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A thesis written by @josephinelipp and @alexandrecorda about Social Media and the Luxury industry, and their complex relationship.
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  1. 1. By Joséphine Lipp & Alexandre Corda.
  2. 2. CONTENTS.I. Introduction ........................................................................................................................................................4 A. The idea B. The two key notions to our paper: Exclusivity & Accessibility 5 1. Exclusivity: from exclusion to individuality ..................................................................................................... 5 2. Accessibility................................................................................................................................................................ 6 C. The problem 7II. Luxury and Social Media as Social Phenomenon .................................................................................8 A. Luxury: a landmark in society 8 1. A notion to be defined – what is luxury? ...................................................................................................... 8 2. A Tradition set in history – Luxury’s role in the society ........................................................................ 9 3. The recent evolution of luxury brands to internationalization ......................................................... 15 B. Social Media: a revolution in the way people communicate 19 1. Introduction ............................................................................................................................................................. 19 2. What is Social Media? ....................................................................................................................................... 19 3. Social Media: A Sociological Phenomenon .............................................................................................. 21 4. Social Media: a Technology ............................................................................................................................. 22 5. Social Media or the Era of the Consumer ................................................................................................ 23 C. Two Social concepts necessarily meant to be confronted 25 1. A reality that overtook the brands’ wills .................................................................................................... 25 2. A complex and challenging relationship: the luxury industry & digital ......................................... 26III. As social media marketing is becoming inevitable, Luxury Brands are starting to embraceit A. The social media phenomenon must be put into perspective 29 1. Luxury brands should not be refining themselves to match social media ................................ 29 2. Social media simply is where your future consumers are. .............................................................. 30 3. Luxury customers are online and want to interact with brands ................................................... 32 B. Brand Content Strategy, Luxury and Social Media: the good formula? 34 1. What is Brand Content? .................................................................................................................................. 34 2. The evolution of Social Media toward Professional Content and Social Entertainment..... 36Social Media and The Luxury Industry 2
  3. 3. 3. Why does Luxury like content? ...................................................................................................................... 38 4. How can Brand Content Strategy help Luxury Brands engage on Social Media? ................ 40 C. The Digital Environment and the Luxury Experience 43 1. Crowdsourcing: an option for luxury brands? ........................................................................................ 43 2. Social media are an interesting way of enriching the luxury experience online ..................... 46 3. Digital in the larger sense is key to the luxury experience ................................................................ 47IV. Recommendations......................................................................................................................................... 50 A. Dos and don’ts: golden rules and lessons to learn 50 1. Some key findings ................................................................................................................................................ 50 2. Lessons learned and recommendations .................................................................................................. 52 B. Content strategy for luxury brands: what type of content can be used? C. Analysis of luxury case studies in social media 64 1. Louis Vuitton or How to Master the Art of Social Media .................................................................. 64 2. Burberry: Why are the Brits always a step ahead? ............................................................................ 68V. Conclusion ........................................................................................................................................................ 72VI. Bibliography ..................................................................................................................................................... 74VII. Appendix ............................................................................................................................................................ 76Social Media and The Luxury Industry 3
  4. 4. I. Introduction A. The idea To introduce this paper, which studies the complex relationship between social media and the luxury industry, we wanted first to establish the foundation of our idea. Early 2010, when we first started looking into the subject, luxury brands were struggling with how to handle social platforms such as Facebook, Twitter or YouTube. Conversations around these brands were already happening, but with the potential of yielding varied bad publicity. Brands did not know how to tackle this lack of control over “their” image. In 2010, Cartier still had a profile on MySpace – which has recently sold for $35 million, after being bought by News Corp for $580 million six years ago. However, Burberry had just launched its Art of the Trench project in association with Fashion street photographer Scott Schuman, best known as The Sartorialist. The Art of the Trench was one of the first attempts by a major luxury brand at social media. To reach a new and younger audience, a blog – The Art of the Trench - was created showcasing trench coat owners photographed by Scott Shuman. "We are now as much a media-content company as we are a design company, because its all part of the overall experience. So its a big deal. Its changing the whole system of buying, and the whole cycle of production. Basically you can buy every bag that goes down the runway and every coat and all the make-up as well." Christopher Bailey, Burberry’s Iconic Creative Director - October 2010. With such a statement, Christopher Bailey set the tone, proving that brands needed to create their own content for the digital space. Luxury brands are seen as pioneers, the promoters of a certain art de vivre. People aspire to become involved with inspirational brands, almost as a form of distinction. Brand content is at the core strategy of luxury communications because it is what people are going to talk about. By providing exclusive content to their fans, brands control what people are reacting to and can also measure what interests people most. In June 2011, Burberry had almost 7 million fans on Facebook. One of their Facebook posts can easily get 13,000 likes and 900 comments. The brand has always been a tastemaker; the only difference is that people can now easily discuss how passionate they are about the brand, constantly reinforcing its power of influence. All along the way, Burberry has had a clear strategy to make sure its presence on social media would continue to enrich the brand, and on a longer term, remain iconic for younger generations. Social Media and The Luxury Industry 4
  5. 5. Following a completely different path, DKNY recently won four of the eight awards presented at the Fashion2.0 awards for Best Twitter, Best Mobile App, Best Blog and Top Innovator . Its Twitter account @DKNY is 1embodied by one of its PR representatives: “Im your well-placed fashion source bringing you behind-the-scenes scoop from inside Donna Karan New York & DKNY and my life as a PR girl living in NY.” Personified,its Twitter account gives a human voice to the brand, communicating as someone reporting from the insideof the fashion house. It sets the brand’s lifestyle, becoming an inspiration for all its followers. With almost350,000 followers it has been a great success, giving a strong online presence to the brand.In a year’s time, luxury and fashion brands have been experimenting in social media in many different ways,as we will see in this paper. One main question remains: have these brands succeeded in maintaining theirexclusivity while becoming easily accessible to everyone? B. The two key notions to our paper: Exclusivity & Accessibility 1. Exclusivity: from exclusion to individualityThe English word exclusivity comes from the Latin word exclusivus, which means to exclude. In fact, theconcept of exclusivity is linked to the notion of luxury. Historically, luxury was a privilege of class and status.Whatever the poor could not have but the wealthy could was considered as a luxury. It was not somethingto be experienced just personally, but rather as a showcase of your wealth, a social distinction, and thusexclusive. The concept of exclusivity was inherent to the concept of luxury.As the French philosopher Gilles Lipovetsky explains, we have now entered the era of the individualization ofluxury . In wealthy countries, people no longer acquire luxury goods for its social meaning, but for the 2particular experience it brings. People wear affordable products from a large retailer and at the same timean expensive piece. You don’t buy luxury for its “showcasing” quality, but because it is made of the finestmaterial, it is technologically advanced or because it is unique. People acquire a luxury product to get theexclusive feeling that you own something that makes you special, something that is only yours. As we cansee, as the concept of luxury has evolved, so did the notion of exclusivity.For today’s marketers, the term exclusivity resonates very much with scarcity. Ed Burstell, Sr. VP ofBergdorf Goodmans Bergdorf Goodman said that, "To set itself apart, Bergdorfs has always looked forthings that are in tight distribution and preferably exclusive.”" In a world where everything travels so fast 3and where companies are selling the same products around the world, there is a personal need to ownsomething that will give customers this feeling of exclusivity, of owning something special. Limited editionslike Lanvin for H&M, aim to offer the Lanvin designs and quality for a much more affordable price. They fulfillthis need, while offering the possibility of a larger audience access this particular side of luxury. The notion of exclusivity is also very much bound to the relationship people have with luxury brands. Owninga luxury item guarantees being treated in a certain way, as if one were a member of a particular club. LouisVuitton, in its Champ Elysées Maison, distributes to its best foreign consumers a list of the finest productsyou can find in Paris. There is an exclusive relationship between the consumer and the brand. All this showshow much the notion of exclusivity has evolved towards something very personal, all about the experience.1 DKNY sweeps Fashion 2.0 Awards, Mashable, February 16 2011. th2 Du luxe ostentatoire aux luxes émotionnels, La Revue des Marques, numéro 53, Janvier 2006.3 TWO WORDS- EXCLUSIVITY & INDIVIDUALITY TREND REPORT, We Connect Fashion, October 2006Social Media and The Luxury Industry 5
