Online Advertising Strategy for Luxury Brands - Dissertation Example

? How Advertising Strategy for Luxury Brand Changing To Take Account of Using Internet for s Contents Contents 2 Introduction 3 Literature Review 4 Research Questions 7 Research Aims and Objectives 8 Aims and Objectives 8 Data to be gathered 9 Milestones and Limitations 11 References 13 Introduction Globalisation and technology are the two aspects that have changed the business strategies of organizations in the present century. Globalisation has ensured that every organization reaches out to lucrative markets that have intensified the level of competition among the market players (Hausmann et.al, 2000, p.114). Technology has also opened up new channels with internet revolutionising the day to day lives of individuals. Internet marketing has transformed the business model of companies from traditional brick model to the bricks and clicks model (Pinterits, 2009, p.22). The present study would analyse the aspect of the changing nature of advertising strategies in the event of the emergence of internet and online marketing channel. The research assumes significance considering the huge reach and popularity of internet among the target market audience. According to a report published by Morgan Stanley the total number of internet users in India numbered about 1.8 billion users that represent a growth rate of 21 percent on a year on year basis. The report also shows that about 18.8 thousand minutes were spent browsing on the internet. Geographically, China followed by USA, India, Brazil and Russia have the largest percentage of the so called ‘netizens’. These figures are itself an indicative of the size of the target market that can be targeted by using internet marketing. The emergence of technologies like 3G, and advanced devices such as iPad have also accentuated the importance of internet as a medium for communicating the intended message about a product or service to the consumers (Morgan Stanley, 2010, p.6-7). Data collected from IMRG International also shows that the total business through e-commerce has reached 591 billion Euros showing a mind boggling growth rate of 25 percent over its previous year. The findings also show that the numbers are expected to double their value by 2013 making internet and e-commerce an ideal business platform for business organizations (IMRG, 2011). One of the reasons for the importance of online channel is the popularity of internet and its boundary less feature that has made the world a global village. Part of this has also been responsible due to the immense popularity of social networking sites like Facebook and Twitter as well as sites like you tube that are extremely popular among the target market audience (Weening, 2011, p.4). The luxury goods industry is also expected to have a very deep relationship with e-commerce and internet marketing. A research report shows that most of the consumer segments for the luxury brand category are essentially net savvy and are influenced by internet marketing. The report also quotes the Chinese market that is considered to be one of the largest markets for luxury brands as an example to show the importance of internet marketing in case of luxury brands (The Levin Institute, 2011). A research report conducted by KPMG also shows that internet has been one of the factors that has been responsible for the growth of luxury brands especially in nations like India and China where the spirit of Westernisation and luxury brands have been propagated using the internet (Schwarz & Wong, 2006, p.31). These findings provide a sufficient reasoning behind analysing the topic of present study as internet marketing can help shape up the business prospects and fuel growth of the luxury brands in the market. Literature Review The advertising strategies for commodities pertaining to the luxury class would certainly differ from normal day to day use products. Anderson and Vincze (2006) state in this regard that advertising activities in relation to luxury products endeavour to focus more on making the product exclusive to the public eyes. Thus in order to reflect the exclusiveness of the product the marketing and advertising campaign in relation to such products proceeds to tie up the product image with other events like sports and also in relation to other popular luxury brands. In regards to an example it is found that how Ferrari the luxury car company in order to highlight its new models have increasingly tied up such with leading jewellery brands. Moreover in another advertising strategy using the help of billboards the company tends to reflect the new launches upon a shinning silver background. Such billboards are planted in highly popular places to attract large number of viewers. To enhance the exclusiveness of the luxury brand the marketers also tend to focus on selected target audiences rather than going over investing on mass market advertisements. This focus on selective markets helps in creating a niche market which would thereby help in enhancing the sales of the product (Anderson and Vincze, 2006, p.423). Luxury Brands like other common brands also was found to take resort to the use of print and visual media for the advertising of their products. However Shay (2008) observes that the luxury brands in order to gain a more exclusive sphere in the consumer’s eyes carved out a more strategic approach while tending to advertise via the print media. In that respect the luxury brands which took the help of travelling and other classifieds