At the end of the 1970's, the luxury industry was far from what it is recognised as today. Over a century ago, the majority of luxury good brands were established as “simple one-man or one-woman shops that sold beautiful hand-crafted pieces.” (Thomas, 2008) It is only in recent decades that great structural changes have been made to the industry, specifically as a result of the “shift from family-owned business to the constitution of large industry conglomerates like LVMH, PPR and Richemont.” (Hoffmann and Coste-Manière, 2012)
At the forefront of this shift, was Bernard Arnault. After taking control of the textile group Boussac in 1984, “Arnault used this foothold in the luxury business to begin building what would become the world's largest luxury conglomerate.” (Business of Fashion, 2017) By 1990, he proved successful in his aim to merge with LVMH Moët Hennessey Louis Vuitton - which at the time had “sales of about $3.65 billion (about €2.8 billion) with net profit of $621 million (about €480 million).” (Thomas, 2008) Shortly afterwards, Richemont and PPR -now known as Kering- would also break into the luxury market. It was at this point that the industry focus changed from craftsmanship to profit. (Contant, 2017)
With these new emerging luxury groups, came completely new business strategies. Previous to this, marketing had not existed within the luxury industry and as a result, “the luxury market has changed, almost beyond recognition.” (Coste-Manière, et al., 2012) Today the revenue of LVMH is an outstanding €37.6 billion with a net income of €3.98 billion. (Financial Times, 2017) The turnover for the entire industry sits at €249 billion and by 2020, this is forecasted to reach between €280 and €290 billion. (Contant, 2017)
Ultimately, “the luxury industry underwent a revolution with the arrival of marketing” (Coste-Manière, et al., 2012) and it is undoubtable that the introduction of these strategies have played a pivotal role to the exponential growth of the fashion luxury industry. However, Philip Kotler has identified the marketing mix as a series of components. These have traditionally been referred to as the 4P's, but which subsequently have grown to 7P's (Jackson and Shaw, 2001) making clear that there are a number of contributing factors that have allowed for the success of marketing strategies, and in turn, the industry. Thus, in order to understand and conclude the extent of which marketing communication strategies have contributed to this success, the most relevant elements of the marketing mix –promotion, people, place and product - must be analysed and compared in depth.
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Marketing Communication Strategies
The term ‘Marketing Communications' refers to the means by which a firm informs, persuades and reminds consumers about the brands that they sell. (Contant, 2017) These strategies fall within the promotion element of Kotler's marketing mix and therefore can include “a wide range of activity from product labels/tickets/packaging to image-based advertising/PR and in-store visual merchandising.” (Jackson and Shaw, 2001) It has been stated that “luxury and communication are consubstantial” (Kapferer, 2015) which highlights the fact that these strategies do have a part to play in the exponential success of the industry. However, in order to fully understand the extent of this role, each promotional activity must be assessed individually.
First of all, it is important to note that the communication strategies used within the luxury industry are fundamentally different to the methods that are normally used. (Kapferer, 2015) This is primarily due to the fact that the aim is not to sell a product, but to sell “an experience by relating it to the lifestyle constructs of consumers.” (Atwal and Williams, 2009) In order to achieve this, it is imperative that a strong set of core values or codes are encompassed within the identity of the brand.
A brand's identity is made up of its functional, rational and tangible elements, which include both appearance and personality. In addition to these two components is ‘Brand Essence', which is otherwise known as the set of core values that are central, timeless and clearly represent the brand. (Contant, 2017) According to J N Kapferer –Brand Specialist and creator of the Brand Identity Prism– there are nine essential factors in creating a luxury brand's signature: the creator of the brand; logotypes; a visual symbol alongside the logotypes; motif repetition; colour; visual communication of details; references to craftsmen; and a typical technique or style. (Kapferer, 2015) These are not only vital in creating brand awareness but also in communicating what the brand stands for and the dream they are looking to sell. It is their consistency that is key in enabling the brand to tell their story and in turn, evoke correlating emotions. (Turunen, 2017) It is the communication of this story that is crucial because “there is no luxury brand without storytelling.” (Kapferer, 2015)
Ultimately, the communication of a brand's identity is simply the foundation on which further communication strategies are built. Once the dream is established, luxury brands must continually reinforce it through various other marketing communication tools such as advertising, public relations and sponsorship. (Coste-Manière, et al., 2012) It is believed that a portion of the dream is carried within each product that is sold. This weakens the brand as a result, and means that the dream constantly needs to be recharged. This is the second role of communication, with the first being to create the dream. (Kapferer, 2015)
Advertising is a hugely significant marketing tool used to reinforce the identity and essence of a brand. Essentially, it is regular promotion that keeps the brand fresh and alive in the mind of the customer, (Newman and Atkinson, 2001) but, in order to ensure maximum effectiveness and influence, it is vital that every image used nurture's all of the brand imagery. (Kapferer, 2015)
In recent years, there has been dramatic changes made regarding advertisements for luxury brands. The communication channels for promotion have become increasingly more complex in the past decade, whereas “ten years ago, the landscape was much simpler with TV, Cinema, Outdoor, Print and Radio.” (Lowrey, quoted in Doran, 2015) In the past, magazines played a pivotal role in reinforcing a brand's identity and creating a sense of luxuriousness. However, there has been a definite decline within the print industry, due to an “economic downturn threatening the long-term survival of many magazines.” (Kansara, 2010) Significantly, consumers have now moved online.