  6. 6. In an article entitled Luxury Marketing Myth: Exclusivity is critical to maintaining luxurys allure , Pam 4Danziger for Unity Marketing, described the notion of exclusivity as “an old European myth” on luxury andstated that it does not appeal to democratic American customers. Used in its original meaning, it has anegative intonation and should thus be used very carefully: “Exclusivity for the sake of exclusivity, asexpressed by the European luxury ideal, is not what American luxury consumers value, rather its anexclusiveness derived from the ability to express a personal point of view, an attitude and ones uniqueness.”Whether or not the debate about European luxury versus American luxury actually makes sense in thisparticular case, it shows that exclusivity now relates to the individual, it’s about delivering your “uniqueness.“The term exclusivity does not hinge on an opposition of classes, as it now relates mostly to this verypersonal experience received via luxury. 2. AccessibilityAs an interconnected network, the internet provides twenty-four hour access to anyone with a connection.For instance, the appearance of e-commerce opened a whole new way of shopping. It meant boutiques wereopen twenty-four hours a day, seven days a week. No disruption. E-commerce websites allow buyers to shopproducts whenever they want. And this is just one of the many ways the internet has completely changedour relation to accessibility. People can now access multiple services allowing them to learn, to read, toshop, to plan at any time. Accessibility has always been a fundamental parameter of the internet. Socialmedia have added the ”people” parameter to this.“The essence of social media is to occasion or enable social interaction among groups of people, whetherthey are known to each other or strangers localized in the same place or geographically dispersed.” Oxford Dictionary of Media and Communication. 5Social media is a revolution in the way people communicate. Information that used to be bound to your closecircles now has the ability to reach a much wider audience, because, in a sense, people have becomeaccessible. And it is not just about reading this information – in magazines, newspapers, encyclopedias, etc.Social media is founded on the principle that users are active. They can bring their own piece of informationto the web. In May 2011, despite MPs naming Ryan Giggs as a super-injunction football star, informationabout his private life was revealed on Twitter and then spread all over the internet. The press, because ofthe super-injunction, could not reveal the information but users did.User-generated content is key to the notion of accessibility as we are trying to envision it in this paper.People are no longer passive about the information they receive, they can also share it, comment on it andentire movements can happen because of it. The recent Arab Revolutions are proof. Now that strangerscan exchange their common beliefs on social platforms, they can also organize themselves to make therebellion a success. And even when governments restrict access, there are still other ways, other platformsto communicate… The ability for users to be active has given a completely new dimension in accessinginformation on the Internet.This notion of accessibility makes all the more sense with the increasing number of smartphones found insocieties. For a long time, the internet was only accessible from your desktop. Now is the era of the mobile4 Luxury Marketing Myth: Exclusivity is critical to maintaining luxurys allure, Unity Marketing, 2004.5 A Dictionary of Media and Communication. First Edition by Daniel Chandler and Rod Munday. Oxford University PressInc. Oxford Reference Online. Oxford University Press. Bibliotheque Sciences Po. 3 July 2011Social Media and The Luxury Industry 6
  7. 7. internet. Social media combined with mobile internet have made us enter a period of time where the digitalspace evolves faster than ever. For brands, there is a necessity to match this demand for constantaccessibility. People want to access the catwalks, want to see behind the scenes of their favoritecampaigns, want to shop directly from where they find the information. There are very few limits to howmuch of real life can be transposed into digital so that it is accessible to all. C. The problem April 12 , Keane, a band partaking in Burberry Acoustic– Burberry’s initiative to support British music th– was shot on the Great Wall in China. The video was streamed on and April 13 , ththe band performed a concert – live-streamed on various websites – to celebrate the launch of theirflagship Asian store in Beijing.Luxury brands have always been ahead of the game in various domains. Chanel reinvented the femalesilhouette by liberating it from the corset. The Mercedes S-class was one of the first series cars to have anairbag. The Jagger LeCoultre wristwatch called the Reverso was invented to avoid Polo players breakingtheir watch during games. Employing specific materials (usually quite costly), through the use of expensivetechnology, or by provoking strong societal changes - because the elites were dictating what was to bedone; luxury brands have been, for a long time, implementing solutions that were then dispersed to a wideraudience.The situation has evolved and the challenges the industry has to face in today’s world are very different.Expectations toward the notion of luxury have changed a great deal: with globalization and the appearanceof new classes of wealthy people in developing countries; with technology evolving extremely fast, offeringmany new ways to communicate and to perpetuate the experience even outside of the traditional retailexperience; with Western societies evolving and new behaviors appearing, such as spending a lot of time onsocial networks.How the luxury industry is facing all these challenges without losing what makes it so special is the mainpurpose of this paper. People from all over the world and from all different types of social backgrounds areengaging on the web and more precisely, on social media. How are luxury brands suppose to communicate?Who should they be engaging with? Where should they be engaging? What techniques should they be usingto perpetuate and enhance this exclusive experience they have been creating through the retail channel?We will try here to go back to the fundamentals of luxury, and try to understand what brands should bedoing in the digital space and more importantly on social platforms to maintain their identity and grow theirpower through these new platforms.Social Media and The Luxury Industry 7
  8. 8. II. Luxury and Social Media as Social Phenomenon A. Luxury: a landmark in society 1. A notion to be defined – what is luxury? “Luxury is not the opposite of poverty. It is the opposite of vulgarity.” Coco Chanel. Such are the words the priestess of Fashion and Luxury used to describe our concept. She wasn’t relating luxury to price, exclusivity or any other marketing notion. She was linking luxury with style, with a certain sense of taste and a way of life. She was adding to the notion of luxury another dimension, a sociological and historical vision. As the author Jean-Noel Kapferer was describing it, “luxury is first and foremost a culture 6 before being a market or an industry.” Luxury could be defined in a thousand different ways, depending on who defines it and for which goals. But we are going to build a certain definition of luxury, using different notions that are linked to luxury while knowing that it will never be a comprehensive and final definition. Luxury is often – if not always - linked to an idea of quality and perfection. Everything has to be perfect in an “Haute-couture” dress, from the label to the hem, and it could be done all over again until perfection is achieved. Luxury is therefore linked with the idea of attention to detail. There are important expectations from consumers of luxury brands, and this quality is expected at every stage – from production to communication, services, experience and sale. Quality is part of the brand itself and part of its value. This is why, for example, at Hermès, there is no Director of Quality. According to Christian Blanckart, previously director at Hermès, it would be a serious issue if one day, they felt the need to create such a position. This idea of quality and perfection is expected because luxury is traditionally associated with crafted and hand-made products and a certain know-how that is specific to the brand. Luxury is – or should be – the opposite of industrialization. But this is a more controversial subject as LVMH, the French luxury goods conglomerate, has often been described as the founder of the “industrialization of luxury.” The know-how and hand-made notions are often associated with cultural inheritance – in a company or in a country. It is something very precious and respected in some countries - like France, which is known as the country of luxury - as a proper competitive advantage. Luxury and heritage are often two words that come together – whether it is the heritage of a brand, a company or the luxury heritage of a country. As Patrizio di Marco, chief executive of Gucci, has said, “Authentic heritage is something that you can see, feel and sense in every product.” Luxury brands always have to maintain this balance between past and future. They must be leaders, always a step ahead and relevant to “now,” but based on their authenticity and without forgetting their history. 6 Luxe Oblige, by Vincent Bastien and Jean-Noel Kapferer, Editions Eyrolles Social Media and The Luxury Industry 8
