Who is the new ‘luxury’ customer in the Internet era?

Written by Lucas Noordhoorn

Who is the new ‘luxury customer’ in the Internet Era?

The more general question that will be addressed in this paper is: “Who is the new customer in the Internet era?”. I would like to limit the scope of my paper to the customers for luxury products in the Internet era.

The dominant part of the current literature is focused on the  managerial approach to the online presence of luxury products and brand, in other words: “What is the best way for companies to approach customers for luxury products?”. This paper aims to shed light on the questions: “Who are the people that purchase luxury goods online?”, “How do they behave?”, and “How is their behavior affected by companies?”.

The implications for companies will be addressed, but will not be the focal point of this paper.

What motivated me to write about this?

This paper takes a non-conventional way of approaching the topic of online luxury branding, in which it aims to make a meaningful contribution to the scientific literature. Both researchers and practitioners in this field can benefit from gaining a greater understanding of the customer.

My personal motivation lies in the fact that I am currently active as a professional in the field of luxury branding. Furthermore, I have devoted my previous master thesis to the topic of luxury branding (of which I have used parts in this paper). However, my  thesis was  written from the perspective of the company . I am very interested in gaining a greater understanding of the customer in this highly interesting market segment, and implementing the increased understanding subsequently.

Luxury branding from a customer-perspective

According to experts in the field of luxury branding their field of marketing is totally different from that of other specializations within the discipline (Pine & Gilmore, 1999).  The way of approaching brand strategy as a way to increase sales short-term does not coincide with the way in which a luxury brand strategist should approach the customer. The most prominent author with this view being Kapferer (Kapferer & Bastien, 2009) in his clear distinction of the specialization of luxury branding.

What we are particularly interested in here is what makes this illusive customer so different and how does he behave in the internet era. 

The luxury consumer is according to the literature highly motivated in their purchasing behavior by the brand authenticity of luxury brands which allows them to distinguish themselves from others (Beverland, 2004; Kapferer & Bastien, 2009; Pine and Gilmore 1999).

“The primary functionality of the product might not be superior to other brands, yet authenticity is vital to its success” (Pine and Gilmore 1999)

This form of self-expression (Beverland, 2004) through purchasing behavior can thus be viewed as the primary motivating factor for luxury consumers and gives us insight in the question: “who is this new customer?”

The luxury consumer as such is ought to be viewed keeping implications concerning the internet era in mind. Actually this is the point where the conversation becomes rather fascinating since several fields of research are combined. In an ‘offline world’ where luxury products are only purchasable and researchable in brick-and-mortar stores, the determination of what constitutes as authentic and what does not is influenced by a large number of factors that are subject to analysis by the customer as soon as they enter the store.  The online world gives a lot of new options to the brand, which can be positive, but certainly creates a number of challenges (Bellman et al., 2006).The ‘online world’ is quite a bit different. It is not possible for a customer to fully utilize its senses like in the normal store. In fact, the impression that is made online is aimed at evoking the same emotion where “exclusivity and desire [being]are contrary to the nature of the ‘classless internet world’” (Okonkwo, 2009) .

So this new luxury consumer does not wish to be asked what their demands or desires are, in fact they would like the luxury brands to tell them what to purchase. This might mostly be a subconscious process, but “equality with one’s clients should be avoided” (Kapferer & Bastien, 2009).

But if authenticity, exclusivity and inequality are the key factors the luxury consumer looks for, this consumer will want the same in an online environment. Arguably, the brands that transfer these key factors into the internet era will be most successful. “[c]Creating synergies among meaning, perception, consumption and brand loyalty” (Noordhoorn, 2012) is what ought to create a well balanced image of the brand (Joachimsthaler and Aaker, 1997). This combination ought to cater to the emotional, sensory, cognitive and relational values that the consumer connects to luxury products. Which is enhanced by the fact that luxury purchases are given their extravagant nature by definition irrational decisions (Kapferer & Bastien, 2009).The “enhancement of a seamless total experience for consumers” in this manner will ultimately lead to “competitive edges” which influence the consumer in its decision making process (Tsai, 2005).Further on the relevant parts of a previously conducted interview with Patrick Hanlon will be addressed in order to gain additional insight into what moves the luxury consumer. Patrick Hanlon is the author of the book Primal Branding ‘creating zealots for your brand’ (Hanlon, 2006).