columns to advertise their product was found to move away from such pages to news columns. Moving away from the classifieds and travel sections to the news sections helped to render a more exclusive outlook to the luxury brands which would be mainly purchased by a niche group of consumers. This strategy helped the luxury brands carve out a niche consumer profile which would earnestly fetch the high priced products (Shay, 2008, p.459). With the advent of internet as a communication medium the advertising strategies for luxury products have undergone sea changes. Okonkwo (2007) states in this regard that the emergence of globalism has largely enhanced the consumerist actions in tending to choose between a large numbers of options. Several companies are found to use the internet as a global medium to help in gaining large number of markets along the global sphere to help in the effective marketing of its products. In the like manner the luxury brand companies are also found to gain the use of internet for helping in the enhancement of the brand concepts among other luxury brands and also in relation to several non luxury and non-branded products. The luxury brands are thus found to increasingly compete along the internet sphere in endeavouring to gain a more enhanced market through spontaneous promotion of its quality and product offerings. The luxury marketers tend to spend in a large manner in gaining an increased market in the internet paradigm and thereby demand a huge return on the investment made in such. Thus luxury brand marketers through the use of internet tend to enhance the position of their brands amongst other brands as they endeavour to gain new markets in developing countries. Countries like China and Russia thus became the growing markets for the luxury products which were previously marketed in regions like United States and United Kingdom. These markets hungry for the use of westernised products gradually helped the brands in gaining a more profitable and large market space (Okonkwo, 2007, p.35-37). The luxury brand marketers in order to compete with other existing luxury brands in the same industry started devising new and effective strategies along the internet sphere. Tungate (2008) observes that luxury brands like Armani, Gucci, Louis Vuitton and others focused on enhancing the strategic marketing to enhance their brand via the internet sphere. Armani is noticed to take the help of outsourcing players like Yoox to design the web page for the garment brand. The outsourcer firm helped in creating two and three dimensional planes in the web to help create a virtual sphere for helping the consumers choose among a large number of options. Louis Vuitton and Ogilvy and Mather operating on the luxury platform of rendering fashionable accessories to the consumers started working on the internet sphere using live models like politicians and celebrities possessing such products. This strategy helped in gaining the minds of the consumers in a prolific manner who was interested in gaining products owned by popular persons. Luxury brands through the above effects focused on gaining greater market size in both the new and existing markets (Tungate, 2008, p.202). Research Questions The paper in question operates mainly based on two research questions which can be stated as follows. Case 1: What were the factors which contributed in the shift of advertising campaigns of luxury brands from conventional modes to internet based marketing strategies? In the first case the paper endeavours to understand the reason for the need of shifting of the advertising activities pertaining to luxury brands from the conventional modes of print and television media to advertising via the online sphere. Herein the paper would endeavour to reflect on the changes in consumer behaviour and psychologies which prompted such shift. Case 2: What are the different competitive strategies taken by the luxury marketers to position their product higher in the brand hierarchy while tending to advertise via the internet plane? In the second case the research paper further divulges to understand the various strategies which the luxury brand can take to market its produces amidst the various competitors in the luxury world. In this regard various competitive strategies of the luxury marketers via the internet plane would be reflected in the paper which would help them gain an enhanced sphere in the global markets. The paper in turn would help us to get a more refined understanding as to the inferences drawn in answering the two research questions duly formulated. Research Aims and Objectives This section would first focus on outlining the specific aims and objectives on which the paper would be formulated for answering the research questions thus framed above. It would then ponder upon the mode through which the analysis would be conducted and the key focus areas along with considerable limitations. The last part would thus reflect on the parameters of success and failure of the research conducted. Aims and Objectives Aims The main aim of the paper is to understand and highlight the factors which required the shift of advertising activities of the luxury brands from the conventional and traditional modes to sophisticated internet based mediums. Moreover the paper also aims in understanding the several strategic and competitive wars carried out by the luxury marketers while marketing their products via the internet sphere. Objectives Focusing on the aims the specific objectives of the paper can be underlined as follows. 