Luxury brands are increasingly embracing online marketing despite earlier doubts that search form of marketing would negatively impact their brand image as it would remove their essence of uniqueness and rarity. Many pieces of evidence are available on how online marketing influences the brand equity of luxury brands. This study explores the influence of online marketing on brand equity by using peer-reviewed secondary data and analyzing them to draw findings and conclusions. The study analyzes the online marketing efforts of luxury brands and how they affect their brand loyalty and equity. One of the contributions of the research is its findings that online marketing positively impacts brand equity and its two dimensions, brand loyalty and awareness.
The continuous spread and use of the internet have enabled people to increasingly interact with each other digitally and even make purchases online. In marketing, brands have resorted to using online marketing tools to introduce their products to the market. To keep up with the digital trends, luxury brands such as Louis Vuitton, Prada, and Versace have moved from traditional marketing (offline) to modern marketing (online) or incorporated the two. Online marketing has expanded to almost every luxury brand through social media, Search Engine Optimization, and Emails. It has been evaluated as an effective business take-off tool. E-marketing is growing on such a large scale that by 2025, it is predicted that one out of five luxury items will be purchased online (Mastropetrou et al., 2019). Many customers prefer shopping online due to the convenience and the one-on-one interaction with the buyers they get from their purchases. Luxury brand companies are paying more attention to significant interest in online platforms to find the best ways to leverage the market and develop a strong brand that is memorable to consumers.
Brands are capable of affecting customers’ preferences, both sold and purchased, and equipping companies with sustained future revenue. According to Mohammad Shariq (2018), brand equity is the association and behavior of a consumer and company that allows the company to earn more than it would if it did not have the brand name. Moreover, the fundamental of brand equity is the strength the consumer perceives the brand over time. Positive brand equity is beneficial to a company as it provides more customer loyalty, higher margins, and increased revenues. It also guides marketing choices; hence companies need to understand their brand equity strengths and how they influence sales and purchases.
The increasing use of online marketing by luxury fashion industries has made it imperative to evaluate the impacts of online marketing and brand equity on luxury brands. The purpose here is to review the transformation of marketing strategies from offline to online in the luxury fashion business, investigate the effect of online marketing on brand equity, investigate how they affect the brand loyalty of consumers, and compare and recommend the most effective marketing strategies for luxury fashion brands. Therefore, the research presented here expands the existing literature by studying the impacts of online marketing on brand equity.
The research is performed through the analysis of previous online marketing and brand equity models for luxury fashion brands. Furthermore, this study enables luxury brands to increase their customer interaction, increasing their brand equity and allowing them to grow in a competitive market. Since the research has been conducted at the initial stages of luxury fashions diving into online marketing, it is hoped that the findings will eventually help to guide the fashion industry in its online marketing activities.
This study is organized into five parts; the following part discusses the literature review, followed by methodology and results, analysis, and discussion sections. The findings of the study are substantial and practical in online marketing.
Many researchers have suggested brand equity measurements with different aspects. Kathleen et al. (2011) conducted a study to determine the effect of social media marketing on positive brand image. They found that interactions with customers on Twitter and Facebook result in positive brand image and equity. Similarly, previous studies on luxury brands’ online marketing have found that e-marketing can increase revenue, strengthen brand image, enhance purchase retention, and increase brand equity.
Phan et al. (2011) performed a study to investigate how Burberry, a luxury fashion brand, did a turnaround from low sales to trendsetters in digital marketing. According to the findings, the company’s brand image is influenced by both the company and the consumers. Therefore, it could not achieve brand equity through one-way communication hence the development of online marketing to encourage customers to provide feedback, reviews, comments, and download items for sharing. Burberry’s online marketing helped it to engage with young customers and become a trendsetter in digital marketing.
Millennials make up a large percentage of consumers who purchase luxury brands. Therefore, many luxury brands use online marketing to engage with them as they are more inclined to make their purchases digitally. According to Dobre et al. (2021), millennials and generation Z found social media marketing to be compatible with luxury brands. Therefore, managers can use digital technologies to provide sensory experiences for their consumers and increase their purchase intention, brand image, and brand equity. Due to the increased online purchases from millennials, many luxury brands are now increasing their online marketing and outreach to connect with young customers and increase their customer-based brand equity.
Brand Equity Models
Aarker Brand Equity Model
Practitioners and academics often ignore the components of brand equity which are integral in the attainment of adequate brand equity. David Aarker identified five brand equity components as follows; brand awareness and loyalty, perceived quality, proprietary assets, and brand associations (Aarker, 1991). According to Aarker, brand equity is the assets linked to the brands. The assets include names and symbols, and they add or subtract value from the product. The model can be used to understand a company’s brand equity and get more insights into the relationship between the components of brand equity and future product success.
