry products at public occasions, new product launches, store events and Youtube videos, including the Acoustic series. Similar to Vuitton, the company has Twitter accounts for the different countries in which it operates as well as the primary account. The company also directly tweets to members of the media via Twitter. With Acoustic, Burberry created a direct link between itself and the entertainment industry, promoting the notion of a relationship with the brand which goes beyond that of purchasing goods, but rather an experience or sort of entertainment. A pet project of Christopher Bailey, Burberry Acoustic features up-and-coming British musical talent in music videos exclusively filmed for Burberry, often set in iconic British locales; on a special section of the company website, Facebook page and YouTube. Burberry Acoustic material is used as a soundtrack for Burberry runway shows and in 2010 the company released a compilation CD in collaboration with London Fashion Week and Sony Music (CD Universe.com, 2011). On Twitter, @Burberry routinely tweets about the videos using the hash tag #musicmondays. Another Burberry innovation in the digital arena is Art of the Trench (http://www.artofthetrench.com/), a social media site where users can upload, view, share and comment on other users‟ images depicting themselves wearing the iconic Burberry trench coat. Launched in 2009, the initiative has been much lauded in by marketing and social media experts as a good example of how to engage the audience by personalizing the experience and creating a sense of participation with the brand (Shamser, 2011). Hermès‟ J‟aime Mon Carre campaign was widely speculated to be inspired by Art of the Trench, yet was seen by many as a failed social media initiative due to lack of interactivity - the site offered neither visitor uploads nor comments (Shamser, 2011). Burberry‟s digital leadership is also evident in their runway shows. The brand set itself apart by streaming their fall 2010 collection live at Burberry.com and at Burberry stores. Viewers were able to purchase selected items from the collection within 72 hours of the show for delivery within eight weeks, while the full collection would not be available in stores for another six months. This move provided a digital experience of exclusivity for digital brand loyalists, since the designs were available for a limited time, while also providing Burberry with the opportunity for advance consumer feedback prior to product release within the broader marketplace. The company took the personalized experience one step further for spring 2011 by enabling viewers to click on items as they came down the runway to create a personalized “look book”. Burberry also added a feature enabling viewers to discuss the show via Twitter and Facebook. As with the Patterson 22 previous collection, selected designs were available for advance purchase (Indvik, 2010). The digital experience is also present in the Burberry brick-and-mortar domain. During fashion week invited guests were treated to “retail theatre”, with fashion shows streamed onto large in-store screens complete with surround sound (Roberts, 2010). Stores hosting these events were equipped with Ipads programmed with special applications to enable “purchasing from the runway” as on the Burberry website (Bonneville, 2010). d. Summary Digital is clearly a large part of Burberry‟s marketing campaign. The brand seems to fully understand the digital arena and has integrated it seamlessly into their overall marketing strategy. In 2009, L2 ranked Burberry 10th in the luxury apparel category with a digital IQ of 107 and a classification of average (LeGall, 2010). This trailed both competitors Vuitton and Hermès with digital IQ‟s of 149 and 121, respectively (LeGall, 2010). The 2011 L2 index ranks Burberry top in class as a genius with an IQ of 144, with the comment, “Digital births an icon. Proof digital investments translate to shareholder value.” (L2, as cited by Wright, 2011). Internet searches of keyword strings such as luxury, apparel, social media, online yield several articles touting the brand as a standout example in the world of luxury apparel. The corporate website, http://www.burberryplc.com, lists marketing innovation as a key part of corporate strategy and mission. The four points listed under marketing innovation all have a digital element, with the first being the new launch of Burberry.com, described as “a place to engage, entertain and interact”, the second being leadership in social media, the third point referring to innovation of fashion shows via digital technology and the final point is further digitization of the brand (Burberry PLC, 2011 ¶ 4-7). Clearly the company has embraced the online world as an opportunity to excite and engage consumers with the lifestyle of the brand. Researching the topic of online marketing and luxury apparel brands, one gets the sense that many luxury brands have accepted digital marketing as something they must participate in, even have seen the opportunity in with ecommerce enabled websites, yet not as many brands have determined how to make digital a meaningful part of their strategy. There is still a great deal of literature on the subject which ponders how luxury brands can navigate the digital world successfully without appearing too accessible or common to maintain the luxury image. Burberry appears to have successfully crafted a strategy which speaks to this concern, and yet what remains elusive to measure is the true perception of “luxury”. In other words, can Burberry, prolific as it is online, still be considered a luxury brand? The 2008 AC Neilson report on the world‟s most coveted brands as cited by Solca and Wing (2009) showed that Burberry was named by 10% of respondents, ahead of Hermès at 8% but only half of Louis Vuitton at 20%. Dated in 2008, this data precedes many of Burberry‟s most innovative digital projects. A more recent AC Neilson report on this subject was not found. Patterson 23

On Burberryplc.com (http://www.burberryplc.com/) the firm reports revenue growth of 24% for the year ended March 2011, and Branwell (2011) cited company pre-tax profits up 40% for the same year. By that basis, digital innovation would not appear to be hindering company performance, but the essence of a luxury brand is to be for the privileged few, not the masses. The issue of perception of luxury image is a more subjective matter which is difficult to assess. On a qualitative level, the image of Burberry across all digital media very much exudes luxury. The brand image does not appear cheapened in any of the digital venues where it is represented. The taste level and aesthetic is comparable to a Burberry brick and mortar boutique with everything executed at a high level.

