Marketing Heritage and Digital Innovation an Apparent Contradiction - Essay Example

? MARKETING HERITAGE AND DIGITAL INNOVATION – AN APPARENT CONTRADICTION TABLE OF CONTENTS Introduction……………………………………………………..4 2. Heritage Marketing……………………………………………..4 3. Product Differentiation…………………………………………5 3.1 Horizontal Product Differentiation………………..5 3.2 Vertical Product Differentiation…………………...6 4. Extent Of Product Differentiation In Luxury Branding……..6 5. Challenges…………………………………………………………6 5.1 High Quality Products and Services………………..7 5.2 Innovation………………………………………….....7 5.3 Product Market Rivalry……………………………..7 5.4 Heritage may Peak Early…………………………….8 5.5 Using Technology to Move into Emerging Markets..8 5.6 The Case of Louis Vuitton…………………………...8 6. Winning Strategies and Forecasts For The Future……………..8 7. The Advantage of Technology Based Innovation……………….9 8. Conclusion………………………………………………………...11 9. References…………………………………………………………12 Abstract Marketing heritage is an emerging concept in the marketing field which is based on the historical status of the older companies and it is explicitly linked to the brand identity and the consumer appeal. In the competitive global market, innovative technology based new marketing strategies, marketing tools and internet based social marketing theories are getting popular and at the same time, the intangible or symbolic brand image or heritage should be preserved for the brand which is promoted online. In the paper below, we will discuss how product differentiation takes place by selling a concept of luxury brand through its historical and cultural heritage, using the innovative tools of marketing. The paper explains the factors which are responsible for product differentiation in luxury brand, the significance and impact of marketing heritage and the challenges faced by these heritage brands in the changing scenarios of technological advancements, where the marketing is based on both online and offline methodologies. 1. Introduction Marketing is mainly about planning and executing concepts, pricing, distribution of ideas, services, goods and promotion of products to create exchanges which can satisfy individual and organizational objectives (Cooper & Madden, 1993). Marketing studies have confirmed a positive connection between a firm’s performance and market orientation (e.g., Jaworski and Kohli 1993; Matsuno, Mentzer, and Ozsomer 2002; Narver and Slater 1990; Slater and Narver 1994). Luxury brands are known for premium quality craftsmanship, style, uniqueness and global reputation (Nueno & Quelch, 1998) and consumers buy luxury brands for symbolic reasons to reflect their status and social goals (Wilcox et al., 2009). Luxury brands can have the low ratio of functionality utility to price and high ratio of intangible utility to price (Nueno & Quelch, 1998) and it possess dimensions which have conspicuous value, unique value, social value and perceived hedonic value (Vigneron & Johnson, 1999). The consumer perception of luxury brands are not common across the market segment as the luxury brands are subjective concepts (Phau & Prendergast, 2000) which depends on the consumer perception of indulgent value, price and functional value. 2. Heritage Marketing Heritage is considered to be a valuable tool for luxury brand as it is viewed in its history but it is also assumed that it inhibits innovation, renewals and restricts the ability to redefine position and strengthen brands in emerging brands. To enhance the importance of brand in contemporary context, the brand must have heritage, not interchangeable with the history but as the symbol which represents the emotional response which can be utilized in the contemporary contexts. Urde, Greyser and Balmer explained the strategy as the following - An historical view may come from the past and corporate heritage embraces three timeframes - past, present and future. The brand may be distinctive which has traits which can come with meaning and value which can benefit the brand of today and tomorrow as it was found in previous centuries or decades. In such cases, the brand’s tradition should create respect for the present and the value should be invested in the brand and should also be extracted from it. Heritage brand can be about the history and it can also be about history in making (Urde et al., 2007, p.7). Luxury brands are defined as the brands which have been constantly been able to justify high prices. If we consider automobiles, a Jaguar is a tangibly stronger brand as compared to Porsche which is fast and expensive but not a luxury brand. Bentley is an expensive brand but is not termed as luxury brand instead it is prestigious brand. The judgment in case of luxury brands is effectively fine for addiction and admiration for the product or the lifestyle. Luxury brand must have a story which involves their past history or how they grew from a scratch (Kapferer & Bastien, 2009) to promote emotional connection with the buyers and “heritage” helps to create the benefit over competition to enhance authenticity for a brand and promote consumer relationship (Urde, Greyser & Balmer, 2007). The feeling of trust is high in heritage brand (Urde et al., 2007) as it creates the brand stature which is measured through consumer respect, knowledge, familiarity and esteem (Keller, 2009). A brand leader should be strong in various categories to make use of heritage. 3. Product Differentiation Product differentiation mainly refers to the variation in the same product in style or brand and it provides market power to the seller. There are two strategies of product differentiation - 1. Firstly, product specific strategies where the marketing is based on target market 2. Second when the customer is ready to pay the price which can cover the seller cost. Product specific differentiation is based on sight, smell, touch, taste, textures, functionality, brands labels and customer loyalty. Differentiation can also be production practices based or location based. It can be implemented in third party certification where the customer is ready to pay for certain characteristics such as safety, specific nation, nature friendly or nutritional factors. 