Aarker’s model also reflects the consequences of the chosen branding policy. The brand equity will increase with an increase in the five components. The components define the different dimensions. The first one is brand loyalty which is the level to which a consumer is loyal to a brand. It is expressed through factors such as cheaper marketing costs since retaining loyal consumers is cheaper than getting new customers (Aarker, 1991). Another factor is trade leverage since loyal consumers provide a steady source of revenue by attracting new buyers (loyal consumers can help bring in new consumers through the use of word-of-mouth or positive reviews on marketing platforms). Customers who are not quick to change to other brands give the business time to work on potential threats.
Brand awareness is another dimension of brand equity. It is the extent to which the public knows of the brand’s existence. It is measured through factors such as customer familiarity (consumers who love the brand will spread it more, leading to increased brand awareness) (Aarker, 1991). Another form of measurement is customers’ commitment to the brand. This is the degree to which the consumer considers the brand during the purchasing process.
Perceived quality is another dimension. It is the extent to which a consumer considers the brand to provide good quality products and services. It is measured through factors such as the product’s quality and the brand’s differentiation from other competitive ones. Price (consumers tend to associate price with quality). Another factor is a brand extension (a wide range of scale may signify quality for consumers).
The fourth dimension is a brand association- the level to which a brand triggers association can be measured in the following ways; the extent to which brand association triggers a positive response in commercials or TV. A high association means high brand equity. Another form of measurement is the level to which association leads to brand purchasing. A high association means high brand equity. The last dimension is proprietary assets which include patents, intellectual property rights, and trade partner relations (the more proprietary assets, the higher the brand equity).
Even though Aarker’s brand equity model provides ways in which companies can measure their brand equity, it does not define any single measure of brand equity in itself but divides it into five dimensions. This does not provide how and which dimensions can be combined to produce a brand valuation. It only provides a set of dimensions that are measured individually, which can be inadequate when marketers want to evaluate their full brand equity. A study conducted by Glinska and Gorbaniuk to show the extensibility of Aarker’s model on posh city branding showed that it was inadequate to describe the city brands’ personalities (Glinska & Gorbaniuk, 2016). This shows that despite the model improving the measures of brand equity, it is not always consistent with different marketing valuations.
2.1.2: Brogi et al.’s Brand Loyalty Model
Brogi et al. (2013) developed a model that could explain the effects of Online Branding Community (OBC) dynamics on brand equity. The researchers used variables inherent to the behaviors and brand perception of OBC members. They selected six brand-related variables for the hypothesis that include; brand community participation (considers community involvement in the OBC and the level of interaction among the online users). Another variable is perceived brand quality (describe how OBC members perceive brand quality). The model also includes brand community-generated content (considers the type of content the online brand community members generate that can influence their purchase) and brand loyalty ( the commitment of the members to buy the product more than once). Another variable is brand association (the feelings associated with the brand) and brand awareness (the level of recall and the OBC members have about the product).
The study findings showed that OBC influences brand equity positively. It showed that brand community participation positively influenced the perceived brand quality and another strong influence on brand loyalty. Furthermore, the more the OBCs participate and interact with each other, the greater the shared content (Brogi et al., 2013). In an online interaction platform such as the OBC, the more interaction, the greater the production of brand-related information. Brogi’s brand loyalty model also shows that OBC has influenced fashion consumers since brand loyalty is heavily influenced by their opinions, perspectives, and insights on the products they purchase online. Therefore, companies should consider online consumers’ opinions to increase or improve their sales and market understanding.
The model also shows that consumers are evolving to become producers of information as well. They continuously produce and consume information and products through their interaction with the OBC (Brogi et al., 2013). The brand loyalty model suggests that increased brand community participation leads to more awareness of the brand. The relation between the two is positive and significant in online marketing. The model indicates that the OBC dynamics positively impact brand equity.
The model is an innovative way of analyzing business profits. The model further shows that marketers could gain by exploiting the opportunities presented by OBC. However, since OBCs are spontaneous and unpredictable in nature, OBCs can present a menace or a good opportunity for a business. Moreover, the model variables are different in some hypotheses in the model and have different correlation values. This might produce inconsistent results when used to evaluate brand loyalty in online marketing. Therefore, the brand loyalty model must be integrated properly into the market for a positive outcome.
