Bringing luxury brands out of the digital Stone Age

Updated: 2012-06-22 16:53

By Saurabh Sharma (China Daily)

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 Bringing luxury brands out of the digital Stone Age

Zhang Chengliang / China Daily

Five ways in which high-end companies can market themselves on the Internet

A recent study by iResearch, a market research company, showed that the volume for e-commerce market transactions in China in the first quarter grew by 68 percent. It now stands at an astounding 1.8 trillion yuan ($283 billion; 225 billion euros; greater than the GDP of Pakistan). Online luxury retail, which has been growing rapidly in China, is also exploding. By the end of 2011, it had reached over 10 billion yuan in value. These numbers are mind-numbing.

But rapid growth is both a boon and bane for luxury brands. It's a boon for the obvious reasons and a bane because it can easily distract us from retaining our luxury brand's values and exclusivity. For example how can a luxury brand maintain its exclusivity in the relatively flat structure of the digital world? How much interaction is too much interaction? What about the loyal buyers against first timers? Luxury brands are known for quality and service. How can they replicate the elements of service in the digital domain, especially in online stores, that are often designed to recommend on the basis of past searches and enable little more than checking out products?

Here are five things about marketing in the digital domain that can help answer some of these questions.

1. Digital is pervasive.

Luxury brands have always been in a bind whether to use digital to become more exclusive or more accessible. But if luxury marketers grasp the full meaning of digital, they will realize it offers both and much more. Today, digital is the creative convergence of digital arts, science, technology and business for human expression, communication, social interaction and education. It has come a long way since the birth of the Internet. Digital has penetrated almost all aspects of our social and personal life. Experts have mapped this evolution from the days of monolithic websites, content creation, user participation and the birth of virtual lives to now when the digital domain has a distinct social dimension to it.

Digital also offer possibilities beyond just the Internet. Imagine a digital application integrated in the vanity mirror of a fitting room in a luxury apparel store. The shopper will be able to try on different luxury bags with different kinds of shoes. The shopper can also get opinion from friends via a special mobile application that broadcasts the fitting room pictures.

Think of an exclusive digital community of luxury car owners or owners of a limited-edition luxury watch that offers members-only privileges to make customers feel special and cared for.

Visualize an augmented reality and laser show that transforms a luxury event into an immersive experience.

Take Burberry in China as an example. The brand did something similar when it launched its flagship store in Beijing. Digital was leveraged to reach out to fans and owners through social media, while it was also used to energize a music and fashion show through cutting-edge digital technology. In the end, Burberry was able to turn a new store opening into an audiovisual extravaganza.

2. Digital can help engage China's younger luxury buyers.

Most luxury brands are still in the digital Stone Age. This is not because of limited understanding of the digital world but also because most of these luxury brands were born in markets where the average luxury buyer was older and thus relatively less Net savvy. In Asia, and more specifically in China, things are a little different. In China 80 percent of wealthy consumers are under 45. Compare this with the figure for US (30 percent) and Japan (19 percent), according to the McKinsey Global Institute.

The younger luxury buyer in China engages in the digital space much more actively than any of his international counterparts. And luxury brands, wanting a larger share of growing markets like China need to realize this and address the younger luxury buyer.

3. Digital content can give social currency.

With more and more millionaires in town, luxury is no longer just about the price of the car or the size of the Persian carpet that one has bought - it is increasingly about the story behind the making of the object or the unique experience that it promises. As the newly rich evolve, thoughts are gaining currency over things and "experience is becoming more important than expensive".

Digital content for luxury brands needs to offer something that's worth sharing. Imagine things such as a first-hand account of space tourism or the experience of climbing virgin peaks across continents. Such stories and experiences have immense chat value and give valuable social currency to people who can access it. Similarly, digital also needs to offer content that can be shared among fans of brands who might not always own the products but aspire to it. This group provides the much-needed buzz for the brand.

Dunhill's Day 8 is a great example of this. It is a special lifestyle channel created by Dunhill and is linked with its website. Day 8 covers the new and the noteworthy topics such as creativity, travel, culture, elegance and intelligence. It almost seems that the brand has developed these topics after understanding interests and preferences of its customers and prospects.

4. Digital can create a community around a brand's mythology.

Luxury brands have rich histories and heritages. Almost all successful luxury brands have rich traditions and mythologies. Similarly a luxury buyer craves a community of like-minded people. He desires to be a part of an exclusive club. Luxury brands have an important role to play here.

Add to this the fact that in countries such as China and India, with vast populations and relatively lower service standards, it is not always easy to serve the luxury buyer at a store. Digital is the missing link that can bridge this gap. While luxury offers exclusivity, digital can help provide privacy and personalization. Digital communities are a powerful way to make people feel special. In the long run such a community can also help better segment and service a brand's buyers based on their interests. These communities of ardent fans and loyalists do not just know a lot about the brand, but can play a role as brand custodians online.

New customers or first time customers who have questions or problems with the brand can write to communities (and not just a customer feedback center). The communities can speak for the brand and dish out an entirely unique brand experience. This will not just make customers feel more confident about the brand, but also reduce customer relationship management and new customer acquisition costs in the long run.

Digital storefronts can also help compliment and enhance a brand's presence. In a vast country like China it is not easy to scale up distribution as rapidly as many marketers would want. In these instances, a digital presence can help enhance a luxury brand where we still do not have physical stores.

5. Digital offers youthful energy (but it is different from being a youth brand).

As luxury brands reach out to younger luxury buyers, they run the risk of mixing youthful energy with the notion of a youth brand. They need to balance youthful energy with elegance.

It is important that marketers view the digital realm as a platform for the brand to listen to younger prospects and be inspired by them. This engagement can lead to valuable insights about the product designs and also help in keeping the brand relevant to future customers. Mercedes Benz did something similar when they started interacting with Generation Y in order to get feedback on vehicle designs.

The author is planning partner, Ogilvy and Mather, Beijing. The views do not necessarily reflect those of China Daily.

(China Daily 06/22/2012 page8)