5.4 Comparison of Digital Activity a. Pillars of Luxury Branding In a set of 10 defining characteristics of luxury brands, Keller (2010), points to maintaining and controlling a premium image, creating intangible elements of value and an aspirational image, carefully aligned marketing strategy and controlled, selective distribution as essential elements of a luxury brand. Further exploring the concept of creating intangible elements of value, Keller (2010) describes many luxury brands as having established heritage and a symbolic meaning which extends beyond the product itself. This association with the brand is an image that consumers can aspire to, which is not created by a need for products but through social means such as word of mouth and public relations (Keller, 2010). Though individual consumers may desire different products of any given brand according to their tastes or needs, generally it is the lifestyle or status associated with the brand which draws them in before the aspiration is manifested in purchase of a specific product. Reviewing the digital strategies of Louis Vuitton, Hermès, and Burberry, Keller‟s critical elements are evident in all three. Each company has created a digital image indicative of the heritage and histories of their brands. All have aligned their digital marketing strategies with other marketing activities, carefully integrating on and offline events and initiatives. All brands are exerting control and selectivity over their distribution channels and supply chain. Although in some ways ecommerce makes the brands more accessible, each brand has created a luxury atmosphere at their online stores in keeping with the image of an exclusive brick-and-mortar boutique. Discounting, a primary concern of luxury brands, does not appear to be a factor of the ecommerce activity of any of the three brands- none of their sites had a “sale” section. Perhaps most significant to this discussion is the notion of control. While each brand exerts control over their carefully crafted, precise marketing strategies; the digital era has significantly shifted control to the consumer. Ideas, opinions and conversations are far more easily shared, leaping geographical boundaries instantly over the internet and social media platforms. Controlling one‟s image is therefore perhaps an idea of the past. At best, brands can control their part of Patterson 24 the message but the collective voice of the public is easily spread and larger than any that the brand can conceive. By engaging with consumers and being a vibrant part of the online discussion, brands give up the air of inaccessibility but also negotiate relationships with their consumers and an avenue to shape the dialogue in their favour. Burberry is embracing and leveraging this as an opportunity. Vuitton and Hermès appear to accept it while not necessarily embracing it. b. Digital Purpose Of the three brands, Burberry appears the most ecommerce driven. Their website offers a full range of products and the brand seems eager to leverage the web as a means to drive sales. Vuitton and Hermès adopt an approach of using the web to support the brand image, provide information and drive consumers to brick-and-mortar locations. Although both Vuitton and Hermès offer ecommerce, and Hermès appears to be expanding this channel; both offer limited product ranges and are more subtle in their approach with the e-stores less obvious on their sites. Burberry is using entertainment, with initiatives such as Acoustic, “retail theatre” and virtual runway-side purchasing as means to create unique experiences with Burberry. Vuitton and Hermès have created “adventures” with the brands on their websites for consumer experiences. The Hermès site, with charming hand-sketched graphics and animation, creates an air of whimsical fantasy. Vuitton lies in contrast with more worldly and sophisticated photography and video suggestive of haute couture sophistication. It is relevant here to note the difference in scale between the three companies. LVMH, parent company of Louis Vuitton, is a so-called “mega-brand”, owning several brands actively competing across many product categories. Due to the company structure it is difficult to discern the performance of Louis Vuitton as a stand-alone business, but suffice to say the company has advantage of scale compared to Hermès and Burberry. Solca, Wing, and Rosso, 2010, note that the fixed-cost reduction of internet business models go against the interest of mega- brands, as such brands can distance themselves from smaller niche-players with luxurious brick-and-mortar flagship locations. Smaller, niche brands have an opportunity, however, to sidestep the costs of physical locations while still reaching their target clients online. This may partially explain the difference between Vuitton‟s less overt, limited ecommerce offering and Hermès‟ and Burberry‟s more open approach to e-tailing. Examination of digital purpose underscores the position of each of these three luxury apparel players. Louis Vuitton, with dominance in the field, massive brand value and scale advantage, shows evidence of the traditional approach to the internet as somewhat of a threat to be approached with caution. Having achieved great success pre-internet they had much to lose should their brand become diluted; hence they are very carefully approaching the internet, although increasing their digital presence. Hermès, though of much smaller scale compared to Vuitton, is considered one of the few “genuine” luxury brands remaining. They face a dilemma in the age of mega-brands, with Vuitton Patterson 25 purchasing a stake in the company in 2010 (Millward Brown, 2011), they must thrive or risk becoming irrelevant or being acquired. At the same time their image is so predicated on traditional luxury brand values of discretion they are challenged to find a digital strategy that is a fit with the modern day world of accessibility and openness. Hermès‟ digital ventures indicate that they know they must be present and participate in the space, yet they seem to not have found the perfect formula yet. Arguably, neither