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Impacts of Luxury Fashion Brands Social Media Marketing on Customer Relationship and Purchase Intention

Angella Jiyoung Kim1)*, Eunju Ko2)

Abstracts
Luxury brands have always been fashion industry leaders, with admirable aesthetic value and innovative yet traditional business management. The brands constantly struggle to secure profits by providing novel value to customers through quality products and services, customer management, retail strategies, and innovative marketing mixes. However, the recent entry of numerous fashion brands in the luxury market coupled with decreased sales related to economic downturns have led to new challenges for luxury firms. Because the luxury fashion business is considered high value-added with guaranteed high profit margins and secure regular customers, the lower sectors have begun to heat up the competition. To survive the recent unforeseen challenges of heated competition, they have turned toward marketing communication using social media. Social media are the two-way communication platforms that allow users to interact with each other online to share information and opinions. Use of social media sites such as Twitter and Facebook has already expanded to almost every luxury fashion brand and been evaluated as business take-off tools. With the increased use of social media as a means of marketing communication for luxury brands, it has become necessary to empirically analyze the effect of social media marketing (SMM). Thus, the study presented here investigated the effects of this SMM on customer relationships (involving intimacy and trust) and purchase intention. A preliminary test was conducted in order to draw a sample of a luxury fashion brand for this study. Self-administrated questionnaires with visual stimuli were used to collect data from luxury consumers in the Seoul area. Respondents were restricted to consumers who had purchased any luxury fashion brand item within the previous two years. Among 150 questionnaires distributed, 133 questionnaires were finally employed for statistical analysis. Principal component analysis using varimax rotation was conducted to figure out the properties of luxury fashion brands SMM. The social media contained five properties: entertainment, customization, interaction, word of mouth, and
1) * Corresponding author: Graduate Student, Dept. of Clothing and Textiles, College of Human Ecology, Yonsei University, Korea, Tel. +82-10-7252-0423, E-mail: ngkim@yonsei.ac.kr 2) Professor, Dept. of Clothing and Textiles, College of Human Ecology, Yonsei University, Korea, E-mail: ejko@yonsei.ac.kr 2010 KAMS. All rights reserved.

trend. Factor loadings ranged from .84 to .52. Cronbachs lay between .80 and .88, demonstrating adequate construct reliability. Multiple regression analysis was conducted to test the effects of SMM on customer relationship (i.e., intimacy and trust) and purchase intention, as well as relationship between customer relationship (i.e., intimacy and trust) and purchase intention. Results show that entertainment has a significant positive effect on intimacy (=.25, t=3.48, p<.01), trust (=.34, t=5.75, p<.001), and purchase intention (=.31, t=4.32, p<.001). Other positive effects are customization on trust (=.13, t=2.28, p<.05), interaction on purchase intention (=.25, t=3,54, p<.01), word of mouth on intimacy (=.14, t=1.92, p<.05) and purchase intention (=.19, t=2.65, p<.01), and trend only on trust (=.32, t=5.30, p<.001). It seems that entertainment, customization, and trend were satisfying what customers expected from a luxury fashion brand. Because the luxury industry aims to provide value to customers in every way possible, the brands should focus on providing free entertainment content, customized services, and trend forward social media site which all act positively toward enhancing customer relationship. Trust has a significant relationship with purchase intention (=.34, t=4.85, p<.001). Since the trust variable within a customer relationship was only significantly associated with purchase intention, the mediating effects of customization and trend were found. The study proves the effectiveness of luxury brands SMM on both customer relationships and purchase intention, and proposes a strategy to enhance the brands performance by defining specific factors influencing both. The result show that the chosen brands SMM includes distinctive elements in comparison to old-fashioned marketing performances. Every property found in luxury brands SMM positively influenced customer relationships and purchase intention, with entertainment affecting more variables than any other properties. Luxury brands should heavily supply an entertainment aspect of social media contents and activities. Every activity enabled by use of the media, such as creating relationships with other users, providing customized service and free entertainment contents, and obtaining genuine information on personal interest should all be entertaining. By focusing on providing such features, customer relationships and purchase intention will be enhanced. Concerning the association between customer relationship and purchase intention, trust and purchase intention were highly related. Customers trust was strengthened via interaction with other users as well as brand on social media sites. Trust gained while enjoying