2.2. Online Marketing
A key indicator in the growth of online marketing is an increase in internet users. For decades now, the number of internet users has been steadily rising. Internet connections and usage now cover most of the globe. Businesses have taken advantage of this trend to engage in online marketing. Online marketing helps companies reach more buyers in the internet communities and build closer ties with them. The digital era has redefined how brand products are created, marketed, and consumed. Nowadays, it is imperative for any company, small or big, to have an online department responsible for maintaining an online presence and ensuring that the company can interact with its virtual customers (Schwarz & Grabowska, 2015). This will help the companies to increase brand loyalty online and offline. Interacting with both worlds enables maximum profitability and production outcomes.
This has shifted the power to influence a brand image from the marketers to customers, thus helping in increased sales. Online marketing offers ever-evolving hence the need for constant strategy development. The strategies used depend on consumer behavior. Regardless of whether a business is operating online or offline, consumer behavior is always the same hence the need to study their behaviors and develop strategies that help retain the existing ones and attract new ones (Schwarz & Grabowska, 2015). It is almost impossible to run a successful business nowadays without an online presence.
The significance of marketing strategies lies in the engagement between the brands and consumers and the low costs involved in creativity and information purposes. Online marketing through social networks increases the strengths of marketing in different forms. It creates connections between users when they interact through commenting or reviewing items. Furthermore, activities such as market promotion stimulate sales by mobilizing the population (Husain et al., 2022). Apart from that, the information members produce about the brands is stored in the deep web, which is easily retrievable, thus distributing business knowledge and news to consumers.
Online marketing uses different tools that help marketers achieve their desired outcomes. The tools include affiliate marketing, social media marketing, email, and viral marketing, and Search Engine Optimization.
2.2.1. Affiliate Marketing
Affiliate marketing is one of the major components of online marketing. It is the process of getting commissions from promoted products or services of another company (Marthur et al., 2018). In this online marketing tool, two or more website owners can collaborate o increase mutual benefits. The method uses automated systems and software where a company rewards the website owner for each online visitor, customer, or sales. The rewards are often through monetary cheques or any other agreed-upon method between the business and the website owner.
Many businesses use affiliate marketing to promote their products online. The reason this method is effective is because there is easy tracking of sales and customer feedback or inquiries. Affiliates are compensated for their efforts for every subscription or customer. They are also referred to as extended sales forces due to the benefits they provide to businesses.
2.2.2. Social Media Marketing
Social media marketing is a common method of online marketing. Besides its use in sharing beliefs, ideas, and entertainment, social media has become a primary online marketing tool for any corporation. Companies have realized that without a good social media presence, they may fail to stay in competition with the increasing digitalization (Dubelink et al., 2021). Social media is also beneficial to small businesses as it increases their edge and enables them to penetrate new markets virtually. With these marketing tools, marketers boost their website traffic by using social media platforms such as Instagram or Twitter. Marketers create unique products that encourage users to click on the products and share them with other online users.
Since social media marketing mainly involves users, businesses must strive to make products that encourage users to share with others, thus boosting traffic and leading to more sales. If it succeeds in gaining users, it means that the business has succeeded in gaining support from trusted sources and will be regarded highly by the consumers. Forms of social media include blogs (Twitter), voting sites (Reddit), Social networks (Instagram), and video-sharing sites (YouTube).
2.2.3 Search Engine Optimization (SEO)
SEO is a technical online marketing tool that helps businesses boost their sales through various google shows. It is the process of driving traffic to a website. Google must verify a company’s site before it starts receiving traffic. It is only after the compartmentalization of the positioning that Google can include an organization’s content in search results (Warokka et al., 2020). The aim of SEO is to rank on the first page of Google by showing users’ desired results.
Internet users majorly use search engines to browse the internet. Therefore, marketers have developed strategies to help their businesses to rank high in users’ search results. The purpose of SEO is to place company websites among highly listed search engines hence creating more traffic to the given websites. The more the traffic, the more the chances of sales.
2.2.4 Email Marketing
Email marketing is the use of emails to send promotional messages to online users and is an efficient online marketing method. Some benefits of email marketing from research surveys are more feedback and low costs (Bostanshirin, 2014). These advantages are turning the technique into an invaluable tool. However, despite these advantages, email marketing also faces some drawbacks. For instance, some users may ignore promotional messages, and some may put them in spam messages. Marketers can prevent this by incorporating other online marketing tools alongside email marketing or asking for permission before sending their promotional messages.
2.2.5. Viral Marketing
Viral marketing is another form of e-marketing. It overlaps with social media due to the use of “word of mouth (WOM).” It is a “WoM” marketing form that aims to spread business information exponentially, especially through the internet (Bostanshirin, 2014). It works by encouraging people to spread, share and forward marketing messages on social networks. Harnessing the power to influence people to share business information with other users boosts sales and leads to more profitability.
