THENUMBERS 60% use the internet each month to find information about luxury goodsAREGROWING 54% would like to see more advertising for luxury goods onlineFORLUXURYBRANDS 51% use the internet each month to communicate with friends and family about luxury brandsadvertising.microsoft.com
Digital Media & Luxury BrandsObjectives of Study Digital advertising has a role to playIs it appropriate for luxury brands to use digital at every stage of engagement.channels in marketing communications? Microsoft has developed a luxury brand • Consideration: The act of researching,• What are the motivations for purchasing engagement model which identifies 6 choosing and ‘trying on’ a specific luxury goods? distinct engagement points consumers product.• How do Luxury Lovers engage with have with a luxury brand, how they interact • Purchase: Offline or online purchasing luxury brands? with these points and what drives these consumers to the point of purchase. It is the • Ownership: Membership of the brand• How open are they to digital advertising? convergence of these engagements through club — purchase represents a higher level• How should digital marketing be used in multiple channels that build stronger brands of relationship with the brand. luxury marketing? and drives consumer brand advocacy. The model describes the six fundamental ways in which consumers engage with luxury brands: Awareness • Awareness: Consumers actively seek out information about luxury brands. p nce Exc hi lge Ad ers • Admiration: Luxury goods represent an l mir Own us u Ind ivit idealistic set of aesthetic and qualitative ation y standards, and luxury brand advertising represents a glimpse into a more A luxury seductive, exciting world. brand n Purc • Exploration: After the initial allure, atio Sta consumers seek to explore, understand tu ali ty s ha Qu lor and authenticate the brand. se xp E Con siderationWe can map digital advertising channels to the engagement model allows us tounderstand the different roles that each can play in a campaign Display Ads Search Email Instant Social Custom Desktop Messaging Networks SolutionsAwareness Targeting first; Sponsored links: B2C: Newsletters C2C: Sharing, C2C: Sharing, Microsite(s) Gadgets Productivity then environment text + video C2C: Sharing, WOM BOTs WOM Software* WOM RSS feeds: news, events, launches, sales, etc.Admiration Video Sponsored links: C2C: Sharing C2C: sponsored Microsite(s) Screensavers/ video Sharing Ads destinations WallpaperExploration Link to content, Sponsored links: B2C: Newsletters C2C: Sharing, sponsored Microsite(s) Gadgets e.g. Fashion Week text + video C2C: Sharing, WOM BOTs destinations WOMConsideration Sponsored links B2C: Newsletters BOTs C2C: C2C: Sharing, Microsite(s) C2C: Sharing, WOM Sharing, WOM WOM My My Gift Wish List My Gift Wish List Gift Wish List Sponsored linksPurchase Downloadable/ B2C: Exclusive UGC UGC Personalized GadgetsOwnership Shareable newsletters UGC Content Screensavers/ Wallpaper
A Passion for LuxuryOur research confirmsa phenomenalglobal appetite for ASIA EUROPEluxury goods. Total spend last year on luxury goods Total spend last year on luxury goodsWe estimate around US$148 billion was US$134 Billion US$14 Billionspent by online Luxury Lovers last year Total luxury goods purchased last year Total luxury goods purchased last yearacross our Asian and European countries,of which around a quarter was spent online. 1.9 Billion 820 MillionIt’s important to notethat Luxury Lovers also % of goods boughtlike to share the love. for self as opposed to giftingAround one third of purchases acrosscategories are bought as gifts. Designer clothing Designer fragrances Fine jewellery and accesories and cosmetics and watches ASIA 72% 66% 65% EUROPE 67% 58% 57%The European market comprises of a more mature market, whereas the Asian market is dictated by a younger luxury consumers. While luxury lovers inEurope are evenly split in gender, Asians are skewed more male. These differences do not mirror their respective populations as a whole.Understanding the differences between regions and within countries is key to targeting and planning for luxury consumers.Note that India, China and Russia are characterized by much younger Lovers of Luxury – something which defines their attitudes towards luxuryconsumption and use of digital channels 26% Europe 23% Female Male Asia 18% 16% 16% 18% 56% 16% 50% 50% 14% 44% 13% 8% 6% 6% 7% 6% 4% 3% 18-25 26-30 31-35 36-40 41-45 46-50 51-55 55+ Europe Asiaadvertising.microsoft.com
The Message of LuxuryAcross all regions, we uncovered a common setof core purchase motivations.INDULGENCEo Treating oneself to something ‘special’o A sensory experienceo Promotes sense of wellbeingo Premium to the act of indulging oneselfEXCLUSIVITYo Being part of an exclusive clubo Members define themselves through understatemento Members take pride in being ‘in the know’o Members signal to and identify each other through the brands they displaySTATUSo Communicating status to those around uso A personal affirmation of one’s own progress through lifeQUALITYo Perceived excellence of design, materials, manufacturing and craftsmanship.