  9. 9. Heritage has become a true debate in a highly competitive market: should brands be focusing on theirheritage and craftsmanship or move forward in the digital world?Karl Largerfeld is often using the words of Goethe to describe how he is using heritage to create collectionsfor Chanel: “Make a better future by developing elements from the past.”Quality and know-how are then supposed to be part of the heritage of the brand. Parizio di Marcosummarized all those ideas by saying that “Authentic heritage is built upon real traditions and values, builtupon experience, passion and know-how handed down over generations.”Another key notion used to define luxury is scarcity. Luxury goods are often described as being scarce fortwo main reasons. First, high quality and handmade products could hardly be mass-produced. The secondreason is more sociological: people often want what is scarce because it makes them feel special, having acertain value due to the possession of this product. It was determined that usage of luxury goods issignificantly related to a satisfaction of inner needs of the personality; these needs are the main factorstimulating usage of luxury goods.Luxury is not always or shouldn’t always be a synonym of price. Some goods could be expensive withoutbeing known as luxury and on the contrary luxury goods might not be the most expensive ones. However,because of all the characteristics of luxury that we described before, luxury goods are, without being a rule,often linked to high price. Luxury goods have such unique characteristics and brand identifiers thatconsumers are willing to make a special purchasing effort. This purchasing effort is often synonymous witha high price, but it could even be the travelling of distances to obtain this special good, or waiting a certainamount of time.Therefore, what is more important is not the price in itself, it is the effort made by the customers.Aside from all these notions we described earlier and which are fundamentally associated with the definitionof luxury, the most important thing to say about luxury is that before being linked to a product, a brand, andan industry, luxury is first and foremost a more philosophical and sociological notion as seen in CocoChanel’s definition. A product could not be a synonym of luxury in itself. Luxury lies in a certain art de vivreand way of thinking – products are simply carriers of these values. 2. A Tradition set in history – Luxury’s role in the society a. Universality of luxury and its role in the societyLuxury is not a modern thing, nor a concept that is peculiar to developed countries and civilizations, but auniversal idea. Luxury is a subjective notion, and we will develop this point later on, but it has always beenpart of different societies across the world. Luxury is a universal phenomenon that is observed even inprimitive civilizations that didn’t have today’s levels of economic development. Therefore, in Ancient Greece,luxury was omnipresent in their society, through different sorts of rituals. Egyptians already had a notion ofwell-being and beautiful luxury products, and were big consumers of jewellery and perfume. It is alsoobservable in primitive societies with the notion of celebration and festival, which are, according to theFrench sociologist Gilles Lipovetsky, a sign of a certain luxury. The etymology of luxury, Luxus in Latin, meansexcess, debauchery, glory and splendour. The character itself of luxury is based on conspicuousconsumption and absence of foresight, things that you already find in primitive celebrations.Because luxury is a universal notion, its role in the society has always been discussed and questioned,especially by philosophers or sociologists. We are going to go through the primary ones that luxury sustains.Social Media and The Luxury Industry 9
  10. 10. • Honorific function as per Malinowski and Mass theoryBased on this notion of luxury as excess and conspicuous consumption, two famous anthropologists, theEnglish Bronisław Kasper Malinowski and the French Marcel Mauss, explained another fundamentalfunction of luxury in the society. They conceptualized the theory of gift exchange and its importance tocreate a balanced society. The exchange process creates social order and a breakdown in this giftexchange process brings social conflicts. In this gift exchange process, luxury has an honorific and socialfunction as it leads to superior positioning. The luxury gift will enable the man to establish himself as theleader and the headman in the society by giving him superiority. The leader becomes the one who acquiressuperiority through an unbalanced exchange process by giving luxury goods. • Inequalities and Max Weber theoryLuxury is also seen as being a sign of distinction in the society. As per the theory of Max Weber, Germansociologist and economist (1864-1920), luxury is not something contingent in a society. Luxury is asnecessary as inequalities. Because inequalities and social classes have their origin in differences ofeconomic distribution, luxury is just the transcription of the hierarchy in the society and of the inequalities.As Gilles Lipovetsky writes when explaining the theory of Max Weber, this is because a society withoutinequalities, without escalation of spending does not exist, that luxury is a universal phenomenon.Luxury does not have to be analyzed only from a sociological point of view, and only as a social sign ofdistinction and inequalities. Luxury has also been a subject of debate and questioning for a lot ofphilosophers. Luxury does not only provide premium goods and is not only just consumption: luxury has alsoa holy function, a certain way to relate to time and is a synonym of pleasure. • A Holy and sacred functionLuxury has a certain holy and sacred function in the society and it is probably one of its oldest roles. Duringwhat is called the period of the “Luxe sacré,” the main function of luxury was religious. Luxury was a way forpeople to buy themselves a proper passage from life to death. Then, there were two different componentsin luxury: the gift, which was often a sacrifice to the Gods and a destruction process. Excess andoverconsumption enabled people to recreate the origin of the world, which always originated fromdestruction and chaos. That was symbolic of celebrations, carnivals or holy festivals: to be reborn andrecreate through destruction, thanks to the magic role of luxury. Luxury was far from all those economicideas that we have in mind now when thinking about it. It was a holy role in a very religious environment,whatever the civilization and the country. There was a strong sacrificial dimension in luxury: first there was aceremony between tributes to exchange gifts and then luxurious products were destroyed and burnt toprove the strength of the headman.In those societies, the role of luxury was totally different from the more materialist image that we have ofluxury. This role was more spiritual. In most of civilizations, religion and society are the reason for thecreation and development of luxury.Social Media and The Luxury Industry 10
  11. 11. • Luxury and eternityGilles Lipovetsky develops this relationship between time and luxury in his book “Le luxe éternel”. He explainshow in the love for luxury goods there is always a quest for eternity. Luxury brands have to deal with thischallenge: follow the trend and keep innovating without losing their roots and the importance of carryinghistory in its products. When buying luxury goods, customers are not only looking for good quality and ameans to show-off; they are also looking for brands offering iconic products, brands set in history. Buying adiamond (DeBeer’s slogan is: A Diamond Lasts Forever) or a Louis Vuitton trunk certainly brings a certainsense of eternity. These products will be kept and most probably transmitted to the next generation. Afterall Patek Philippe advertisements say: “You never really own a Patek Philippe. You merely look after it for thenext generation.” This idea of eternity brought by luxury goods lies in a particular way of consuming. Luxury isagainst the idea of mass-consumption. When people consume luxury goods, there is a specific concern foremotion, for the experience that is delivered not only by this product but also by the brand. This leads us toanother key role of luxury: dreams, emotion and pleasure. • Dreams, emotion and pleasure “Le luxe, c’est créer un rêve qui perdure…” Jean-Louis Dumas-HermèsIf this role is really controversial and has been criticized in the past, mainly by religious organizations andphilosophers such as Rousseau, luxury brings back to society the notion of dream and magic. Luxury goodsexalt the senses. They create emotion. Luxury is first and foremost a personal and individualist pleasure.Luxury could be a synonym for sensual pleasures. People are not only buying a luxury good for the product,but also for the experience they are going to live with. Luxury goods do not belong to elementary needs asDimitri Mortelmans was explaining. “Luxury has been viewed as useless and superfluous because it belongsto the realm of desires instead of elementary needs.” This is why luxury goods have always been linked todebauchery and excess. Luxury is also a synonym for “art de vivre” and perfection. This is a way of living, adesire to bring perfection into our everyday life; to transform our daily needs into something magical. In amore common function, luxury rhymes with a certain sense of elegance in the way of life, from the art ofentertaining to the art of living, from an elegant outfit to gorgeous decors. • A driving force behind the economy, techniques and artA last important function of luxury in society is its importance for the economy and for the country. The mainphilosopher behind this idea was Voltaire, who joined the English school opposing the school of Rousseauand supporting the idea of Luxury. While Rousseau was condemning luxury for the wrong effect that it hason people, Voltaire was one of the main advocates of luxury during the Enlightenment. Developing someideas that Mélon was already discussing in his book “Essai politique sur le commerce,” Voltaire explains howluxury is a benefit for an economy and a country. Luxury should not be condemned because it bringsprosperity to the state, as well as happiness to people who consume it. Above all, luxury enables smallartisans and the working class to earn a living. Luxury is a driving force for the economy: it is the origin of alot of artistic and technical discoveries.Social Media and The Luxury Industry 11
