Abstract
Contemporary marketing strategies have shifted from unidirectional to bidirectional logic, according to which the rise of digitization and of social networks are changing the concept of marketing itself. The most impactful digital technologies have been digital platforms and brand communities, which have exposed companies and consumers alike to new challenges, such as online purchasing experiences. As a result, luxury retailers, who have traditionally resisted rapid adoption of market trends, have begun embracing digitization as part of their marketing strategies. This chapter highlights how understanding this topic is crucial amid changing global economics that are reshaping how luxury consumers interact with retailers. Through a qualitative approach based on semi-structured one-to-one interviews with experts from a leading digital marketing company, this chapter intends to illustrate the critical factors (and related opportunities) that luxury brands will look to exploit in the near future. The results highlight the pervading separation between digital technology and luxury brands.
TopIntroduction And Research Context
Internet expansion, digitization, and the development of social networks have disrupted the modern economy, prompting new digital business models focused on meeting the constantly evolving needs and expectations of new consumers (Teece, 2010; Wirtz, 2019). The number of people using the Internet increased by 7% between 2019 and 2020, with 5.19 billion unique mobile users and 3.80 billion people using social media on mobile devices (We Are Social, 2020). Readily available access to the web of tablets and smartphones (Bruggeman et al., 2019) has brought people into greater contact with digital media (Rathnayaka, 2018). Crucially, these changes are altering the very concept of marketing itself: marketing paradigms have shifted from Marketing 2.0, oriented exclusively to consumers and based on unidirectional logic, to Marketing 4.0, of which the development of digital technologies is the key driver (Kotler et al., 2010, 2017), to the extent that a re-conception of the figure of the consumer is required. Moreover, these technologies have exposed all companies to new challenges, such as how to adopt technological innovations to better understand and address consumers’ needs with respect to brand involvement, interactivity (Yu et al., 2017), and purchasing experiences in a digital context (Mosca & Chiaudano, 2020).
Digital technologies, innovations, and social media marketing activities have proliferated across the full spectrum of retail sectors (Alalwan et al., 2017; Jacobson et al., 2020)—even within the luxury sector, which has traditionally eschewed such advances (Godey et al., 2016; Kim & Ko, 2012). Such shifts have transformed the means of communicating and selling luxury brands, often transposing these activities into completely virtual contexts. This rapid growth has broad implications for companies, especially those in the luxury sector that have begun embracing digitization further redefined by technological advances in communications (Kapferer, 2015; Kim & Ko, 2012; Liu et al., 2019). However, according to Liu et al. (2019), from the perspective of accessibility and democratization, the use of digital technologies for retailing and marketing activities could conflict with the air of exclusivity that luxury brands work so hard to cultivate. In particular, luxury companies are concerned that they will be unable to guarantee key brand attributes such as quality, exclusivity, and tradition, which are considered crucial to their retail and digital marketing mix (Mosca & Giacosa, 2016; Mosca & Chiaudano, 2020). Moreover, luxury marketers have long been committed to designing a coherent luxury retail strategy that is capable of conferring uniqueness, a reputable image, and the perception of quality (Desmichel & Kocher, 2020; Kapferer & Bastien, 2012). Luxury brands must therefore strengthen their relationships with digital retail channels to offer new shopping experiences and secure their market-dominant positioning (Desmichel & Kocher, 2020; Tarnaud, 2019).
Key Terms in this Chapter
Luxury Brand: It is a brand characterized by a mix of specific features such as exclusivity, uniqueness, scarcity, premium price, excellent quality, and aesthetics.
Digital Communication: The set of marketing activities related to the promotion of a content (texts, images, videos, etc.) through the use of digital technologies such as PCs, tablets, satellites, smartphones.
Social media: Are interactive platforms where companies and customers can share information and contents about a brand or a product within the network.
Luxury: It is a large and lucrative sector serving as one of the most relevant engines of growth in many countries.
Digital Marketing: Refers to all those brand promoting activities and feature a powerful tool for building, consolidating, and maintaining brand awareness through one or more digital channels.
Smart Retail: New business models that allow retailers may achieve competitive advantages over their technologically lesser-integrated competitors, by enhance the customer shopping experience through the smart use of technologies for retailing purposes.
Digital Transformation: The capability of adopting new, fast, and frequently changing digital technology to solve problems, improve experiences of customers, employees, and companies.