Swarovski's digital marketing strategy for luxury engagement

¶ … Swarovski's customer in the digital world.

The review of the literatures reveals that marketing and promotion strategies that Swarovski could employ to achieve market advantages. The study reviews the literatures on experiential marketing for luxury brand, emotional brand engagement and IMC (Integrated Marketing Communication). The literatures are also reviewed to explore the Swarovski brands, which assists in enhancing the greater understanding on the strategy the company could employ to promote its brands in the competitive market environment.

Overview of Swarovski

Swarovski is an international company having brand synonymous to ingenuity, technology and poetry. The company has developed a speciality and supreme mastery in precision cutting making it to become the world leader in genuine gemstones, and stones. Over the century, Swarovski has inspired creative trends in jewelry and the company draws its richness from Central Europe where Swarovski's name stands for quality, creativity, and workmanship. Swarovski was established in 1895, and over the century, the company has achieved superior level and perfection in the creative products. The company has also set creative trends in broad spectrum of designs, which include jewelry and fashion, as well as lighting and interior design. Swarovski globally recognized brand has made the company to record a consolidated turnover of €2.52 billion, and Swarovski brands comprises of Swarovski Crystallized that consists of jewelry, watches, accessories, and crystal objects. Swarovski Enlightened also comprises of synthetic or genuine gemstones. Swarovski Optik comprises of high quality precision optical equipment. (Swarovski 2010). Despite the success that Swarovski has achieved over the years, one of the biggest challenges facing the company is the internationalization of the crystal components. Typically, the company is facing stiff competitions in the international business environment, and to offset this problem, Swarovski's management has realized that a successful global marketing campaign is the strategy to gain high end.

The review of the literatures aims to provide the needs of Swarovski's customer in the digital world. It is essential to realize that Swarovski needs to take the advantages of "emotional brand engagement, experiential marketing for luxury brand and IMC (integrated marketing communication)" to achieve global competitive market advantages.

Overview of Swarovski Brand

Swarovski is known globally for its precious-cut crystal, and Swarovski vision is to achieve growth, excellence for consumer, and innovation with passion for the brand. For a very long time, Swarovski did not develop a unique brand identity for its product, and branding was not the core objective of the company strategy. However, in the contemporary competitive business environment, the growing competitions from the cheaper Chinese products has made Swarovski to suffer market decline, Swarovski needs to build a strong brand to differentiate itself from the market environment. Swarovski Nadja, Swarovski's Vice President reveals that the company needs to develop a hard communication strategy to communicate the company unique brand identity. Based on the company brand objective, Swarovski has developed a Magical Brand through mystery, genius and awe. The company uses the groundbreaking technology associated with genius to create quality product that could be valued by customers. Typically, Swarovski uses imagination to create innovative and aesthetically unique product for customer. An important Swarovski's brand is Swarovski ELEMENTS, which are the premium brand for the high quality and finest crystals manufactured by the company. Swarovski brand is unmistakeable, and the features of Swarovski brand is embedded with highest levels of quality made with the benchmark of craftsmanship and precision.

With Swarovski ELEMENTS, Swarovski has been able to immense the company in the world of jewelry, fashion, accessories, lighting and interior design. The precious ingredients created by the company are designed with "MADE WITH SWAROVSKI ELEMENTS" label that serves as a certificate of product authenticity. The label denotes that the products are made with genuine Swarovski ELEMENTS comes alive with originality and beauty. Typically, Swarovski ELEMENTS is made up of crystalline semi-finished products and loose crystal, which the company has inspired in the accessories, fashion and jewelry for many years. Swarovski also integrates Swarovski ELEMENTS in the design pieces, which include architecture, home decorations, light design, and interior fittings.

Swarovski CRYSTALIZED is another Swarovski brand that comprises of timeless and glamorous jewelry piece. Swarovski CRYSTALLIZED is an exclusive accessories and jewelry collections of created stones and precisely cut genuine gemstones.

