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TRANSCRIPT
The implications of digital marketing on WeChat
for luxury fashion brands in China
Sindy Liu
School of Materials, The University of Manchester
Oxford Rd, Manchester M13 9PL, United Kingdom
Patsy Perry
School of Materials, The University of Manchester
Oxford Rd, Manchester M13 9PL, United Kingdom
Gregory Gadzinski
INSEEC Research Center
International University of Monaco
2, Avenue Albert II, 98000 Monaco
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The implications of digital marketing on WeChat
for luxury fashion brands in China
Abstract:
This paper examines the use of e-commerce and social media marketing within brand
marketing in international luxury fashion retailers in China, focusing on their use of Chinese
social media app WeChat for marketing communications and sales. A multiple case study of 15
international luxury fashion brands active on e-commerce platforms in China was conducted in
2015. Qualitative data were collected through face-to-face semi-structured interviews with senior
managers in the retailers’ Chinese head offices and their VIP clients, combined with observation
of the brands’ WeChat accounts. Contrary to previously held beliefs that e-commerce erodes the
fragile perception of luxury brands’ exclusiveness, our findings suggest that concerns over brand
exclusivity due to social media overexposure is irrelevant for the Chinese market, and product
exclusivity remains the prominent element in protecting brand exclusivity. WeChat is
significantly different in its functionality and use from Western social media, and has particular
advantages over other social media for luxury consumers and brand managers within China and
beyond. Finally, the paper presents a conceptual framework for managing luxury brand
marketing in China in the digital era.
Keywords: Luxury, China, Branding, Omnichannel, Social Media, WeChat
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1. Introduction
The rapid development of luxury emerging markets since the beginning of the 21st
century provides luxury retailers with immense opportunities, albeit greater challenges than ever
before (Kapferer, 2015). More recently, the luxury sector has been further redefined by
technological advances in communications and the increasing shift to digitalization (Kapferer,
2015; Ko et al., 2016), including online retailing and social media marketing. However, in terms
of accessibility and democratization, use of digital channels for sales and marketing could
conflict with the traditional luxury brand strategy of high control and exclusivity, so most luxury
brands have traditionally shied away from offering goods for sale online or being present on
social media. However, luxury e-commerce is gaining ground (Bain & Co., 2017a) and the e-
commerce market for luxury personal goods showed a 90% increase from 2010-2015
(Euromonitor, 2016). Acknowledging the shift away from a highly controlled and centralized
approach, Chandon et al. (2016) questioned how may luxury brands maintain their dream value
online, and what is the optimal balance between exclusiveness and inclusiveness?
The challenge of luxury brand management becomes even more complex in the growing
Chinese market, which is characterized by younger, digitally savvy luxury consumers, and
rapidly evolving consumer behavior (Liu et al., 2016). Already the largest mobile phone market
in the world, China provides an immense opportunity to embrace digital communication and e-
commerce/m-commerce, yet luxury brands have not fully taken that opportunity (Euromonitor,
2016). The luxury sector faces a challenge in adapting to the new digital world in emerging
economies without losing its value proposition of exclusivity and rarity (Ko et al., 2016; Quach
and Thaichon, 2017). This study seeks to identify the challenges and opportunities of e-
commerce and social media marketing practices by luxury fashion brands in China, and to
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understand how digital sales and communications channels (in particular WeChat) affect the
traditional luxury brand marketing strategy within the Chinese market and internationally.
The paper begins with a literature review on the opportunities and challenges of e-
commerce for distribution and social media for communication within China’s luxury fashion
retail sector. Next, the qualitative research design is set out, which combines data from
practitioner and consumer interviews with observation of the brands’ WeChat accounts. Findings
from the empirical analysis of luxury fashion brand practitioners and Chinese luxury fashion
consumers highlight the key roles of creative and culturally adapted content, and how the
adoption of m-commerce is shaping successful luxury marketing strategies in China. Finally, the
article draws conclusions and offers managerial implications for luxury fashion brands to better
manage their overall marketing strategy in China and internationally.
2. Literature review
2.1 The opportunities of digital marketing for luxury brands
The use of digital sales and communication channels offer opportunities for luxury brands to
manage omnichannel connections with clients, diffuse brand content and provide higher levels of
service (Kapferer, 2015). Evidence suggests that online word-of-mouth (eWOM) significantly
influences consumer purchase behavior (Chen et al., 2011; Mangold and Faulds, 2009). New
digital media have transformed the ways in which people exchange information and social media
in particular enable customers to exchange information about brands with their network (Chae
and Ko, 2016; Kasabov, 2016). Enabled by advances in internet and communications
technology, consumers increasingly participate with producers in the co-creation of value in the
marketplace (Zwass, 2010). The passive consumer has evolved towards an increasingly
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“connected, empowered and active customer” (Prahalad and Ramaswamy, 2004, p.8), becoming
more involved in firms’ marketing activities (Chae and Ko, 2016). In the luxury sector, “co-
creating the luxury brand experience involves dialogue and complex interactions between the
brand owner, employee, customer and other social groups including the customer brand
communities”, which could occur online as well as in a physical sense at brand events (Tynan et
al., 2010, p.116). To facilitate the transition from offline to online, brands also need to combine
consumer and community based tactics by putting customers’ emotions at the center of the
marketing strategy (Lemon and Verhoef, 2016). The transformation of physical spaces into a
multisensorial experience is fundamental in order to evoke sensations, feelings and behavioral
responses generated by brand stimuli (Brakus et al., 2009). Provided that the digital strategy is
fully integrated into the customer journey, luxury brands can close the gap between the virtual
world and reality to ultimately build a community-based creative experience. Pine and Gilmore
(1998, p.99) noted that “companies stage an experience whenever they engage customers in a
personal, memorable way”. With the increasing significance of the online channel for
communication and distribution within luxury, the use of new technologies also aided the
potential for experiential marketing (Atwal and Williams, 2017), so that engaging customers in a
personal, memorable way could include online as well as offline communications.
