Managing Integrated Brand Communication Strategies in the Online Era: New Marketing Frontiers for Luxury Goods

In recent years, luxury goods markets have faced significant changes that have influenced both the dynamics of the competition, which are daring players, as well as their strategies. The principal changes include the following: new geographical market development, such as in the Far East, India, and some parts of Africa (these countries are added to a list of already relevant countries that are involved in luxury goods consumption, such as the Emirates, Russia, and South America); new consumers are facing these luxury markets; there is diffusion of new media and new technologies in communication, which is characterized by a high degree of interaction; and the evolution of distribution channels is underway – these channels are moving toward new forms of integration that utilize both physical channels and digital ones. With respect to new markets and new consumer development, we are facing a situation where increasing numbers of consumers are interested in luxury goods consumption. These consumers are not completely educated about global brands, but they are looking for products that are able differentiate themselves and/or guarantee unique experiences. Luxury players have to understand the factors that affect people who are making purchasing decisions, and they also have to be aware of the dynamics that characterize consumers’ buying behaviors. Concerning the diffusion of new digital technologies, in recent years, the increasing importance of the digital channel and the globalization of markets has changed both consumers’ roles and the nature of the competitive landscape. This has forced firms to revise their strategies and implement multichannel marketing strategies to continue to operate in increasingly international markets that are characterized by increasingly more demanding and informed consumers. Recourse to a plurality of channels has proven to be a necessity for luxury goods, especially because digital platforms now constitute communication channels in their own right. From this standpoint, the digital channel serves as a medium that interacts with demand, and it further adopts a hybrid connotation: it can perform functions that are informative, transactional, and relational, and it alternately or simultaneously uses both physical and virtual contact modes. Based on this perspective, multichannel management policies can contribute significantly to establishing a brand’s loyalty of existing consumers while acquiring new market segments. Although luxury firms initially had some reservations about using the Web as a distribution channel – especially given that they did not think it would be able to reproduce customers’ experiences from the physical point of sale, and that it created distance from buyers with high spending power – in recent years, the opportunities offered by the digital channel have become clear and numerous. In this way, the logic underlying the development of the digital channel for luxury players is one of integration with the physical channel; it is not to be viewed as a standalone distribution channel, but as one that completes and complements the physical channel. The traditional store setting always plays a major role in the experience of buying luxury goods; however, the huge success of the digital channel has turned it into an inescapable channel for players in the market for high-symbolic-value goods. A Web strategy is thus essential for a luxury brand. The development of non-conventional marketing allows firms to engage with their consumers by focusing on the goal of transmitting the values of a specific brand through involvement, entertainment, and fun. Consumers become leading actors, and firms can develop measures of engagement, while taking advantage of word-of-mouth referrals, using both a proactive and dynamic approach. Analyzing the evolution of consumer behavior during the purchasing process is particularly important for manufacturers and distributors because the Internet now enables two-way communication flow, thus transforming the classic approach to communication, which was characterized by a lack of interaction. This digital channel has enabled firms to extend their market to new consumers who have different sociodemographic characteristics and are located in emerging countries. High-symbolic-value goods are traditionally considered incompatible with the digital channel; even today, some companies that maintain extreme brand positioning believe it inappropriate to develop distribution activities in the digital channel. Most luxury players have developed a direct presence in the digital space; this strategic distribution option has largely been successful. The digital channel is increasingly integrated with the activities of physical distribution, and this amalgamation makes it possible to enhance the consumer’s shopping experience, while also maintaining long-term relationships. The latest trend in brand development centers on the growing integration between UGC and the various distribution channels. Brand communication in luxury markets has undergone further development with social media marketing that has dovetailed into both the digital and physical distribution space. The consumer is ready, even in luxury markets, to receive information from a specific brand, to share that information, and to respond by liking the product and purchasing it in the digital or physical channel. This growing integration between distribution and effective communication (both online and offline) follows a circular approach, whereby information channels and their flows surround the consumer. This is one of the frontiers of marketing high-symbolic-value goods. Channel integration in markets for luxury goods lies, in practice, in the introduction of innovative technologies to points of sale, in the integration between two-way communication activities in social networks, and in the physical channel of distribution. With regard to the first path of integration, the use of technology in luxury-brand stores clearly helps intensify consumers’ feelings and stimulates their senses. New technologies make it possible to entertain customers, while enhancing the communication process. The variety of communication options available online allows firms to send messages that are tailored to capture the attention of consumers because they are able to reflect these buyers’ special interests and well-established habits. The Internet is thus a reliable medium to achieve this aim, and the effects of an online marketing campaign are easily traceable. Firms are now in a position to define and convey an offer in an integrated manner – that is, by using multichannel strategies. This involves developing a coordinated and comprehensive set of means and channels through which to reduce the gap between supply and demand. Ultimately, it is an approach to managing customer relationships that tends to overcome the logistics of using a single channel (typically, the physical channel), thanks to the progressive growth of the economic weight of the service sector and to the increasing use of electronics and digital networks, which make it possible to extend beyond the logistical limits imposed by traditional points of sale. Within this context, rapidly changing firms have reacted by adopting strategies that are focused on expanding their global presence. These firms have primarily developed hybrid distribution systems, both direct and indirect, but with increasing weight attributed to direct distribution. This growth not only pertains to the major global players in the luxury market, but also to medium-sized companies that have been able to establish themselves in global markets. These companies increase their attention to the use of the digital channel to market their products, as well as to integrate digital and physical distribution channels; this is a communication strategy that focuses on acquiring new consumers through social media. The three sections of the present book aim to document the principal tendencies described above, with particular attention paid to purchasing behaviors, the progressive interaction between distribution channels and social media, and the major developments in distribution activities.