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How Luxury Brands Can Successfully Attract Millennials DISSERTATION Strategic Touchpoint Management: How Luxury Brands Can Successfully Attract Millennials DISSERTATION of the University of St. Gallen School of Management, Economics, Law, Social Sciences, and International Affairs to obtain the title of Doctor of Philosophy in Management submitted by Lara Haug From Germany Approved on the application of Prof. Dr. Sven Reinecke and Prof. Dr. Torsten Tomczak Dissertation no. 4949 Difo-Druck GmbH, Untersiemau 2020 The University of St.Gallen, School of Management, Economics, Law, Social Sciences and International Affairs hereby consents to the printing of the present dissertation, without hereby expressing any opinion on the views herein expressed. St.Gallen, October 25, 2019 The President: Prof. Dr. Thomas Bieger Abstract Recent years have brought a remarkable increase in possibilities for brands to get in touch with customers, driven especially by the rise of digital media. This has added significant complexity to the management of customer touchpoints. Brands are confronted with the challenge of deciding where to be present for what purpose and with which content. Furthermore, they need to adapt to changing customer preferences, predominantly driven by the customers of the Millennial cohort. Luxury brands are particularly exposed as they both aim to provide the best experience for their customers and face the risk of diffusion due to overexposure. Previous research has not sufficiently aided brands in coping with these new challenges of reaching and engaging Millennial customers and using opportunities to their advantage. Thus, the dissertation at hand explores the following research question: How can luxury brands strategically approach touchpoint management to successfully attract Millennials along the customer journey? To do so, I have first generated insights on what customer journeys for luxuries look like both from a brands’ perspective and a customers’ perspective. The first viewpoint shed light on how luxury brands constitute success for themselves along the journey. The latter analyzed what characterizes Millennial journeys and identified critical touchpoints. The comparison of the two views has resulted in nine insights for luxury brands to consider when serving Millennials. Second, I have taken a closer look at prevailing stereotypes of the Millennial cohort and extracted five luxury customer segments. Third, I have integrated the previous findings to derive a strategic approach for brands regarding how to successfully manage their touchpoints in a Millennial market, which I refer to as touchpoint strategies. Based on the developed insights, luxury brands should strategically manage five groups of touchpoints to successfully attract Millennials along the customer journey. They should put their primary focus on the critical touchpoints, which are split into the must-dos (WOM, brand website, predominant POS, staff, and product or stay) and the should-dos (social media and direct contact). Furthermore, they should strategically position themselves in four strategic touchpoint groups, namely: the attractor, exciter, engager, and facilitator touchpoints. In this way, they can adjust their touchpoint setup to different strategic goals, industry requirements, or target customer needs. By applying this touchpoint strategy concept, brands can respond to Millennials’ rather lengthy, distracted, diverse, and more digitally-oriented customer journeys. I Zusammenfassung In den vergangenen Jahren sind die Möglichkeiten, durch welche Marken mit Kunden in Kontakt treten können, merklich gestiegen; eine Entwicklung, welche besonders durch das Wachstum digitaler Medien beschleunigt wurde. Marken stehen hierdurch vor der Entscheidung, wo und warum sie mit welchen Inhalten präsent sein möchten. Zudem müssen sie auf Veränderungen der Kundenbedürfnisse reagieren, welche insbesondere durch Kunden der Generation der Millennials verstärkt werden. Für Luxusmarken stellen diese Entwicklungen eine besondere Herausforderung dar, da sie einerseits danach streben, ihren Kunden ein hervorragendes Einkaufserlebnis zu ermöglichen und andererseits stets dem Risiko einer zu hohen Marktpräsenz und somit einer Verwässerung ihres Markenbilds ausgesetzt sind. Da die existierende Forschung diese Thematik noch nicht ausreichend aufgegriffen hat, beschäftigt sich die vorliegende Dissertation mit der Forschungsfrage: Wie können Luxusmarken das Thema Kundenkontaktpunktmanagement strategisch angehen, um die Millennials auf ihrer gesamten Customer Journey erfolgreich für sich zu gewinnen? Hierzu wurde in einem ersten Schritt der Customer Journey von Luxuskunden sowohl von einer Marken-, als auch von einer Kundenperspektive beleuchtet. Die Markenperspektive beschäftigte sich insbesondere