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Instagram as a Marketing Tool for Luxury Brands

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Instagram is one of the fastest-growing online photo social web services where users share their life images with other users, however the academic research related to this media is limited. This study aims to measure the relationships between Instagram marketing, brand equity, and customer behavior towards brand. The research attempts to evaluate the relative importance of the components of Instagram marketing regarding creating brand value and consumer preferences. Also, it tries to analyze the main components of brand equity creation through Instagram marketing and understand the effect of Instagram marketing and brand equity in creating brand loyalty, brand preference, and on brands' possibility to ask a premium price for their products.
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Int. J. Manag. Bus. Res., 8 (2), 120-126, June 2018
120
Instagram as a Marketing Tool for Luxury Brands
S. Khan
Assistant Professor, Department of Marketing, College of Business, Effat
University, Kingdom of Saudi Arabia
Received: 29 April 2018 Accepted: 22 May 2018
Abstract - Instagram is one of the fastest-growing online photo social web services
where users share their life images with other users, however the academic research
related to this media is limited. This study aims to measure the relationships between
Instagram marketing, brand equity, and customer behavior towards brand. The
research attempts to evaluate the relative importance of the components of Instagram
marketing regarding creating brand value and consumer preferences. Also, it tries to
analyze the main components of brand equity creation through Instagram marketing
and understand the effect of Instagram marketing and brand equity in creating brand
loyalty, brand preference, and on brands' possibility to ask a premium price for their
products.
Keywords Brand Awareness, Brand Equity Brand Image, Brand Loyalty, Brand
Preference, Consumer Responses, Instagram Marketing, Price Premium
1. INTRODUCTION
Individuals spend more time on Instagram
than other similar sites, suggesting it is of
importance to research this media type [1].
Often, just the brand hashtag itself is
enough to have loads of engagement.
Luxury brands have already begun taking
advantage of this highly visual medium.
They have a large and devoted following
who are active on social networks. These
brands have big budgets for quality and
creative photography and videography.
Their target audience is connected - 3 out
of 4 luxury shoppers have a smartphone
which heavily influences their buying
decisions. Gucci, the most popular brand
on Instagram, post images that are simple
and bright, always keeping in mind that
most viewers are checking the site from
their smartphones. Their mix of celebrities,
products and conceptual images keep their
feed fresh and fun.
2. Conceptuel Framework
The conceptual model of the study is as
follows as shown in Figure 1.
Instagram Marketing
This study examines the Instagram
marketing efforts of different luxury
brands from [2] five perspectives;
entertainment, interaction, trendiness,
customization and word of mouth.
Entertainment is the result of the fun and
play emerging from the social media
experience [3]. [4] find that social media
users consume brand related content for
enjoyment, relaxation, and as a pastime.
This study uses a survey to assess whether
consumers find luxury brands' social media
fun and interesting, and to subsequently
measure entertainment.
Social media provide the latest news and
hot discussion topics and are also core
Int. J. Manag. Bus. Res., 8 (2), 120-126, June 2018
121
product search channels. Consumers more
frequently turn to various types of social
media to obtain information, as they
perceive them as a more trustworthy
source of information than corporate-
sponsored communication through
traditional promotional activities [5; 6].
The level of customization describes the
degree to which a service is customized to
satisfy an individual's preferences [7] By
personalizing their site, brands can
customize and express individuality,
building stronger brand affinity and loyalty
[8] In the social media world,
customization refers to the intended
audience of the posted messages.
Social media are ideal tools for eWOM,
because consumers generate and spread
brand related information to their friends,
peers, and other acquaintances without
constraints [2; 6].
Brand Equity
The model of brand equity that [9]
proposes is dominant, providing the link
between its two dimensions: Brand
Awareness is the likelihood that a brand
name will occur to consumers as well as
the ease with which it does so. Brand
Image is the perception about a brand
which the brand associations in consumers'
memory reflect. [10; 9, 11]; [12] support
that strong brand equity contributes to:
increased brand preference willingness to
pay a premium price customer loyalty.
This study therefore focuses on the
influence of brand equity on three
important customer responses.
Brand preference
Brand preference is commonly measured
by asking consumers to indicate their
favorite brands from a category or
selection of brands. Previous studies on
luxury brands used specific brand
preference scales [13; 14].