The marketing technique has been developed with the rise of the internet. Due to their speed and fast ways of spreading information, viral marketing usually takes place on social networks. The most common example used today is the creation of emotional, funny, or unique YouTube videos and sharing them on other social media platforms such as Twitter. One of the drawbacks of this form of marketing is the risk of misinterpretation since information control is in users’ hands. It is all about reaching users and new consumers in a non-traditional manner. If used effectively, viral marketing can boost product sales.
2.3. Online Marketing of luxury brands
The global digital transformation has benefited the fashion industry by increasing brand awareness and interaction with the products. The fashion industry’s involvement in online marketing through social media platforms and SEOs has led luxury brands to also participate in such marketing methods. When online marketing started, most luxury brands were against the idea of such a method of marketing as they thought it would reduce the product’s “dream value” by making it more accessible and available. However, luxury brands came to realize that technology is more of a benefit than a threat. Interaction with customers through online platforms such as Instagram, Facebook, and Twitter creates friendly interaction and stimulates consumers’ desire for luxury brands.
In the luxury fashion brand, e-marketing has played a key role in the brands’ success. For example, Louis Vuitton and Prada post videos of their models on runways on their Facebook and Instagram platforms, which exposes their brands to interested consumers. On the other hand, Burberry launched an online shopping site that offers a full-time chat system with its Chinese customers (Godey et al., 2016). The brand also has an online presence on Chinese online marketing sites such as douban.com. The online presence of luxury brands has steadily grown over the years as they have embraced digital marketing strategies and embraced methods that work for them.
The use of online marketing by luxury brands started to rise in 2009 when Gucci created a social network site, “Guccieyeweb.com,” to reach emerging digital customers (Kim, 2012). Similarly, Burberry developed a social network site, “Artothefrench.com,” in 2009 to also appeal to digital consumers. Online sales for both companies increased after the launch of their websites. Currently, the two are most frequently on their social media platforms and have developed a high online presence and interaction with customers. Dolce & Gabbana also uses their bloggers to post to their online marketing platforms after runways. This helps their customers get to see their favorite brand modeled directly. Other luxury brands that use online marketing are Louis Vuitton, Yves Saint Laurent, and Versace.
Online marketing efforts of luxury brands have five dimensions; entertainment which is a result of the fun consumers get from the social media experience, and interaction that comes with communicating with customers. Another dimension is trendiness as a result of the latest fashion, customizing, which represents the degree to which a product is customized to meet a customer’s preference and WoM (Godey et al., 2016). The five dimensions are effective strategies to grow and reach wider audiences.
Even though luxury brands have moved swiftly from traditional marketing to digital marketing, they still rely on traditional marketing to sell their brands. To create a balance and ensure their brands remain luxurious when using the two forms of marketing, luxury brands have unwritten laws such as non-positioning. This is because luxury brands are non-comparative. They do not seek to differentiate or position themselves but to be unique in the market (Romo et al., 2017). Therefore, in marketing, positioning does not exist in both forms of marketing. Another law is they do not have to respond to an increase in demand since luxury brands do not have to respond to an increase in demand since they respond to a dream, not a need. They should not produce in mass as doing so would lose their essence, uniqueness, and value. They should also make it challenging to buy by using premium prices. This ensures the products do not flood the market and hence lose brand value.
Even though some customers still need to view fashion items on runways and at international fairs, the digital era offers luxury brands with possibilities that influence their marketing and trends in luxury brands. According to Romo et al. (2017), the three important trends in the business world are three; business consolidation, digital marketing strategies, and globalization. The digital trend, in particular, is significant in innovating communication and market growth.
The digital marketing strategies that luxury brands use the most are websites and social media platforms. The two help the brands promote video production that enables interaction with consumers and engages in the storytelling of the companies. A few years ago, digital marketing in luxury brands seemed impossible. However, the new age has challenged companies to consider using technology to market their products.
2.4. Online marketing efforts in the creation of brand equity
Consumers buy luxury fashion products for their own pleasures, as gifts, and as a symbol of success. Despite the differences in reasons for purchase, the brand remains the primary reason for connecting with consumers. It may influence customers’ perception of it in ways such as brand awareness, image, and preference. Marketing activities enhance brand equity in online marketing. Unlike the traditional form of marketing, which only enhances brand awareness, online marketing strongly influences the brand image and brand awareness (Godey et al., 2016). Even though luxury brands were skeptical about entering online marketing, they have been able to find ways to be digitally available without compromising the laxity of the products. They have moved from traditional marketing and have embraced digital marketing to enrich their sales and connect with their customers more effectively.