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entertainment and communication provided on the sites seems to contribute greatly toward a luxury brands profit. With the growing interest of luxury fashion brands in providing luxurious value to customers in every way possible, using social media appears to be appropriate for retaining old customers and attracting cross-shoppers. As competition among luxury fashion brands becomes more intense by providing plenty of alternatives to customers, the brands prosperity seems no longer quite so promising. The importance of managing customers as valuable assets cannot be emphasized more. As such, more luxury brands should engage in social media marketing activities to anticipate a positive contribution to the brands by providing new luxury value to customers. Keywords: Luxury fashion brand, Social media marketing, Customer relationship, Intimacy, Trust, Purchase intention

t=4.85, p<.001

Twitter Facebook 150 80 .88

1. Introduction
The recent entry of numerous fashion brands in the luxury market coupled with decreased sales related to economic downturns have led to new challenges for luxury firms. Having founded their characteristics on long history and tradition, luxury brands nonetheless have become front-runners in leading trends. They have always been placed at the top of the fashion stream and influenced the rest of the fashion industry with their aesthetic value and innovative yet traditional way of business management. While relying on the styles of their own traditional design houses, they have never neglected to provide hip and trendy styles as industry leaders. Innovative style is not limited to their main products, but also is applied to customer management, marketing mixes, customer services, retail strategies, and more. Because the luxury fashion business is considered high value-added with guaranteed high profit margins and secure regular customers, the lower sectors have begun to heat up the competition. In this intense business environment, many luxury brands have begun to search for new markets in Asia in order to make up for poor sales in Europe and America. Others have either focused on a retail network that brings efficiency to existing retail systems or launched second brand lines to expand customer boundaries. They have even stopped depending solely on their own design house to collaborate with celebrities, star designers, and artists in providing new value to their customers. From temporary stores to exclusive limited items, luxury brands are struggling to take back their lost

133

.84 .52Cronbachs .

=.34, t=5.75, p<.001 =.25, t=3.48, p<.01 =.31, t=4.32, p<.001 =.13, t=2.28, p<.05 =.25, t=3,54, p<.01 =.14, t=1.92, p<.05 =.19, t=2.65, p<.01 =.32, t=5.30, p<.001) =.34,

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customers. As a means to provide value to their customers in every way possible, luxury brands have now turned to social media, the two-way communication platforms that allow users to interact with each other online to share information and opinions. Use of social media sites such as Twitter and Facebook has already expanded to almost every luxury fashion brand and been evaluated as business take-off tools. Advanced technology has begun to benefit the luxury fashion industry while brands and customers are building and strengthening relationships via the social media sites. Even more, brands are able to introduce themselves and provide information while engaging in a casual interaction with customers. In the beginning, as evident in the brands use of websites and e-commerce, the luxury market showed a passive attitude toward the use of technology and did not believe in its potential to attract customers. Most were resistant because the technology worked against the firms desire to control their own brands. However, although the technology is still seen as a threat to luxury brands, it is also inevitable. With the increased use of social media as a means of marketing communication for luxury brands, it has become necessary to empirically analyze the effect of social media marketing (SMM). The purpose here is to define SMM properties and evaluate the impact for luxury brands on customer relationships as well as on purchase intention. Luxury brands engage in social media activities mainly to build a strong relationship with their customers and create purchase intention to ensure success in the long run. Therefore, the research presented here studies the impact of luxury fashion brands SMM and details its effects. Moreover, as this study has been carried out at the beginning stage of luxury fashion brands SMM activities, it is hoped that the results will eventually serve as a guide to managing SMM for the rest of the fashion industry.

2. Literature Review
2.1. Social Media Marketing of Luxury Fashion Brands
Traditional designer houses such as Louis Vuitton are providing live broadcasts of fashion shows on Facebook. Ralph Lauren, Chanel, Donna Karen, and Gucci have worked with Apple to create iPhone applications. Many luxury houses have created their own Twitter accounts or posted themselves on Facebook. Brands and customers are communicating with each other with no restriction in time, place, or medium so that old-fashioned one-way communication is transformed into interactive two-way direct communication. Social media are defined as the online applications, platforms and media which aim to facilitate interactions, collaborations and the sharing of content (Universal Maccann International, 2008). There are a variety of forms, including

