Instagram as a Marketing Tool for Luxury Brands

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.

Full text

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.
References
P. Sheldon and K. Bryant, “Instagram: Motives
for its use and relationship to narcissism
and contextual age. Computers in Human
Behavior”, vol. 58, pp. 89-97, 2016.
A. J. Kim and E. Ko, “Do social media
marketing activities enhance customer
equity? An empirical study of luxury
fashion brand”, Journal of Business
Research, vol. 65, pp.1480−1486, 2012.
E. Agichtein, C. Castillo, D. Donato, A. Gionis
and G. Mishne, Finding High-Quality
Content in Social Media. Proceedings
WDSM’08, 2008.
D. G. Muntinga, M. Moorman and E. G. Smit,
“Introducing COBRA’s: exploring
motivations for brand-related social media
use”, International Journal Advertising,
vol.30, pp.13–46, 2011, Issue 1.
W. G. Mangold and D. J. Faulds, “Social
media: The new hybrid element of the
promotion mix”, Business Horizons, vol.
52, pp. 357-365, 2009, Issue 4
C. Vollmer and P. Geoffrey, Always On:
Advertising, Marketing, and Media in an
Era of Consumer Control, New York:
McGraw Hill, 2008
R. W. Schmenner, “How can service
businesses survive and prosper,” Sloan
Management Review, Vol. 27, pp. 21-32,
1986, Issue 3.
K. Martin and I. Todorov, “How Will Digital
Platforms Be Harnessed In 2010, And
How Will They Change The Way People
Interact With Brands?” Journal of
Interactive Advertising, vol. 10, pp.61-66,
2010, Issue 2.
K. L. Keller, "Conceptualizing, Measuring, and
Managing Customer-Based Brand Equity,"
Journal of Marketing, vol. 57, pp. 1-22,
January. 1993.
D. Aaker, Managing Brand Equity:
Capitalizing on the Value of a Brand
Name. New York: The Free Press, 1991.
K. L. Keller, “Brand Synthesis: The Multi-
Dimensionality of Brand Knowledge,”
Journal of Consumer Research, vol. 29, pp.
595-600, 2003, Issue 4
K. L. Keller and D. Lehmann, “Brands and
Branding: Research Findings and Future
Priorities”, Marketing Science, vol. 25, pp.
740-759, 2006, Issue 6
Y. Truong, R. McColl and P.J. Kitchen,
“Uncovering the relationship between
aspirations and luxury brand preference”.
Journal of Product and Brand
Management. vol. 19, pp. 346-355, 2010,
Issue 5
F. Vigneron and L. W. Johnson, "Measuring
Perceptions of Brand Luxury'," The
Journal of Brand Management, vol.11, pp.
484-508, July. 2004
J. Jacoby, “A model of multi-brand loyalty”,
Journal of Advertising Research, vol. 11,
pp. 25–30, 1971
R.M. Baron and Kenny, D. A., “The
moderator-mediator variable distinction in
social psychological research: Conceptual,
strategic, and statistical considerations”,
Journal of Personality and Social
Psychology, vol.51, pp.1173-1182, 1986

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