A strong brand equity is closely associated with a robust online marketing presence. According to Husain et al. (2022), brand equity created through online marketing positively affects the future purchase intention of customers. Consumers search for brand equity the most in the online niche. This explains why loyal customers pay premium costs for their preferred luxury products. The digital world helps to spread information in a faster way across the globe. This explains why it might be the best option for creating brand equity for companies, as it leads to more brand awareness, association, loyalty, and association.
Online marketing plays an essential role in contemporary promotional mixes. Recent studies show that social media has a positive effect on brand equity (Husain et al., 2022). Consumers generally prefer highly publicized goods, and social media does that hence producing strong brand relations. Therefore, it can be inferred that online marketing positively impacts brand equity.
The three main hypotheses in this research are;
i) Online marketing tools have positively impacted the brand equity of luxury brands.
ii) Online marketing positively influences OBC’s brand loyalty.
iii) Online marketing has positively transformed the luxury brand industry
2.5. Conceptual Framework
Previous studies have shown that online marketing has a positive effect on luxury brand equity. They also show that the increased use of online marketing by luxury brands also leads to brand loyalty. According to Brogi et al. (2013), the five dimensions that measure OBC dynamics impact brand equity positively. The dimensions are; brand community participation, perceived quality, brand association, brand community-generated content, and brand loyalty. The online tools are social media, affiliate marketing, email marketing, and viral marketing. The conceptual model will study the impact of online marketing as an independent variable and brand equity as the dependent variable.
The research study used secondary data to draw findings and conclusions for the study topic. Saunder’s research methodology was significant in this research methodology as it helped in developing the research design with research philosophy, design, and tactics in mind (Aesa, 2020).
The study used a qualitative research method and conducted a research assessment in the field of online marketing and brand equity of luxury brands with an emphasis on interpretation and synthesis evaluation. While there are many secondary sources such as newspapers, reports, blogs, and magazines, the research-validated peer-reviewed journal articles over the rest due to their credibility. Using peer-reviewed journals will guarantee a trusted and credible form of scientific information.
The researcher used a step-by-step evaluation as done in meta-analysis and conducted an evidence-based study in 3 phases. The 1st phase involved performing a keyword search in google scholar and looking at articles published between 2013 and 2022 that had titles, abstracts, or keywords with the words “online marketing, “luxury brands,” and brand equity” The number of articles that had those words integrated into their title, abstract, body, or keywords were around 93. In the second phase, the researcher evaluated the articles using content analysis and found that even though some articles had all six words; online, marketing, luxury, brands, brand, and equity, the words were separated and did not appear as “online marketing” or “brand equity.” This weeded out close to 40 articles. Using articles that did not closely reflect the study topic variables was unnecessary and would lead to irrelevant information.
A further investigation of the remaining articles to find out details of online marketing on the brand equity of luxury brands. The research resulted in 14 relevant articles. The investigation of relevant articles on Google scholar showed that the study of online marketing in luxury brands measured an array of variables such as purchase intention, brand image, consumer behavior, social media marketing, consumer intentions, digital marketing, and consumer response. The variables presented in these articles were closely related to the study topic and hence would help in the retrieval of information.
Finally, the researcher conducted a thorough investigation using content analysis and hence summarized the information in categories of variables used main conclusions and emerging research themes on the impacts of online marketing on luxury brands. Table 1 represents the research synthesis of ten years of study surrounding the impacts of online marketing on the brand equity of luxury brands on Google Scholar from 2012. The table highlights the number of articles that highlights the keywords searched.
Year No. of articles with the three keywords mentioned No. of relevant articles Keywords used Quantitative Qualitative
Table 1 Research synthesis for a ten-year study
3.1. Emerging Research Focus
After the completion of the third phase, the researcher grouped articles on the basis of word similarities with reference to “impacts of online marketing on the brand equity of luxury brands” and found 3 clusters that emerged through cluster analysis. The first research focus was from the first cluster- online marketing efforts of luxury brands. This cluster did not include brand equity but was found necessary in proving the research hypothesis and aims. The second cluster that emerged was the effects of online marketing on brand equity. Even though it did not focus on luxury brands, the variables used in the studies were significant in arriving at this research’s findings and conclusions. The third cluster covered all three parts of the research topics, the impacts of online marketing on the brand equity of luxury brands. This last cluster was broader than the other two, and it covered all aspects of our study. The variables in this cluster were also necessary for drawing conclusions for the research.
