Achieving Internet Marketing Success - Research Paper Example

Business Research Methods Luxury sells online have increasingly become a more important selling point for high-end fashion brands. Brands have to balance their sells and how to maintain their brand identity of exclusivity. Many luxury brands have recently begun selling online towards the emerging markets, as the brand has identified an opportunity. However with the emerging markets as a focus there are different difficulties and restrictions. The Methodology and approach the research will take is inductive. By analysing secondary research of ecommerce in the fashion luxury segment and emerging markets the study will work towards a hypothesis. The research will have an interpretivist approach as the data collected do not address the subject fully and lack some information regarding luxury sells in emerging markets. The aim of the research will be to recognise these and investigate how the brands conduct their business to attract the target market to be brand loyal. Furthermore, this investigation will have an academic value adding to the limitation in material that is currently available around the subject. Key words Luxury Brands Internet E-commerce Emerging Market China Online Selling The Objective and Purpose of the Project The research will be created around the topic of fashion luxury brands and sale of products online. Currently the literature does not sufficiently address the strategy problem, brands deals with when expanding into other regions (such as emerging markets) online. The objective is therefore to gain an understanding of adaptations that the luxury fashion segment does online when enlarging to these countries. Therefore, there is a need to obtain first hand information in the form of interviews from luxury brands that are expanding towards emerging markets. That will be the feasibility in the dissertation. Research Question What are the restrictions and disadvantages of Internet sales for luxury brands in China in comparison with other markets such as the EU? Background We live in a globalised world in which communication has essentially changed human interactions and consequently businesses as a whole. The advent of internet and online shopping which began in the early 1990´s in Europe changed the way businesses conduct their operations and how they deal with consumers (source). At first, luxury brands and the Internet do not seem to be a perfect match due to the fact that the internet is a mass communication medium whereas luxury tries to stay within a niche market and does not want to lose its appeal of exclusivity. Recently the internet has deeply changed the anatomy of branding and the overall marketing communications strategy of the fashion industry, from fast moving ones such as M&S and Zara to luxury brands such as Burberry and Hermes (Riley and Lacroix, 2003). Perterson et al argue that the internet is extremely efficient at building a sustainable brand identity and providing a forum giving consumers knowledge about the brand and its products. Additionally it is also necessary to point out that the internet provides a platform to build long lasting relationships with consumers. Traditionally brand management relied upon several media outlets such as TV advertising, print media and product placement on TV and movies. Marketing strategies focused on market research, segmentation and positioning in order to create the perfect marketing mix. (Chaffey, 2000). Riley and Lacroix (2003) focus on the changes that online marketing brought to the marketing strategies of luxury industry. Access to information has become much quicker and consumers have become extremely demanding over the last 2 decades. Luxury brands used to have very stringent control over their brand, with an allure of exclusivity that would not allow “non-members” to enter. With the advent of internet and consequently, social networks, brand management has essentially changed in order to adapt to the new requirements of online marketing and its operational system. It is essential to any luxury company to grow their profits to the max, however, it is imperative not to lose their cache and become overexposed (Geerts and Veg-Sala). Although the internet has changed brand management as a whole, the luxury industry has had one of the most severe impacts. This is because luxury brands have heavily relied on the concept of exclusivity, which crashes with mass media appeal brought by the internet. It is the fashion debate of our times: Mass v. Class. Brands such as Burberry and Chanel have been extremely reluctant to enter the online world. They have preferred to operate in their own boutiques or selected points of sale instead of promoting online sales. However, with the power of internet and consumer bargaining power, such brands have rendered themselves and started to operate online in order to satisfy their regular customers as well as foreign customers in emerging markets (source). Although the internet may provide potential luxury consumers with a platform to search for information and shop online, thus reducing marketing and operational costs; the internet also may present a real threat in the form of devaluing brand identity by making it very easily accessible by all customers. Luxury brands concentrated their marketing campaigns on developed markets and often luxury goods could only be purchased by consumers in Europe or in the US. This picture has changed dramatically as emerging markets have become the target markets for luxury brands over the last 2 decades. The BRICs (Brazil, Russia, India and China) market has become the top destination for brands such as Burberry, LVMH and PPR Group. The rising middle classes and their appetite for luxury names have created a luxury boom which has brought big fashion houses into Brazil and China and consequently they had an on online sales boom that has forced such companies to open boutiques. The internet has made it possible for consumers as far as Brazil or China to be able to purchase goods and be in touch with the fashion world (Nueon and Qeulch, 1998). Degen (2009) states that China has become the world’s second largest consumer of retail of luxury brands. Literature review Since the movement of the high-end fashion industry towards ecommerce in emerging markets is in the infant stage, agreements have not been developed around a set of arguments or theories. Although fragmented the literature is addressing the marketing theories that fashion brands use in their online presence. There is a deficit of literature that connects the brands with the emerging markets. According to Geerts& Veg-Sala () it is very difficult to define luxury due to its subjective nature. Luxury can be broadly defined as a “way of life but also a way to buy, consume and use” (p.), instead of merely the way in which a product is produced. SOURCE adds to this view by stating that what is luxurious for one person may not be the same for another