1. To find out the factors that required the need to shift from traditional advertising modes to internet based marketing. 2. To find out the different strategies that the fashion brands ought to take to increasingly compete against other fashion brands in the same industry. Data to be gathered The data needed for gathering inferences to the research questions would be gathered from secondary sources. The use of secondary sources is recommended for the paper for it helps in the accessibility of large amount of authentic information which is again retrieved in a cost effective manner. Use of secondary research also serves as a background for future primary researches to be conducted on the topic (Webb, 2002, p.30). Case 1 In regards to understanding the need for internet to advertise the luxury brand concept it is found that of age internet has now become a global medium for multi-channel retailing which helps the luxury brands to render large number of services to the consumers from under one umbrella. This concept has helped the companies to advertise products, gain a platform for new launches and extend enhanced consumer services. This helps in enhancing the brand concept for the product (Okonkwo, 2010, p.21-25). The luxury branded companies in order to capture the minds of the people in an extensive fashion shifted the focus to internet based advertisements. Such advertisements helped the companies in designing attractive web pages based on two or three dimensional technology which was not possible in the case of traditional advertisements. Further with the rise in social networking the use of internet was taken by the luxury brands as an effective communication and selling platform (Yus, 2011, p.86-87; Cubitt, 1998, p.135). The internet based marketing and advertising activities are seen by the luxury brand and other branded retailers as a cost effective medium in reaching to large consumer masses to spread their brand message and also to reflect new launches. In print advertisements the incorporation of colours require additional cost which in regards to online advertisements becomes included with the web designing cost. Further small luxury branded companies can also use the web pages of bigger brands to enhance their brand dimensions (Chevalier and Mazzalovo, 2008, p.276; Dillon, 2009, p.194). The use of internet as a communication medium for advertising the luxury brands has in fact been able to carve out a different style statement. Moreover the incorporation of effective technologies along the web sphere has helped in understanding the frequency in which people tend to visit the site through their cell phones or other internet based tools (Davis and Baldwin, 2006, p.178-179; Information Gatekeepers Inc., 2007, p.18). Case 2 In regards to the second case it is found that luxury brands like Louis Vuitton in order to grab a larger market for its luxury products like bags and ladies accessories tends to render large amount of investments in regards to promotional activities along the internet sphere. Such large scale investments is made by the company to compete against its competitors like Prada and Gucci among others and thereby helped the company augment the sales revenues and gain an increased market share (Cravens and Piercy, 2009, p. 339; Julier, 2007, p.151). The luxury product retailers while operating based on the internet paradigm focus on rendering value additions to the services like enhancing the consumer relationship aspects and also in generating online payment modes. Such aspects help one luxury brand to increasingly compete with another luxury brand in the same sphere. However consumers are found to visit the sites of popular and trusted brands more frequently than for other brands (Seringhaus, 2002, p.14-18; Okazaki, 2011, p.186). The use of internet as a sales medium by the luxury retail companies has helped in cultivating better relationships. With the creation of virtual stores and addition of music and colouring effects has helped in enhancing the competitiveness of the different brands along the internet medium to excite emotions in the minds of the consumers (Kapferer, 2008, p.448; Shapiro, 1997, p.22). Above outlined are the different aspects both in regards to Case 1 and 2 upon which data needs to be gathered and elucidated in regards to the thesis paper. Milestones and Limitations Milestones The paper in question endeavours to achieve certain milestones in the course of conducting the above research. It is found that firstly the paper earns success in arriving at effective inferences on why the luxury brands have shifted from the domain of conservative and traditional advertisements to internet based advertisements. It reflects on the several advantages earned by the companies in such respect. The second milestone reflects inferences drawn as to the competitive strategies and potential gained by the luxury companies over each other while advertising via the internet. Herein the several strategic configurations based on colour, sight and sound is reflected. Limitations The paper however suffers from a serious limitation. It fails to reflect the several electronic and other threats while endeavouring to trade via the internet sphere. Again the paper also does not reflect as to the mode through which the rate of consumer visits would be measured in regards to the web pages of the companies. References Anderson, C., and Vincze, J. (2006). Strategic Marketing (2Nd Ed.). 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