has Louis Vuitton, but their scale in brick and mortar distribution is likely to carry them through for a short time while they figure it out. By contrast, Burberry was perhaps in the sweet spot to leverage the web, and they have done so. Burberry has a rich heritage, but until recently was a relatively niche brand. Unlike Vuitton, the firm‟s established clients or “past” were not enough to guarantee its future in a world of mega-brands. Having less to lose and more to gain than either Hermès or Vuitton, they clearly saw the opportunity of the digital space to spread the word about their brand which, though esteemed and rich in heritage, had limited reach. Burberry‟s commitment to digital and success in the space has likely been a key factor in the brand‟s growth in the past five years. Using digital as part of an overall strategy for growth the company‟s online activity has supported their brick and mortar efforts, creating greater awareness of the brand prior to establishing flagship stores in key markets. An example of this is the 2011 opening of the Toronto flagship in Yorkdale Mall. Prior to the internet, Burberry‟s presence in Canada was extremely limited, with distribution at Holt Renfrew and a few independent boutiques. The ability to track the origin of website traffic, and through e- commerce, the destination of shipments, is an excellent tool to gauge demand and viability for new retail locations. Other web metrics such as demographic information from social media sites like Facebook provide marketers with excellent opportunities to tap into their key audience both on and offline. Burberry provides a powerful example of the internet as opportunity for luxury apparel as it has been integral to transforming the brand from niche to global. c. Heritage: Asset or Liability? In a comparison of how three brands richly steeped in history and heritage navigate the new frontiers of marketing in a modern, digital world; it is interesting to look at where each is coming from and where they intend to go. Both Louis Vuitton and Hermès share a similar heritage in leather goods, Vuitton with roots in travel trunks and Hermès in equestrian gear. As the brands evolved, both have gained solid status in handbags, identified by Solca and Wing (2009) as key components in the luxury apparel product mix, specifically for the rapidly growing aspirational segment. Both Hermès and Vuitton are established as luxury, although anecdotally Hermès seems slightly more exclusive with well-publicized waiting lists for the brand‟s famously coveted Birkin and Kelly bags. By contrast, Burberry‟s heritage lies in the much less glamorous trench coat, a garment of service and function, notably enlisted as part of British military uniform. In its 2007 annual report, Burberry PLC announced development of Patterson 26 non-apparel products as one of five key strategic themes, specifically referring to handbags, small leather goods and shoes as a key avenue for growth in the past year and future anticipated gains. Of the three brands, Burberry has most aggressively used digital media as a means to reach its targeted audience. At the same time, it had a much less established image as a luxury fashion leader and much smaller reach to start with: Burberry revenue in 2007 was just £850M (Burberry PLC, 2011) as compared to Hermès at €1.625B (Hermès, 2011). Burberry did not have the scale to rely on word of mouth from its established heritage alone. Burberry needed to reach out farther and speak louder to attract a larger number of new aspiring prospects in order to achieve growth and compete against larger players like Vuitton. Interestingly, with J‟aime Mon Carre, Hermès appeared to be following Burberry‟s lead. While well-respected and certainly of impeccable luxury status pedigree, Hermès has an image which is arguably stuffy or old-fashioned. They have followed a traditional model, avoiding over-exposure or flashy campaigns with the discretion befitting a genuine luxury brand (Shamser, 2011). J‟aime Mon Carre was aimed to demonstrate both the brand‟s appeal to and connection with the masses, yet this was seen as inauthentic for the ultra-exclusive brand, sharply underscoring the luxury/digital dilemma (Shamser, 2011). Indeed, while Hermès and Burberry share a similar imperative to grow and compete in a space increasingly dominated by mega-brands, Burberry‟s less established image as a leader is perhaps an asset in the digital era while for Hermès‟ their image is a double-edged sword. Their history will not secure their future and yet they have enough of a past to put them under intense scrutiny and risk of alienating their clientele by appealing to a broader market. This speaks to the most elusive aspect of this research: perception of luxury. Vuitton, Hermès and Burberry are thriving. To the degree that is publicly known, the companies are performing and each has a respectable brand value. There are comparable and unique elements to the digital strategy of each, and it is certain by the number of “fans” on social media, that a certain segment of the public desires to experience and interact with these brands online. What was found to be difficult to measure is if and how the online presence impacts perception of luxury. Company performance and traditional metrics do not specifically speak to this, since as a rule luxury brands are defined by limited distribution hence there is a degree to which increased revenue may indicate better company performance yet also a shift from luxury to the mass market. d. An Official Online Voice As discussed, the early days of e-commerce established it as a marketplace for easy access to cheap goods. It also gained a quick reputation as the place to go for stolen or counterfeit merchandise, such as illegally downloaded merchandise or knock-off luxury designer goods. There have been many well publicized lawsuits by large fashion corporations targeting counterfeiters. In June 2011 Louis Vuitton and Burberry were awarded large settlements from three Canadian- based companies for selling counterfeit versions of their goods (Elliott, 2011). Patterson 27