2.2 Challenges of online accessibility vs. brand exclusivity
Despite the increasing significance of the internet as a luxury communication and
distribution channel (Atwal and Williams, 2017), there are issues surrounding the online
environment in terms of its accessibility. Marketing luxury goods requires a balance between
satisfying increasing consumer demand in the international market, and maintaining brand status
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of rarity and exclusivity, in order to manage “the delicate equilibrium between supply and
demand” (Dubois and Paternault, 1995, p.75; Tynan et al., 2010). Furthermore, luxury brand
communication strategies aim to not only sell the product, but also create a dream and reinforce
brand values (Dubois and Paternault, 1995; Dion and Arnould, 2011; Kapferer and Valette-
Florence, 2018). Therefore, traditional luxury brand management strategy was traditionally
characterized by centralization and a high level of control. Exclusivity took precedence over
accessibility and thus e-commerce and social media were not generally seen as appropriate
distribution or communication channels (Dubois and Paternault, 1995; Kapferer and Bastien,
2012). Kapferer (2015, p.725) claimed “all brands look alike online”, and only in the store would
differences between mass and luxury market segments become apparent. Although the internet
and social media are valuable for luxury brands’ marketing communications, they contradict the
principles of luxury brand management, where creating a distance between the brand and
consumers is essential in maintaining the ‘aura’ of luxury brands (Kapferer and Bastein, 2009,
2012).
Luxury brands should exercise restraint in selling via digital channels since this
‘massification’ contradicts the essence of ‘luxury’, namely exclusivity and rarity, and the
potential for rapid penetration via online distribution could thus diminish the crucial dream value
of luxury brands (Kapferer and Bastien, 2012; Kapferer and Valette-Florence, 2018). It may also
be argued that the very nature of social media, in terms of its accessibility and democratization of
communications, conflicts with the traditional luxury brand strategy model of high control and
exclusivity. Although the social value dimension and the perceived brand status and prestige
helps to attract new customers, luxury brands still need to maintain the sense of exclusivity by
offering selective online content and services to loyal customers (Hennigs et al., 2015; Kapferer
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and Valette-Florence, 2018). Social media are primarily consumer spaces and brands must
therefore relinquish control (Fournier and Avery, 2011). As consumer-brand interactions on
social media can involve other social network users too, value can be co-destroyed as well as co-
created, for example unfavorable perceptions could be drawn if other users ridicule or give
negative feedback about the brand (Quach and Thaichon, 2017). Hence, the democratization of
information access online was traditionally perceived to be incompatible with luxury’s fragile
perceptions of rarity and exclusivity (Okonkwo, 2009; Seringhaus, 2005; Dall’Olmo Riley and
Lacroix, 2003).
More recently however, Kluge and Fassnacht’s (2015) experimental study suggested that
selling online does not negatively affect consumer perceptions of exclusivity. Cristini et al.
(2017) noted that luxury’s traditional association with exclusivity (Okonkwo, 2009; Dion and
Arnould, 2011) is increasingly less prevalent as luxury has become reachable and accessible
(Yeoman, 2011), meaning that “excellence can come without exclusivity” (Cristini et al., 2017,
p.105). Kapferer and Valette-Florence (2018) questioned whether luxury brands’ desirability still
rests on maintaining some form of rarity and exclusivity, and whether this is more relevant to
traditional Western markets than in Asia. Interestingly, Ko et al.’s (2018) recent definition of
‘luxury brand’ did not explicitly include aspects of exclusivity or rarity.
2.3 Luxury brand marketing in China
The challenge of luxury brand marketing becomes more complex in the emerging
Chinese market, which is characterized by younger and digitally savvy luxury consumers, and
rapidly evolving consumer behavior (Liu et al., 2016; Bain & Co, 2017b). Over the last two
decades, the Chinese economy developed rapidly and China became the third biggest global
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luxury market after the US and Japan (Euromonitor, 2016; Bain and Co., 2017a). Chinese
consumers have transformed the luxury market, with growth in domestic sales as well as
continued voracious spending as tourists: they make half of all luxury purchases in Asia, and
nearly one-third of those in Europe (Bain & Co., 2015; Bain & Co., 2017a). Globally, nearly one
in three purchases of personal luxury goods is made by Chinese consumers (Bain & Co., 2017a)
with the highest level of growth in e-commerce for luxury personal goods during 2010-2015
coming from China (Euromonitor, 2016). Chinese High Net Worth Individuals (HNWI) expect
more personalized services, but most them are accustomed to using digital services and like the
idea of receiving regular information and recommendations via online platforms such as WeChat
and mobile devices (Bain & Co., 2017b). One of the fastest growing cohorts of HNWIs are the
so-called gold-collar professionals, a new generation of entrepreneurs: young, urban and digitally
educated, who now account for 30% of China’s HNWIs, more than twice their 12% share in
2009 (Bain & Co., 2017b) 1.
Chinese luxury purchasing behavior is significantly different to other nationalities,
characterized by a lack of brand loyalty and greater conspicuousness in consumption than
typically seen in culturally opposite Western markets (Liu et al., 2016). In collectivist societies
(such as China), luxury consumption tends to be symbolically driven as a means to achieve
social recognition, compared to the greater hedonic motives seen in more individualistic societies
(Degen, 2009; Shukla and Purani, 2011). Buying luxury products to impress others is still a
dominating factor for luxury consumption in China (Zhan and He, 2012). Chinese luxury
consumers may also be more prudent and cautious, as they rely heavily on the recommendations
of others and rarely buy unknown brands (Berger, 2012; Berger, 2014). Word-of-mouth
1Overall, there were 1.6 million HNWIs (assets of more than RMB 10 million, USD 1.6 million) in 2016, and expected to reach more than 1.9 million by 2017.
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recommendations are the key source of information for Chinese consumers when buying luxury
goods (Berger, 2012), with a greater effect on consumers than seen in individualistic cultures.
