Methodology

This study’s primary data collection employed an online survey and interviews with luxury consumers and luxury industry experts. The online survey was distributed to a total of 96 people, and 56 respondents were also interviewed. The sample consisted of mainly millennials (born between 1980 and 1994) of different nationalities to reflect diversity. The non-probability method of convenience sampling was used because the project is exploratory and descriptive in nature.

Findings

Study Findings

Based on our observations, we were unable to derive any concrete conclusions regarding who the influencers are and how they perform in the current luxury industry marketing scenario. However, the following findings can be derived from this research:

  • • Tourists prefer to shop for luxury products in the country of origin’s flagship/main store for a complete luxury experience. Even if they do not intend to buy anything, consumers want to visit flagship stores, comparing it to visiting a historic site. They want to see where the exclusive products are sold and understand how the experience differs from an average store or authorised dealer.
  • • Social media has some impact on the purchasing decision. Most consumers come to see a product they have seen trending on social media channels. They intend to purchase the exact product and are rarely looking to just chance upon a good product. In most cases, when it comes to luxury products, consumers decide beforehand what they want to purchase.
  • • Influencers help to sell the physical store experience and create a desire in consumers’ minds. Influential figures, such as bloggers, celebrities, or socialites, help to sell the in-store experience when they post about it. It creates a desire in the minds of potential consumers who follow them on social media to experience the same treatment. Sometimes, consumers will visit a store if they think there is a chance of spotting a celebrity at the store.
  • • Millennial are engrossed in social media, and they watch brands. Out of the 96 people surveyed, only one person responded they do not use social media. Out of these 96 people, 94 (98%) use Instagram, 74 (77%) use Facebook, 70 (73%) use YouTube, and 42 (44%) people of the 96 use all three platforms: 22 of the 96 respondents (23%) use more platforms in addition to those, such as Pinterest, Weibo, Snapchat, Twitter, etc. The respondents using social media for more than eight hours totalled 36 (37.5%), and 35 (36.5%) use it for three to five hours a week. Of the respondents who use social media, 81 (84%) follow luxury brands. Thus, it can be assumed that millennials spend a considerable amount of time on social media platforms and are constantly updated about what is happening in the industry. Brands should therefore be vigilant about the kind of content they share because of this.
  • • The number of followers is overrated and not the only factor defining an influencer. The definition of an influencer is very vague and varies from person to person. Out of the 96 people surveyed, 68% (58 people) agreed that an influencer writes about specific topics and runs a blog besides having a social media account. However, many respondents agreed to all three statements defining an influencer: (1) someone who writes about specific topics and runs a blog besides having a social media account, (2) someone with lots of followers on social media platforms, and (3) someone in the fashion industry like a buyer/creative head/designer, etc. As to the statement that an influencer has knowledge about specific topics but not many followers on social media, 36 (38%) also agreed. Therefore, it can be assumed consumers are influenced by people who actually have knowledge and credibility over someone who only has many followers. Brands thus have difficulty choosing influences to work with because consumers are concerned with more than one thing when it comes to influences; they prefer someone they can trust over someone famous.
  • • Consumers prefer influencer-branded content over celebrity-branded content. A large portion of the sample was neutral towards influencer- or celebrity-branded content, but, notably, a larger percentage preferred influencer-branded content over celebrity- branded content: 27 (28.1%) agreed, and 11 (11.5%) strongly agreed they are interested in celebrity-branded content. However, 39 (40.6%) agreed, and 10 (10.4%) strongly agreed they are interested in influencer-branded content. When the respondents were asked if they trust influencer product reviews over celebrity product reviews, 44 (45.5%) agreed, and 17 (17.7%) strongly agreed. This seems to indicate consumers have a preference, and it is not for celebrities.

Social media is a powerful tool that drives sales independent of influencers according to the survey findings, in which 48 (50%) of the respondents indicated they are more likely to purchase a popular or trending product on social media. Brand promoters can rely on multiple methods to gain visibility on social media platforms, and even though influencers can definitely aid in spreading the word, a brand does not necessarily need to rely solely on influencers for that. A combination of methods, such as AdWords, search-engine optimisation, striking content design, paid promotions, usergenerated content, etc., can be used to get a brand trending on social media platforms. The teenage meme sensation Damn Daniel is a notable example of how a brand can gain visibility by relying on user-generated content (Grimm, 2017).