Despite the unique brand that Swarovski has built for itself, one of the biggest challenges that the company is facing is the internalization of its crystal components. Thus, management intends to react with the changing market conditions and develop offensive marketing strategy that could assist the company to achieve both short-term and long-term growths. Some of the marketing strategies that Swarovski could employ to achieve market advantages is the combination of "Experiential marketing for luxury brand, Emotional Brand Engagement and IMC (Integrated Marketing Communication)."

Experiential Marketing for Luxury Brand

Perceived value has been identified as a significant predictor of consumer satisfaction. In the case of luxury brands, consumer pay higher price for a product to achieve both hedonic and utilitarian value from the purchase experience. Typically, consumers purchase luxury goods to satisfy their expectation of social significance as well as the quality associated with the products. The hedonic and utilitarian value derived from the luxury goods such as diamond, precious stones and jewelry is positively linked to satisfaction. (Song, Hur, Kim, 2012). However, Fionda, et al. (2008) argue that the concept luxury is typically related to the symbolic function which operated at individual and collective level and the functions of luxury is referred as status of symbol. With reference to the production level, luxury refers to the excellent quality, distinctiveness, high transaction value, craftsmanship, and exclusivity. "The core characteristics of luxury product involve: exclusivity, premium prices, image and status which combine to make them more desirable for reasons other than function." (Fionda, et al. 2008 P. 349).

The luxury brands possess the attributes of quality, innovative and unique products. The iconic coveted products are the features of luxury brand products. The iconic products are typified by their quality, authentic, and exclusive characteristics. These products often epitomise the brand DNA or brand signature because they portray high personality, which subsequently increase their relevancies in the current market. The components of exclusivity and rarity associated with the luxury brands are considered significant since luxury brands are characterized with limited production. (Bruce and Kratz, 2007).

On the other hand, Uche (2009) argue that luxury has been built on certain principle that could neither be ignored nor compromised. The luxury principles require thorough understanding before adoption of a business practice. Typically, luxury goods are built on the intricacies and output that are different from the traditional goods and services. Within the past societies and civilization, luxury goods were linked to the royal families, nobles and aristocrats. Their consumption was stamped with superiority to maintain distance class from the lesser privileged. In the Roman Empire, the class distinction is associated with the color of shoes. Although, such class distinction has disappeared in the modern society, however, the core role of luxury goods remain unchanged. Luxury remains the form of indirect stratification as well as ascertaining position in the society. (Kliatchko, 2001). It is essential to realize "the aura of scarcity adds to the appeal of luxury brands. Managers can sustain the exclusivity of the brand through advertising, endorsement, controlling distribution and price, and producing limited editions lines." (Fionda & Moore 2008 P. 351). To enhance market advantages for luxury brand, the environment, which the luxury products are presented, is very crucial for luxury propositions. Marketers need to use the luxury stores that convey the sense of splendour, and the splendid architecture to enhance shopping experience of wealthy customers. The luxury experience and environment is typical of showcased in the flagship stores located within the capital city or the metropolitan environment. "These stores typically enjoy significant financial investment, and are considered crucial to a brand's marketing communication process and reputation and as a support for the wholesale business." (Fionda, & Moore 2008 P. 351).

Marketing communication is an effective tool to increase brand awareness of luxury fashion brand, and marketing communication employs combination of marketing tools, which include advertising, fashion shows, PR (public relations), celebrity endorsement, and direct marketing. Marketers often consider direct communication to enhance luxury brand awareness in order to develop relationship with customers. Some brands invest in catwalk shows, which place greater importance in fashion element. (Kliatchko, 2005).

Part of the marketing tools for luxury items is brand signature that refers the item as designers' styles, handwriting or brand DNA. Each is considered as luxury fashion brand that shows a clear signature of whole collection. In a number of cases, iconic products have closer connection to their heritages as well as epitomising the brand signature. Premium price technique is another technique to enhance marketing strategy of luxury brand, premium price is used to develop the luxury status of the brand, and the priced not only reflect the hand-made product, the price also reflects the attributes of the quality associated with luxury brand. Typically, the premium price creates barrier to entry.