In terms of analyses, most articles used quantitative research methods and utilized multiple regression and linear analysis to achieve their objectives. Quantitative analysis was also common for articles that studied social media marketing, digital marketing, and online marketing of luxury brands and brand equity. Table 2 shows the synthesis done regarding emerging research foci and the relevant studies, variables, and findings.
Table 2 Synthesis regarding emerging research foci
Chapter 4. Analysis, Results, and Discussions
4.1. Case Study 1: Louis Vuitton
Louis Vuitton is an example of a brand that has embraced online marketing. The company has a large social media presence, which is equally noticeable in google search engines. A study done to evaluate the impacts of online marketing on the brand equity of big brands showed that Louis Vuitton had the most number of online engagements on platforms such as Facebook and Instagram, defeating other studied samples such as Zara, Mercedes Benz, and Ikea. In 2017, Louis Vuitton had the most number of engagement posts on Facebook alongside Disney (Shay & Host, 2019). The study, which incorporated 100 brands, showed that online reach had a positive impact on Louis Vuitton’s brand equity.
A study conducted by Godey et al. (2016) showed that Louis Vuitton had a high engagement in online marketing. The company used marketing tools such as social media, which boosted its customer interactions and reached online marketing. The increased online marketing techniques boosted the company’s brand loyalty, image, and awareness in the digital market. According to Octavia et al. (2020), Louis Vuitton’s posting videos of its catwalks and traditional marketing on its digital platforms boosted the company’s brand awareness and equity in the online community.
Despite the advantages that online marketing brings to luxury brands, it also poses some threats and challenges. The most notable challenge is the emergence of counterfeit products in the online market. Counterfeit products and unauthorized sales may threaten the integrity of Luis Vuitton products, especially when unsuspecting buyers purchase them. Counterfeit products ruin the original brand image and cause the original products to be less popular in the market (Srisomthavil & Assarut, 2019). Another challenge that LV faces is the threat of its products flooding the market, making them less luxurious. The essence of “luxurious” brands is that they are rare, expensive, and not very accessible. However, digitalization means that customers from around the globe can purchase the products.
Burberry is among the luxury brands that have adopted and embraced online marketing. It has introduced a twenty-four-hour online system where consumers can interact with sellers at any time of the day (Sehar & Azam, 2019). They can make online purchases and give feedback or reviews using the site. Burberry also has microblogging sites such as Weibo, which has gathered over a million followers since its inception in 2009. The company uses its online sites to interact with customers. By creating a unique brand image in its online marketing platforms, the brand has increased brand loyalty and awareness, which leads to increased brand equity.
Burberry faces similar threats and challenges in online marketing. The surge of counterfeit products in the market has affected the company’s brand image as unsuspecting consumers buy fake products, which are always of poor quality. Additionally, the brands increasing accessibility and ease of purchase also threaten the laxity of the brands (Sehar & Azam, 2019). Apart from that, since digital marketing in luxury brands is still in its infant stage, managers still have a challenging time understanding logic and promoting sales in a way that does not affect their luxury brand status.
4.3 Analysis and Results
4.3.1. Research Focus 1: Online marketing efforts of luxury brands
This online marketing domain includes strategies luxury brands have put in place for effective online marketing. According to Dobre et al. (2021), it is essential to know the consumers’ motivation in online marketing to ensure marketers influence purchase intention and share information about the products with other users. Online marketing can deliver a rewarding experience with luxury brands for consumers who rely on the internet to make purchases. The perceived value of luxury brands also influences consumers’ intent to continue shopping in online stores.
The luxury fashion industry faces unprecedented changes due to the emergence of technologies and the digital revolution. Even though the industry was skeptical at first to engage in online marketing due to the fear due to the fear of losing value, many brands, such as Gucci and Louis Vuitton, have adapted to the changes and considered online marketing. Online marketing and luxury goods sales are likely to increase over the years, and by 2025, close to a fifth of luxury sales will be done online (Dobre et al., 2021). Luxury brands make their products desirable by maintaining an online presence and using unique forms of advertisements that appeal to consumers. They have managed to remain exclusive by using selective distribution despite the visibility they get online.
Luxury brands can use online marketing by using strategies such as storytelling and experience. They build relationships by interacting with customers on their platforms which also creates brand awareness and loyalty (Munster, 2014). Even though not all luxury brands have fully embraced online marketing, studies show that using online marketing tools is advantageous to companies.