Recent Asian consumer research suggests that social media marketing by luxury brands enhances
customer equity because of the conformist culture (Kim and Ko, 2012; Seung-A, 2012). Kim and
Ko (2012) acknowledged the highly positive impact of luxury fashion brands’ social media
marketing strategies on collectivist Asian consumers’ purchase intention. According to Jin
(2012), Louis Vuitton’s social media channels were positively perceived by Asian consumers
with several beneficial outcomes, including attitudes toward the brand and intentions to shop at
the brand’s e-commerce site as well as in retail stores. Stankeviciute (2013) studied Elie Saab’s
social media strategy in Hong Kong for one year and concluded that the highly active social
media strategy helped the brand to establish its image and positioning as a very high-end luxury
brand, without damaging the brand’s exclusivity. This cultural difference could be beneficial for
luxury marketing in China, as the viral effect of social media plays a key role in impacting
consumer behavior by increasing awareness, information acquisition, opinions, attitude, purchase
behavior, post-purchase communication and evaluation (Mangold and Faulds, 2009). Therefore,
luxury brands must acknowledge the digital phenomenon in China and its implications for luxury
marketing strategies in order to meet the future demand of Chinese luxury consumers. Industry
reports suggest the luxury industry generally lagged behind in developing a solid digital strategy
in China: Bain & Co. (2016) noted the lack of localized content on luxury brands’ digital
channels while Exane BNP Paribas (2014) highlighted Burberry and very few others as
exceptions that had made some attempts on Chinese social media, focused upon brand
experience. Consequently, the industry may have lost an immense opportunity to reach target
Chinese consumers in the digital space and to take advantage of collectivist behavior by
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harnessing the word-of-mouth effect via Chinese social media. More recently, however, China’s
luxury market has witnessed several major e-commerce launches as well as experimentation
across WeChat mini programs, omnichannel, direct-to-consumer and e-tailer channels. Some
sophisticated and interactive examples of WeChat campaigns include Montblanc’s VR museum
experience and Michael Kors’ bag customization zone (Farooqi, 2018). This suggests that taking
a broad-brush approach to the digital environment as unsuitable for luxury is too simplistic,
especially in the Chinese market.
CRM is an essential part of luxury brand marketing as it enables brands to make their
customers feel they are part of a community or an exclusive club, to enhance engagement with
existing customers and to recruit new customers, then turning them into ambassadors or even
into recruiters through word-of-mouth (Cailleux et al., 2009). CRM was traditionally conducted
face-to-face, over the phone or via email, using database marketing methods, but the rise in
popularity of social media has led to uptake of social media channels for CRM purposes.
2.3.1 Use of WeChat for luxury brand marketing in China
Since internet censorship prevents Chinese consumers from accessing most Western
social media, local platform WeChat has become China’s dominant social media. A combination
of instant messaging, social gaming and social media (Chen, 2018), its functionality combines
and surpasses that of any Western social media, permitting users to pay for goods and services
both online and offline, book appointments, as well as see contacts’ updates, create private or
public groups, send instant messages, and make voice and video calls. By providing such a
variety of social functions, WeChat has become an integral part of the Chinese lifestyle for both
business and leisure, rather than just another social media app (Chen, 2018; Long, 2017;
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Curiosity China, 2018). Furthermore, the development of mini-programs, or third party sub-apps
that exist within WeChat, allows brands to provide advanced benefits to users such as
ecommerce, coupons and loyalty programs, without users needing to download a separate app.
Due to its vastness and integration of online and offline services, WeChat has become a ‘one-
stop shop’ for Chinese users’ daily lives (Chen, 2018), with most users opening it more than 10
times daily and some using it significantly more often (Tencent Pinguin Research, 2016).
WeChat also permits one-to-one personalized and dedicated interaction between brands
and users (Chen, 2018) and has been heralded as an effective tool for luxury CRM, with its
functionality allowing brands to develop a range of marketing initiatives from immersive
branding campaigns to boutique appointment systems and integrated WeChat e-commerce
(Curiosity China, 2018). Users simply scan their WeChat QR code to connect with another
individual (e.g. luxury sales personnel), without needing to provide any other contact details.
This permits highly personalized brand-consumer communications, which is paramount for high-
end consumers: according to LuxurySociety (2017), 86% of Chinese millionaires care about
customized experiences when purchasing luxury products and services. By connecting directly
with a sales associate, consumers may access customer service at any time and in any place, no
matter if they are at home or traveling. Sales associates engage in one-on-one interactions by
messaging with the consumer to provide information and answer questions, and may also post
events and offers to their client list. Customers are more likely to view posts that appear on their
newsfeed from a friend, which helps to address the generally low open rate of official brand
campaigns on WeChat (Zheng, 2017). The use of WeChat in Chinese luxury retailing has
become so commonplace that some brands provide staff with company-owned mobile devices,
and in the event they resign, they must also hand back the device containing their contacts
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(Zheng, 2018). As luxury retailers seek to promote extra-ordinary shopping experiences in-store
by way of brand advisors and customer service (Berger, 2014), the use of WeChat by sales
associates supports the integration of offline and online channels. Such highly personalized brand
communications using social media are not typically seen in Western markets. However, the
practice has begun to extend beyond China (Wing, 2017), as seen for example in US department
store retailer Neiman Marcus’ (2018) job advert for a US store-based ‘WeChat Sales Associate’.
Some brands publicly set up their own CRM system on a master WeChat account, located on a
public i-Pad in-store, where customers could input their birthday (Zheng, 2017).
With China being the most important market for luxury brands and Chinese travelers
being the prominent driving force behind luxury consumption (Curiosity China, 2018; Farooqi,
2018), a business challenge exists between the need to conduct active digital marketing and e-
commerce activities to adapt to the digitally-driven lifestyle of Chinese consumers and the need
to prevent dilution of luxury brand exclusivity by being too accessible. To date however, no
study has been conducted on luxury brands’ digital marketing strategies in China. Therefore, to
identify the appropriate adjustments for luxury brand marketing in China, our ultimate research
question is:
RQ: How do e-commerce and social media, and WeChat in particular, reshape
traditional luxury brand marketing in China?
3. Methodology
Following previous studies on luxury fashion retailers’ strategies which adopted
qualitative approaches (Dion and Arnould, 2011; Tynan et al., 2010; Liu et al., 2016), a multiple
case study of 15 international luxury fashion retailers in China was conducted in 2015. As the
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world’s largest emerging market for luxury goods and a global leader in the digitalization of
brands (Exane BNP Paribas, 2015), China represents the ideal case to examine the impact of e-
commerce and social media marketing on luxury brand management (Kapferer, 2015).