Based on the attributes of luxury brand, the luxury brand requires special marketing strategy to achieve brand objectives. The strategy assists in developing global brand reputation as well as forming brand awareness within the global competitive environment. (Moore and Birtwistle 2005).

In the contemporary marketing environment, experiential marketing has become a cornerstone of marketing, and retailing for luxury brand. Experiential marketing is the technique of viewing consumer as an emotional and rational being who aims to achieve pleasurable experiences. (Atwal et al. 2008). Typically, experiential marketing offers customer memorable experiences in order to achieve customer satisfaction and competitive market advantages. The experiential marketing uses different tools to create the memorable experiences for customers. For example, experiential marketing organizes entertainment for customers in order to educate them, allow them to escape the reality, as well as giving them aesthetic objects or places to see. Experiential marketers use different tools to create experience which include: FEEL (affective experience); THINK (cognitive experiences); SENSE (sensory experience); ACT (behaviors, lifestyles and physical experiences), RELATE (social-identity experiences acquired by relating to a reference culture or group). (Snakers & Zajdman, 2010).

However, academics and marketing practitioners have developed different frameworks to develop experiential marketing strategies. Smith (2003) develops a six-step process. The first step is to audit customer experience in order to evaluate and assess the current brand experience. The second step is to create a brand platform that focuses on defining a clear brand positioning. The third stage is to design the brand experience, which involves alignment of the brand's products, processes and people against the brand proposition. The fifth step is to communicate the brand internally and externally, while the final step involves monitoring the performances to ensure the brand is delivered with reference to defined objectives.

Similarly, Hogan et al. (2004) also identifies the key customer segment for luxury brand. First, the democratisation of luxury has significantly changed luxury consumption. The evaluation of customer data is also an essential tool to identify most profitable customer. This strategy assists in aligning the brands to right customer. The touchpoint chain is the second step where there is interaction between the brand and the target customer according to the phases of purchase, pre-purchase, and post-purchase. More importantly, experiential marketing integrates tradition into innovation, precision, dynamism, emotion and aesthetics. This strategy assists in entering into dialogue with customer.

On the other hand, Pedraza (2007) argues that the development of new technologies has influenced the practice of experiential marketing. The internet technology has particularly assisted the communication and distribution of luxury goods. Survey conducted by Pedraza (2007) shows that 88% of wealthy consumer have preferred internet as a research avenue for product, while 38% of wealthy consumer prefer to purchase luxury products online versus 33%, who prefer to purchase the luxury items by the traditional face-to-face technique. This has shown that luxury fashion brand create positive, compelling and enjoyable customer experience for online shoppers.

On the other hand, Oh and Kim (2011) use differentiated marketing strategy to analyze the purchasing behavior of consumer who purchases the luxury item. The authors argue that many marketers have integrated both innovation and traditional system in the implementation of masstige (mass prestige) marketing, and advertising.

Emotional brand engagement has also been identified as effective tool experiential marketing for fashion jewelry.

Emotional Brand Engagement

Emotion involves feeling of consumer during the shopping experience. Pleasure, dominance and arousal are the positive aspect of emotion during customer's shopping time.

"Emotion is a mental state of readiness that arises from cognitive appraisals of events or thoughts. It is also a phenomenological tone accompanied by physiological processes often expressed physically (e.g. In gestures, posture, facial features)." (Snakers & Zajdman, 2010 P. 5).