4.3.2. Research Focus 2: Effects of online marketing on brand equity
One of the online marketing tools is social media. According to Ebrahim (2020), users engage in online platforms such as social media to obtain tailored services that meet their demands. Therefore, social media marketing enhances brand loyalty through its dimensions, such as trendiness, word of mouth, and interaction. Loyal customers play an essential role in improving brand loyalty and brand equity. The study by Ebrahim on the role of trust in the brand equity of luxury goods also showed that trust is a significant aspect in generating positive brand association and equity in the online marketing of luxury brands (Ebrahim, 2014). The trust they have in the brands also influences the association between marketing activities and brand loyalty.
Further studies on the effects of online marketing on brand equity show that the marketing technique has a positive impact on brand image and brand awareness, confirming that online marketing is a precedent in creating brand equity (Seo & Park, 2018). Therefore, developing a good marketing strategy is imperative in achieving brand equity in online sales.
4.3.3. Research focus 4. Impacts of online marketing on brand equity in luxury brands
Moving from traditional marketing to online marketing has influenced luxury brands’ brand equity. Brogi et al. (2013) did a study to analyze the impact of OBC on brand equity in the luxury brand industry. The findings showed that the online brand community is an effective marketing strategy for luxury brands. The OBC dynamics that the researchers investigated, including brand community participation and brand quality, positively impact the brand equity o luxury brands. The researchers recommend that luxury brands should exploit the opportunities presented by online brand communities as they are strategic assets for the luxury brand industry.
Another study shows that social media marketing positively influences brand awareness, loyalty, and brand image (Godey et al., 2015). The researchers further suggest that investment in online and offline brand equity would strengthen online marketing efforts. Online marketing using social media also positively impacts brand loyalty, brand awareness, and brand preferences, which are essential outcomes in online marketing.
The ten-year study synthesis in online marketing and brand equity exposed three research themes; online marketing influence on brand equity, luxury brands’ efforts in online marketing, and the impact of online marketing on brand equity in luxury brands. The studies that have been used in this research show consistency in findings. Even with the different variables, the peer-reviewed journals show that e-marketing has a positive effect on brand equity. Apart from that, there is brand loyalty among online brand communities due to the increased exposure of luxury products with reviews and more connection with the designers (Brogi et al., 2013). When a customer is able to connect with the seller in a casual way, their loyalty to the brand increases, and they may even be able to spread their experiences through Word of Mouth (WOM), which positively influences a company’s online marketing presence.
4.3.1 Hypothesis testing
H1: Online marketing tools have positively impacted the brand equity of luxury brands
The reliability of the finding in this hypothesis was tested using the CRAAP analysis (Currency, Relevance, Authority, Accuracy, and Purpose (Benedictine University, 2022). The technique analyzes the validity and reliability of the hypothesis conclusion. Using the CRAAP technique ensured that the conclusions drawn on the hypothesis were accurate and based on facts. The information used to draw a conclusion on the first hypothesis was all peer-reviewed journals. This means that they are credible information. Apart from that, the journals ranged between 2013-2022, making them current and relevant to the study. The research did not use any unauthorized data as they were free from the internet. Their purpose was to help in analyzing the hypothesis formed for the study. The studies on the impacts of online marketing tools on the brand equity of luxury brands which were done by Brogi et al. (2013), Ebrahim (2020), Sehar (2019), Seo (2018), and Romo (2017) show a positive association between e-marketing and brand equity of luxury goods. Based on this research, this study draws the conclusion that, indeed, online marketing tools have a positive impact on the brand equity of luxury brands.
H 2. Online marketing positively influences OBCs’ brand loyalty.
Once again, the study used the CRAAP technique to determine the validity of the information used to draw conclusions on the second hypothesis. The data used here were peer-reviewed and current. They also discussed the main parts of the hypothesis, making them relevant to the discussion. The research confirmed the second hypothesis from six studies to ascertain brand loyalty in online marketing. According to Husain et al. (2022) and Kim & Ko (2012), online marketing, using the social media marketing tool, positively influences brand loyalty. Other studies from Brogi et al. (2013) and Shay (2019) draw the same findings. The first and second case study, done by analyzing peer-reviewed articles on the impact of online marketing on Luis Vuitton and Burberry, also shows a positive relationship between online marketing and brand equity.
H3. Online marketing has positively transformed luxury brand equity.
The research has also confirmed this hypothesis to be correct. According to Kim & Ko (2012), luxury brands that utilize online marketing have increased purchase intention, brand loyalty, awareness, and association. All these factors lead to good brand equity. Mastropietro et al. (2019) also propose that digital marketing is imperative to luxury brands so that they can connect with customers who are also shifting to digital method purchases. The study argues that even though luxury brands are still slow to switch to digital marketing, they should consider the positive effects that online marketing has brought to the luxury brand industry and the digital transformation that is continuously expanding and creating a dynamic and competitive business environment. Apart from that, Case study 1 and 2 on two luxury brands, Luis Vuitton and Burberry, shows a positive relation between online marketing and brand equity. This draws a conclusion and confirms the third hypothesis.