Price Premium
Price premium can be defined willingness
to pay a premium price as the amount
customers are willing to pay for their brand
rather than another.
Brand loyalty
[15] describes brand loyalty as a decision-
making unit's biased (non-random)
behavioral response (purchase) over time
regarding one or more alternative brands
out of a set of brands and as a function of
psychological processes.
3. Methodology
The objective of this study is to investigate
the influence of Instagram marketing
efforts on brand equity creation and
consumer behavior towards a brand.
Designing a quantitative survey targeting
consumers and followers of prominent
luxury brands with significant presence on
Instagram. In addition to four established
social media brands:
Chanel- 27.1 million followers; Louis
Vuitton- 22.8 million followers; Gucci-
22.7 million followers; Dior- 18.9 million
followers. One brand that more recently
starting appearing in social media was also
chosen Hermes- 6.4 million followers as in
Figure 2.
Consumers who had made luxury brand
purchases during the last year and who
follow the brand on Instagram platforms,
were approached for the survey. The
approximate time spent on Instagram per
week by each respondent was also
recorded. Consumers from two main cities
of Saudi Arabia: Riyadh and Jeddah were
targeted for this study. The questionnaire
was translated into Arabic.
The demographic profile of the
respondents is as follows as in Figure 3
4. Analysis and Result
Hypothesis 1. : Marketing efforts on
Instagram have a positive and direct
influence on consumer-based brand equity
(CBBE).
Int. J. Manag. Bus. Res., 8 (2), 120-126, June 2018
122
H1 is tested with a structural equation
model linking Instagram marketing efforts
to brand equity. The impact of Instagram
marketing on CBBE is significant at p <
0.001 level and accounts for 37.3% of the
explanation of the brand equity variance in
the tested luxury brands. The components
of Instagram Marketing efforts are all
statistically significant. The effect on brand
equity is more on the luxury brand image
than on its awareness. The impact of
Instagram Marketing on Brand Equity is
significant at p < 0.001 level and accounts
for 37.3% of the explanation of the brand
equity variance in the tested luxury brands.
The components of the Instagram
marketing are all statistically significant.
The effect on brand equity is more on the
luxury brand image than on its awareness
as in Figure. 4
Hypothesis 2: Marketing efforts on
Instagram have a positive and direct
influence on the consumer preference,
willingness to pay a premium price, and
brand loyalty.
The study verifies Instagram marketing
efforts direct influence on consumer
preference, loyalty, and willingness to pay
a premium price, and this influence is
statistically significant (p <
0.001).However, the coefficient of
determination explains just 21.6 % of the
consequences of consumers' positive
behavior towards luxury brands .The
findings raised the question of whether
there was a mediating effect in the
relationship between CR and SMMEs [16],
which led to the testing of a
comprehensive model introducing brand
equity mediation to the initial relationship
The study verifies Instagram Marketing’s
direct influence on consumer preference,
loyalty, and willingness to pay a premium
price, and this influence is statistically
significant (p < 0.001). However, the
coefficient of determination explains just
more than 21.6% of the consequences of
consumers ‘positive behavior towards
luxury brands.
The findings prompted us to test a
mediating effect in the relationship
between Consumer Responses and
Instagram Marketing which led to the
testing of a comprehensive model
introducing brand equity mediation to the
initial relationship as in Figure 5.
Hypothesis 3: Brand equity (CBBE) has a
mediating effect on the relation between
marketing efforts on Instagram and
consumer response (CR).
As the model fit was acceptable, estimates
of the standardized regression weights,
coefficients, and squared multiple
correlations of the dependent variables
were calculated. The results highlight the
existence and relative importance of the
link between Instagram Marketing efforts
and brand equity with a coefficient of
determination (R2 = 0.362) significant at
p<0.05 level. Instagram marketing efforts
explain 79.8% variance in consumer
responses when mediated by brand equity
(CBBE) at p< 0.001 level as in Figure 6.
In this model of relationship between
Instagram marketing and consumer
responses in terms of preference,
willingness to pay a premium price, and
loyalty with the mediation of CBBE, an
Instagram marketing strategy explains
consumers' positive behavioral intentions
towards luxury brands. The influence is
mostly indirect and involves the prior
formation of a CBBE for luxury brands.