Qualitative data were gathered from practitioner interviews, consumer interviews and
observation of the brands’ WeChat accounts. With over 700 million daily users and 55% of daily
users opening the app more than 10 times daily in 2015, WeChat is the most important marketing
communication platform in China (Liu et al., 2016; Curiosity China, 2018). It is also the most
relevant for luxury brand-consumer communications (Curiosity China, 2018), compared with
Weibo, for example, which is a public account that does not facilitate CRM in the same way, as
its functionality does not permit brand accounts to communicate with consumers on a personal
one-to-one level.
3.1 Respondent sample
Each case included one in-depth company interview and one in-depth consumer
interview, alongside documentary analysis of internal company reports and observation of the
brands’ official accounts on WeChat. In this study, the term ‘luxury fashion’ is taken to include
items that can be worn on the person such as apparel, watches, jewelry and leather goods (Zhang
and Kim, 2013). Following similar approaches in recent luxury branding research (Kapferer and
Valette-Florence, 2018; Liu et al., 2016), the sample of brands was identified using the luxury
associations of four countries from which most luxury fashion brands originate (Fondazonie
Altagamma, Italy; Comite Colbert, France; Walpole, UK; CFDA, USA), luxury market reports
(Bain & Co., McKinsey & Co.), online databases (WGSN, Business of Fashion) and top fashion
magazines (Vogue, Elle). The authors checked each brand’s WeChat account, with a total of 28
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found to be active in 2015. These 28 brands were contacted and ultimately a final self-selected
sample of 15 companies (representative in terms of size, country of origin and scope of product
range) agreed to participate (see Table 1). The multi-brand retailers participating in this study are
also members of the aforementioned committees, ensuring the luxury positioning of all
participants. Following Riot et al. (2013), company respondents were selected on the basis of
their ability to provide rich, insightful information on the topic, hence each respondent was at
senior management level with in-depth knowledge of the Chinese market. The consumer
respondents were the retailers’ VIP clients, who were suggested by the companies. They are
HNWIs who purchase luxury goods on a regular basis and frequently use WeChat to
communicate with the luxury retailers’ CRM teams. This consumer profile ensured that
respondents had sufficient experience of luxury brand marketing activities on e-commerce and
social media platforms. Adopting a purposive sampling strategy within each company to access
senior managers with relevant expertise and depth of involvement allowed for the creation of
information-rich cases (Patton, 2002). Table 1 below shows the sample breakdown and
respondents’ details for each case.
Table 1: Sample breakdown
Luxury brand
(product category)
Country of
origin
Respondents Number of
interviews
1. Multi-brand E-retailer UK CEO; VIP Client 2
2. Apparel & accessories UK International Marketing Director; VIP Client 2
3. Apparel & accessories Italy Branding Consultant; VIP Client 2
4. Lingerie UK Head of E-commerce; VIP Client 2
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5. Multi-brand E-retailer UK Marketing Executive; VIP Client 2
6. Watches Switzerland VIP Service Specialist; VIP Client 2
7. Watches & jewelry USA PR Director, China; VIP Client 2
8. Watches & jewelry FranceMarketing Director, China;
VIP Client
2
9. Writing instruments,
watches & accessoriesGermany
Chinese Account Manager; VIP Client 2
10. Watches & jewelry UKDirector of Chinese Market Business Development;
VIP Client
2
11. Department Store Hong Kong Creative Director; VIP Client 2
12. Leather goods & apparel France PR Manager, China; VIP Client 2
13. Apparel UKInternational Marketing Director;
VIP Client
2
14. Leather goods & apparel France Marketing Manager Asia Pacific; VIP Client 2
15. Department Store UKInternational Marketing and Communication
Manager, Asia Pacific; VIP Client
2
3.2 Topic Guide
The interview topic guide was created from the literature review, as shown in Table 2
below, concentrating on the impact of e-commerce and social media marketing on the overall
brand marketing strategy in China. Semi-structured interviews were chosen as the most
appropriate interview format, in order to guide respondents throughout the interview and to allow
them to express their views in their own terms.
Table 2: Interview topic guide
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Brand interviews Consumer interviews
How important is it to use Chinese social
media platforms?
What are the key platforms you currently use?
Do you hire local Chinese or conduct
operations within your head office?
What are the advantages and disadvantages of
this management approach?
Has your business performance been affected
in China because of such social media
activities? And in which way?
Based on your company’s experience, what are
the key success factors for managing Chinese
social media platforms?
What problems are you facing/have you faced
on Chinese social media?
If you have started to conduct e/m-commerce
in China, what would be the key challenges?
Has this affected your brand’s image and
positioning, in and out of China?
What is your outlook for luxury e/m-commerce
in and outside of China in the foreseeable
future?
How important is it for luxury brands to use Chinese
social media platforms?
Which one(s) are the dominant platform(s) brands to
use? And why?
Which brands are doing well? Can you name your
top three choices and provide examples?
Have these digital marketing strategies increased
your interest or/and loyalty to these brands?
Examples?
Can you identify the key success factors of these
luxury brands’ digital marketing strategies?
What other key marketing communication strategies
should luxury brands conduct in China?
In your opinion, which brands are doing the best
marketing communication offline? And overall?
How important is it to adapt to Chinese culture when
conducting digital marketing strategies? Examples?
Is e/m-commerce necessary for luxury brands? Why?
Any additional comments on future development of
luxury retailing/marketing in China?
The first author conducted an average of two semi-structured face-to-face interviews,
lasting an average of 90 minutes in total, within each brand. The interviews were conducted in
Chinese, recorded with permission from all participants, transcribed and translated into English.
Identities were anonymized on the request of respondents.
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3.3 Theme generation and data analysis
Template analysis facilitated data organization and reduction (King, 2012), enabling systematic
comparison of themes across a large body of data to provide a rich and detailed account (Braun
and Clarke, 2006). From the literature review, the authors generated a priori codes to create the
initial template for analysis. The flexibility of template analysis allowed the incorporation, where
appropriate, of additional codes as the interpretive process proceeded (King, 2012). Utilizing
established qualitative data analysis principles to identify cross-connections and relationships
within the data (Miles and Huberman, 2002), the authors analyzed the data deductively, by
coding the interview transcripts according to key themes identified in the literature, and
inductively, with themes emerging from the data itself (Braun and Clarke, 2006). The authors
then revisited the literature alongside the preliminary analysis, which led to re-coding and
refinement of themes and categories to create a final template for structuring the final analysis
(King, 2012), as shown in Table 3 below. Observation of the companies’ WeChat accounts were
combined with the interview data as supporting evidence.