This issue is not unique to the digital space, knock-off goods made their way to the marketplace long before the internet existed. With that said, it can be argued that the internet provides counterfeiters a fast avenue to market with low start-up costs, making the process easier. While many companies aggressively combat counterfeiting through legal avenues, it is a difficult process which often yields unsatisfactory results. Though court decisions like the one in Canada in June suggest times may be getting tougher for those dealing in counterfeit products, it seems unlikely this problem will ever be eradicated. By staking their ground in the online space, luxury brands establish their own official voice, providing consumers with an avenue to become educated with the characteristics of authentic products of the brand. Even at that, it can be challenging to differentiate some aspects of quality online in a photo (in fact, images are often easily stolen online by counterfeit sites). Many luxury brands are speaking to this issue by promoting the heritage and hand-craftsmanship that goes into their products on their online sites. Another tactic is creating custom or personalized experiences online, allowing consumers to create their own version of the company‟s designs, beyond anything that a counterfeiter could offer. Counterfeiting is widely believed to devalue a brand‟s image, attacking the sacred pillars of exclusivity by reducing the goods to common commodities. Gosline, 2010, presents an interesting counter-argument, positing that counterfeits may actually benefit luxury brands. Conducting a small study, Gosline (2010) found that almost half of 112 purchasers of counterfeit handbags purchased the genuine article within two and a half years, after becoming disenchanted with the inferior quality of the knock-off versions. Gosline (2010) concludes that counterfeits may provide a gateway to authentic luxury, piquing the interest of aspiring consumers in the genuine article as a point of comparison with the fake versions. Gosline presents a compelling case, especially when one considers that much of the definition of luxury is not based on the product, but the intangibles and image that go along with it. The image of stolen or fake merchandise is not one that most aspire to, certainly not the target consumer of luxury brands. Gosline‟s argument aside, viewing counterfeits as a boon to luxury brands is likely a stretch. The consumer who wants and can attain authentic luxury goods is not likely to be satisfied with a fake, but a proliferation of fake merchandise that looks identical to the real thing is sure to reduce the value in owning it. Knock- offs must be kept in check to avoid negative impact on brand image. Luxury brands can strengthen their defense against counterfeits by utilizing more proprietary components and signature details and making customization more prevalent in their product offerings. Another tactic is offering online registration of products, which also can strengthen affinity with the brand by suggesting a sort of “membership” via purchases. Although most brands speak publicly on this subject only through legal avenues, brands can creatively use PR channels to spread the word on how to differentiate between fake and authentic goods. Searching “counterfeit luxury handbags” on Google (http://www.google.com/) Patterson 28 yielded several sites offering tips on how to spot fakes, though none were from official brand websites. e. Luxury vs. Mainstream When comparing luxury apparel websites, even looking slightly downstream to an aspiring luxury brand reveals a difference in approach. Michael Kors is a successful luxury brand that has adopted a more mainstream distribution approach in recent years. Though considered luxury, the company appeals to a younger aspiring target demographic with lower-priced entry level products. Visiting the company‟s e-commerce site, (http://www.michaelkors.com/), a primary difference in comparison to the three subject brands of this paper is the treatment of pricing on the site. When visiting a brick-and-mortar luxury store, prices are either not visible or very discreetly placed. One does not tend to see large price tags or signage. The online worlds of Vuitton, Hermès and Burberry are consistent with this, presenting products first and displaying pricing and other details only after visitors click on or “pick up” a product by rolling over the image with a mouse. By contrast, products at Michael Kors are displayed with prices visible at once, not to mention a code for free shipping on purchases over $100 U.S. appears at the top of the home page (Michael Kors, 2012). Visitors are also able to filter products by price, an option not found at any of the three subject luxury brands (Kors, 2012). Images on the home page are labeled in a more overt, hard-sell manner, more of a call to action to buy than an invitation to experience. A similar approach is found at iconic U.S. designer Ralph Lauren (http://www.ralphlauren.com/) and fast-fashion giant Zara (http://www.zara.com/). Another key distinguishing feature is a sale section. True luxury brands avoid discounting, choosing to dispose of excess inventory through carefully controlled channels. Michael Kors, Ralph Lauren and Zara all have sale sections, the latter having the word “sale” in large print on the centre of each section landing page at the time the site was accessed (Zara, 2011). Michael Kors, Ralph Lauren and Zara also have sections on their sites dedicated to the image of the brand, but the overall aesthetic is less experiential, more of a blatant marketplace or catalogue environment. The look book section at Zara successfully conveys a high fashion image, but upon navigation to the e-commerce section products are lined up several to a page on a white background with prices literally “slashed” and reductions below each one. This comparison underscores how essential it is for luxury marketers to maintain their brand identity and create a luxury aesthetic and ambiance in their online worlds. The core concept of Zara is to take design from couture runways and interpret it quickly for market in a low-price offering. By contrast, both Ralph Lauren and Michael Kors can be considered luxury brands. Yet, just as their broad distribution strategy in brick-and-mortar channels has diluted the perception of luxury associated with their brands, so does the aesthetic of their websites. This is the quintessential marketing paradox for luxury brands. Marketers must find ways to convey their message in the digital media without compromising their brand values and exclusivity. Companies were able to avoid Patterson 29 the internet in its early days since traditional marketing media were still more powerful. Going forward, as digital has and will likely continue to become more and more embedded into our society marketers will be unable to reach new consumers without successful digital strategies. 6.0 Application to Research Questions At the outset of this research, the answers to three specific questions were sought. Following extensive literature review and examination of digital strategies of our three example luxury apparel brands, it is now possible to return to these questions for discussion.