  12. 12. As we have seen all along, luxury has always played an important role within society – even whencontroversial: whether it is as a religious symbol, as a key driving force for the economy or asentertainment. Useless for some, mainly because it does not belong to elementary needs; fundamental forothers, luxury is a universal phenomenon. But as the professor Dimitri Mortelmans was explaining, “Luxuryis defined as a specific kind of sign value, produced in specific narratives and used in processes ofstratification. As a sign, it becomes apparent that luxury is a relative concept. Every social group can be saidto have its own luxury. Every social group has in fact a different kind of luxury”. The notion of luxury can evolvefrom one culture to another, but also varies with time. The idea of luxury itself is universal and timeless. Itdoes not mean that the products we consider as luxury goods are not changing. In order to understand thisevolution, we need to look back into the recent history of luxury, and we will need to focus on the quest foridentity of luxury nowadays to understand the problems and problematic which are raised today to luxurybrands. b. Evolution of luxury since 19 century, modern luxury and its quest for identity th • The revolution of luxury and the first signs of an industrialization of luxuryAt the end of the 19 century, the luxury industry was facing its first change towards a future thindustrialisation. The traditional idea of luxury during the 19 has changed. Luxury was no longer only about ththe art of entertaining. The emergence of a few creators was going to deeply change the perception ofluxury: some new signs of distinctions appear in the society, such as perfumes or fashion. At the heart ofthis revolution, some creators are often viewed as pioneers. The main ones are Guerlain, who developed theinterest of luxury consumers for perfume, and Worth for fashion. Worth was the first individual to developthe “Haute Couture.” This was still the end of the 19 century; those changes are still minor in comparison thto what the luxury industry would go through in the 20 century, but the society was living the first steps of ththe industrialisation of luxury.The “old model,” or shall we refer to it as a “traditional” model, was artisanal and aristocratic. Luxury goodswere not products of creators but artisans. The goods were bespoke, handcrafted and unique, and probablythe main difference was that the customer was at the heart of the creation. Those first changes made inpeople’s mind with creators like Worth, or Jeanne Lanvin during the 1920s were amplified with theeconomic prosperity after the WWII. The successes of some “Maison” like Chanel are considered examplesby an entire generation of new creators who took advantage of the new economic prosperity. Many newMaisons de Haute Couture were financed thanks to rich entrepreneurs. The most famous one is MarcelBoussac, who financed the creation of the Christan Dior Maison in 1947. At the end of the 1940s, morethan hundreds of Maisons have the label of “Haute Couture.” This is the period of the creation of famousMaisons that are still very well known today, Balmain in 1945, Givenchy in 1953, Guy Laroche in 1957,Courrèges in 1964. Important international media coverage and a noted quality to the work contributed tothe development of the fame of Parisian fashion. At the same time as this important increase in the numberof Maisons, this was an important period for creators. This was not the end of bespoke fashion, butcreators now became famous for their style, their name, they established themselves and imposed theirown taste to the consumers. This was the triumph of the creation and the creators. Luxury was not onlydefined because of beautiful fabrics and their quality, luxury was now also linked to a name of a Maison, aname and the style of a creator. It took an important part in the revolution of luxury and it changed thecreation itself: the logic that opposes the model to copy is now developed.Social Media and The Luxury Industry 12
  13. 13. An important phenomenon that took part before the 1970s in this “revolution of luxury” is the developmentof luxury groups. If the number of brands increased quite a lot during this period, the luxury market had lessand less companies. The phenomenon of concentration in the luxury industry found its origin in a neweconomic logic. After WWII in France, some industrials started to understand the importance of the luxurysector for the economy and as a competitive advantage for France. This is the period of the creation of the“Comité Colbert,” mainly created by Lucien Lelong and the perfumer Jean-Jacques Guerlain. The initialpurpose of the Comite was to relaunch an industry that suffered from the war and that could be anpowerful industry for the French economy. It soon became a proper vehicle in defending an industry that isnow seen as a French symbol abroad with more political and economical stakes. If the evolution of the luxuryindustry has a lot to do with the industrialisation of the product itself, this financial concentration in theindustry and the control of the main companies and Maisons by some rich investors took an important partin the revolution of luxury.The main aspect that lead to a revolution of luxury is the industrialisation of the products and it started atthe early 20 century. The sector that pulled this industrialisation is the sector of the perfumes and thFrançois Coty embodied this trend. He created, in 1904, the “Rose Jacqueminot” based on natural andsynthetic essences, sold in a bottle designed by René Lalique. He did it again the next year with its perfumeL’Origan and settled a new model of production for the following years. The perfume industry then became aprecursor to the evolution of the luxury industry, and the 1950s and 1960s would accelerate thephenomenon. Because of this expansion of the perfume sector, it became a sector in itself and not justlinked and dependant on the fashion industry and Haute Couture Maisons. This sector soon tended to usemass production and changed the rules of distribution of the luxury industry. Changes in distribution, massproduction and diversification of the brands with a strategy of extension are the main trends in the luxuryindustry that started to emerge before the 1970s. Some examples illustrate those changes quite well: “MaGriffe”, the perfume that had samples distributed in Paris in 1946; the development of the duty-free shopsin the airport selling luxury goods and the creation in 1972 of the Cartier boutique des Must, which sellsaffordable Cartier products using the Haute jewellery image and mass production. • Since the 70s, modern luxury, marketing and its quest for identitySocial Media and The Luxury Industry 13
  14. 14. All the changes that happened after the 70s are just an acceleration of the evolution that happened before:the industrialization, the concentration of the luxury industry in big groups, the development of new types ofluxury products, the importance of the brand and creator name in the luxury buying process…One important change, which is something new, is the important development of marketing as a key part ofluxury brands strategy. This period is characterized by the important development of the collaborationsbetween artists, models and brands. A symbolic example of this new importance of marketing was the1977 launch of the perfume Opium by Yves Saint-Laurent, considered to be one of the first marketingcampaigns for a perfume created by a luxury brand. Helmut Newton shot the first advertising for thisperfume with the model Jerry Hall. Steve Hiett, David Lynch and Tom Ford also contributed to the nextcampaigns for the perfume with other models.Social Media and The Luxury Industry 14
  15. 15. This new strategy adopted by luxury groups, towards a more commercial, marketing and financial focus,lead to more mass production. In the perfume industry for instance, this translates into a huge increase incosts for the launch of each new fragrance. At the same time the competition is getting wider – mostbrands have a perfume nowadays – making the market cluttered and reducing the product lifetime.All those changes within the luxury industry have been and are still criticized by industry professionals. Themain concern is to develop the industry toward a commercial-only logic and to no longer focus on luxuryitself and what has to be luxury. Criticism has been made on the mass-production in industries like perfumeas well as the production in the same laboratories for different brands of perfumes in big luxury group suchas LVMH. The same evolution can be observed in the “Haute couture.”. The number of Maisons has beendivided by two in less than ten years, and the premium and high-end ready to wear seems to have replacedthe Haute Couture. All these evolutions are often linked to the economic situation, the crisis and the financiallogic that drives certain strategic decisions in the luxury industry. In an interview in the newspaper LeMonde, Franco Cologni, CEO of Cartier, was explaining how luxury has changed because of the consumersbut can also be explained by the strategy implemented by certain companies. According to him, theimportance of the brand as a guarantee of quality is a good thing but he is against the “logomania” which isbased on an abusive use of the logo and the name of the brand to sell products at a higher price. He raisesan on-going concern for the luxury industry, which is the notion of scarcity. He thinks that it is fundamentalfor a brand to keep being more demanded than offered and that it is a big issue today due to a hardcompetition and an important increase of consumers of luxury, especially from the BRICs.Thus, it is important to talk about the other important characteristic and change in the luxury industry afterthe 70s: the emergence of new consumers, and thus, new strategies. 3. The recent evolution of luxury brands to internationalization a. New luxury consumers in developed countries and strategy of extension of the brand territoryWhat we call luxury today seems quite distant from what it represented in 19 century societies. One of the thmain criticisms coming from “purists” is that luxury is now everywhere. There is an overabundance andluxury is ubiquitous, which blurs the frontier between what is luxury and what is not. Nowadays, luxury seemsto be accessible to everyone. Luxury brands are developing offer strategies (vs. demand strategy whichused to be the rule) to successfully sell to different types of luxury consumers. Luxury became even morecomplex than it was before and it is now possible to establish a segmentation of luxury with accessible,semi-accessible and inaccessible luxury. Pierre Bergé was explaining in a talk in 2002 how perfumes havebecome convenience goods because the products need to be at the taste of people from all over the world;from Americans to Japanese. According to him, it led to a waste of quality and originality. Users’requirement specifications have been too restrictive; there is no longer enough liberty to create a properluxury product.In mass consumption societies, luxury is no longer reserved to the happy few, slightly changing its role at thesame time. One out of two European consumers is now buying a luxury product at least once a year. Luxuryconsumption has become more personal and individualistic. The consumption of luxury goods is now lessthe result of social pressure, and more the expression of a true desire. If there truly is a democratization ofSocial Media and The Luxury Industry 15
