Luxury brands have always been fashion industry leaders, with admirable aesthetic value and innovative yet traditional business management. The brands constantly struggle to secure profits by providing novel value to customers through quality products and services, customer management, retail strategies, and innovative marketing mixes. However, the recent entry of numerous fashion brands in the luxury market coupled with decreased sales related to economic downturns have led to new challenges for luxury firms. Because the luxury fashion business is considered high value-added with guaranteed high profit margins and secure regular customers, the lower sectors have begun to heat up the competition.
To survive the recent unforeseen challenges of heated competition, they have turned toward marketing communication using social media. Social media are the two-way communication platforms that allow users to interact with each other online to share information and opinions. Use of social media sites such as Twitter and Facebook has already expanded to almost every luxury fashion brand and been evaluated as business take-off tools. With the increased use of social media as a means of marketing communication for luxury brands, it has become necessary to empirically analyze the effect of social media marketing (SMM). Thus, the study presented here investigated the effects of this SMM on customer relationships (involving intimacy and trust) and purchase intention.
A preliminary test was conducted in order to draw a sample of a luxury fashion brand for this study. Self-administrated questionnaires with visual stimuli were used to collect data from luxury consumers in the Seoul area. Respondents were restricted to consumers who had purchased any luxury fashion brand item within the previous two years. Among 150 questionnaires distributed, 133 questionnaires were finally employed for statistical analysis.
Principal component analysis using varimax rotation was conducted to figure out the properties of luxury fashion brands’ SMM. The social media contained five properties: entertainment, customization, interaction, word of mouth, and trend. Factor loadings ranged from .84 to .52. Cronbach’s α lay between .80 and .88, demonstrating adequate construct reliability.
Multiple regression analysis was conducted to test the effects of SMM on customer relationship (i.e., intimacy and trust) and purchase intention, as well as relationship between customer relationship (i.e., intimacy and trust) and purchase intention. Results show that entertainment has a significant positive effect on intimacy (β=.25, t=3.48, p<.01), trust (β=.34, t=5.75, p<.001), and purchase intention (β=.31, t=4.32, p<.001). Other positive effects are customization on trust (β=.13, t=2.28, p<.05), interaction on purchase intention (β=.25, t=3,54, p<.01), word of mouth on intimacy (β=.14, t=1.92, p<.05) and purchase intention (β=.19, t=2.65, p<.01), and trend only on trust (β=.32, t=5.30, p<.001). It seems that entertainment, customization, and trend were satisfying what customers expected from a luxury fashion brand. Because the luxury industry aims to provide value to customers in every way possible, the brands should focus on providing free entertainment content, customized services, and trend forward social media site which all act positively toward enhancing customer relationship. Trust has a significant relationship with purchase intention (β=.34, t=4.85, p<.001). Since the trust variable within a customer relationship was only significantly associated with purchase intention, the mediating effects of customization and trend were found.
The study proves the effectiveness of luxury brands’ SMM on both customer relationships and purchase intention, and proposes a strategy to enhance the brands’ performance by defining specific factors influencing both. The result show that the chosen brand’s SMM includes distinctive elements in comparison to old-fashioned marketing performances. Every property found in luxury brands’ SMM positively influenced customer relationships and purchase intention, with entertainment affecting more variables than any other properties. Luxury brands should heavily supply an entertainment aspect of social media contents and activities. Every activity enabled by use of the media, such as creating relationships with other users, providing customized service and free entertainment contents, and obtaining genuine information on personal interest should all be entertaining. By focusing on providing such features, customer relationships and purchase intention will be enhanced. Concerning the association between customer relationship and purchase intention, trust and purchase intention were highly related. Customers’ trust was strengthened via interaction with other users as well as brand on social media sites. Trust gained while enjoying entertainment and communication provided on the sites seems to contribute greatly toward a luxury brand’s profit.
With the growing interest of luxury fashion brands in providing luxurious value to customers in every way possible, using social media appears to be appropriate for retaining old customers and attracting cross-shoppers. As competition among luxury fashion brands becomes more intense by providing plenty of alternatives to customers, the brands’ prosperity seems no longer quite so promising. The importance of managing customers as valuable assets cannot be emphasized more. As such, more luxury brands should engage in social media marketing activities to anticipate a positive contribution to the brands by providing new luxury value to customers.