Table 3: Final template for data analysis
Digital strategies in
China
Development pattern Specific strategies
1. Importance 1.1 Necessity as a communication
channel
1.1.1 Focus on social media, especially WeChat
1.1.2 Microblogging as a brand awareness tool
1.1.3 De-centralized in-house e-commerce/m-
commerce and communication
2. Implications 2.1 Advantages 2.1.1 Lower cost
2.1.2 Wider & faster
2.1.3 Direct interaction with consumers
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2.1.4 Higher brand visibility
2.1.5 Big Data for targeted marketing
2.2 Disadvantages 2.2.1 Language and culture differences
2.2.4. High upfront investment
4. Success
factors &
challenges
3.1 Creativity and innovation 3.3.1 High levels of creativity
3.3.2 Storytelling
3.3.3 Links with retail strategies
3.2 Adaptation to Chinese culture 3.2.1 High level of cultural adaptation
3.2.2 Interactive content
3.2.3 Targeted marketing
3.2.4 Local key opinion leaders (KOL)
3.3 Global strategy 3.3.1 Omnichannel seamlessness
3.3.2 Consistent marketing messages across
regional markets
3.3.3 Incorporate Chinese digital channels into
international training programs
7. Current &
future
trends
4.1 As a strategic focus for luxury
brand management in China
4.1.1 Higher level of decentralization
4.1.2 Tailored CRM programs
4.1.3 M-commerce emphasis
4.1.4 Digital Word-Of-Mouth
4.2 Barriers in China 4.2.2 Investment costs similar to media company
4.2.3 Cost of analyzing Big Data
4. Results and discussion
The WeChat platform was clearly identified as the focus of luxury marketing
communications in China. In addition, WeChat is seen to improve offline retail and CRM
management better than any other digital platforms in China, as it elevates the impact of brands’
offline activities and greatly facilitate CRM. Moreover, it is identified as a key channel for
conducting m-commerce. Our findings revealed several strategic implications of how
international luxury fashion brands adapt to Chinese consumers’ digitally driven lifestyles.
Firstly, brands completely decentralize operational control to the China team due to the high
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level of cultural adaption required. Secondly, high levels of creativity and technological
innovation are used to enhance brand communications, to an extent not yet seen outside China.
Our findings also identify that m-commerce, rather than e-commerce, is the predominant channel
for online retailing in China, and that a seamless omnichannel strategy is the key success factor
in enticing Chinese luxury consumers.
4.1. WeChat as a key marketing communication channel in China
In terms of current practices, findings suggest that WeChat is the most effective marketing
communication platform in the Chinese market. All respondents emphasized the significance of
WeChat as the only social media platform that has been integrated into Chinese consumers’ daily
lives, becoming the predominant information feed channel. Not only is it a unified platform that
comprises the functions of many of the popular (yet banned) Western social media, including
Facebook, Twitter, YouTube and Instagram, it boasts other benefits such as phone/video call, file
transfer, money transfer and taxi hailing capabilities. WeChat thus enables consumers to interact
with brands at a more personal level than any other forms of social media, as emphasized by VIP
no.5:
“Most Western companies still don’t recognize the importance of WeChat in China. WeChat is
part of every Chinese’s life, it’s our preferred way of communication with people and brands…
WeChat is THE center of all information resources for Chinese people. So if a brand is not
communicating on WeChat, the brand is invisible.”
All repondents shared similar views that WeChat is the preferred communication channel of
Chinese consumers. This confirms Liu et al.’s (2016) point that Chinese social media is essential
for luxury brands’ marketing strategy in China. It also identifies WeChat as the most effective
channel for luxury retailers to target Chinese consumers, and most importantly, to conduct CRM
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with upscale Chinese luxury consumers, since retaining the most important clientele enables
brands to maintain their luxury status (Cailleux et al., 2009). Neither practitioner nor consumer
respondents expressed any concern over ‘exclusivity’; on the contrary, active participation on
WeChat by luxury brands was seen to elevate brand desirability if conducted in a highly creative
way.
Furthermore, 28 out of 30 respondents (including all 15 VIPs) confirmed that WeChat
enables the most efficient WOM effect in China, as Chinese consumers of all ages and
professions tend to share and make recommendations to their peers. The convenient and private
nature of WeChat thus provides luxury brands with the best platform to fully utilize the
collectivist behavioral characteristics of Chinese consumers (Shukla and Purani, 2011).
4.2. Digital vs. traditional luxury marketing strategies in China
Our findings suggest that digital marketing strategies are reshaping luxury marketing
management in China. All 15 practitioner respondents acknowledged that digital marketing has
been the strategic focus of luxury brand marketing in China since 2013, and is believed to now
parallel or have even overtaken some traditional marketing strategies, especially print advertising
which was formerly seen as the most important luxury marketing communication medium
(Kapferer and Bastien, 2012). Whilst this does not mean traditional marketing communication
strategies can be dismissed, it does mean they can get lost in such a vast country as China, as
indicated by the Marketing Director of Company 7:
“WeChat has really revolutionized luxury strategy in China in a big way since 2013, most brands
including us noticed a much faster and greater shift into digital marketing in China compared to
other markets. Life in China is super-fast paced, so convenience and speed are very important to
Chinese people. Traditional marketing strategies are still important such as advertising and
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events, but if you do not interpret well on WeChat nowadays, the messages simply get lost, so the
biggest challenge for every brand in China now is how to integrate WeChat into traditional
marketing effectively.”
For smaller brands or brands new to China, a digital marketing strategy is even more
effective, because it provides the fastest channel to build up brand awareness at a relatively lower
cost, if the management team understands target consumers in China. Furthermore, it can aid
well-known brands to maintain their brand visibility and increase brand loyalty. All respondents
indicated that Chinese consumers lack brand loyalty, therefore they need luxury brands to
constantly create interesting content to entice them toward the brands and their product offering.