The two components of brand equity are
almost equally affected by the tested
luxury brands' Instagram marketing.
5. Research Implications
This result means that Instagram marketing
should not only be thought of as a means
of raising brand awareness and reaching
new customers, but also as an increasingly
important and serious brand image
building tool. Investments in brand equity
(online as well as offline) would strengthen
Instagram marketing effects on customer
responses.
6. Research Limitations
The main limitation of this study is its
generalizability beyond the luxury sector
and Saudi Arabia. While the results are
Int. J. Manag. Bus. Res., 8 (2), 120-126, June 2018
123
likely to be useful in the luxury sector,
they may not be directly applicable to
other industries. The general nature of the
findings therefore needs to be confirmed in
other contexts. The study employed brand
awareness and brand image as dimensions
of brand equity. Future research could also
incorporate other dimensions, such as
brand quality and brand associations, and
re-evaluate the brand equity creation
process. Lastly socio-demographic
variables such as gender, age, income, and
education, might have a significant
influence, or a moderating effect, on the
conceptual model and could be included in
future analyses for a more thorough
understanding of the studied phenomenon.
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Int. J. Manag. Bus. Res., 8 (2), 120-126, June 2018
124
Figure 1: Conceptual Model
Figure 2: Brand Responses
Int. J. Manag. Bus. Res., 8 (2), 120-126, June 2018
125
Figure 3: Demographic Details of Respondents
Figure 4: Test of Hypothesis 1
Int. J. Manag. Bus. Res., 8 (2), 120-126, June 2018
126
Figure 5: Test of Hypothesis 2
Figure 6: Test of Hypothesis 3
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A range of new marketing mediums can be leveraged to keep people tuned in and seamlessly integrate brands into their everyday lives. Accordingly, digital platform adoption by brands will continue to grow along with the diverse set of consumer actions unlocked by the introduction of the platforms themselves. In the coming year, savvy chief marketing officers (CMOs) will use digital platforms in new ways to make their brands integral and integrated parts of customers’ everyday lives. As digital adoptions continue to skyrocket with the introduction of new platforms, marketers can no longer view these methods as standalone touchpoints but instead must recognize them as seamless engagement opportunities that can keep customers connected to a brand story throughout the day. To be successful in every digital initiative and strengthen the brand-consumer relationship, CMOs should select digital platforms that deliver high engagement value, connect brands with consumers’ social networks, and provide value and relevance in the context of each consumer’s location and activity.
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The article examines the use of social media by Internet users related to advertising and marketing, called "consumers' online brand-related activities (COBRA)." Interviews are conducted with such Internet users through instant messaging as to their motivations for engaging with brands and brand name products through social media. It was found that a desire for information, a desire for entertainment and the possibility of reward were the primary motivations for COBRA activity by Internet users, with entertainment being the primary motivation for the generation of brand-related social media content.
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Branding has emerged as a top management priority in the last decade due to the growing realization that brands are one of the most valuable intangible assets that firms have. Driven in part by this intense industry interest, academic researchers have explored a number of different brand-related topics in recent years, generating scores of papers, articles, research reports, and books. This paper identifies some of the influential work in the branding area, highlighting what has been learned from an academic perspective on important topics such as brand positioning, brand integration, brand-equity measurement, brand growth, and brand management. The paper also outlines some gaps that exist in the research of branding and brand equity and formulates a series of related research questions. Choice modeling implications of the branding concept and the challenges of incorporating main and interaction effects of branding as well as the impact of competition are discussed.
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The emergence of Internet-based social media has made it possible for one person to communicate with hundreds or even thousands of other people about products and the companies that provide them. Thus, the impact of consumer-to-consumer communications has been greatly magnified in the marketplace. This article argues that social media is a hybrid element of the promotion mix because in a traditional sense it enables companies to talk to their customers, while in a nontraditional sense it enables customers to talk directly to one another. The content, timing, and frequency of the social media-based conversations occurring between consumers are outside managers’ direct control. This stands in contrast to the traditional integrated marketing communications paradigm whereby a high degree of control is present. Therefore, managers must learn to shape consumer discussions in a manner that is consistent with the organization's mission and performance goals. Methods by which this can be accomplished are delineated herein. They include providing consumers with networking platforms, and using blogs, social media tools, and promotional tools to engage customers.