6.1 A Matter of Misperception? The positioning and strategy of brands is obviously varied and diverse, but recurring themes come up in discussions of luxury branding online, specifically an appearance of being too common and less exclusive, and concern over the ability to create an online experience in keeping with the brand image and comparable to that which can be delivered in a brick-and-mortar setting.

As previously mentioned, the question no longer seems to be if, but rather, how, to participate in the virtual world. Does this mean earlier concerns were unfounded? It would seem not. In fact, much of the current literature voices these same concerns that were present in the early days of e-commerce. In their March 24, 2011 article “Removing Exclusive Tags Risks Permanent Damage”, authors Costa and Handley cite PR executive Cecile Simon as saying “The biggest challenge is how to take the world of luxury and make it relevant to a much wider audience without compromising the exclusivity factor” (¶ 3). The same article quotes LVMH digital marketing executive Franck Sange as saying “We can‟t hide ourselves in an ivory tower but we have to remain precious and exclusive” (Costa & Handley, 2011 ¶ 4). In the luxury section of its 2011 Brandz report, Millward Brown notes that successfully retaining exclusivity protected luxury brand value and provided insulation from the recent recession. At the same time, another key point in the luxury section observes that luxury brands found ways to be present online since their customers were there (Millward Brown, 2011). Not only is the mass aspect of the internet contrary to the notion of exclusivity, but early associations with the internet, brands, and e-commerce were heavily connected to value, discounting, and, if simply for ease of transacting, low-value items such as music compact discs, easily and inexpensively shipped from sites like E-Bay (http://www.ebay.com) and Amazon (http://www.amazon.com). This image is hardly conducive to the ideal of a luxury emporium. The internet has largely remained a place for value-minded consumers, with conservative estimates that less than 5% of apparel sold online falls into the luxury category (Solca et al., 2010). Patterson 30

In terms of creating online luxury experiences comparable to those found in a flagship store, this concern was likely valid at the time, though technology has advanced and continues to do so. Modern day websites are significantly different than their first generation ancestors. Early e-commerce ventures had many obstacles to overcome. Aside from aesthetics and functionality, there were concerns over conveying payment and security of transactions. These factors are still present but as the market has increased so too have solution providers to meet the demands of e-commerce. In fact, it could be argued that the multi- media and interactive aspects of today‟s modern sites have the potential to create an experience tailored to the user‟s preferences beyond that available to visitors at a brick-and-mortar location without the limitations of capacity, logistics and staffing present in a physical setting. In this aspect, luxury brands late to the table online may have gained an advantage by waiting. In sum, concerns of luxury apparel marketers over the internet are similar today as they were when the internet first began, but what has changed is the medium itself. From the outset, many identified that the web would change how people experience products, interact with brands, and shop. What was unclear was how, and truthfully, the medium is evolving fast enough that the final answer to that question may be unknown for some time to come. With that said; the internet has matured well beyond its initial stage as a hunting ground for discounted goods and sought after collectibles. Though it occupies a small portion of the online world, there is a legitimate space for luxury online. If one were to envision the internet as physical real estate, a shopping plaza if you will; years ago when anchor tenants were the likes of E-Bay and Amazon with few other legitimate partners, no luxury apparel brand of any caliber would consider renting space alongside them. Now the internet is much more diversified, and, similar to many physical shopping destinations, there are luxury niches, discount stores, services and mainstream retail shops. Also similar to a physical retail setting, there are pressures of competition which dictate claiming your space among that of your competitors. As such, avoidance is not likely to be the winning strategy, and indeed, when searching luxury brands online none were discovered to have absolutely no presence on the web, what varied was the degree. Successful marketers will have to use creativity and leverage technology to find ways to be present in this space while maintaining exclusivity. Interestingly, though at a minimum most brands have a website and use of e-commerce is on the rise, use of social media varies widely among luxury brands. Yet of any digital medium now available social is the most likely tool to facilitate creation of an exclusive, personal experience with the brand tailor made to already loyal followers. The opportunity for direct interaction and outreach created by social media is incredibly powerful. Although there is a mass aspect to the primary social media outlets such as Facebook, luxury marketers can reach out to broad fan bases via such sites with more specialized, luxury events to appeal to the select few who are genuine brand consumers. Alternatively, brands have the option of creating their own social networks with private online clubs for select Patterson 31 customers. These are options which can be executed now, but savvy marketers, knowledgeable that the online space is as much a part of successful marketing strategy as a high-profile flagship store, will invest in the technology to create a differentiated image similarly to investment in design of a brick-and-mortar environment.

6.2 The Four P’s The answer then, to the question “Were past perceived contraindications between the internet and luxury fashion brands false?” is no. The second part of the question, “Have new market conditions eclipsed these concerns?” elicits a different answer. Much of the literature points to the economic downturn of 2008 as driving the imperative for a change in approach to digital luxury branding. Others point to increased competition, with behemoths such as LVMH borne of mergers & acquisitions, brands must create a louder voice or risk being (literally) eaten alive or worse still, silenced forever. Both of these are valid points and certainly contributing factors to this discussion. Several other factors are also relevant, specifically, how the internet has evolved and been adopted into daily life. In the early days, many jumped into the conversation with sweeping (yet true) statements such as “the internet will change retailing”. Of course, it will and has, but the intelligent question for the marketer is “how, and what does it mean for my brand?” Much of this early discussion was framed around placing products and marketing them on the internet. The significant game changer which was likely not envisioned was social networking and how it would become engrained into our culture. In studying brands and their digital activity, though ecommerce is a part of it, it is simply a choice of distribution and one part of the equation, while social media creates a forum for the voice of past present and future consumers of the brand to commune and share at the convenience of a click. Traditionally, marketers have minded their P‟s: Product, Price, Place and Promotion. Initially, the internet was viewed by luxury brands very much in the context of Place, how it would impact the perception of the brand‟s positioning in the marketplace, and from a more literal aspect whether or not this was a viable location for commerce. This was and is not a false concept, ecommerce is growing and advancing technology will only increase capabilities to successfully market more products in the digital space. Positioning is also arguably a luxury brand‟s greatest concern, with image and intangible aspects going above and beyond the functional elements of the product.