For instance, the PR Manager of Company 3 explained how WeChat helped the company to
regain its popularity in China:
“Compared to the events we conducted three years ago without using WeChat, now the words
spread faster and stronger because Chinese like to share and follow their peer’s opinions. We’re
also able to communicate with Chinese customers at a highly interactive level, such as
collaborating with Uber Shanghai, by using our WeChat QR code, customers can get discount on
both the ride and the exhibition tickets, and we’ve received a much higher volume of visitors than
we expected. But of course, the exhibition has been a huge success of itself, so it’s about having a
multi-channel strategy.”
What remains more exclusive are “experiences”, precisely because these cannot be
commoditized online. One of the most powerful forms of conspicuous consumption today is not
the accumulation of goods but the accumulation of memories and stories. These are precious
because they cannot be replicated. For example, Company 2 increased activities to provide their
Chinese VIPs with unforgettable experiences such as invitations to the most exclusive ski resorts
to test their new ski jackets; Company 8 invited their art collector Chinese VIPs to participate in
21
the curation of the brand’s exhibition. From observation of WeChat brand accounts, smaller
brands newer to China (such as Companies 3 and 4) performed well on WeChat, with their
regular feeds featuring creative content achieving higher reads and reposts than much larger and
more established brands (such as Companies 12 and 15). This supports the finding that providing
a better experience to target audiences via their most relevant communication channel is a highly
effective marketing strategy in China, as well as saving costs compared to traditional marketing
tactics.
4.3 Overall impact of digitalization on international brand marketing
Findings suggest two key impacts of luxury digital strategies in China on the companies’
overall international luxury branding management. Firstly, the digital management team must be
decentralized from European head offices, to ensure the most suitable digital content and service
is created and provided, as indicated by the Director of Chinese Market Business Development
of Company 10, a very high-end British luxury jeweler:
“Now is the turning point of the Chinese luxury market, consumers are very mature, especially
the HNWIs in tier 1 and most tier 2 cities, so brands must give up their power to local team, to
provide better service more suitable for the Chinese culture. My editor friends told me that
online contents they put include many slangs compared to their prints, so you need local people
to understand how to adapt to the cultural differences, which is much higher online than offline.”
Secondly, Chinese consumers’ advanced level of mobile device adoption and use of WeChat
as key communication platform have created problems for the consistency of luxury brands’
international service level and the overall brand message. This was acknowledged by many
practitioner respondents, including the VIP Service Specialist of Company 6:
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“Chinese shop with WeChat! Since 2013 we noticed that our clients, both the very high-end and
the first-timers, come to the store, immediately open WeChat, and show us our WeChat feeds of
the products they wanted…however, most of the international sales do not have any knowledge
about what have been posted on WeChat, which indicates bad service to the customers and the
loss of potential sales.”
To overcome this problem, several practitioner respondents stated that they had already begun to
amend their international staff training programs to include training on WeChat functions and
digital content creation by the decentralized Chinese teams. This reinforces the key service
dimension of the luxury brand (Kapferer and Bastien, 2012), as emphasized by Company 12’s
PR Manager for China:
“For luxury brands, the service consistency is highly important, we had complaints from lots of
Chinese customers in the past few years that the salespeople at our international stores do not
even know what we posted on WeChat, so our head office amended our training program and
now our sales team in our stores across Europe understand the power of WeChat and what our
Chinese team promoted on there. In order to ensure an international seamlessness service, our
Chinese sales within our international stores use WeChat for CRM, and communicate our stock
with Chinese clients who now travel very often.”
13 out of 15 practitioner respondents confirmed that incorporating WeChat into international
training programs also helps marketing managers to conduct localized communication strategies
targeting Chinese travelers, such as in-store events during the traveling high seasons, based on
the brands’ WeChat content.
In addition, findings acknowledged the importance of highly controlled retail distribution
channels for luxury brands, which is seen as a key element in successful luxury brand
management (Kapferer and Valette-Florence, 2016). WeChat account observations evidenced the
23
danger of diluting brand image through e-commerce, such as a lack of product and marketing
consistency. User comments on Company’s 2 WeChat account showed confusion over product
authenticity on Company 2’s Tmall site, due to differences in selection and presentation of
merchandise compared to the brand’s official website. Other companies also acknowledged the
importance of direct ownership of e/m-commerce activities worldwide, especially in emerging
luxury markets such as China, where maintaining brand desirability remains the biggest
challenge, as indicated by the International Marketing Director of Company 2:
“We originally signed the deal with Tmall for e-commerce in China, but we had many complaints
from customers, which indicated the inconsistency of products, service and marketing content to
our official website. This, in the long term, could dilute our image in China.”
In order to protect their brand image, Company 2 ended its e-commerce partnership with a
Chinese partner and reinstated head office control of its directly-owned e/m-retailing channel in
China. Full control of e/m-commerce also provides luxury brands with a centralized consumer
database system, as indicated by the same respondent:
“We now conduct our e-commerce in China directly. The millennial customers are truly ‘global
citizens’, they research brands online across all international digital channels, so consistency is
highly important, and at the same time, it enables us to gather consumer data and then managing
it effectively and directly.”
Therefore, control of e/m-commerce helps luxury brands to maintain their exclusive distribution
channels, avoiding the danger of overexpansion of physical stores that often results in dilution of
brand desirability (Kapferer and Bastein, 2012). Nevertheless, all respondents emphasized the
importance of omnichannel seamlessness. The Marketing Director of Company 8 expressed a
positive outlook for the brand’s newly launched e-commerce site which is promoted and linked
to its WeChat channel, enabling a seamless omnichannel experience:
24
“Contrary to the belief that offering a wide range of luxury goods online will affect brand
exclusivity, Chinese consumers demand that and they do not think it affects the brand image; but of
course, the important thing is to manage everything in-house to maintain control of the e/m-commerce
and make a seamless connection with social media and our boutiques.”
4.4. Key success factors for luxury digital strategies in China
Three key success factors for luxury brands’ digital strategies in China emerged from the
data: the need for creative and culturally adapted content on social media, and omnichannel
seamlessness.
