Sunday, March 2, 2014

Does the Internet Support the Luxury Brand Market?

Uché Okonkwo who’s recognised worldwide as one of the pioneer luxury business strategists wrote that “luxury has been built on the foundation of certain principles that can neither be ignored nor compromised. It is a culture and a philosophy that requires understanding before the adoption of business practices because its intricacies and output are essentially different from other types of goods such as daily consumer goods, (p.303).”
But how has the luxury brand market been able to respond to the modern era of the Internet and keep their brands exclusive but at the same time modern and current, attracting the new generation of ‘luxury’ brand customers.
Brands such as Versace and Prada, for example, did not have corporate websites until 2005 and 2007, respectively; where economic as well as consumer societies have expressed bewilderment at the slowness of the luxury industry in establishing an online presence in comparison to other sectors.
A major existing paradox however lies in creating and retaining ‘the desire and exclusivity’ attributes of luxury brands on the mass and classless Internet world and at the same time maintaining and enhancing the equity of the brand. Another contradiction that luxury brands face online is the task of increasing sales and the risk of overexposure while maintaining a fragile perception of limited supply. These factors are inherently peculiar to the Internet whose central features appear to be the opposite of luxury’s core elements.
Okonkwo highlights how “the characteristics of the Internet and e-Retail are a global reach; a pull marketing approach where customers are drawn to information and purchases, rather than a push medium where customers are driven by advertising; a lack of physical contact with the goods and human contact with the sellers; a low switching cost as it takes only one click to switch between websites; fast and convenient; more product variety and access to viewing them; availability and accessibility irrespective of time and location; less powerful sales as it is easy to say no to a computer; a universal appeal and uniform information. These characteristics indicate that the Internet as a medium of communications and retail is available to a mass consumer base, which is in direct disparity with the niche consumer base that luxury goods have always targeted (p.304).”
Luxury goods are regarded as sensory in nature and this means that the human senses of visual, smell, touch and feel are considered imperative in selling luxury goods. These above factors could imply that luxury goods are unsuitable to be placed and retailed on the Internet, but then the luxury goods market haven’t had to ‘compete’ and ‘recognise’ the existence of the Internet before now. So simply writing the Internet off for this unique sector may be a bit too impulsive.
Luxury itself has always had innate characteristics that are intricate to its very being and comprise of elements that speak more to passion than reason. These include originality and creativity in product and retail conceptualisation; craftsmanship and precision in creation and production; emotional appeal and an enhanced image in brand presentation; exclusivity and limit in access and high quality and premium pricing, all for a specific clientele. The application of all these elements often requires an unwavering dedication to perfection that sometimes defies logic, and this oftentimes requires a rather narrow approach, which has consequences for business management. The natural reaction to any possibility of interrupting this approach and thought process would be ‘apprehension and resistance’, which has been the initial reaction of luxury to the advent of the Internet.
So for those organisations looking at developing a luxury branded item, it’s worth having a relook at your marketing strategy in respect of the Internet. The ‘modern’ consumer likes to be able to find things on line – and if you can give them a ‘luxury’ experience when they are there, you may be pleasantly surprised by the impact this has both on image and sales of your product in the marketplace. 
Okonkwo, U. (2009). Sustaining the luxury brand on the Internet. Journal of Brand Management. Vol.16, Issue 5/6, p.302-310.

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