  16. 16. luxury because society has spread widely the taste for luxury and well being, brands being the expression ofthese tastes, there is still an important desire for luxury. The evolution of luxury is complex and has differentorigins – globalization, concentration of the luxury groups, industrialization, the economic crisis … - and weare now facing new strategies from brands in an attempt to adapt to a much broader audience. At thesame time that brands are focusing on their core businesses, they tend to extend their brand territory.The first important strategy is the strategy of “brand stretching.” The objectives behind a brand stretchingstrategy are plural: increase the turnover, broaden the targets, increase the average spend per client,reduce the seasonal demand and reduce the risk of having few products. Such strategies are well known inthe luxury fashion industry because it is easier to decline the offer in fashion and develop the accessorising.Accessories and perfumes are the most developed products for such a strategy. Source: Luxe et Brand Content, QualiQuanti and SAME SAMEBrands like Jimmy Choo or Vanessa Bruno, to name a few, have differentiated themselves by developingproducts like sunglasses, scarves, leather goods but also new collections for men or children for example. Itis a more complicated strategy to adopt for jewellery and watch brands because of the core business itself.Such strategies have strong advantages for luxury brands such as increasing brand awareness as well as adiversification of target but at a huge risk of losing its luxury image.The second strategy is the strategy of deepening in the core business of the brand. To attract a broaderaudience, those brands are developing different types of collections to segment the offer: from upmarket toseasonal and unlimited collections. At the same time that brands are developing second looks to reach ayounger audience especially with products that are more “entry-level” and more affordable to startconsuming luxury. In general, those collections are cheaper and have a modern and younger style like thecollection Etoile by Isabel Marant, Marc by Marc Jacobs, Athé by Vanessa Bruno, etc.Those new strategies are complex and at a risk but are necessarily driven by business and financialobjectives. It also reflects the fact that consumers have changed and luxury no longer has the same role insociety. It is important to raise the importance that “non luxury consumers” have taken in the business andcommunication strategy of luxury brands.Social Media and The Luxury Industry 16
  17. 17. Source : la pyramide Eurostaf du luxe b. Crisis, economic development of the BRICs and focus on emerging consumersSince the early 2000s, the luxury industry has known another important evolution, with new strategies forluxury groups based on emerging consumers. France is still the leader worldwide when it comes to luxury,and this sector represents the French people’s first exportation industry outside Europe – 80% of thebrands’ turnover made abroad - but the economic crisis in Europe and in developed countries has urgedluxury groups to rethink their strategy and target new potential consumers. In a very globalized world andafter the recent economic crisis, luxury groups have then tried to develop themselves and their turnoverabroad, focusing on emerging countries like North America, Asia, especially China and India and someEastern European countries. After the economic crisis, the luxury industry has overcome the recessionsince 2010 with a growth of 11,1%, thanks to the Asian countries, with China as a leader. Source: EurostafRelying on those Asian and BRIC countries for the luxury growth also means that luxury brands have nowproperly taken into account those new consumers and their culture and specificities when it comes toproducts, services, experience, and communication. Luxury brands can’t just use their Western imageanymore to sell luxury brands to those countries that became more mature.Social Media and The Luxury Industry 17
  18. 18. Those new consumers – i.e. mid to upper class - are really attracted to luxury goods, especially Europeanones: French, Italian, and German brands are always in the top mentioned. Luxury products are for them asynonym of high quality, but also of innovation, which is a difference of perception from western consumers:81% of Russian people surveyed think that luxury products are the best in terms of innovation, 84% of the 7people surveyed in India and 76% in Mexico think this as well. Those differences in perception of luxurygoods and brands mean that luxury brands have to adapt their communication toward those newconsumers. China is expected to be the most important market for luxury goods in 2015 but luxury brandsare still struggling to talk to those new consumers who are using Internet as the first influential media in thebuying process . Educating these new consumers and initiating them to what is luxury, how to use the 8products, what is the history, the “savoir-faire”, etc… is a fundamental and highly strategic aspect for luxurybrands according to Matthieu Guéval . In a report from DLG (Digital Luxury Group) on China Connect , it is 9 10noted that one of the particularities of Chinese consumers is that they are eager to learn more. Marketingcampaigns focusing on consumer education creates greater impact. Another really important thing aboutthose new consumers, and again, especially Chinese ones, is that luxury brands have to take into accounttheir cultural specificities. If luxury has to have multicultural codes, and have to keep them in luxuryadvertising and communication, it is crucial they also inform the local culture: marketing adaptation cannotbe underestimated when targeting Chinese wealth consumers. Some luxury brands have started differentmarketing and distribution strategies in those countries: from developing and increasing the number ofshops (Burberry, Ferragamo in China), to developing specific products for those countries (Chanel and theShanghai collection) to going even further and developing new brands (Hermès and the development of theirnew Chinese luxury brand, Shang Xia, in September 2010). The same questions have to be raised for thecommunication of luxury brands and it is all the more important when it comes to digital and social mediacommunication, as China has its own social networks such as RenRen, Sina Weibo, Tencent or Jiepang toname a few, and 50% of the online users being affluent (monthly revenue up to 2000RMD).Now that we have drawn up an overview of the luxury industry from its definition to its role in the society, itsevolution and its current issues and trends that it has to face, it is clear that the luxury industry could not becompared to any others, and that it has its own specificities. The luxury industry is not just another industry;it is first and foremost a social and cultural phenomenon and it is important to always keep this in mindwhen it comes to analysing any marketing and communication strategy. To be able to understand furtherthe challenge that this industry is currently facing in the digital age, we have to describe and explain what isthis other social phenomenon: social media.7 According to the World Luxury Tracking, an Ipsos survey made in 2008 on luxury with 6000 interviews in 7 countrieson the high-middle class.8 According to a BCG study in Asia9 Author of the book on brand content and Research Director at QualiQuanti Europe’s first conference on marketing and digital in China, organized by Stratégies Conférences in 201110Social Media and The Luxury Industry 18
  19. 19. B. Social Media: a revolution in the way people communicate 1. Introduction“The collection of people, hardware, and software -- the multi-access computer together with its localcommunity of users -- will become a node in a geographically distributed computer network. Let us assumefor a moment that such a network has been formed.” J. C. R. Licklider, Robert Taylor, The Computer as a Communication Device, 1968. 11In 1968, visionaries Licklider and Taylor wrote: “we are entering a technological age in which we will be ableto interact with the richness of living information (…) as active participants in an ongoing process, bringingsomething to it through our interaction with it, and not simply receiving something from it by our connectionto it.” Their idea was: “We want to emphasize something beyond its one-way transfer: (…) the part thattranscends “now we both know a fact that only one of us knew before.” When minds interact, new ideasemerge. We want to talk about the creative aspect of communication.”Licklider and Robert Taylor were already envisioning how this network of computers would becomeuniversal, and how it would be much more than a transmission data service but also a tool to create “newideas” through the interaction with or of its users. It would thus be the power of this virtual community thatwould allow the creation of a networked world with no boundaries for ideas, knowledge, exchange, etc.The internet is a product of the Cold War. Created in the 1970s, the initial aim was to protect key data incase of a nuclear attack. But during the 1980s, it became an academic exchange network, a place forknowledge. Then it quickly started becoming a means of mass electronic communication accessible toanyone having a telephone line and a computer.With its immense possibilities, the internet might be the greatest technological development of the 20 thcentury, allowing instant access to websites offering information about literally everything and anything. Thefirst stage of the internet – or web 1.0 – was about finding and reading content created by institutions orcompanies, the web 2.0 – also called the social web – is all about user-generated content. And this is whatwe are going to explore here. 2. What is Social Media?Before studying “social media” as a whole, each word should be considered separately to understand whatnotions, values and means are involved here. Social sciences define the word “social” as: “developing from orinvolving the relationships between human beings or social groups that characterize life in society.” It is themovement emerging from human relationships. The word Media relates to “the main means of masscommunication, esp. newspapers, radio, and television, regarded collectively; the reporters, journalists, etc.,working for organizations engaged in such communication.” Whereas social is more of an action, a notion,the media is the means. Considered, as a whole, social media would thus be defined as the main mean ofmass communication based on what comes from the relationships between humans.11 The Computer as a Communication Device, J. C. R. Licklider, Robert Taylor, 1968Social Media and The Luxury Industry 19
