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Applied Project Proposal APRJ -699 Laura Patterson Luxury Fashion Brands and the Internet Word Count: 17, 050 January 22, 2012 Gord Sorli Patterson 2 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. Patterson 3 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
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