Promotion has always been carefully and discretely executed by luxury brands via controlled media avenues, but the age of social media has made the brand‟s own voice all but irrelevant. Consumers are more likely to notice a brand via what other consumers are saying about it than by the brand‟s own promotional efforts. Helstab (2011), as quoted by Costa and Handley (2011, ¶ 28), describes a trend of consumers taking over brands, defining their authenticity, with peer opinions and user-generated content rendering brand voice almost meaningless. Patterson 32

Helstab wisely identifies the role of luxury marketers in facilitating such conversations, as opposed to the traditional stance of attempting control over them (Costa & Handley, 2011 ¶ 29).

Social media has undeniably changed how consumers seek information about brands and experience them. It is also undeniably about the masses, seemingly incompatible with the exclusive nature of luxury branding. Yet the key word in this discussion is control. The control has shifted to the consumer, which is what makes the traditional ideals of carefully controlled marketing and PR at once seem dated in the digital age. Referring to core marketing concepts, such as Porter‟s five forces, one can see that social media represents both a dramatic increase in buyer power in addition to increased transparency of competition.

It is also relevant to examine shifts in macro-environmental factors when reviewing market conditions in the luxury brand space. We have already identified and discussed significant social, cultural and technological changes. Another significant factor is demographics. Solca and Wing, 2009 are among many who point to less penetrated markets as the source for future growth, specifically Asia, India, Russia and Eastern Europe. Entirely new segments of affluent consumers are developing in the digital age. These consumers are more likely to look to their mobile devices for information than a print magazine. For many in these countries digital media will connect them to the brands they aspire to in some cases long before the products are available to them locally. Prior to the digitally enabled world, brick-and-mortar stores were the only way to gain significant presence in a given market, replacing mail-order catalogues that bridged the long distances between shops in major centres. It will be interesting to see how retail landscapes evolve in developing markets in the post-digital age.

6.3 Luxury: Redefined?

We posed the question: do recent changes in internet communication strategies of luxury brands suggest a change in how such brands and the concept of luxury itself are being defined? We also offered a definition of the term luxury, which, although there are variations on the term, each carries a common thread that luxury goes beyond what is needed to fill a functional role and carries intangible, emotional components. Extensive research and literature review which followed these initial proposed concepts supported them, so the definition of luxury seems largely intact. When the question is extended to define luxury brands, change seems evident.

Much of the literature refers to the discretion and inaccessibility of luxury brands as part of what makes them desirable. To a degree, luxury brands are still inaccessible, although the term seems to be encompassing a larger segment of products, price points and consumers than ever, which supports the theory that luxury is truly about image, attitude and lifestyle, not only price tag. At this point it is important to differentiate between brand and product, affordability and Patterson 33 accessibility. The literature supports that the brands are more accessible from the aspect that they are more actively engaging in the digital world, a very public and accessible space. Accessibility in this context can denote information and awareness of the brand and, in the case where e-commerce is available, ability to purchase products independent of access to a brick and mortar store. These factors increase access in one sense, but do not influence access via affordability. In some cases, products may be more affordable because, as noted by Solca and Wing, 2009, many higher end brands are introducing lower opening price point product ranges to capture the aspiring consumer. Because this initiative does not extend across entire product ranges as a whole, luxury products are not more accessible. In this context coveted high-end items are still reserved for a limited few.

In examining accessibility, it is of note that advances in digital technology have increased the notion of accessibility overall in recent years. A powerful example is the use of Twitter accounts from high-level executives, celebrities and world leaders such as U.S. President Barack Obama (@barackobama) and Canadian Prime Minister (@pmharper). This creates a perception of greater accessibility to these individuals as sound bites in past reserved for interviews and press conferences are now broadcast spontaneously to all who choose to follow, not to mention, those same followers can respond back. As technology advances, it impacts how we define things. Before the age of the internet and e-mail, facsimile machines greatly facilitated sending printed and visual materials quickly; making them more accessible. Today, having a fax machine would not be considered such a boon to accessibility of information. Although this reasoning does not make an argument that luxury itself is being re-defined, it is possible that the context of some characteristics of luxury has shifted or may shift as technology continues to evolve.

Researching luxury brands and their marketing approaches brought a repeated, consistent message: it‟s all about image and perception. To that end, the argument can be made that little has changed. Vuitton, Hermès and Burberry have created digital worlds around their brands which give a perception of more openness and accessibility while maintaining a luxury, upscale image. The research by Solca and Wing, 2009, shows that the aspiring, not the elitist customer is driving growth in luxury. This trend will definitely change luxury from being identified as something for the privileged few to a lifestyle enjoyed by many. As Helstab notes, this trend is also sparking a desire among elitists for even more exclusive products and experiences (Costa and Handley, 2011). Still, our definition of luxury is primarily tied to what it means to the consumer, and there is no indication that the idea of luxury is perceived differently due to social class or financial means; it is more likely that it is manifested in different experiences or products. Luxury brands interact with consumers and society differently in the digital era. In a broad sense, it can be argued that these brands are likely perceived as less remote than in the pre-digital world, but, over all the concept of luxury remains the same. Patterson 34