In comparison to other sectors, the luxury industry has been slow to embrace digital marketing. This is primarily due to the fact that “luxury brands were unable to replicate the impact and quality of print or TV campaigns online.” (Ait Addi, quoted in Doran, 2015) It is the dream that a brand is aiming to sell that is key, and “luxury brands pride themselves on creating unique experiences for their clients … they needed time to extend this into their digital experience in the right way.” (Lowrey, quoted in Doran, 2015) Luxury brands have been developing innovative ways in which they can incorporate this, but this recent embrace of social media does poses new criticisms. It has been argued that this form of marketing lessens the exclusivity element, meaning “questions are asked about whether social media marketing is making brands approachable and non-exclusive.” (Turunen, 2017) Nevertheless, it is undeniable that the internet has allowed for the creation of a number of new communication channels. Thus, this has led to the creation of “the basic rule of luxury: Always communicate via the internet, but never sell on the internet.” (Kapferer, 2015)
Despite the importance of advertisement, -and now social media- this is no longer the most fundamental form of communication. Modern society requires a relationship to be built between the brand and consumer, and while the internet allows this to a certain extent, it has been claimed that “what matters … are press relations and public relations.” (Kapferer, 2015) Today, it is PR that is fundamental to marketing communications within the luxury industry.
Defined as “the supply, dissemination and management of information regarding an individual or a company to the public or press”, (Business of Fashion, 2017) PR can ensure a luxury brand is maintaining some element of exclusivity that, arguably, is lost through digital marketing. It is PR that allows for a focus to be placed on “'the right people' to give the brand ‘glamour' and thus enable the products to benefit from the halo it creates.” (Kapferer, 2015)
Contrary to general belief, “celebrities are used with caution in the luxury strategy” (Bastien, 2015) because it is indispensable that the attitude, actions and personality of the figure is coherent with the brand's core values. The dream must be conveyed correctly and identifying celebrities and brand ambassadors is “essentially a delicate matchmaking game” as they “bear the responsibility of promoting a brand's image and values.” (Shuang, 2015)
Within PR, Experiential Marketing is also highly influential. This term refers to “the engagement of consumers though their participation in brand events, such as exhibitions, shows, concerts and immersive retail experiences and entertainments.” (Business of Fashion, 2017) These events must also reflect and relate to the story of the brand - which is not always simple. (Kapferer, 2015) However, if done effectively, it will successfully take the “essence of a product and amplify it into a set of tangible, physical and interactive experiences that reinforce the offer. “(Atwal and Williams, 2009)
Therefore, PR enables a much more personalised experience for the consumer. This, in turn, will enhance the element of exclusivity and luxuriousness for the brand, while further reinforcing their identity. However, in addition to advertising and PR, there is also a role to be played by the physical surroundings in which the luxury products are sold.
The essence of a brand can not only be reinforced through traditional methods of communication, but also in the store. (Kapferer, 2015) This is largely down to the way in which each point of sale is presented. Ultimately, Visual Merchandising is the “'language of the store' – it how the retailer communicated with the customer through product images and presentations” (Ebster and Garaus, 2015) but within this “language”, there are four strategies that can be used by the brand: merchandising to manage; merchandising to seduce; merchandising to communicate; and merchandising to organise. (Corrons, 2017) In order to achieve maximum effectiveness, a brand must implement each of these strategies. However, it is ‘merchandising to communicate' that enables the introduction of the visual identity of the brand, as well as its values and positioning. Notably, this is what allows the concept of the store and its atmosphere to be conveyed.
There are various elements which contribute to this communication, including “store planning and design, store windows and floor displays, signage, space design, fixtures and hardware, decorative panels, and mannequins.” (Newman and Atkinson, 2001) It is specifically through these displays and designs that the identity of the brand can be conveyed, with a further emphasis being placed on the experience the brand is trying to sell. An effective merchandising strategy “can lead to even greater effects, achieved by directing shoppers' attention to specific products, triggering unplanned purchases, and establishing a uniform picture of the store.” (Ebster and Garaus, 2015) It is this coherent store image that allows for the reinforcement of the brand identity, which “often makes the point of different in the race for increased market share.” (Newman and Atkinson, 2001)
Therefore, it is clear: marketing communication strategies and promotion do play a very important part in contributing to the marketing success of the luxury sector. Ultimately, “what the brand says, and how it says it, is critical to evoking an impression of luxuriousness.” (Tururen, 2017) The identification of a brand's identity and their core values are fundamental in laying the foundations of a successful communication strategy because, in order to sell the dream, it is first required to identify this dream. Afterwards, reinforcements can be made through advertisements and social media, PR and visual merchandising. Each of these have a pivotal part to play in enhancing the experience that the brand is trying to sell and “whatever the channel or content, coherence and alignment wherever the brand is present and their fit with the brand's identity and story are key.” (Tururen, 2017) It has become evident that it is PR and Experiential Marketing that is most significant due to the fact it allows for the personalisation and sense of exclusivity that is so attractive within the luxury industry.
Despite this significance of all of the marketing communication strategies put in place, there are a number of other elements that contribute to Kotler's marketing mix. It is therefore important to continue to analyse the other relevant components before coming to a conclusion as to how effective these strategies are comparatively.
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