4.4.1 Creative social media content
Literature suggests that cultural adaptation is a very important factor that affects Chinese
consumers’ luxury brand awareness level (Chevalier & Lu, 2010; Liu et al., 2016). Within the
digital world, content must be highly creative, preferably utilizing new technologies that enable a
high level of interaction with Chinese consumers. Three luxury brands were notably mentioned
by respondents in this respect: Cartier was the most mentioned brand with the highest level of
creative content on WeChat (mentioned 25 times out of 30); then Tiffany (22 times out of 30),
and Burberry (20 times out of 30). Observation of these companies’ WeChat accounts supports
this sequence, as these three companies had the most WeChat feeds with highly creative content
and use of innovative technologies, and most importantly, the greatest number of views. The
importance of creative content was highlighted by many practitioner respondents, for instance
Company 8’s Marketing Director for the Chinese market:
“Translating Western media content into Chinese social media does not work anymore! We focus
on the quality of our WeChat content, and we’re making bold decisions in China because we
25
realized that Chinese consumers are extremely digital savvy and demand a very high level of
interaction with luxury brands.”
Company 8 is the leading luxury jewelry retailer and is pioneering e/m-commerce worldwide. In
China, the company has been groundbreaking in its innovative m-commerce strategy via
WeChat, as explained by the Marketing Director:
“For the launch of our new classic watch, we used WeChat as the initial launch channel
compared to a previous lavish event; it paid off for us, because it’s to date the most innovative
WeChat campaign, the watch appears one detail after another when shaking one’s phone and you
can virtually touch the details, then the customers can directly pre-order the watch via WeChat
channel, and speak with sales people directly via this feed. The feedback according to our
consumer research is excellent, as Chinese customers find the ‘game-like’ feed intriguing and
fun, and our VIP customers have told us it’s much more interesting than a plain advertising and
being contacted by sales people directly via the feed elevated our service level.”
Company 3 collaborated with taxi app Uber Shanghai via the brand’s official WeChat account to
encourage consumers to visit the brand’s exhibition free of charge, thus providing convenience
and service to consumers. All respondents gave positive views of such creative social media
initiatives, which demonstrate the brand’s creativity in marketing communication and contribute
to the creation of competitive advantage.
4.4.2 Cultural adaptation of content
Secondly, a high level of cultural adaptation is needed for a successful social media
strategy in China, as indicated by the PR Director of Company 7:
“It is very important to adapt to the Chinese culture when communicating. For example, during
Chinese Valentine’s Day, we invited a Chinese poet to write a poem as a celebration of ‘love’,
which not only emphasized our international consistent brand image, it localized the content
26
because ‘love’ is interpreted differently in Chinese culture. If a brand is able to recognize and
adapt to such local level, it shows that the brand truly understands Chinese consumers.”
She went on to indicate further that content skills were brought in via talent acquisition from
related industries:
“We now hire previous editors from renowned fashion magazines to work in our editorial team,
they know how to create the best media content in China without misinterpreting our key
branding messages.”
This strategy of hiring media specialists was confirmed by 13 out of 15 practitioner respondents,
which suggests that luxury companies, and not only retailers, must react to the demanding
Chinese consumers by creating high quality editorial content. Respondents also expressed the
importance of follow-up strategies for bigger campaigns, such as interactive apps and tailored
CRM programs with their high-end clients, featuring high levels of creativity. For instance, VIP
no.4 stated:
“Cartier is always creative, the exhibition they conducted is the most artistic I’ve been to, both in
China and in Paris, and they wrote interesting stories about them. Tiffany has been very creative
as well on their big campaigns. They create interesting contents that people actually want to read
and repost for them, and they follow up with a highest level of service and other storytelling
contents, such as tailored CRM program to enable a personalized service.”
This echoes previous work by Hennigs et al. (2012) who showed that sophisticated value-based
concepts of emotional product and brand differentiation are required to create a holistic brand.
Furthermore, 28 out of 30 respondents highlighted the effectiveness of working with Chinese
KOLs (key opinion leaders), as indicated by VIP no.10:
“It’s always better received if the campaign is promoted by a familiar local face, although
nowadays wealthy Chinese travel a lot and are familiar with international pop culture, we feel
more identifiable with Chinese personalities As a nation, we’re obsessed with celebrities and we
27
tend to blindly follow celebrities, even elderly people are like this, which is very different from the
Western culture where people tend to become more critical thinkers as they age.”
This significant cultural difference confirms that the WOM effect can be highly positive for
luxury brands in China, if the KOL has been chosen strategically. Observation of Companies 4,
6 and 9’s WeChat accounts showed that collaborative limited edition products to commemorate
Chinese festivals sold out within 20 minutes of being offered for sale directly via WeChat during
various festival periods. In these cases, brands succeeded in developing creative content adapted
to local market preferences (Bain & Co., 2016) by incorporating specific cultural elements, as
well as producing relevant products. In contrast, other companies that only created WeChat posts
and products based on a superficial understanding of Chinese culture received very little
attention. Therefore, a decentralized approach where local teams understand cultural elements in-
depth and are able to speak to local consumers directly is an essential strategy for marketing
success in China, as opposed to the centralized approach seen across most Western social media
in international markets.
4.4.3. Omnichannel seamlessness
Findings suggest that an omnichannel strategy, including e-commerce and m-commerce,
is the strategic focus of luxury branding in China now and for the foreseeable future. Although
only five companies conducted e-commerce at the time of data collection in 2015, all HNWIs
shared highly positive views of e-commerce and indicated that m-commerce should be the future
focus of luxury companies. Therefore, contrary to Kapferer and Bastien (2012), our insights from
Chinese HNWIs support the assumption that selling products online does not affect the overall
exclusivity of luxury brands’ image. In contrast, Chinese consumers require luxury goods to be
available via mobile devices, and all indicated their preference for being directly linked to
28
brands’ e-shops. Consumer respondents felt that all information should be made available online,
including prices, with provision of CRM services on very high-end goods. Nonetheless, most
recognized the need to retain certain products for personal selling in-store in China, such as fine
jewelry and watches. Similarly, practitioner respondents noted that as long as high-end pieces
that most signified brand image were retained for in-store selling, availability of other products,
such as entry-level accessories, for online purchase did not affect overall brand desirability. For
example, Company 12 produced limited edition handbags for Chinese Valentine’s Day and sold
them via WeChat instead of in-store. Being offered in limited quantities on a ‘first come first
served’ basis was in line with company practice for in-store products. Such initiatives enable
luxury brands to protect brand exclusivity by managing product exclusivity, whilst still
maximizing brand visibility to the mass through digital marketing tactics.