person. A Gucci handbag may be viewed with very ‘snobby’ eyes by a regular consumer of Hermes whereas for a Coach consumer a Gucci bag is a dream to be attained. Oknowo (2008) analyses the difficulties luxury brands face when entering the internet and how to maintain their cache. According to Wie and Fienberg (2004), China’s internet usage has become the second largest in the world. Li, Li and Zhao (2009) support this statement and add that advertising and e-commerce have started to change their strategy in order to fit the Chinese market. Bin, Chen and Sun (2003) have focused on the diverse trends of e-commerce, and the study highlights how language barriers can be a problem. Unsunier and Lee (2205) also support the fact that the high-context languages countries such as Japan, China and Korea are the ones with the largest and fastest growth in internet usage. The internet allows brands to customize information targeted for different cultures. This idea is also supported by Luna et al (2002) who argue that an internet site and a brand must attempt to reach cultural congruity with the inclusion of both nonverbal and verbal framework. Tian and Emery (2002) state that consumer products online will most likely be a successful market since there is a probability that the customer already has had information and interactions with the type of product and brand. This theory is supported by Unsunier and Lee (2005) with the example of a website that focuses and specialises in niche goods of antique rare books. Arguments have been made by Evans and Wurster (1999 and 2000) that the Internet has provided a trade off between the richness of information involved in a transaction and the number of people that it could reach. This is supported by Hollensen and Opresnik (2010) stating that the Internet has made it possible for companies and brands to reach a large target audience with the same richness of information that has enhanced the design and interactivity of the information on the brand’s web site. Evans and Wurster (1999 and 2000) refer, identify and measure bases of competitive advantage which brands can operate under on the Internet: the reach which discusses the accesses and connection ability to internet, the richness concerning the information the brand provides the customer and the affiliation referring to whose interest the business represents. This idea has also been implemented by Riley and Lacroix (2003) in their study of luxury brands online. Methodology The philosophy used in this research is an interpretivist approach as it is investigating the deep understanding of human behaviour and why some companies take one approach and other companies take another. It is also an inductive approach, as the study observes patterns in the social environment, creates a pattern of theory, and develops a hypothesis which will be tested. Saunders (2008) suggests that one of the major advantages of this method is that it is less expressive and more accessible to carry out. The research may also be using a triangulation approach as the question may have been researched before though not in the same environment. The secondary research which will be obtained from the literature will view internet marketing strategies, academic papers, business and marketing resources such asDatamonitor and Mintel, as it is important to access and evaluate new market changes. The information obtained from secondary sources will be used to create a framework in the primary data collection. In order to create the relevant framework and structure the secondary data that will be examined will be related to marketing strategies regarding luxury brands such as Burberry. The fundamental aim will be to examine how e-commerce has become a new channel of sales, the effect that has had on luxury brands and how these brands have adapted their strategy on the Internet to emerging markets compared to how these sales channels are used in mature markets such as EU. Primary Data & Sampling A qualitative approach sampling will be conducted on a small scale. This method fits the purpose better as it considers people’s perception whereas the quantitative approach only views outcomes from numbers. The sampling methods that will be used in the dissertation are a mix of a convenience and snowball approach. The people that will be approached first are those who are easily reachable and then hopefully this will lead to an introduction to the decision makers in the industry. The sampling population will include personnel who work in the industry and field that are dealing with the issue of how successfully to adapt the company’s website to the emerging markets requirements. The methodology that is appropriate for this research question is qualitative as the question is addressing a narrow and specific topic which involves an analytical perception of human behaviour. Therefore quantitative research which focuses on a systematic empirical investigation is not appropriated Practical &Ethics The research that will be conducted needs to take into consideration confidentiality issues such as the identity and records of individuals and organisations. The participants who will take part in this study need to consent and be aware of the purpose of it. Account must also be taken of the fact that since I have been interning for a longer time in the E-commerce industry and the luxury fashion industry, my view of the topic might not be neutral. Practical issues need to be taken into consideration such as when conducting interviews some facts and information might be revealed due to confidentiality issues and these must be handled sensitively. Grantt Chart Week1 Week2 Week3 Week4 Week5 Week6 Week7 Week8 Week9 Week10 Week11 Week12 Initial Supervisor Meeting X Supervisor Meetings X X X X Litterateur Review X X Secondary Data Collection X X X X X X Primary Data Collection X X X Write up X X X X X X X X X Bibliography X X X X X X X X X X X Submission X References Chaffey, D. (2000) Achieving Internet Marketing Success, The Marketing Review, 1(1), p.35-59. Degen, R. (2009) Opportunity for Luxury Brands in China, The IUP Journal of Brand Management, 6(3), p.75-84. Li, A. et al. (2009) Advertising Strategy of Multinationals in China, International Journal of Advertising, 28(1), p.125-146. Nueno, J. and Quelch, J. (1998) The Mass Marketing of Luxury, Business Horizons, 41(6), p.61-68. Okonkwo, U. (2008) The Luxury Brand Strategy Challenge, Journal of Brand Management, 16(5), p.287-289. Park, H. et al. (2008) Purchasing Global Luxury Bands Among Young Korean Consumers, Fashion Marketing and Management, 12(2), p.244-258. Riley, F. and Lacroix, C. (2003) Luxury Branding on the Internet: Lost Opportunity or Impossibility, Marketing Intelligence & Planning, 21(2), p.96-104. Sinha, P. (2011) luxury retail: Creating Brand Experience, Vikalpa, 36(1), p.85-87. Wie, J. and Feinberg, M. (2004) Forecasting Internet Penetration in China: The Effect on E-Commerce, Internet Commerce, 3(3), p.83-86. Read More