  20. 20. As a new concept, the definition of what is called social media is far from being set in stone. The termrelates to everything and nothing: it is basically any form of online publication allowing users to engage inconversations. That would be the generic definition, or one of them; publication meaning any sort of contentavailable to the public.But this definition does not satisfy us, as it does not embrace the online part. What is called social mediahere is restricted to online publications, or at least the effect it has online. And as soon as you consider theweb, you also have to keep in mind the technology behind it. Thus this definition is not satisfying, as it doesnot embrace the technological aspect that goes with it.In people’s minds, the word social media relates to a category based on user-generated content andconversations around this content. This category includes social bookmarking like, socialnetworking sites like Linkedin and Facebook, social news like Reddit or Digg, social blogging platforms likeTumblr and many others. The main idea is that is a both an innovative tool and a social phenomenon. “Social media is "a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, which allows the creation and exchange of user- generated content." 12 Users of the world, unite! The challenges and opportunities of Social Media , Andreas Kaplan and Michael HaenleinThis definition takes in consideration both aspects: ideological and technological. The ideal of an open spaceworld where everything is about creating, sharing and discussing; but also having the ability to do so throughinnovative tools with enhanced user experience. The technology is needed to allow the user to enter thisnew era of the Internet. Without tools as easy to use as social networks, the presence of social plug-ins toallow users to share, browser extensions, etc, there would be no social web. It is the technologicalperformance that allowed the social revolution to happen. But these tools have appeared in a desire to solvethe engineers’ day-to-day problems. It is the need for these tools that pushed developers to create them.One way or the other, the idea of bringing the web to a next step and the technological progress are tied intogether to create the social web, leading to social media. Kaplan, Andreas M.; Michael Haenlein (2010). "Users of the world, unite! The challenges and opportunities of Social12Media". Business Horizons 53(1): 59–68. doi:10.1016/j.bushor.2009.09.003. ISSN 0007-6813. Retrieved 2010-09-15.Social Media and The Luxury Industry 20
  21. 21. 3. Social Media: A Sociological PhenomenonThere is a debate on whether or not the World Wide Web has entered its 2 generation in terms of ndtechnology, but there is a general acknowledgement that there is now greater user participation,interaction, data sharing and networking. The web 1.0 was mostly used as an information source, thus thedomination of search engines like Google. The web 2.0 is about creating and consuming content. The notionof user-generated content is one of the main ideas of the web 2.0 and translates a massive change in theway people interact with each other. People have now entered a phase where they want to share what theydo, what they think, how they see the world; with everyone and through all social platforms. “Social phenomena are considered as including all behaviour that influences or is influenced by organisms sufficiently alive to respond to one another. This includes influences from past generations.” 13 John Markey, A Redefinition of Social Phenomena.In this case, we are focusing on human behaviours on social platforms and how we can consider that socialmedia is a sociological phenomenon. It is the observation of the “behaviouristic trend and the emphasisupon the objective nature of social life, study of groups, and group life, environmental study” that will allow usto determine if it we can say so here.With the web 2.0, and the phenomenon of creating and consuming content, notions of user-generatedcontent, social sharing, etc; we observe a clear evolution in people’s behavior. The human life is not boundanymore to the real life and continues on digital platforms where the conversation carries on.As specified in the definition, we are looking for “all behavior that influences or is influenced by organisms -humans in our case – sufficiently alive to respond to each other”. And that is where the term social mediamakes all its sense. It is the ability to have conversations online - to share content, to discuss, to laugh, tocry - basically to have a social life, to form groups, that conveys this idea that social media is a sociologicalphenomena.And it goes further along as social media have truly changed the way people interact and how they viewthemselves. People adjust their online identity to be consumed by others. Our identities on social platformsare not who we are but they are what we want other people to see us as. We only share what we want to.We forge our online presences so that people interact with us.David Armano wrote an article in the Harvard Business Review called Why Social Sharing Is Bigger thanFacebook and Twitter where he explains how “social media has led to “social sharing,” the broadcasting of 14our thoughts and activities.” Before we would only share “our thoughts and activities” to our closeenvironment: friends, family and co-workers. Now we are constantly responding to questions such as: what John Markey. "A Redefinition of Social Phenomena: Giving A Basis for Comparative Sociology." American Journal of13Sociology Vol. 31 (1925-26): 733-743.14 Why Social Sharing Is Bigger than Facebook and Twitter, David Ormano, HBR, 2010.Social Media and The Luxury Industry 21
  22. 22. are you doing? What do you like? What do you read? We have entered a new era on the Internet where weconstantly feel the need to tell others what we are doing/reading/viewing/eating/drinking… Social mediahave been reinventing the way we interact with our peers but even with people we do not know. And as anysocial phenomenon, at the start only early adopters would activate these tools – tweet this button, likebutton – but now it has truly become something the majority does. People are now entering this phasewhere they curate their social profiles because it is now also part of their social life.The initial dream of the Internet to create a platform where we could interact with information hassucceeded in finally taking place. But social media as a social phenomenon never could have taken placewithout the technological tools being activated. It is the combination of “the ideological and technologicalfoundations of Web 2.0” that have allowed the global Internet to enter this new phase. 4. Social Media: a TechnologySocial media have become a social phenomenon, but are first and foremost the use of web-based andmobile technologies created to facilitate social activities on the Internet. Web-apps, mobile-apps, social plug-ins, social platforms, social games, social comments, instant messaging, blog, etc: they all contribute tomake the web more social, to allow people to communicate, exchange information and commenting onother people’s status.As seen in Kaplan’ and Haenlein’s definition, social media are built on the technological foundations of web2.0: “web applications that facilitate participatory information sharing, interoperability, user-centered design,and collaboration on the World Wide Web.” Notions of user-experience (UEX) and user interface (UI) arekey in the development of social media. Web 1.0 was mostly an environment where people were passiveviewers of content that was created for them. Only the people able to code and who could understand thetechnology behind it were able to become users. With web 2.0, all changed as easy tools were developed toenable people to create their own content and to become active users of the Internet: it is the birth of thesocial web. User interfaces are re-designed to make the user experience as easy and pleasant as possible.The Internet is no longer reserved for people who understand how it works; you can now be a part of itwithout being able to understand the technology.And this is where it has become fantastic. The initial dream of the Internet was a network of information. Itwas designed to become the “multi-access computer together with its local community of users” but wasfor long reserved to the people that know how to put this information on it. You could only be an active userof the Internet if you had a website for instance and if you knew how to code. But it is because thetechnology and the user-experience has improved so much that the web has now entered its social phase,becoming a true network! Micro-blogging platforms like Tumblr now allow you to extract any content fromany website that has a Tumblr share button and directly re-blog it. The like and tweet this buttons haveliterally enabled people to actually do it because it is so easy. Mobile apps have allowed people to be activeon the web even when they are not on their computers and have allowed a full change to the way peopleinteract. Within real conversations, people will still interact with their mobile devices to verify someinformation, or send notes to themselves about things that they have recently seen. In a shop, people wouldupload the photos of the clothes they are willing to buy on Facebook and ask their friends’ opinions. All thiscan only be allowed because the technology has initiated the change and has been able to keep up andembrace people’s will to share and curate and document real life as well as digital life.Wikipedia defines a tool as “a device that can be used to produce an item or achieve a task, but that is notconsumed in the process. Informally the word is also used to describe a procedure or process with aSocial Media and The Luxury Industry 22
  23. 23. specific purpose.” If you only consider it as a technology, social media is a tool. It has been created to allowconversations to happen around user-generated content. People use social media as a continuation of theirpersonality in a way, and adjust their online identity to be consumed by their peers. As a result, they informtheir peers about what they wear, what kind of music they listen to, where they travel to and basicallyanything that matters to them. They also talk about brands and politics. Again, the social web hastransformed the Internet from a dry and passive space to a space where everyone contributes. This is verynew because individual opinion is not bound to a note pad, an oral conversation, or a customer servicevoicemail, the social web has enabled users to discuss with other users – that they do not necessarily know– of their concerns about a product, their love for a brand, their passion for an activity, etc. Forums could dosomething similar but it was only limited to people who would take the actions to go on their particularnetwork. Now people commenting about that brand or that politician can easily share it on social networksites and ask their friends’ opinion. Furthermore, this information is not just implemented on a forum or ablog that you cannot really find unless you use the right keywords on Google, it can be shared through“social buttons” very easily across all platforms at once. All this gives a massive power of influence to users. 