Abstract
Seeing the success of digital platforms and advancement, social media marketing has strengthened the relationship between buyer and seller from a mere commercial transaction to a personal connection. The outcomes of this interaction are meticulous, and like other industries, it has also revolutionised the luxury products industry. It has become pertinent for the luxury brands to participate in the online visibility for customer awareness, customer engagement, customer acquisition, and customer retention. Though certain challenges are there, there is a need to develop strategies to mitigate them for better positioning, building online trust and online value.
TopIntroduction
“Luxury is a necessity that begins where necessity ends.” Coco Chanel
Luxury is a state of one’s mind. It is something that is available to few but desired by many. It is something that is linked with one’s wealth, power, and status, among others. As per Tsai (2005), the motive for acquiring luxury brands is Buying to impress others. Luxury brands have created a market of their unique kind. In this brand-driven market, people buy the products due to the perception and popularity of the brand. Luxury can be a product to wear/carry; it can be the service that one experiences or can be the assets like cars, houses, and so on. Approximately luxury market is growing at 5% worldwide and becoming the preference or desire of each individual.
Earlier, this market was exclusive, but digitalization has made it possible to make the luxury market accessible to all. Increasing incomes, easy consumer credits, changing lifestyles, and so on have made luxury brands more affordable to a broader category of people across the world. Mostly, ultra-high net worth (UNHWI) and high net worth (HNWI) individuals like to purchase luxury brands, and this small segment is even less than one percent of the total world’s population. But due to the evolution of the luxury market, new generations are turned into more active, knowledgeable, and demanding. They are getting younger and diverse. They are writing the new rules of this industry. As a result, brands are behaving proactively to the customer’s needs and complaints. Luxury is not only about the high price, it’s all about the unique experience. The customers want an emotional attachment and trust while investing in these expensive brands. There are eight pillars of luxury brand marketing: pedigree, performance, public figures, paucity, placement, persona, pricing, and public relations (Arora, 2013). Out of these, paucity and performance are the most important (Dhaoui, 2014). Arora (2013) defined paucity as the perception of a brand’s scarcity and performance as its brand experience.
Due to the change in the segments of the luxury brands, the mode of targeting has been shifted from offline to online mode. Digitalization increases connectivity that allows access to anyone from anywhere. Brandt and Henning (2002) also stated that digitalization has made people communicate irrespective of time/pace and get exposed to worldwide knowledge. The customer is now not only using this digital channel for searching or downloading movies, photos, music, and so on, but he is engaging himself online by sharing, uploading his own views on different digital platforms. Being digital is the need of the hour for customers as well as for the brands. As per internet world stats Table 1, the total number of internet users in the world reached 4,949,868,338 as of 31st December-2020. China, India, and the US are the top countries in terms of internet users. Out of all world regions, Asia is having 51.8% [calculated as (Internet Users/World Internet users) * 100] of Internet World percentage, has 51.8% [calculated as (Internet Users/World Internet users) * 100] of Internet World percentage, which is much higher than other regions. The penetration rate in North America is 89.9% (calculated as (Internet users/ North America Population) * 100) which is highest compared to all regions. In Asia, China is at the top with 37.1% of internet users, India is holding the second rank by having 24.3% of internet users, Indonesia (7.4%), Japan (5.2%), Bangladesh (4.2%), Philippines (3.4%), Pakistan (3.1%), Vietnam (3%), Thailand (2.5%), South Korea (2.1%). It is found that 400 million people approximately from countries like Singapore, Indonesia, Malaysia, Vietnam, the Philippines, and Thailand came online for the first time in the year 2020. An increase in digital financial services, online health services, educational services, e-commerce sector, online health consultations, remote learning, and so on have contributed a lot to increasing Internet usage. As per a report by Livemint, India has the highest data usage per smartphone in the world, with consumption of over 11GB per month, and it is expected that it will rise to 18GB by 2024.
Key Terms in this Chapter
Luxury Brand: A luxury brand is a branded product or service that consumers perceive to be high quality; offers authentic value via desired benefits, whether functional or emotional; has a prestigious image within the market built on qualities such as artisanship, craftsmanship, or service quality.
Augmented Reality Applications: Augmented reality applications are a technology that superimposes a computer-generated image on a user's view of the physical world, thus providing a composite view.
Pseudo-Holographic Systems: Pseudo-holographic system allows object scenes of size up to 21.0 x 11.0 cm to be floating on air, and they can be observed by users from three of the four possible sides.
Virtual Try-On Technology (VOT): Virtual try-on technology enables customers to try products using their camera-equipped devices such as mobile phones. With the help of augmented reality, users may contextually visualize the item in which they are interested, interacting, and confirming the style, size, and fit before making a purchase.
Digital Gig Platform: The digital gig platform is an economic and social ecosystem facilitated by platforms. Such platforms are typically online sales or technology frameworks.
Algorithmic-Based Management: Algorithmic-based management is a diverse set of technological tools and techniques to remotely manage workforces, relying on data collection and surveillance of workers to enable automated or semi-automated decision-making.
Phygital Retail: The term “phygital” is the integration of digital technology (digital) with the personal communications with the consumers (physical), thereby bridging the gap between the two.