3.1 Horizontal Product Differentiation There are mainly three basic families of product differentiation which are used for equilibrium with a free entry - location model, representative consumer model and circle model. The representative consumer model starts with the intention to show aggregate preferences and the preferences demands the system for differentiated products which can measure the welfare for optimal analysis and this type of function embodies global competition. 3.2 Vertical Product Differentiation Post innovation, either monopoly or competition prevails and in case of heritage luxury branding, vertical product differentiation follows which is not based on monopoly or competition; instead heritage branding follows vertical product differentiation where the product may get out of trend or get back in fashion with a fast pace. 4. Extent Of Product Differentiation In Luxury Branding Reproducing creative ideas can lead to the formation of common heritage of tastes which can be semiotic and cultural heritage and fashion mainly is restricted to make out between bad and good tastes. The heritage tastes and preferences can lead to common reading of signs and producing of homogenous representations. U.S. and China are two big markets of luxury brands where the cultural comparison is restricted and there exists the impact of cultural differences in consumer purchase for the luxury brands (Li & Su, 2007; Wong & Ahuvia, 1998). The consumptions of luxury brands is mostly determined by the social function as the consumer presents individuality and exhibits social standing through the luxury brands ( Wilcox , Kim & Sen , 2009). Style - The product life cycle includes four stages -- introduction, growth, maturity and decline, and these four stages can be categorized into three special categories in case of luxury brands - style, fashion and fads. Most of the fashion is known for popular style and the four main styles found in fashion are - emulation, mass fashion and decline (Chester R., 1965). In luxury brands, customer pays high amount for French styles due to its historical status. Some such prestigious French brands include Calvin Klein and Chanel, which are apparel brands famous for quilted handbags, black dresses and tweeted suits. 5. Challenges Brand heritage is central to brand identify but it is not a universal concept. There are many limitations and challenges of brand heritage - 5.1 High Quality Products and Services - For luxury branding, product positioning should be high in quality to earn more business as the premium quality allows the brand to change price and it also enhances the chances of repeat purchase, consumer loyalty and word of mouth. The cost of delivering the quality is not very high as compared to the business units which produce low quality products. Quality also depends on the product performance. For improved competitive edge, the companies can have better trained people. Better trained employees exhibit these qualities generally -- courtesy, competence, reliability, credibility, responsiveness and improved communication. Ritz Carlton ensures the customers are answered fast and the phone calls are answered with a genuine smile in voices. The case of Singapore Airlines is known for better trained attendants and IBM is a company known for professionalism, while Disney is famous for upbeat ideas. 5.2 Innovation - Researchers have explained the role of innovation to facilitate market orientation and performance relationship (e.g., Han, Kim, and Srivastava, 1998; Hurley and Hult, 1998). Customers are not aware of their needs as they are not aware of the latest innovation and technological development (MacDonald 1995; Von Hippel 1988). If innovation is non-drastic, the incentives to innovate under competition and protected monopoly are almost similar and research has found that the incentives of monopolists can be threatened by the process of innovation. Many heritage brands are not ready to adopt innovative technology and marketing is mostly restricted to engage customers but the changes in technology has raised the needs for interactive marketing where the costumer requires deeper relationship. However, some major examples of heritage brands that have revitalized their image include LL Bean and Lacoste. The heritage brand marketing strategies should be based on the complexities and benefits of the latest trends and marketing models should offer high credibility and authenticity. 5.3 Product Market Rivalry- The company executives should be aware of the approach to make use of the brand heritage. The old product market is highly competitive and new product market is monopolistic, which creates a competitive fringe for selling a vertically differentiated product. In such conditions, the new product requires drastic innovation if the presence of old heritage product has no effect on maximized profits of the new product, also the new product has to act as if the old product did not exist. 5.4 Heritage may Peak Early- The length of any luxury brand remaining fashionable is difficult to predict and at one point, it has been observed that fashion ends when a growing number of buyers starts using the same pattern or style. If most of the consumers follow the same style, the fashion can become obsolete and this will turn away others from the field. Fads can become fashion and it also gets noticed very fast. It is mostly adopted with real enthusiasm and it peaks early. Hence, its decline is also very fast. 5.5 Using Technology to Move into Emerging Markets - Luxury fashion brands have taken a long time to make use of the internet ( Okonkwo, 2009) but today, the brands are putting a lot of energy to create online presence, however they are still not moving whole heartedly into the online world. The main fear is of losing the brand positioning by breaking the tradition, and their inability to move into the online marketing zone is one the biggest challenges. 