weblogs, social blogs, microblogging, wikis, podcasts, pictures, video, rating, and social bookmarking. Two of the most commonly used among luxury fashion brands are social blogs (e.g., Facebook) and micro-blogs (e.g., Twitter). The Facebook pages of luxury fashion brands provide a variety of contents such as video clips, pictures, and stories. The brands not only expose their PR contents on Facebook, but also designers lives and episodes, which draw attention from customers. On Twitter, users are able to get instant customer service or answers to personal questions, and can easily form a community through networking and to exchange opinions as well as information. According to Miller, Fabian, and Lin (2009), the importance of social media lies in the interaction between consumers and the community, and in the facilitation of immediate, interactive, and low-cost communications. Nowadays, internet communities, blogs, and social networks have become a part of life for most people, so that social media have become alternative communication tools supporting existing relationships and activities in a joyful way that can enrich the users experience. Moreover, increased use of social media provides a platform for nurturing brands and affecting consumers purchase decisions. Luxury fashion brands actively make use of social media for advertising and marketing. Now that marketing has merged with services as joining of business and advertising, it will continue to align itself with services that users value. The shift to marketing-supported services opens up enormous opportunities for marketers to expose consumers to brand messages and, more important, to interact with them. Commercial messages and interactions with consumers will be partnered with media, events, entertainment, retailers, and digital services of all types. Social media have made it possible to perform integrated marketing activity with much less effort and cost than before. Marketing is a multidimensional process made up from various strategies; however, one of the main goals of any marketing strategy is to increase sales and profitability. Thus, this study investigates the effects of this newly introduced marketing phenomenon: social media.

2.2. Customer Relationships

Relying on a brand itself can no longer guarantee company performance as competition gets tough in the luxury environment. Loyalty toward a certain brand weakens as a variety of alternatives are provided to customers. Brands now need to build strong relationships with their existing customers in order to keep them around as long as possible. Intimacy and trust have received extensive exposure in the academic literature on customer relationships in the fashion marketing field. While this study aims to investigate how SMM influences customer relationships and purchase intention, it will focus on intimacy and trust as representative of a customer relationship that will eventually contribute to a brands performance.

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2.2.1. Intimacy Intimacy refers to feelings of closeness, connectedness, and bondedness (Sternberg, 1996). It is possible that consumers forge an emotional relationship such as intimacy with a certain brand, and perceptions of intimacy are required before the consumer will make an emotional investment in the brand and develop perceptions of trust (Elliot and Yannopoulou, 2007). Intimacy is a matter of knowledge that accumulates over time (Carroll and Ahuvia, 2006) and lasts longer than other emotional relationships (Sternberg, 1996). 2.2.2 Trust A degree of tendency to believe in a certain brands ability to perform a promised function can define trust (Chaudhuri and Holbrook, 2001). Trust is considered one of the keys to an enhanced relationship between a consumer and a certain brand, and it has been recognized recently as a core variable of long-term relationships with customers. In order for customers to attain firm and lasting relationships with a brand, trust must first be obtained. As one party trusts another, positive behaviors, such as intention to purchase and recommend, are created (Lau and Lee, 1999). Thus, strong belief in a brand becomes a fundamental element of a customer relationship.

following research questions and hypotheses have been developed: Research Question 1. What are the properties of luxury fashion brands social media marketing? Research Question 2. How does each property affect customer relationships (i.e., intimacy and trust) and purchase intention? H1. Social media marketing will have a significant positive influence on customer relationships (i.e., intimacy and trust). H2. Social media marketing will have a significant positive influence on purchase intention. Research Question 3. What is the relationship between customer relationships (i.e., intimacy and trust) and purchase intention? H3. Customer relationships (i.e., intimacy and trust) will have a significant positive influence on purchase intention. Figure 1 presents a proposed model for outlining the hypothesized relationships among SMM, customer relationships, and purchase intention.

2.3. Purchase Intention

Purchase intention is defined as the consumers possibility of purchasing in the future. Since it is expressed as a customers will to promise certain activity related to future consumption, many studies have employed purchase intention to estimate a brands future profits. Understanding consumers purchasing behavior is essential to a firm in order to attract and retain its customers (Ko, Kim, and Zhang, 2008). According to previous studies, purchase intention is strongly related to attitude and preference toward a brand or a product (Kim and Ko, 2010; Kim and Lee, 2009). As customer relationship is built on attitude toward a brand, purchase intention is expected to be influenced by such relationships.

