Consumer behavior is continuously evolving, and with it, so is the business of luxury. Besides other societal and economic changes, digital technology and social networks have affected how people search for information, buy products, and relate to luxury brands. As a growing number of people use social networks, an abundance of social data can be analyzed to detect shifts in perception and behaviors, generating insights that can benefit luxury brands. There is a need for theoretical conceptualizations and, based on these, strategy frameworks to help identify relevant sources of social data and derive actionable insights by using social media intelligence in a strategic, structured, and impact-oriented manner. With their conceptual study, the authors aim to close this gap and contribute towards marketing management literature by proposing a conceptual social listening framework. Their framework highlights the benefits of using social data and explains the basic steps of turning data into valuable insights that drive managerial action based on relevant theory and technology.
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The changing global luxury landscape, new competitive dynamics, and rapidly evolving consumer behavior require luxury companies to listen closely to their current and future clientele. Luxury brands must evaluate new ways of studying emerging interests, needs, and preferences to adapt and better connect with their target audiences. This chapter presents a comprehensive framework of the most essential, and frequently overlooked, social data sources and corresponding social listening methods. The framework addresses the disconnect between observed consumer behavior and social data in current marketing theory. It will enable marketers to improve their decision-making processes by applying a more customer-centric approach to their overall marketing strategies. The authors address luxury business pivots - major directional changes in dealing with luxury brands - and show how social listening can provide valuable insights.
The proposed framework is based on relevant theory and the use of social media analytics software. It supports marketers in understanding the possibilities of social listening and helps them identify the changes they need to make to their digital marketing strategies through insights derived from social data related to the brand.
In their framework, the authors structure and explain the attributes of social data and the benefits that can be gained from it. They propose analytical tools to connect with consumers on a deeper level and to improve decision-making that is driven by data. While social data is nothing new to practitioners and researchers seeking to understand consumers’ online behavior, the business intelligence available has changed, and related software has dramatically improved along with the ever-growing amount of digital data. However, a gap still exists between data gathering and analysis and, ultimately, marketing decision-making. This is shown by the amount of social data still untapped by luxury companies. According to Forrester, “between 60% and 73% of all data within an enterprise goes unused for analytics” (Gualtieri, 2016, p.1).
Background
Digital transformation presents the world of luxury with new challenges but also countless opportunities. In the beginning, the luxury industry was relatively slow to make use of digital channels. In contrast to the phenomenon of luxury, which can be traced back thousands of years, digitalization is a phenomenon of modern times. It is emblematic of a continuous and accelerating change process that links both the economy and society through information technologies (Laudon, Laudon, & Schoder, 2016, p. 73). The intelligent linking and automation of systems and processes and the smart use of the growing amount of data available make it possible to create new business models or adapt existing business practices, provided a company builds the necessary capabilities to derive relevant insight. Digital value creation processes generate new sources of income and promote new forms of interaction with customers, enabling companies to achieve competitive advantage through data know-how (Bundesministerium für Wirtschaft und Energie, 2015, p. 3).
Technology, however, is only one part of the equation. The value of big data is only as good as a company's ability to gather, structure, and analyze the relevant data, combine it with other, non-digital information, and finally extract actionable insights. This ability affects the way the company interacts with its customers, the control it has over the brand image, and even its corporate culture (Duma, Labati, Brunetti, & Gadgil, 2020). Luxury companies are increasingly forced to transform from a closed entity mode to an ecosystem and network mode, in which the company has to rely on external partners to keep up with the accelerating speed at which its surroundings change (Achille et al., 2013). To succeed, luxury companies need to focus on understanding their audience better through social data, developing the related knowledge and skills, and on integrating tools, processes, and strategies to make most of the sheer mass of information available to them.
To place their research into a larger context - contemporary luxury business and the drivers behind major behavioral shifts - the authors looked at substantial disruptions in the luxury market: the democratization of luxury and the role of social networks, the accessibility of luxury products online, and the digital push on both the supply and the demand side of the luxury market, which seems to have intensified.