5. Social Media or the Era of the Consumer a. The social web has enabled social recommendations.The implications of social sharing are multiple and must be taken into consideration to understand theentire phenomenon. Social media are an effective contribution to society because they have a true purposeand have not only been conceived for gossipy conversation. They constitute a new platform for people toshare their thoughts on all subjects including serious ones like politics, problems effecting their everyday lifebut also their love and hate of brands. The social web, by enabling discussions, has allowed users to findothers easily who have been experiencing the same issues or have been passionate about the same brands.It is the start of social recommendations, enabled through social plugins, Facebook comments, etc. b. Social recommendations have empowered consumersBrands have started to listen to these conversations. They are taking more and more into considerationcustomers’ experiences and concerns for many reasons: crisis management, social CRM, productpromotion, brand awareness, etc. People are already talking about their brands. Thanks to the social webthey can easily become ambassadors or the complete opposite. For a long time, if you were having a poorexperience with a brand or product, it was very hard to spread the word about it and thus warn the brandthat actions must be taken to repair their mistakes, or they would suffer the consequences of it. In thepresent times, if someone who is influential starts talking in poor terms regarding a brand, its reputationcould be damaged. As people are getting more and more aware of what others are experiencing, they arebecoming less attentive to brands’ messages. The one thing you do when you want to buy a phone, acamera, and a computer is to try to find other customers’ experience with this product. The same wouldhappen if you were dissatisfied. Social recommendations have become key to users, shifting the power fromwhat brands could achieve with advertising to something based on true experiences. c. The phenomenon of co-creationBrands have also started to see how they could use the power of social media to implement the rightsolutions within their offering. They don’t have to guess or determine on their own what is good for theirSocial Media and The Luxury Industry 23
  24. 24. customers. No need to test ideas on a panel of users. Social savvy brands can now simply get theircustomers involved. It is a win-win situation. It’s cost effective for brands, and customers finally have thefeeling that brands listen to them. This is what we call co-creation. As stipulated in The Future ofCompetition: Co-Creating Unique Value with Customers , Prahalad and Venkat Ramaswamy explain how 15“today managers can no longer look at their businesses as the center of the universe, around whichcustomers orbit far outside decision-making processes.” Customers no longer want to be part of a yes/nosituation on what the company is offering: the era when companies created the offerings that they wantedcustomers to buy is now over. d. Customers are becoming specialistsCustomers are the primary users of whatever product is made by a company. As such, they know what kindof problems they are experiencing. Small suggestions that could make people’s lives better could easilyemerge from these kinds of initiatives. Social media are the perfect platform to implement this: people arepassionate and want to get involved. Sure, many companies mostly use it for PR purposes. Vitamin Waterfor instance created a new Vitamin Water taste after asking people’s opinion on Facebook. As one of thefirst attempts at co-creating, it received important coverage. But it is also the small details that will makethe difference in the customers’ mind. Active community management is essential to some brands. Beautybrands, for instance, can finally keep track of how well their products are working, what kind of problemspeople are having with their skin, etc. Clinique does a fantastic job of this: every time someone posts acomment on Facebook, they redirect it to the appropriate department. So if a group of women areexplaining that they are having trouble opening the product – a packaging issue – they will make sure thatthe appropriate department knows about it, to implement the necessary modifications. Customers arebasically becoming more and more the specialists in the products they use because brand want to educatetheir customers more and more. Users become savvier and want to get more involved. Again, thisempowers customers.Changes in our pace of life have enforced consumers to become more and more adept at digital. In asociety where we are constantly pushed to become more pro-active, digital has appeared as a practicalsolution, allowing people to have access to more services, to their favorite shops at any time. The notion ofchoice is key in the digital space and this is why brands need to be available everywhere. Technologicallysavvy, careful about their spending, with very little available time, consumers have embraced digital whichhas given them more power, more knowledge and it is essential for brands to make sure that online usersare exposed to their messages.15 The Future of Competition: Co-Creating Unique Value with Customers, Prahalad and Venkat RamaswamySocial Media and The Luxury Industry 24
  25. 25. C. Two Social concepts necessarily meant to be confronted 1. A reality that overtook the brands’ willsNow that we have defined more precisely the notion of luxury and described this new social phenomenonthat is social media, why must these two notions be confronted together? Why do luxury brands have tocare about social media?A first point to rise regarding the luxury industry is that it tends to construct an image much more throughthe media than before. Media are playing an important role of influence regarding buying or during thebuying process. The Internet, especially, is now at the heart of every luxury brand communication strategyand is further complicated because it involves new and different relationships with the brands. Source: Luxe et Brand Content, QualiQuanti et SAME SAME.We now speak of a “revolution” of social media because social media are not just a new marketing channel,it is completely redefining “virtually” the way we communicate, as well as the way we buy, the way we play, welearn, we share, we discover, we collaborate, even the way we choose brands. Social media are not onlyabout brand awareness; it also means PR, after sales, consumer service, loyalty building, networking andcustomer acquisition. Social media are everywhere and used by everyone. The 5 of July 2011, Google thlaunched its own social network, deepening at the same time the battle with the giant of social media,Facebook. The event has probably had some of the biggest media coverage online but also offline – on TV,newspapers, and radio… Social media have now become a real social phenomenon. It is no longer just asubject of discussion for geeks or professionals of the industry. The fact that a movie, The Social Network(2010), has been done about the early days of Facebook and its creator Mark Zuckerberg just shows howimportant this development is, and that it has became a cultural phenomenon as well.Brands just cannot avoid it anymore and they have to look at figures and how people, especially the younggeneration who are the potential future consumers are consuming, getting information and conversing withthe brands. There are thousands of figures that could be given to show how important this phenomenon isbut we just want to raise its social importance: 1 in 5 couples meet online today at the same time that 1 in5 divorces are blamed on Facebook; 80% of companies use social media for recruitment; 93% of socialSocial Media and The Luxury Industry 25
  26. 26. media users believe that a company should have a presence in social media; if Facebook was a country, itwould be the world’s 3 largest population; 35 hours of videos are uploaded on YouTube every minute. It is a rdfact that social media have now became more than just a new platform and can’t be avoided by brands.People, consumers are using those tools not only to share with their friends or to entertain but also todiscover brands or buy online. Figures are showing that not only the gen Y or some influencers are on socialmedia. It is now reaching a broader audience. The target of users aged from 50 to 65 is one of the fastestgrowing audiences on social media. Affluents – from $200k + - are using social networks like Facebook,Linkedin or Twitter much more that the general population.At the time of the development of the Internet and of the websites, luxury brands have always been thelater-adopters. But they have now understood how important this channel was for their communication andmarketing, and that they just cannot afford not to be there. It took a lot of time for those brands to properlyunderstand it and to develop digital strategies with allocation of budgets for it. The issue is now the samewith social media and luxury brands fearful of adopting it. Conversations are already happening, consumersare already talking about the brand, using social media as a source of information about products, as wellas third party information sources (blogs, Amazon, eBay, online magazines…) that collect discussion,product reviews and price comparison. Fake luxury brands’ Facebook fan page or Twitter accounts arecreated everyday: it is important for luxury brands to understand that they have to be there or someoneelse will take their place. This necessary social media presence for luxury brands does not mean that it would be an easymove to do. It is important to raise the issues that luxury brands are facing today. If we really think thatluxury brands have to use social media - and by social media we are not only thinking about having aFacebook page and Twitter account - as part of their communication and marketing strategy, this isimportant to understand that there is a challenging relationship between the luxury industry and the digital,especially social media. 2. A complex and challenging relationship: the luxury industry & digitalIf we have no doubt about the fact that luxury brands cannot ignore social media any more, not only as amarketing channel but more as a social phenomenon and a new way for the consumer to interact with thebrands, we have to explain and raise the issue of this complicated relationship.The reason why social media is a complex move for the luxury industry is due to the nature itself of luxuryand the definition we developed before. Social media is and will still be a complex change for a while for a lotof brands because there is a need to understand that it is not only a complex new platform to use but alsonew comportments of the consumer to take into account.Within this “revolution,” the luxury industry is facing a more challenging problem: how to keep being exclusiveand premium in open and accessible platforms. If it is easy to select the audience you want to target whenyou are doing an event offline, how does one talk to a niche of consumers on and through social media?Social Media and The Luxury Industry 26