5.6 The Case of Louis Vuitton The first digital technology which invoked brand heritage was adopted by Louis Vuitton. The first online promotion was made through the introduction of Louis Vuitton Soundwalk. After the launch of Louis Vuitton Soundwalk, blogger online shared experience of the video footage, articles and comments. Further interactivity was enhanced by starting the Shooting Star campaign where the interviews of popular personalities were promoted online and these strategies helped Louis Vuitton to create brand heritage online. Louis Vuitton used interactive marketing strategies which gave brand heritage to enhance relevance and create an online experience which was not available offline to this brand. The main tradition at Louis Vuitton has been to provide in-store services where the hand painted and made-to-order luggage are found exclusively offline and the hot stamping initials are found online. 6. Winning Strategies and Forecasts for the Future Marketing pioneers mostly have great benefits. Campbell, Coca-Cola and Amazon.com developed the market dominance as these companies brought new ideas and concepts (William T. Robinson, 1985). The advantage of pioneering is not inevitable. Today with technological development, it is the time to roll out new products and utilize of technology and innovation on marketing strategies. There are mainly two breakthrough innovations based on advances of existing technology and departures from the existing market segment (Benner & Tushman, 2003). So, how the structure of product market rivalry influences innovative strategies and what is the significance and impact of marketing heritage and digital innovation on marketing strategies? 7. The Advantage of Technology Based Innovation Exclusivity is considered to be the main feature of luxury brands but it may cause tension when the brands try to grow and attract customers in new markets while trying to retain the old customers. Mercedes offers special invitation to its exclusive online club, where the exclusive members can interact with companies and make suggestions. At the introductory stage, the products are not known and the promotional expenses are high as it requires you to inform the potential customers about the new, induce product trials and secure distribution outlets (Chandy and Gerard, 1998). It mostly takes time to roll out new products which involves filling the dealer pipelines, getting consumer acceptance and getting the sales growth trends (Robert D. Buzzell, 1956). Today the innovative technologies use internet and mobile based tools to share and discuss information which relates to the activities of integrated technology, social interaction, telecommunication and construction of words, picture, audio and videos. Marketers are mostly famous of being talkers but now the social networking has encouraged listening where the marketers a have to listen to the demands of the consumers to provide solutions. Gucci has amassed a huge fan following on Facebook, having almost half a million fans. They constantly update their Facebook page, thus engaging the consumers through the ‘Likes’ and ‘Comments’ buttons. Marketers monitor the online conversation through blogs, mails, forums, social networks and channels to ensure the business can provide solution the customers directly. Social networking is the phenomena which are about everyday social interactions through the social media where many people exchange information on internet. A large number of organizations are providing professional social marketing conversations to tell people about the products, services, business and these countless companies includes the Fortune 500 and the heritage brands who talking on blogs, Facebook, Twitter and Wikis to the customers directly. The online media marketing conversation can be tracked and they can be monitored to accurately to calculate the efforts of marketing. The winning strategies in the market are based on increased exposure and the global trends where more and more consumers have access to the luxury brands and also to its inherent passion (Okonkwo, 2009). Old luxury brands are about the qualities, attributes and feature of the product and its appeal is derived from the prestige and status (Unity Marketing, 2006). The current consumer needs the up and down of market and also the emotional relationship which is provided by the heritage brands and some authors can see the shift being more democratic where you provide products for everybody and also different products for everybody . It’s a fact that almost 50% of luxury brands are offering e-commerce solutions. Additionally, a number of luxury brands have followers on social networking sites. Some of the emerging opportunities for luxury brands include using Twitter for customer interaction, Open Graph of Facebook, using Android and iPhone apps for social shopping, use blogs to promote brands and location based marketing. Burberry has utilized Twitter for a show called ‘Tweetwalk’. Besides internet, luxury brands are using other cutting edge technologies too, such as Ralph Lauren’s 4D show in Paris. The main focus of market orientation is to create superior customer value based on knowledge derived from the competitor analysis and customer demand (Slater & Narver 1995, p. 68). The latest innovation adaptability is the key to a brand’s relevance in a period of time (Urde et al., 2007, p.16). The four main steps which can be followed for successfully developing online strategy for heritage brand are 1. First the brand story should be promoted. 2. An appropriate brand heritage and its iconic aspiration should be offered online 3. Innovative and interactive online experience should be created to customers 4. To harness the online buyer power and to ensure positive interaction - the brands should be promoted through the social web. 8. Conclusion The traditional marketing strategies made heritage brand the custodian (Christobulides, 2009) which produced strong strategies which positioned itself in market, while product innovation is a completely different term as compared to heritage where the monopoly of old products is restricted. There are also drawbacks of heritage where the brand heritage can create inertia, which can be a variant of efficiency which effects competition. But the latest innovations in technology provides great incentives and the latest marketing strategies and internet can be merged together where all the elements of marketing can be aligned in a way to provide a high quality experience, service and value (Keller, 2009). 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