When considering the value luxury customers attribute to exclusivity of luxury products, the reservations luxury brands have when increasing their online exposure is not surprising. What is referred to as the before mentioned ‘classless internet world’ (Okonkwo, 2009)  is exactly what drives this reluctance. Creating a strong online presence that reflects the brand message that coincides with the products is a difficult task, but an unavoidable hurdle (Harris, Dennis, 2002) Communicating a level of legitimacy for the luxury that is part of the customer promise is critical (Barwise and Meehan, 2010). The country of origin effect can therefore have an impact on the perception of the consumer concerning the luxuriousness of a brand (Aiello et al., 2009).

The segmentation strategy that is required when brand strategy is aimed at influencing purchasing behavior of luxury consumers, specifically targets a particular online segment of the market. Experience profiles and demographic profiling are tools that can be used to reach such goals (Aljukhadar and Senecal, 2011).

“potential benefits to be gained far outweigh the resource implications required to implement a successful segmentation approach” (Quinn, 2009, p. 254)

How does this translate to practice?

Interview With Patrick Hanlon

Patrick Hanlon, the author of ‘Primal branding’ – which describes a refreshing view on the creation of brands – was asked by me to share his insight on the role of ‘luxury consumers’ in an online environment. The interview was conducted through e-mail correspondence.

“He started off by saying that the first thing about Luxury brands is quality. Quality manufacture, design, or process necessitates a higher price. Secondly Luxury brands seize upon an "icon" that distinguishes and differentiates them. Icons are not merely logos like the Burberry plaid or Louis Vuitton crest; they engage any (or all) of the five senses: sight, touch, feel, taste, sound. He continued by mentioning what are the functional aspects of Luxury in his opinion. “The emotional aspects are much more complex and involving [importance of emotion as mentioned before deemed important by Kapferer and Bastien]. Again, they engage any (or all) of the five senses: sight, touch, feel, taste, sound”, “but they also involve layers of emotion, memories, moments, experiences, engagements, planned and unplanned encounters that lodge in our brain stem and make such purchases totally, completely, passionately "worth it"” [again, emotional determination of the value of a purchase].  Hanlon stated that truly resonant Luxury brands then provide layers of mythos: “beginning with a creation story, ritual, positioning themselves against other designers and the lower castes of the fashion world--what they are not and would never become (nonbelievers)” [emphasizing on a clear segmentation of the market]. The layers that he described propel these brands into becoming stronger and more robust according to Hanlon. “They create rich narratives about themselves that create community and transport them from design fad to fashion brands”.” (Noordhoorn, 2012)

Through this interview it has become apparent that the level of emotional involvement that a luxury consumer demands from a brand goes far beyond that of an ‘ordinary’ brand, which needs to deliver on a more functionality based brand- and product promise.

A real-life example of a luxury brand

The following best practice case is a way of illustrating the practical implementation of an online brand strategy which shows a true understanding of the  luxury consumer.

Ermenegildo Zegna is a world renowned designer of luxurious fashion for men. The brand strategists and web designers have tried to create website to which the consumer segment which they have targeted can relate. A clear understanding of the consumer shows in the way the site has been designed. Particularly focussing on men with a very high income who enjoy true craftsmanship and design of these products.

Figure one shows the homepage of the Zegna website. Immediately the visitor is approached in an almost personal way, asking whether they would like to be kept informed. A newsletter – if it does not become ‘spam-like’ – can certainly be used to establish a greater sense of an enhanced experience for the customer (Tsai, 2005), as mentioned before.

Figure one shows the homepage of the Zegna website. Immediately the visitor is approached in an almost personal way, asking whether they would like to be kept informed. A newsletter – if it does not become ‘spam-like’ – can certainly be used to establish a greater sense of an enhanced experience for the customer (Tsai, 2005), as mentioned before.

Figure two shows the extremely ‘clean’ layout of the website. The approach that has been taken shows an understanding of the chosen consumer segment, since a very clear presentation of the products with beautifully taken professional pictures is exactly what one would expect this customer is looking for. 