The Motivations of LuxuryIndulgence, Exclusivity, Status and QualityThese four motivations map to either rational or emotional perceived luxury product benefits RATIONAL EMOTIONAL o Heritage, expertise, o Quality of o Success o Desirability reputation manufacturing o Confidence o Indulgence o Quality of design o Quality of o Wealth o Pleasure o Quality of materials experience/ o Elitism o Reward serviceLuxury goods purchase in Asia is motivated by the desire to own high-end quality products while exclusivity and indulgence drive luxury purchases in Europe.While each motivation plays a role in the decision to purchase luxury goods, our analysis suggests that Status is the most variable motivator when comparingindividualsIn Europe, the drivers of luxury consumption are exclusivity and indulgence, whereas in Asia, the primary driver is statusIndex scores on each factor (arrows showdirection of mean relative to average) Indulgence Exclusivity Status Quality ASIA (-0.1) (0) (0.6) (0.2) (-0.3) EUROPE (0.1) (0.2) (0)And differences even appear betweenage groups within regions. ASIA 0.02 -0.29 -0.74 -0.04 -0.02 0.06 0.67 0.48 0.55 0.19 0.20 0.18 0.06 0.08 -0.13 -0.05 -0.02 0.03 EUROPE -0.09 -0.50 -0.80 0.17 0.19 0.05 18-35 36-54 55+advertising.microsoft.com
Mapping countries according to their affinity with different purchase motivations providesinsights for campaign planning. We found that markets can differ by key motivators whichis important information for advertising strategists.Germany, Denmark, Italy Spain are markets which are exclusivity-driven whereas Japan,China are status-drivenThe size of the bubbles indicate the online population. Axes show the extentto which each country over/under indexes on each motivator.Over-index = right and top, under-index = left and down. Exclusivity Exclusivity Exclusivity Driven +1.0 + Status Germany Singapore Denmark Spain Russia Taiwan India China Sweden Italy Finland -1.5 Status Status South Korea +1.5 Switzerland Hong Kong Netherlands Belgium Japan Status Exclusivity Driven Norway -1.0Belgium, Netherlands and Sweden emerge as markets most driven by Indulgence as a motivator. Indulgence Indulgence Indulgence Driven +1.0 + Status Sweden Belgium China Netherlands Taiwan Germany Spain Norway Switzerland Singapore -1.5 Status Status +1.5 Denmark Italy Finland India South Korea Russia Hong Kong Japan Status -1.0 Driven Indulgence
Luxury and TechnologyLuxury Lovers are increasingly dependent ondigital media and technologyOur survey data confirm that Luxury Lovers are heavy users of online services and applications.Used in past six months Online Activity ASIA EUROPE Using Email 80% 84% Online Banking 73% 70% Online Shopping 70% 66% Business Purposes 59% 63% Downloading Music 56% 44% Instant Messaging 55% 46% Watching user generated video clips 54% 45% Going on social networking sites 48% 36% Watching TV 42% 29%advertising.microsoft.com
Luxury Consumers and the InternetLuxury consumers are already using the internet to bothengage with and talk about luxury brands60% Researching or 30% Receiving 51% Communicatingsourcing products communications from with others aboutor brands brands or retailers brands or products• Finding out where to buy • Receiving email newsletters from • Forwarding emails or links to friends – to share a desired product prestige retailers or recommend products• Establishing a brand’s heritage and • Receiving email newsletters or event • Sending IM to friends about luxury products ‘authenticity’ via its website invitations from luxury brands • Sending SMS or MMS messages from stores to• Browsing luxury goods online include friends in purchasing processThere is high acceptance of luxury In Europe, the Internet has an importantdisplay advertising across many role to play in luxury brand inspiration.online environments (even more so In Asia, the Internet rates highly as a keyfor Asian Luxury Lovers) source of inspiration for luxury brands. % of those who would be happy to see online ads Thinking about luxury items such as fashion, fine jewellery, on each of the following watches, cosmetics and designer fragrances, which of the following give you inspiration and ideas on what to buy? 73% Visiting the 63% Fashion Websites 67% actual stores 79% Lifestyle, Culture & 67% 65% Magazines Entertainment Websites 60% 60% Travel Websites 42% The Internet 63% 33% 50% Upscale Community 53% Catalog/brochure 50% Websites 31% through mail 45% Major web portals, e.g: 48% Advertising 63% msn.com 24% on TV 43% Personal Finance 30% Advice from 46% Websites 21% friends & family 41% News websites 30% Billboards/posters 41% 20% 34% Asia Asia Anywhere online 35% Seeing what people 35% 19% Europe wearing on the street. 34% Europe TV Shows 51% 29%