On the other hand, emotional brand engagement is defined as the strategy to engage customer on the level of emotion and senses to forge a deep lasting and intimate emotional connection to the brand in order to create a holistic experience that makes customer to be emotional attached towards the brand. (Gobe, 2001). However, providing effective approach to branding experience requires coordination and integration of organizational effort to make customer feel good and satisfy with the consumption experience. Managing and creating effective emotional branding experiences could enhance brand differentiation, and consumer loyalty. The importance of emotion to attract customer loyalty towards products cannot be overlooked. Emotion plays important role in creating marketing message to attract the attention of consumer, and emotion is a powerful tool to stimulate purchase and brand interest. Thompson, et al. (2006) argue that emotional branding is widely heralded as a key to marketing success, and over the last few decades, emotional branding is being considered as highly influential brand management. Emotional branding paradigm focuses on relational, consumer-centric, as well as story-driven approach to forge deep bonds between consumer and brand. Typically, brand linkages are formed when branding strategies are formulated to understand customers' aspirations, inspirations, and life circumstances among brand users. Atkin, (2004) reveals that emotional view of consumer- brand relationships has been identified as the central pillar to market differentiation as well as being used as a tool to sustain competitive market advantage. Morrison et al. (2007) also provide similar argument by pointing out that customer's emotion is an effective tool to build strong brand, and emotion provides the powerful role in customer selection, loyalty, and satisfaction towards a specific brand, and emotion dynamic needs to be understood to build a strong brand. Typically, modern consumer no longer buy simple product and service for the sake of possessing product, however, they buy the emotional and wonderful experience around what is being sold.

Schmitt (2010) argues that customers are emotional as well as rationally driven who frequently engage in the rational choice driven by emotion. Typically, consumption is often driven in pursuit of fun fantasies, and feelings. Customers' physical and mental apparatus generate thoughts, feelings and sensation to solve problems. Customer experience occurs when encountering an object, and experience provides emotional, cognitive, behavioral, and relational and functional values. White & Steel (2006) also point out that Jewelry object carries multilayered meaning that involves the emotional quality of the interaction. The sensation of touch, gesture and feelings become physical, visual, and psychological elements. The circumstances create emotional attachment and sense of status for Jewelry user.

O'Shaughnessy et al. (2003) discuss three level of managing emotional brand engagement:

Managing emotional engagement at pre-purchase stage

Managing emotional engagement at purchase stage

Managing emotional engagement at post-purchase stage

During the pre-purchase stage of managing emotional engagement, marketing professionals consider the types of emotional contents to be included in the marketing messages. Characteristics of target customers are also important before drawing the contents of the pre-purchase stage to enhance customer emotional experience. This type of emotional contents at pre-encounter stage must be positive, elicit and its intended message should be directed to the intended customer. For the luxury brand such as Swarovski's brand, the slogan must be designed to elicit positive emotional reaction concerning the luxury brand. There is also a need to include message that must be brand specific, and customer segmentation is also important for the success of emotional brand engagement. Thus, marketing communication needs to be drawn to generate emotional branding effort. Marketing communication needs to generate emotion to stimulate purchasing behavior.

Managing emotional engagement at purchase stage is critical in the promotion of luxury goods. At this stage, there is a need for mutual understanding and best prediction of positive consumer reactions at the purchasing stage. Thus, communication providers need to design these elements into all aspects of the product brand experience. The environment should be inviting and should include civility and empathy to enhance extra customer attention. At this stage, interaction with customer is very critical and it should be done in such a way to enhance sense of control over the situation. Implementation of this criteria leads to more positive emotional experience. At this stage, it is critical to be innovative to create greater feelings of emotional experience for customers. (Pine II and Gilmore 1999).

Managing emotional brand is also critical at the post-purchase stage in order to increase customer loyalty as well as extending customer emotional attachment with the brand. Managing emotional brand at post-purchase stage could be implemented in several strategies. For example, a marketer can follow up customer after the purchase and offer discount for the return visits. Thank you note is particularly effective and firms may provide personal gift upon completion of the order. Sending greeting for birthdays is another effective method to be emotional connected with customers. (Pine II and Gilmore 1999). Analysis of the emotional brand engagement reveals that the most effective strategy that Swarovski needs to employ in creating and managing positive emotional brand experience during after the product purchase is to employ a well-designed and attractive atmosphere for the emotional brand creation. True customer experience, excitement and loyalty are the aspects of the emotional brand management, and the company needs to create, intense, active, and loyalty relationships between customer and the organization. The results will lead to the increase in the customer retention as well as reduction the marketing costs and increase the profitability. Focusing on brand building strategy will lead to the creation of lasting emotional attachments and emotional fulfilment of customers leading to the long-term profitability for organization.