Figure two shows the extremely ‘clean’ layout of the website. The approach that has been taken shows an understanding of the chosen consumer segment, since a very clear presentation of the products with beautifully taken professional pictures is exactly what one would expect this customer is looking for. 

What the website does very well is show the manner in which the customer can use these products in their desires of self-expression (Beverland, 2004). The internet might be a classless medium (Okonkwo, 2009) , but at Zegna they have certainly succeeded in overcoming this hurdle (Bellman et al., 2006).

A very important point of critique however is the complete lack of what Patrick Hanlon formulated as follows in the interview I conducted:

“beginning with a creation story, ritual, positioning themselves against other designers and the lower castes of the fashion world--what they are not and would never become (nonbelievers)” (Hanlon, P. in Noordhoorn, 2012)

The creation story, rituals or even a clear positioning against other brands seems to be missing from the website. In particular the first two are extremely important in fully convincing the customer of the fact that the craftsmanship and design are of the highest possible standard and that it is in line with a long tradition of tailors. The company is family owned and was founded in 1910, currently run by the fourth(!) generation of the Zegna tailors. All of this information is nowhere to be found on the website, as is the emphasis on Italian pride and heritage.

What are the lessons learnt?

In conclusion we can say truly understanding who one’s customer is and what moves them is essential in luxury brand strategy. Perhaps the team that has created the Ermenegildo Zegna website found out that their market segment had a complete disregard for the brand narrative and its creation story, in which case their approach seems fitting.

Personally I would have to agree with the literature – in particular Kapferer and the like – who stress the importance of emotional involvement induced by the brand. Although this has been attempted, it has definitely not been done sufficiently in the case of Zegna.

As mentioned before, Patrick Hanlon formulated the need for customers to become ‘believers’ by use of rituals and a creation story. I believe that if luxury brands start understanding their customers’ need for this, they will become more successful.

 

 

Bibliography 

Aiello, G. et al.. An international perspective on luxury brand and country-of-origin effect. Journal of Brand Management, Mar2009, Vol. 16 Issue 5/6, p323-337.

Barwise, P. and Meehan, S. 2010. The one thing you must get right when building a brand. Harvard Business Review, Dec. 2010.

Bellman, s. et al., Designing marketplaces of the artificial with consumers in mind: four approaches to understanding consumer behavior in electronic environments. Journal of interactive marketing volume 20 Nos. 1, pp. 21-33. 2006.

Beverland, M. (2009). Building Brand Authenticity: 7Habits of Iconic Brands . New York, NY. Palgrave Macmillan.

Harris, , and Dennis. Marketing the E-Business. New York: Routledge, 2002. Available at: Google Books books google.com [accessed 14 January 2011]

Joachimsthaler and Aaker, 1997. Building brands without mass media. Harvard Business Review, Jan.-Feb. 1997.

Muhammad Aljukhadar, Sylvain Senecal, (2011),"Segmenting the online consumer market", Marketing Intelligence & Planning, Vol. 29 Iss: 4 pp. 421 - 435

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Noordhoorn, L., (2012),  Key drivers and impediments in creating an online based luxury fashion brand,  A case study in newly created luxury fashion brands. Master Thesis school of economics and management – department of business administration, Lund University. Non published. 

Okonkwo, Uché. Sustaining the luxury brand on the internet. Journal of Brand Management, Mar2009, Vol. 16 Issue 5/6, p302-310 

Pine , B . J . and Gilmore , J . H . ( 1999 ) The Experience Economy . Boston, MA: Harvard Business School Press. Kapferer & Bastien, 2009 

Quinn, L. (2009), “Market segmentation in managerial practice: a qualitative examination”, Journal of Marketing Management, Vol. 25 Nos 3/4, pp. 253-72.

Tsai , S . ( 2005 ) Impact of personal orientation on luxury-brand purchase value . International Journal of Market Research 47 (4) : 427 – 452.

 

Other sources

Patrick Hanlon, 2012, Interview

www.zegna.com

 

Figures

Figure 1 Homepage Zegna Newsletter

Figure 1 Zegna collection Photograph