  27. 27. There are several rules that luxury brands should follow, also known as “anti-marketing” rules because itcould only be applied to the luxury industry. The main ones are: 1/ Do not talk to a mass-audience but focus on a very specific population. 2/ Put some distance between the brand and the consumers. There should not be equalitybetween the two; luxury brands have to have a certain aura on its customers. 3/ There should be barriers to entry on the luxury market. Those barriers should not be only basedon price but be mainly sociological. Those barriers have to help build a world of privileged and expert people. 4/ Do not talk the same way to all your customers. It is important to differentiate them, especiallythe highly privileged ones who are ready to pay enormous amounts of money and wait a long period toacquire their object of desire.Because luxury brands are not following the traditional rules of marketing, using social media is a morechallenging and complex problem. The two main issues with social media for a luxury brand seem to belosing exclusivity and losing control. In a recent article, Peter Kim was still questioning the fact that luxury 16brands should use social media, and raising the question of what is exactly a luxury brand. As we have seenbefore, luxury is a complex notion and it became more and more complicated with the segmentation ofluxury, but that still does not mean that some luxury brands have to be on social media and some shouldnot. We think that the biggest point is how to be on social media and what type of strategy to adoptdepending on which brand you are and who your customers are. Social media are a new way to provideexperiences to the customers and to talk to them. As for luxury brands’ shops or their presscommunication for example, what has to be questioned is not the fact of having a shop or of advertising inthe press but how to do it. The experience will never be the same when a customer is entering a Chanelboutique or visiting a Calvin Klein shop, because the brands are not the same, and because everything ismade in the Chanel boutique to provide a proper luxury experience which is not the case in the Calvin Kleinshop. It is the same for a press ad: if the two brands are advertising in the press, they are not going to do itin the same way and in the same magazines. The segmentation of luxury does not mean that the higherluxury brands do not have to use social media but definitely means that they have to use it in a completelydifferent way, in their own way. The most important thing is for each brand to appropriate this new mediaand tools and to make it suitable for the brand.The critics against social media, saying that brands are losing exclusivity, are based on the fact that socialmedia are quite accessible platforms. In this case, what does accessibility really mean? Everyone canaccess the Facebook fan page of Louis Vuitton, but does this mean that they are all going to experience it inthe same way? Does this mean that they are going to understand the same things, feel a part of the samegroup of people as the real customers? It is not because you are walking in front of a Chloé Boutique thatyou are going to enter the house, or even if you do, that you are going to feel treated as a special guest.Exclusivity and accessibility have a complex relationship and a complex definition. It is important to explainthat, first, the accessibility of social media as a platform is not linked to the accessibility of the brand. Anyluxury brand requires certain capital – social, cultural and financial- for customers to be able to buy it.Having access to their Facebook fan page does not give you this capital and this accessibility. The secondpoint raised by Marci Ikeler is that “all luxury communications fall somewhere in the spectrum between 17accessibility and exclusivity. Luxury brands must, by definition, be exclusive. However, their value must berecognized and desired even by those who cannot attain it.” This is an important statement about luxury. A16 Peter Kim is the Chief Strategic Officer of Dachis Group, specialized in social business. His article is named “do luxurybrands need social media?” Marci Ikeler has spent the last 10 years working with advertising agencies and is now Director of Digital Strategy atGrey, NY.Social Media and The Luxury Industry 27
  28. 28. luxury brand does not have to and must not talk to everyone but it is important to be heard by a broaderaudience to generate desire.Another important criticism and argument for luxury brands not to use social media is the control. In theluxury industry, brands need to have control more than in any other industry. It is due to the essence itself ofluxury. As we have said before, luxury brands are following “anti-marketing” rules. They need to have theirown rules. Luxury brands cannot afford to make mistakes or failures. This is the reason why they alwayshave been careful to control every step of the production. For their communication, luxury brands are alsocontrolling every step, using agencies only for their creative executive role and having the strategy definedby the Creative Director who plays a strong role in the brand image. Karl Lagerfeld for Chanel, ChristopherBailey for Burberry or John Galliano for Dior (before he got fired), to name a few, are symbolism of thedifferent Maisons and they are building their own view of the brand. On the other hand, social media areoften synonymous with “no ability to control” because words can spread. The characteristics of social mediabeing real-time connected between the different platforms and the playground of people and not brandsexplain this lack of control. However, what are not controllable are the comments of people, the critics, thereviews and comparisons, not the content itself. When a customer is not happy about a product or theservice he paid for in a shop, he will spread the word about his disappointment in the same way thatconsumers are now doing online on social media, but it is now going faster and that is what is frightening forluxury brands. There are still ways to control the brand image and to keep it very strong. Social media arejust driving luxury brands to make a lot more effort to keep this control. Social media can be then seen as away to maintain the highest quality of product and services, the highest quality of experience – off and online– and the highest quality of relationship with consumers.Figures and facts are showing the importance of social media not only as a marketing channel but also as asocial and cultural phenomenon. Conversations and reviews are happening there anyway, overtaking thebrand’s will. Luxury brands cannot ignore any more social media and avoid it, using the excuse of beingexclusive and not willing to use mass and accessible platforms. This relation is complex and has to beproperly integrated as part of a brand strategy. Social media are not just a new channel of communication;they are a new way to communicate. It is an important challenge for the luxury industry to continueadvancement, to keep defining its own rules and values. Luxury – as being more than just products but aculture – should not be a follower but a trendsetter. We are now going to develop how, despite thischallenging relationship, luxury brands can turn digital, and especially social media, into a powerful tool todevelop brand awareness, build a relationship and listen to their customers, provide relevant content andinformation and create desire.Social Media and The Luxury Industry 28
  29. 29. III. As social media marketing is becoming inevitable, Luxury Brands are starting to embrace it A. The social media phenomenon must be put into perspective 1. Luxury brands should not be refining themselves to match social media Social networks have always existed. They were just for a long time bound to our real life circles: work, friends, family, etc. It is the technological performance combined with the desire to become more active users that have enabled us to enter this era of the social web. Customers are gaining more and more power and there is a risk for luxury brands at paying too much attention to their customers expectations and lose what characterizes them: being aspirational and leaders in their domain of expertise. In an article entitled Burberry: A Crowd Pleaser , Suzy Menkes - fashion editor of the International Herald 18 Tribune – explains that Burberry in its attempt to integrate digital and social media fully might have gone a step too far. Under Christopher Bailey’s commandment, the 155-year-old British brand has evolved a great deal. Its Chief Creative Officer has re-launched the brand by reinventing its key pieces. He has successfully incorporated digital within the brand’s strategy, positioning it as one of the leaders in the industry. But during its last London Fashion Week, not only was the AW 2011 collection catwalk live-streamed online, it was also live-streamed on Piccadilly Circus. Menkes’ words are the following: “for what it gained in bombast, the once-quirky line lost in charm, cheek and irony that the designer Christopher Bailey has previously brought to the Burberry Prorsum brand.” Her explanation for this is very interesting to this paper: “But perhaps when you bring fashion to the people, you have to please the whole crowd and go through the gamut of brand recognition tabs.” As we explained before, it is essential to make sure that on social platforms, brands continue to propose something exclusive, a special experience, and avoid falling into “the gamut of brand recognition tabs.” History defines luxury, not marketing. Luxury brands are tastemakers and should not be subject to people’s expectations. Whether or not Menkes is right, she does have a pertinent point of view. Has Burberry in its attempt to expand the luxury experience online gone too far? Is this actually being detrimental to its core mission: remaining an aspirational brand? Social media are a new way of communication but the brand should not be reinventing itself to match people’s expectations - “Moms in London”: “with Dusty Springfield droning on the soundtrack, it looked like the usually pert models had gained a few years, and pounds.” The brand should also not be reinventing itself to meet the requirements of digital: “it was easy to see this show as a made-for-small-screen presentation.” The danger of wanting to satisfy its “fans” (on Facebook for instance) could lead the brand to becoming “a crowd pleaser, if not a crowd sourcer”. The reason? “Probably half the Moms in London, let alone half the cyber world, would vote “Like” for a nice, roomy winter coat.” Luxury brands should be inflexible with regard to executing their true mission: creating what is best in their industry, made with the finest materials in order to offer a truly exclusive experience, something special. If their power of attraction is so high it is because they are trendsetters; they innovate in terms of technology and in terms of employed materials: they are leaders. It is a world of creativity and performance. Social media is mostly based on conversations and on user-generated content. It provides many opportunities for brands to gain strong insights from their fans to later meet their expectations. Here is a risk for luxury 18 Burberry: A Crowd Pleaser by Suzy Menkes, Fashion Editor of the International Herald Tribune Social Media and The Luxury Industry 29