Personal selling

Advertising is defined as the paid form of non-personal communication for the promotion of product and services. Non-personal communication involves the communication through the mass media, which include TV, radio, newspapers, and magazines. Advertising is the best form of product promotion and probably the most important promoting tools. One of the benefits of advertising is that it is cost effective. In the United States, average 30-second spot for TV ads costs $14.27 per thousand households. Moreover, advertising is effective to build a strong brand image and symbolic appeals for a company.

"Another advantage of advertising is its ability to strike a responsive chord with consumers when differentiation across other elements of the marketing mix is difficult to achieve. Popular advertising campaigns attract consumers' attention and can help generate sales." (Belch, & Belch, 2003 P. 18).

Direct marketing is another element of promotion mix that involves direct communication with target customers in order to generate response. Direct marketing has become an integral part of integrating marketing communication and it involves direct mail order and mail order catalogs.

Internet/Interactive Marketing

The advancement in technology has made internet to revolutionize the promotion activities and interactive media. The interactive media is the process where a user is allowed to participate in the back-and-forth flow of information. Organizations have developed websites to promote their products and interact with customer. Typically, internet has become a tool to implement the IMC program and execute all elements of promotion mix because the internet could be used to execute other element of marketing mix such as direct marketing, public relations, sales promotion and personal selling.

Sales promotion is the promotion activities to enhance sale force as well as promote a company's products. However, publicity and public relations is non-personal communications tool to promote products and a company could cover a favourable story on a product to create awareness. Techniques used to gain product publicity include news, press conferences, feature articles, releases, films, photographs, and videotapes. On the other hand, public relations are "the management function which evaluates public attitudes, identifies the policies and procedures of an individual or organization with the public interest, and executes a program of action to earn public understanding and acceptance." (Belch, & Belch, 2003 P. 23).

Personal selling is an element of promotion mix where a seller uses person-to-person communication to generate sales. The personal selling could be used to persuade prospective buyers in purchasing the company products. Unlike advertising, personal selling involves direct contact between seller and buyer which assists seller to notice or hear potential buyer's reaction, and this allow seller modify the product based on the buyer's reaction.

Despite the identification of all elements of marketing mix, there is a need to coordinate all the elements to enhance the integration of marketing communication. (Kitchen and Li, 2005). Swarovski needs to combine the promotional-mix elements to produce effective and efficient promotional campaign. Part of the implementation of the effective integration marketing communication is the promotion management. Swarovski needs to conduct a market research to enhance better understanding of customer.

Despite the effectiveness of IMC in enhancing the brand equity for Swarovski, there is a challenge in combining the right communication tools to deliver the branding message efficiently and effectively. The fragmentation of media, shift from traditional promotions, increasing advertising clutter, and growing competition among marketers have made IMC practice to face challenges in the contemporary marketing environment.

Following are the various steps that Swarovski could employ to implement effective integrated marketing communication:

Identification of the target audience.

Determining the communication objectives

Designing the communication message

Selecting the appropriate media channel.

Making decision on the budget.

Deciding the marketing communication mix

Measuring the results

Coordinating and managing the IMC

Summary

The review of the literatures explores experiential marketing for luxury brand, emotional brand engagement and IMC (Integrated Marketing Communication). Marketers have identified the experiential marketing as the effective tool to achieve competitive market advantages since experiential marketing assists in viewing customers as an emotional and rational being aiming to achieve pleasurable experiences. The literatures are also reviewed to explore the emotional brand engagement that assists customer to forge a deep lasting relationship with the brands. Integrated marketing communication also reveals the integration of different marketing and promotion tools to achieve market competitive market advantages.

List of References

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