Luxury Online AdvertisingOver half of Luxury Lovers would like to see more luxury advertising onlineI would like to see more advertising of luxury goods on the Internet% of global sample agreeing with statement Agree 30% Among the ”Agree” and “Completely Agree” Groups: 24% 25% Completely Agree Region: ASIA EUROPE Age: 16-34 34-54 55+ 13% 8% 64% 31% 59% 47% 34% Completely DisagreeInternet is a great way to stay up to date with luxury brands Agree 34% 34% Among the ”Agree” and “Completely Agree” Groups: Completely Agree Region: ASIA EUROPE Age: 16-34 34-54 55+ 25% 13% 4% 72% 57% 72% 62% 52% Completely DisagreePerhaps unsurprisingly, Luxury Lovers want their favouriteluxury brands to adorn their PC desktopMean appeal scores of ad formats (1-5, where 5=very appealing) Desktop Wallpapers 4 The overall order of preferred 3.6 formats was the same when Desktop Gadgets* 3.7 comparing key demographics. 3.2 On Cellphones / Blackberries 3.6 Note the higher preference 2.9 for ads on cell phones and Banner ads on websites 3.6 blackberries in Asia. 3.2 Desktop Screensavers 3.6 Base: 3.1 Total quantitative sample (n=3,603) Email Newsletters 3.4 *Full text is “Desktop gadgets that 2.9 keep you up to date with the latest luxury information” IM Ad banner 3.2 2.5 In Game Advertisement 3.2 2.8 Asia Search Engine (Ad Words) 3 Europe 2.7advertising.microsoft.com
Microsoft Advertisingchannels reach LuxuryLovers of all demographics % who use at least once per month REGION AGE GENDER Asia Europe 16-34 34-54 55+ Male Female Windows Live Hotmail 74% 44% 72% 55% 43% 65% 64% Windows Live Messenger 72% 47% 72% 52% 43% 64% 63% Windows Live Search 67% 29% 61% 47% 30% 57% 53% Facebook 58% 31% 60% 36% 15% 51% 48% Windows Live Spaces 58% N/A** 61% 43% 29% 56% 52% Windows Live Search Maps 60% 22% 54% 32% 17% 48% 41% XBOX Live 1% 17% 6% 6% 3% 5% 6% MSN Portal 72% 38% 67% 53% 48% 63% 59% * Base Total Sample (n=3,603) ** This question was not asked in Europe
Appendix | MethodologyAll research was conducted by London-based Essential Research on Microsoft’s behalf.Phase 1: Qualitative ResearchA multi-stage approach across the US, UK, France and JapanSTEP 1 Media and technology diarySTEP 2 Individual depth interviewsSTEP 3 Friendship pair interviewsPhase 2: Quantitative ResearchA 15-minute online survey amongst 3,603 “Luxury Lovers” followed by awave of follow-up web chats conducted via Windows Live MessengerASIAN SAMPLESSouth Korea China Japan India Hong Kong Singapore Taiwann:253 n:250 n:252 n:250 n:253 n:253 n:251EUROPEAN SAMPLESItaly Germany Spain Sweden Switzerland Belgiumn:255 n:254 n:255 n:58* n:255 n:153Netherlands Denmark Norway Russia Finlandn:256 n:47* n:88* n:251 n:57**Note that Denmark, Norway, Finland, and Sweden were combined (weighted by population) and presented as Scandinaviaadvertising.microsoft.com
Appendix | Internet is a critical source of information amongst luxury goods consumersYou mentioned that you use the internet to find outabout luxury items. Approximately how often do youuse the internet to find out about luxury goods?Proportion of our sample who use the internet at leastmonthly to find out about luxury productsAsia 69% Europe 52%Proportion of Asian countries who use the internet at leastmonthly to find out about luxury products onlineAsia South Korea China Japan69% 65% 78% 53%India Hong Kong Singapore Taiwan38% 63% 45% 37%Proportion of European countries who use the internet atleast monthly to find out about luxury products onlineEurope Italy Germany Spain Sweden Denmark52% 49% 50% 49% 53% 61%Norway Russia Switzerland Belgium Netherlands Finland38% 63% 45% 37% 44% 66%
For more information contact:Beth Uyenco, firstname.lastname@example.orgGlobal Research DirectorNancy Ko, email@example.comResearch Manager for Greater Asia/PacificSimon Falconer, firstname.lastname@example.orgConsumer & Emerging Media InsightManager for EMEAadvertising.microsoft.com
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