6.4 The Future of Luxury Brand Management Our final research question asks what implications for the future of luxury brand management can be drawn from analysis of present practices in the industry. Thorough review of the literature on the subject and examination of three leading brands has provided excellent insight into present practice and concerns about luxury branding in the online world. This insight has helped answer questions but also poses new ones about the future. Louis Vuitton, Hermès and Burberry demonstrate clearly how carefully marketing decisions for luxury brands must be made and integrated into overall strategy. Each brand provided firsthand examples of hits and misses in the digital marketing space. Louis Vuitton is precise and focused in their campaign strengthening their position as the brand for the style-savvy chic traveler. They are actively participating in digital and demonstrate innovation but are still reserved in their approach, limiting their online exposure to a degree. Hermès does not seem to know quite what to do with digital yet. They are using it as a distribution channel, are present online and seem to want to use digital to reach out to their next generation of brand loyalists; they just haven‟t found the sweet spot in terms of methodology yet. Burberry is definitely fully committed to digital. Having less to lose than either of their peers, they were perhaps in a position of advantage, having heritage in their brand to have something to leverage, but not so much they were unable to take chances. The chances they did take seem to have paid off and the brand comes off as fresh and innovative; an excellent position to capitalize on affluent younger consumers just getting their first taste of luxury. Although we are specifically scrutinizing digital activity, our research suggests that all decisions must be made carefully by luxury brands. It can be argued that even greater care must be taken now since blunders are more public than ever in the digitally enabled world, but still, everything for a luxury brand matters- be it a Facebook wall post or model selection for a print ad or choice of decor in a flagship store restroom- all are part of the associated brand experience. It may also be argued that now that digital is firmly entrenched in our culture and a key part of how brands are experienced, decisions made regarding online marketing do not greatly differ in importance than any other for these brands; in the near future they are most likely to be considered de rigueur. The concerns associated with the online space for luxury are unchanged from several years ago; but initially these concerns were addressed with a decision to participate or not. Today, and in the future, marketers will have to continue to innovate to find ways to leverage the opportunities while mitigating the risks. As such, luxury must continue to lead in differentiating their online experiences. Much in the same way as a flagship luxury store, such as a Louis Vuitton Maison, is not just any retail shop, luxury must find ways to differentiate and create online experiences which are a step above. This is a primary difference that must be maintained. The online presence must reflect the luxury and exclusivity of the store and the product. Quite different than the Sears Catalogue approach that is used by the mass merchandiser sites. Initial concerns over digital cannot be claimed false, but the action of avoidance is not effective in a world where digital Patterson 35 has taken such a strong hold. Successful marketers should actively be on the forefront of technological innovations to help leverage the potential of the digital space in a way that upholds brand values and image. Brands of all echelons still seem to be in somewhat of a quandary over social media. For some, the route to success seems simple and obvious. Indeed, social media seems to lend itself most to such a model; with its organic, uncontrolled nature, it seems a better fit with off- the-cuff thought patterns more than precisely crafted marketing. The social media domain is powered and owned by the public, and though present school of thought is for companies to be present or considered aloof and stand-offish, questions persist about ROI and impact of these campaigns. Marketers have yet to form a definitive answer to the question: “Just how valuable is a friend on Facebook?” Technology for web design has significantly advanced, making it possible to create online experiences that seemed like science fiction fantasy scant years ago. Similarly, technology is evolving to enable more powerful metrics for web analytics, including social media. With company pages on sites like Facebook fairly recently gaining both increased popularity and functionality, there will soon be more track record to establish returns on these sites. Specifically with luxury brands, given their reticence over social media, savvy marketers must find ways to support a business case for their campaigns. Burberry‟s recent Body fragrance launch was a good example of leveraging a vast social media following to get instant feedback and buzz over a new product. The ability to directly connect consumers who are already interested in the brand and want the product is very powerful when compared to a scent strip campaign in a print magazine where many getting the sample have no interest in it at all. It‟s a treacherous world to navigate, since successes can go “viral” in a flash but so can flops. Now that brands accept social media as part of the necessary mix, success will lie in finding ways to tap into it and directly connect with consumers without invading their social space. Social media is a key tool in the way individuals communicate now. Imagine being on the phone with a friend and having your call cut into with an advertisement. This illustrates the care with which brands, luxury and otherwise, must approach this medium. In studying all the core disciplines of business administration, a recurring theme was powerfully evident. Each functional area, be it operations, finance, human resources, marketing- must have a strategy, and each functional strategy is bound to fail if not integrated into the overall strategy of the firm. Considering the challenge of luxury branding online this theory rings true. Comparing the approach to digital of Louis Vuitton, Hermès, and Burberry while also examining the scale and scope of the businesses, it is clear that digital strategy is closely associated with company strategic goals. Burberry is the most overtly committed to online media and has also experienced significant growth in the past five years. One wonders, in an age where digital connection is so powerful, if they could have achieved this growth so quickly without leveraging digital media so effectively. Established brands must carefully balance the imperative to maintain their image and not appear too common with the fact that the most likely avenue Patterson 36 to cultivating the next generation of consumers for their goods is being an active part of the online world. As yet, many luxury brands seem to struggle with developing any online strategy. The smartest brand managers, however, will be able to discern strategies appropriate to their particular business objectives. 7.0 Recommendations