Fig. 1. Research model

3.2. Preliminary Test, Sampling, and Data Collection

In advance of the final development of survey questionnaires, a preliminary test was conducted among fifteen graduate students majoring in fashion marketing in order to draw a sample of a luxury fashion brand for this study. Participants were asked to list three such brands. After a frequency test using SPSS 17.0, Louis Vuitton was mentioned most often and was selected to represent the brands. Louis Vuitton is currently engaging in a variety of social media activities and is ranked at the top in international luxury brand rankings (e.g., Interbrand, 2008; Millward Brown, 2008). Data were collected from a convenience sample in the Seoul metropolitan area. Respondents were restricted to consumers who had purchased any luxury fashion brand item within the

3. Methods
3.1 Research Questions, Hypotheses, and Proposed Model
According to Samsung Design Net (2009), the use of social media among luxury fashion brands builds friendly affection toward brands and stimulates customers desire for luxury. Because of the recent emergence of the use of SMM among luxury fashion brands, academic work dealing with its effects is rare. However, in light of the luxury industrys growing interest in SMM, it has become necessary to empirically investigate those effects. Within a limited body of literature, the

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previous two years. Self-administrated questionnaires were distributed to 150 customers and, after excluding incomplete answers, 133 questionnaires were finally employed for statistical analysis.

3.3. Measurements
The questionnaires consisted of three parts, with the first part measuring the brands SMM activities. In order to do this, a visual stimulus of Louis Vuittons activity on the two most commonly used social media, Facebook and Twitter, was developed (See Figure 2). Participants were asked to review the proposed visual stimulus and answer 25 measurement items, which were developed from previous literature related to luxury fashion brands social media marketing (i.e., Kim, 2010).

The second part of the questionnaire included eight items to measure customer relationship and purchase intention. In this study, customer relationship was to include overall intimacy toward a brand (e.g., I am a true fan of this brand, I feel intimacy toward this brand, I know this brand well), trust (e.g., I have a strong belief in this brand, This brand provides precise service information). Measures were developed from Hennig-Thurau, Gwinner, and Gremler (2002) and Ju and Chung (2002). Items to measure purchase intention were developed from Park, Jeon, and Kwak (2007). All statements were measured by five-point Likert-type scales (1 = Strongly Disagree, 5 = Strongly Agree). The last part measured demographic characteristics of the sample, including age, education, marital status, occupation, average household income, spending on fashion goods, and spending on luxury purchases.
Table 1. Factor analysis of social media marketing

On June 2009, Louis Vuitton created its official account on Facebook called The Art of Travel by Louis Vuitton(www.facebook.com/louisvuitton) as a first among luxury brands. Louis Vuittons Facebook has been visited by 850 thousand people around the world up to now, and it is creating intimacy between the public and brand since its page on Facebook provides exclusive details such as designersdaily lives, preparation for collection, or episodes which are not found on its official webpage. On October 2009, Louis Vuitton attempted service to feed real-time fashion shows on line, and it also

Factors

Items The contents found on Louis Vuittons social media seem interesting. It is exciting to use Louis Vuittons social media. It is fun to collect information on brands or fashion items through Louis Vuittons social media. It is easy to kill time using Louis Vuittons social media. It is possible to search customized information on Louis Vuittons social media. Louis Vuittons social media provide customized services.

Factor Cronbachs loading .82 .73 .88 .70 .69 .79 .76 .67 .63 .52 .84 .73 .88 .69 .66 .87 .72 .87

Entertainment

Customization

Louis Vuittons social media provide lively feed information I am interested in. It is easy to use Louis Vuittons social media.

receives real-time feedback from customers by Facebook and Twitter. In addition, Louis Vuitton established official Twittie (http://www.twitter.com/ LouisVuitton_HQ) on Twitter for users to lively exchange information or diverse opinions based on the network created on-line.

Fig. 2. Visual stimulus of Louis Vuittons social media

Louis Vuittons social media can be used anytime, anywhere. It is easy to convey my opinion through Louis Vuittons social media. It is possible to exchange opinions or conversation with other users through Louis Vuittons social media. Interaction It is possible to do two-way interaction through Louis Vuittons social media. It is possible to share information with other users through Louis Vuittons social media I would like to pass out information on brands, products, or services from LVs social media to my friends. I would like to upload contents from LVs social media on my blog or Word of Mouth micro blog. I would like to share opinions on brands, items, or services acquired from Louis Vuittons social media with my acquaintances. It is a leading fashion to use Louis Vuittons social media. Trend Contents found on Louis Vuittons social media are up-to-date.

