Kering: Luxury in the Digital World

Rania Ghannoum
EMBA Cohort 18 - American University of Beirut
Marketing Management
Dr. Wilfried Vanhonacker
April 29th, 2016

Challenge
Kering is challenged to successfully grow the digital presence of its luxury brands without straying away
from the luxury strategy of its brands.
To be successful in its endeavor, Kering should:
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Define/focus on the personal luxury industry, the unique business environment of the industry
and the key success factors for operating within the industry
Focus on brand image and brand positioning
Identify luxury customer segments and their impact on business decisions; Investigate current
consumers behaviors in the online market; target all groups along their needs
Consider globalization and the impact of technology

Challenges are many and all evolve around the consumer experience. It is crucial to succeed in how to
meet tech-savvy consumers where they wish to interact, as well as the need for creative campaigns,
exclusive experiences, a geo-pricing strategy, and other factors described below.

Definition
Luxury as described in the article refers to, personal goods fulfill consumers need to have something
for them and are usually visible to others and are purchased for mid - to long-term use.

Key Success Factors

Luxury key success factors are mystery, aura, rarity, elegance, craftsmanship, mystique, exclusivity and
the whole in-store experience, where every luxury shopper is recognized and provided with personal
attention. How to sustain these factors in digital shopping is a challenge for Luxury e-commerce.
The experience and personal approach surrounding the purchase of a luxury item made the buying
experience unique.
This is one of the major challenges for luxury online-shopping. In the physical in-store experience,
customers are able to experience the uniqueness of the brand by creating the ambiance that blends
with what the brand stands for through basic sensual attributes, (such as smell and touch). The company
is also able to use the physical store as a means to educate the consumer about the brand. The staff
would help the shopper understand what made the product unique and worth thousands of dollars.
Difficulty would be applying the multi-sensory, mystique and exclusivity of the in-store experience onto
an e-store online business.

Identify Luxury Customer Segments

Luxury perception is relative and thats directly related to the customer. Three customer segments were
identified in the article; their behaviors should be studied in order to ensure successful online shopping.
First customer segment is the absolute group. These customers were defined as ultra-high-net-worth
individuals (UHNWI); money is not an issue for them. The absolute customer segment appreciate brand
heritage. This market looks for goods that emitted quality and understated opulence.
For this segment, an emotional, distinctively exclusive shopping experience set luxury brands apart
from the rest, and privacy takes top precedence. To this segment, price is important as the price needs
to be high enough to make it unattainable to most.
The second customer segment was the aspirational group, which included celebrities, professionals and
businessmen and women with a high amount of disposable income.
Luxury brands to them are those which recreate the emotional and creative world of the brand,
containing the cultural and psychological references that justify the price.
The aspirational group valued some level of exclusivity and personalization, particularly in the buying
experience. At the same time, they were still aspiring to be recognized by others and become associated
with luxury. Brand recognition, particularly exclusivity of the brand is important to them. The
aspirational group also valued quality. The style, design and quality of the goods are important.
The third segment would be the accessible segment. The emergence of this group proved that luxury
was no longer restricted for the kings and queens but the mass marketing phenomenon of everyday life.
The members of this market segment still wanted to differentiate themselves through the status of the
brands they wore, although their income level limited their access to certain luxury goods.
To this market segment, a luxury good symbolized a membership badge and the ability to show status
and wealth by association with the affluent class; therefore, they often choose goods that explicitly
show the brands through distinct designs. Due to limited resources, price was an important factor while
purchasing luxury goods.

Strategy
Because of e-commerce emergence, brands are no longer just trying to get their content noticed by the
customers over their competitions; brands are competing to get noticed.
Digital and luxury are two different fields; respective expertise should meld, to succeed.
There is always the fear of diluting the brand image and losing the exclusivity and prestige of the brand.
Furthermore, it is challenging for firms to communicate and represent the luxury brand experience, and
the sensory attributes of the products through virtual experiences.

But there is a gain in e-commerce.

Digital marketing has extended the power of the brand to redefine ones competition and target
audience. Thus, the differences in priorities and tastes of the different customer groups would need to
be considered when reaching out to the different markets online.
Not being able to physically see the items is a major challenge of online shopping. To apply this online,
e-commerce should maintain the quality of the content, with impressive videos and imagery that reflect
the luxury brand.
Some online shopping sites geared themselves to attract consumers who wanted to try the items before
they committed to buying them. E-shoppers would have to pay for the items to have them delivered,
but as a marketing strategy, items are offered free shipping on returns, allowing customers to try the
items before committing to the purchase.
Some E-stores use visual technology to help make the shopping experience more interactive like a
virtual journey across the actual stores, etc. Bentley takes customers on a virtual journey, in one of
Bentleys many variants, with detailed descriptions about the various attractions that the route takes
them through. Users can even opt to know more about a place by clicking on the different pit-stops
along the way.
Some online stores allowed consumers to zoom in on products to examine their texture, color and other
details.
Online retailers became direct competition to traditional retailers as they allowed online price
comparison, which is an advantage to customers.
Adoption of e-commerce for the luxury brand would facilitate personalized online communications and
provide more customized products. Though given the differences in tastes, cultures and globalization,
this is hard and challenging.
Segmenting your different audiences as said earlier is the first step. Creating different roles to different
platforms and create assets on purpose. It can start by producing and deploying an iPad app designed to
distribute rich, interactive company communications to iPad- equipped employees, stores and
customers.
Luxury firms can have more instant feedbacks from customers by adopting e-commerce. Customers can
have more diverse product choices and product information through an online store than an offline
store. For instance, social media channels, such as Facebook, Twitter or YouTube, are great ways to stay
in close and direct contact with consumers. These channels might not only provide direct feedback from
consumers and but also enables luxury firms to spread and promote information about new products or
fashion shows.

The Louis Vuitton Pass is one of the successful examples for online shopping. They have created a
smartphone app designed to bring its advertising campaigns to life. By scanning the campaign images
that feature the Apps icon in magazines and in stores, users will be shown a dedicated space
showcasing product information, videos, images, and more. The app will also help users to locate stores
or be directed to the e-commerce platform.