mit der Frage, wie der Markenerfolg entlang der Customer Journey definiert wird. Die Kundenperspektive analysierte Charakteristika der Millennial Journeys und identifizierte kritische Kontaktpunkte. Der Vergleich beider Perspektiven resultierte in Erkenntnissen, welche Luxusmarken bei der Interaktion mit Millennials beachten sollten. Ein zweiter Schritt beschäftigte sich mit vorherrschenden Stereotypen über Millennials und extrahierte fünf verschiedene Millennial Kundensegmente. Zuletzt wurden die Ergebnisse integriert, um einen strategischen Ansatz zum erfolgreichen Kundenkontaktpunktmanagement abzuleiten: das Konzept der Kundenkontaktpunktstrategien (Touchpoint Strategies). Die Erkenntnisse zeigen, dass Luxusmarken ihren strategischen Fokus auf fünf Touchpoint-Gruppen legen sollten, um erfolgreich Millennials anzuziehen. Die Basis einer erfolgreichen Touchpoint Strategie bildet die Gruppe der kritischen Touchpoints, welche sich in „must-dos“ und „should-dos“ unterteilen lässt. Zudem sollten Luxusmarken sich in vier strategischen Touchpoint Gruppen positionieren: Attractors, Exciters, Engagers, und Facilitators. Hierdurch können sie auf bestimmte strategische Ziele, Industriebesonderheiten oder zielgruppenspezifische Kundenbedürfnisse eingehen und auf die Charakteristika im Kaufverhalten der Milllennials reagieren. II Content List of Figures ....................................................................................................... VI List of Tables ....................................................................................................... VII Abbreviations ..................................................................................................... VIII 1 Introduction ........................................................................................................ 1 1.1 Setting and Problem Statement ..................................................................... 1 1.2 Objectives ...................................................................................................... 4 1.3 Outline ........................................................................................................... 5 2 Theoretical Background .................................................................................... 7 2.1 Touchpoints Strategies .................................................................................. 7 2.1.1 Touchpoints .......................................................................................... 7 2.1.2 Customer Journeys .............................................................................. 8 2.1.3 Customer Experience ......................................................................... 10 2.1.4 Touchpoint Strategies as an Integrative View ................................... 12 2.2 Luxury Brands ............................................................................................. 12 2.3 Millennials ................................................................................................... 14 2.4 Deducting the Research Objectives ............................................................. 15 2.4.1 Millennials and Luxury Brands ......................................................... 15 2.4.2 Touchpoint Strategies in a Millennial Market ................................... 17 2.4.3 Touchpoint Strategies for Luxury Brands.......................................... 18 2.4.4 Touchpoint Strategies for Luxury Brands in a Millennial Market .... 20 3 Research Approach .......................................................................................... 23 3.1 The Customer Journey for Luxuries – an Experts’ Point of View .............. 23 3.1.1 Research Design ................................................................................ 24 3.1.2 Sample and Data Collection .............................................................. 24 3.1.3 Data Analysis ..................................................................................... 26 3.2 The Customer Journey for Luxuries – a Millennials’ Point of View .......... 26 3.2.1 Research Design ................................................................................ 27 3.2.2 Sample and Data Collection .............................................................. 28 3.2.3 Data Analysis ..................................................................................... 31 3.3 The Millennial Cohort ................................................................................. 31 3.3.1 Research Design ................................................................................ 32 3.3.2 Sample and Data Collection .............................................................. 32 3.3.3 Data Analysis ....................................................................................
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