Many HNWI respondents confirmed that Chinese consumers are more demanding than
other markets. Exclusive services are a sine qua non part of luxury management, which includes
excellent product presentation, skilled sales personnel and time flexibility. For example, VIP
no.3 indicated that:
“I think it’s essential for companies especially luxury companies to offer the extra level of service
and at the moment it’s just not there. Sunday delivery is normal in China; now many Chinese
companies offer cash on delivery service, allow you to try out the products while the delivery men
are waiting.”
All five luxury companies that conducted e-commerce in China at the time of data collection
in 2015 indicated no concern over exclusivity, and predicted strong growth for the future in e-
commerce and m-commerce. However, the Creative Director of Company 11 highlighted the
challenges of effectively utilizing big data to better understand consumers and inform future e/m-
commerce initiatives, especially in such a vast market as China:
29
Luxury Brand Desirability, Awareness,
Market Share
E-Product and E-Services
Quality
Digitally Trained Sales
Staff
Exclusive Distribution
Channels
Omnichannel Consistency
Digital Seduction
Cultural Adaptation
Tailored Social Media CRM
Creative Media
Content
“I think the challenge for all e-retailers in China is big data, because it’s more overwhelming
because of the size of the market, we now have a CDO (Chief Data Officer) who manages a team of
analysts, in order to help us understand consumers better, which is even more important in such a
vast and complicated market like China. The Holy Grail is when you truly understand consumers at
an in-depth level, and then you can come up with creative contents to entice them and get them more
involved regarding service or product.”
While the overall aims of brand management remain the same in the digital world (i.e. to
sustain and grow the business), traditional models that emphasize quality and seduction
objectives (see Kapferer and Valette-Florence, 2016) must be updated. The equivalent e-
component of the former objectives must induce strategies that respond to the needs of a new
generation of clients and, in this case, the particular characteristics of Chinese consumers.
Developed from the outputs of our study, Figure 1 below provides a summary of the findings and
highlights the changes occurring in digital marketing management for international luxury
fashion brands in China. This model could also serve as a guiding framework for existing and
new luxury brand managers in their quest to conquer the Chinese market.
Figure 1: Luxury fashion brand management model in the digital era: the case of China
30
Brand Management Aims
Digital Branding Objectives
5. Conclusion and implications
The growing importance of the internet for marketing and sales is undeniable to luxury
retailers, and the key strategic implications facing luxury retailers are identifying how luxury
brands can maintain their dream value online and finding the optimal balance between
exclusiveness and inclusiveness (Chandon et al., 2016). This becomes even more important in
China, as one of the world’s biggest and most complex markets in terms of consumer behavior.
This study concludes that digital strategies for the Chinese market are much more
prominent than recognized in previous studies, and our findings suggest that concern over brand
exclusivity in the digital sphere is less relevant in the Chinese market, as long as the key brand
message is consistent with offline marketing, and e-commerce is fully controlled by the company
with limited distribution of products in accordance with the brand’s positioning. This is contrary
to previously held beliefs that e-commerce erodes the fragile perception of luxury brands’
exclusiveness (Kapferer and Bastien, 2012; Seringhaus, 2005). Our findings align with Kluge
and Fassnacht’s (2015) conclusion that e/m-commerce need not affect consumer perceptions of
luxury exclusivity and Cristini et al.’s (2017) proposition that exclusivity is not always a
necessary criterion of luxury in the contemporary mass-production era of accessible luxury
(Yeoman, 2011). Our findings suggest that m-commerce and social media in fact reinforce
luxury brand image and loyalty by enabling higher levels of service provision and convenience
to demanding and digitally savvy Chinese consumers. A very high level of cultural adaptation is
required for creating the most suitable digital strategies in China, to an extent not seen in other
markets; therefore requiring a very high level of decentralization. In particular, a much heavier
investment allocation is required to build successful digital management teams, with talent
31
acquisition of a Chief Data Officer and Chinese media content specialists necessary to fully
exploit the cultural perspectives of developing successful digital strategies. E/m-commerce sites
must be fully controlled by the companies’ Chinese subsidiaries rather than local partners, to
ensure consistency with offline marketing and product distribution.
This study identifies a number of key strategic implications from an operational
perspective. Firstly, luxury marketers need to discover how their brands are recognized in the
Chinese community and pay more attention to efficient ways of improving the social meaning
that the brands provide to attract more Chinese consumers. Secondly, as Chinese consumers
demand a seamless omnichannel brand experience to a greater extent than seen in other markets,
luxury companies must incorporate international staff training about WeChat, with a particular
focus on the brands’ own WeChat content and on Chinese consumer behavior, to enable
seamless service delivery across international stores. This could also add value to international
marketing activities targeted at Chinese travelers, a key luxury consumer segment (Euromonitor,
2016). Thirdly, traditional marketing communications strategies are still important in China, but
because of the low brand loyalty that this study affirms (Liu et al., 2016), luxury companies need
to reinterpret their traditional marketing communications more innovatively in the digital sphere,
for example by using storytelling content and interactive activities to increase the brand’s
desirability in consumers’ minds. When managed well, digital strategies can enhance luxury
brand experience and help brands consolidate their existing retail network and creatively engage
with customers more freely and cost-efficiently.
The main limitation of this study is its relatively small sample size; nonetheless, for
empirical research to generate insights and understanding of the implications of the digital
strategies in the current Chinese luxury market, this is a significant sample size, in terms of the
32
total amount of luxury retailers currently active on WeChat and with e/m-commerce activities in
China. Given the rapid development of the Chinese e-commerce and social media platforms,
several aspects identified in this study could be investigated further. For instance, the
implications of a greater uptake of e-commerce and m-commerce by luxury retailers in China
should be investigated, with an emphasis on a quantitative study of consumers’ attitudes, such as
brand loyalty and brand switching behaviors, to contribute to the further development of
knowledge on luxury service strategies in the digital era.
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