The online world has been established as a legitimate space for luxury and other brands to cohabit. Many luxury brands are still cautious and have not defined what luxury will mean for them. To that end the greatest recommendation from this research is for marketers of luxury to heavily invest in understanding the online world and the activity which is taking place there. Institutions like L2 and others openly criticize luxury for being slow to catch onto online, while others just as openly acknowledge the risks. In some ways, keeping a low profile or even abstaining from digital entirely can be considered a strategy, since a poorly executed website or social media page is like a sloppy flagship store window the whole world can see and share in an instant. For all marketers, digital and social media has been a game changer. It is now widely accepted that a brand‟s own message is irrelevant compared to what a consumer‟s friend, relative, or even a complete stranger online are saying about the brand. The success of websites such as Trip Advisor (http://www.tripadvisor.com/) provides testimony of this. The unique situation for luxury is that such a large part of success lies in intangible qualities created by brand image. In the process of researching this topic, vast amounts of material on luxury marketing including live and virtual summits on general luxury branding and niches in the luxury space was found. It is clear that many in the industry acknowledge the need to understand the new media and successfully incorporate it into the marketing mix. Luxury marketers need to fully explore and understand the online world, discover how their target customers are using it, what they are saying and what they are listening to. Luxury brands also need to collaborate within the industry to lead innovation and stay on the forefront of technology that will further enhance the luxury online experience. In past, delivery the sensory and personalized experience online was hampered by limitations of technology. Today‟s websites are rich with audio, video and animation, in addition to greater ability to display high quality imagery. Augmented reality, technology which allows virtual “trying on” of clothing and accessories is likely to be the next significant component for creating a personalized luxury online experience. In summary, the following is recommended for luxury apparel marketers: 1. Thoroughly understand the digital arena in which the brand operates. What is being sold there, what is being said, where do people interact related to these products online? What is not being done online? How is that likely to change in the future? Look both up and down-market from your brand. What is going on in the digital space here? How are mass Patterson 37

market competitors marketing online? What points of differentiation can be achieved from them? What are the leaders in the category doing well and not so well? 2. Have a clear marketing strategy that is integrated into the over-arching brand strategy. Examine the digital strategy. Is it integrated into the marketing strategy or is the brand just there because everyone else is? Are the brand values and personality clearly expressed in its online activity? Is the brand appropriately differentiated from mass-market and lower-end competitors? Are there tools for differentiation which are not being exploited? Imagine the digital activity of the brand as a physical space, the largest flagship store ever since it is open 24/7 and draws traffic worldwide. What does the space look like? Are brand values reflected in every element of design and point of contact or is it a little tired, shabby? 3. Similar to brick and mortar locations, websites must have plans for continued renewal. Web pages that never change are like store windows left the same for months. Digital is an extremely dynamic world. Marketers must be aware of limitations of online experiences and diligently stay on top of technology to overcome them. Set objectives for improvements and actively seek technology solutions to achieve them. Consider collaboration with other luxury brands to invest in technology for improved online experiences. Consistently re-evaluate your own activity and assess that of competitors to ensure the brand is not losing pace online. 4. Leverage every opportunity for metrics and use this data productively. Understand who is interacting with your brand online and where they are doing so. Adjust your messages in the appropriate media to speak to this audience. Pay attention to who is not interacting with your brand online. If this is your target audience, find out how to speak to them. Stay abreast of technology for improved metrics. Leverage e-commerce to attain measurable ROI from websites and valuable consumer feedback and purchase trend data.

8.0 Conclusion The paradox between the integral values of exclusivity and inaccessibility of luxury brands in the always on, all-access 24/7 digital era continues to exist. It cannot be said that initial concerns over effective luxury marketing online were unfounded, nor can it be said that the concept of luxury has inherently changed. What can be stated with certainty is that the digital world has evolved significantly since the early days of the internet. Another fact is that consumer online activity has evolved significantly and continues to do so. Online shopping continues to grow, and online research has become a first point of contact for information on Patterson 38 everything from products to services to social activities among friends. The online space has matured into a centre of significance. Luxury apparel brands must view it as just that; designing their voice just as they would a flagship in a major fashion destination like Paris, Milan or New York. It is a formidable challenge, since many points of differentiation can be leveled in two-dimensions on a low- resolution monitor. With that said, niche brands have a distinct opportunity to create powerful brand image online in advance of expensive brick-and-mortar locations, spreading their word faster and less expensively than was possible in the pre-digital era. For established, heritage brands, the bar is significantly higher since the image set by their existing flagship salons must be equaled online. Avoiding the internet they risk appearing stand-offish and alienating the aspiring, digital-native clientele of the future; while an online presence that dilutes their brand risks turning off their present clientele. Hermès is an example of a heritage brand whose ivory tower is high enough they cannot climb down from it but not strong enough to guarantee a sustained future. For brands such as this with a reputation for being somewhat of a “best-kept-secret” the challenge is daunting as they must find ways to become publicly private. The best way of doing this is to leverage their existing following from brick-and-mortar activity to create a private online world others aspire to be a part of, so that new consumers can experience and discover the brand online while certain activities and events remain exclusive for established clientele. On the whole, the digital world presents more opportunities than threats. Like any new media, there is a learning curve for mastery, and in the case of highly dynamic digital the target is ever-moving. It is likely that many brands were in a similar quandary when television first came about. Thinking even further back, marketers have been making improvements for centuries on how to present their wares to the public in brick-and-mortar settings. The online space is unique due to the level of instant interactivity which it facilitates, making it a key medium for sharing of ideas among consumers. Marketers cannot let fear of failure banish them to the sidelines or they risk becoming obsolete. Instead, they must accept digital media as a legitimate space and develop strong strategies to support and market their brand message online.

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