Consumers are more likely to be influenced by organic content rather than advertisements or paid promotions when making a purchase. Although an advertisement is a proven way to reach and inform an audience about a new product, consumers can easily distinguish between organic and sponsored content. They can determine when a celebrity or influencer is a brand ambassador or partner who has an interest in providing a promotional brand review. Consumers recognise this as another form of advertising and thus do not base their purchase decisions on these sponsored reviews. To drive sales, it is more effective to showcase reviews from noncelebrities because they are considered more trustworthy with nothing to gain from the sales and thus are more likely to influence purchasing decisions. A small fraction of the respondents (25; 26%) replied they would purchase a product due to advertisements or sponsored content.

Brands founded by influencers and celebrities (indie brands) have a substantially higher success rate because they can capitalise on already having many followers who will purchase their brands. Of the respondents, 49 (51%) indicated they would purchase indie brands developed by influencers, and 52 (54.2%) responded they would purchase celebrity-developed brands. Influencers started developing indie brands when their reach was peaking; recently, celebrities joined in on the trend. Both Huda Beauty and Kat Von D are some examples of successful beauty brands founded by influencers in the early 2000s, and, more recently, cosmetic companies such as Fenty Beauty by Rihanna, Haus Laboratories by Lady Gaga, Kylie Cosmetics by Kylie Jenner, and other celebrity- launched companies have emerged. These brands have a higher chance of success owing to their large established audience, fame, and credibility compared to indie brands founded by unknown entrepreneurs.

• Micro-influencers with fewer followers may lead to higher sales than established influencers because consumers are well aware of the difference between sponsored and organic content. They can also differentiate between bloggers with credible knowledge about the industry and small-time celebrity-turned-influencers, who may recommend beauty products but whose endorsement carries little weight because it is not the influencer’s forte. Consumers notice when an expert in the industry shares an opinion, even if this expert does not have a large popular following across social media platforms. This was reflected in the survey, where 37 (38.5%) of the respondents agreed, and 17 (17.6%) of the respondents strongly agreed they follow micro-influencers more than established influencers. Consumers trust opinions they believe to be honest and void of a hidden agenda. If consumers recognise a sponsored collaboration and understand the influencer is likely to receive a commission, they will dismiss the influencer’s opinion.

Interview Findings

The interviews yielded the following findings:

  • • Brands that engage an influencer who is not well-matched with the brand image can cause more damage than brands realise. The respondents commented that the luxury value of a brand drops in the consumers mind when the influencer or celebrity does not conform to the brand’s values or is simply not considered a luxury influencer. Likewise, a luxury brand must take care to associate with a blogger who conveys the values of the brand through their blog; otherwise, consumers may feel deceived or confused about the brand’s values and ideologies.
  • • Most of the interview respondents indicated that they only care about the influencer’s opinion if it is a negative opinion. Influencers who give positive reviews of a brand’s products can be biased depending on what perks the brand offers the influencer. On the other hand, negative opinions are usually more genuine because the influencer has nothing to gain by giving negative feedback about a brand. However, it can also be biased if the influencer does not like the brand or if the brand does not employ the influencer. Brands also need to maintain relationships with all the bloggers they work with; otherwise, the bloggers could deliver negative reviews, which, to some extent, could influence consumers’ purchasing decisions.
  • • Communication is the final deciding factor regarding the luxury perception of a brand. Communication is the most important factor, which decides the fate of a brand. Consumers perceive a brand to be a luxury brand if the brand communication conveys it as such. Therefore, a brand’s positioning and communication of this positioning are closely related and must align. New luxury brands normally rely on a combination of traditional and modern marketing approaches to gain luxury status. New brands, such as Off-White, Zuhair Murad, and Christopher Kane, follow traditional marketing methods of storytelling. They also combine their fashion- forward products and social media strategies that keep them relevant and eventually perceived as luxury brands by consumers. These brands also heavily engage in celebrity and influencer marketing, which has generated sales traction.
  • • New and niche luxury brands can benefit from influencer marketing. The interviewees’ preponderance answered the question, how do you discover new/niche luxury brands, with a similar response. They all claimed following influencers and exploring on Instagram to be their main means to discover new or luxury brands. This leads to the assumption that new brands can definitely benefit from influencer and social media marketing to a greater extent than established brands already known by consumers. Influencer marketing with a controlled budget and an effective social media strategy can create awareness and an initial positioning in consumers’ minds. This option can possibly lead to results for specific product categories.
 
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