An increasing number of research studies discuss the theoretical and practical impacts of online marketing on brand building and brand equity, as well as the challenges and implications that it entails (Sohail et al., 2020; Opreana & Vinerean, 2015). Yet there are few researches that show evidence of how online marketing influence brand equity in luxury brands and how they subsequently affect other dimensions such as brand loyalty and brand awareness. This study addresses this gap by offering a study on luxury brands’ activities in online marketing. The luxury sector is, therefore, the basis of the research. It adds to the existing literature by providing a framework demonstrating how online marketing affects brand equity in luxury fashion brands.
The results presented in this study are consistent across four luxury brands; Luis Vuitton, Burberry, Gucci, and Chanel. They do not have any significant differences between them. From a marketing perspective, all four dimensions of Arker’s brand equity model stand out in online marketing (Aarker, 1991). These results show that online marketing tools should be used to reach new customers and as a significant tool for creating brand equity. From the analyzed studies, online marketing significantly improved brand loyalty which is significant in creating brand equity.
From a managerial point of view, the study analysis and results have the following contribution to the literature; the four dimensions of brand equity all contribute to luxury brand equity. The peer-reviewed journals used in this study show a positive relationship between online marketing and brand equity. Another contribution is that online marketing has a significant positive effect on brand loyalty, consistent with previous work on the same topic (e.g., Godey et al., 2016, Kim & Ko, 2012, and Brogi et al., 2013). This answers one of the research objectives, which was to analyze brand loyalty among the OBCs. Additionally, the findings show that luxury brands that use online marketing tools show an improved performance compared to using traditional marketing, which would involve cat walks, magazines, and other functions. Luxury brands have incorporated online marketing alongside these traditional forms of marketing, which is why it is common to see companies such as Gucci post their runway shows on online marketing platforms such as Instagram.
Despite these advantages, online marketing has also posed challenges for luxury brands. The most common one is the rise of counterfeit goods in the market. Businesses duping brands such as Gucci, Versace, Burberry, and Chanel have cropped up and are now selling fake items on online marketing platforms (Srisomthavil & Assarut, 2018). The people affected the most by this are the luxury fashion industry and consumers. Counterfeited products decrease the brand image of original products as they are often cheaper and more readily available. Unsuspecting consumers will find themselves buying these goods that are usually of low quality, which may reduce their trust in the original brands. Apart from that, the luxury fashion industry still faces the threat of competition even though its products are usually unique. Competition among themselves is increasing in online marketing platforms. Since the industry is still new in online marketing, luxury fashion managers are yet to develop long-lasting strategies that will ensure they remain relevant in the market. Despite these threats, challenges, and limitations, luxury brands continue to embrace online marketing and enjoy the positive impacts that it brings to their businesses.
As previous literature has discussed, online marketing tools are significant in achieving brand equity in luxury brands and other industries. By using these tools, luxury brands can increase their connection with customers. Despite earlier speculations and doubts about whether online marketing was the best way to go for luxury brands, this study reveals that the marketing technique offers more benefits than harm. More luxury brands are embracing online marketing and incorporating it with their traditional form of marketing. With the right strategies, the fashion industries have maintained their images and increased their media outreach.
5.1. Main findings
The luxury fashion industry continues to embrace online marketing and incorporate it alongside its traditional form of marketing. The findings in this study show a positive relation between online marketing and brand equity. Businesses that use online marketing tools create more brand awareness which leads to more reach in the online brand community. The engagements and interactions gotten from online marketing lead to positive brand equity. Another finding is that online marketing leads to brand loyalty. Lastly, luxury fashion brands embracing online marketing have increased brand equity since they are able to connect with their digital consumer who may not be able to attend their catwalks or get copies of their magazines.
5.2. Limitations and future study
The main limitation of this study is that the findings are not generalizable beyond the luxury fashion industry. Even though it could be used in luxury sectors, the data used may not be comprehensive due to the small samples chosen and the thousands of research on the same in literature. Secondly, even though brand equity has four dimensions, the study mainly employed brand loyalty and awareness as dimensions for brand equity. Future research may expand the study to incorporate other dimensions, such as brand association, or study them individually with reference to the study topic. Lastly, future researchers may study socio-demographic variables such as income and gender and how they influence brand equity of luxury brands for an in-depth understanding of this research topic.
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