.80

.70 .82 .82 .73

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4. Results
4.1. Properties of Social Media Marketing
Principal component analysis using varimax rotation was conducted to figure out the properties of luxury fashion brands SMM. After eliminating some items possessing either low factor loadings or cross loadings, five factors with eigenvalues greater than one were drawn: entertainment, customization, interaction, word of mouth, and trend. As indicated in Table 1, factor loadings ranged from .84 to .52. Cronbachs was used to test reliability of the measures, and the reliability coefficient of each property lay between .80 and .88, demonstrating adequate construct reliability. The brands social media were found to comprise fun elements and provide customer-focused service while supplying two-way interaction platforms that enable users to influence each other. Moreover, the social media included trend aspects.

Table 2. Impact of social media marketing on customer relationship and purchase intention
Independent variable Entertainment Customization Interaction Word of Mouth Trend Entertainment Customization Interaction Word of Mouth Trend Entertainment Customization Interaction Word of Mouth Trend Dependent variable .25 .10 .01 .14 .05 .34 .13 .07 .10 .32 .31 .13 .25 .19 .04 t-value 3.48** 1.47 .22 1.92* .75 5.75*** 2.28* 1.18 1.74 5.30*** 4.32*** 1.85 3.54** 2.65** .63 R2 F

Intimacy

.12

3.72**

Trust

.35

14.18***

Purchase intention

.24

8.42***

***p<.001, **p<.01, *p<.05

4.2. Impact of Social Media Marketing

To test the effects of SMM on customer relationships and purchase intention, multiple regression analysis using SPSS 17.0 was used. The five SMM properties were entered as independent variables, and intimacy and trust (for customer relationship) and purchase intention were applied as dependent variables. Prior to multiple regressions to test the hypotheses, reliability tests proved the internal consistency of each dependent variable. Cronbachs was .74 for intimacy, .82 for trust, and .81 for purchase intention. 4.2.1 Customer Relationship When the effects of SMM on intimacy and trust were examined, entertainment (=.25, t=3.48, p<.01) and word of mouth (=.14, t=1.92, p<.05) had a positive impact on intimacy. Regarding trust, entertainment (=.34, t=5.75, p<.001), customization (=.13, t=2.28, p<.05), and trend ( =.32, t=5.30, p<.001) each had a positive impact. Table 2 summarizes the results of multiple regressions between SMM and customer relationships. According to the findings, intimacy was driven by entertainment and word of mouth. Because intimacy with a certain brand is formed by frequent exposure with familiar feelings and positive information, entertainment and word of mouth seemed to influence intimacy positively. Trust was affected by entertainment the most and the effects of trend and customization followed after. It seems that entertainment, customization, and trend were satisfying what customers expected from a luxury fashion brand. Because the luxury industry aims to provide value to customers in every way possible, the brands should focus on providing free entertainment content, customized services, and trend forward social media site which all act positively toward enhancing customer relationship.

Moreover, entertainment was the most effective property of SMM, influencing all customer relationship variables in the study. In addition, Chen and Wells (1999) insisted that entertainment contributes most to attitude toward the website. A relationship between customer and brand formed by entertainment is steady and is enough to induce future customer behaviors that are important to a brand. Thus, luxury fashion brands should focus on offering entertainment through their social media platforms as much as possible. 4.2.2. Purchase Intention With regard to the impact of each SMM property on purchase intention, entertainment (=.31, t=4.32, p<.001), interaction (=.25, t=3,54, p<.01), and word of mouth (=.19, t=2.65, p<.01) had a positive influence on purchase intention. It was interesting that the impact of interaction was greater than that of word of mouth. The result indicates how important it is for customers to share information and opinions on social media. Consumers seem to create purchase intention while they engage in a casual interaction with other users as well as the brand. It thus becomes necessary for luxury fashion brands to provide an interaction venue that enables customers to express and share opinions of communal interest.

4.3. Relationship between Customer Relationship and Purchase Intention

In addressing Research Question 3, multiple regression analysis with SPSS 17.0 statistic package was conducted to figure out the connection between customer relationships and purchase intention. Table 3 summarizes the results of multiple regressions between customer relationship and purchase intention. The results indicated a significant relationship between trust and purchase intention (=.34, t=4.85, p<.001). Thus, H3 was partially supported. Only the trust variable within a customer relationship was significantly associated with purchase intention.

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In testing H1 and H2, the mediating effects of customization and trend were found. Although these two properties did not have a direct effect on purchase intention, they will eventually affect intention through the influence of customers trust. Since intimacy was not significantly influential toward purchase intention, it is assumed that there might be other moderating factors that affect the relationship between intimacy and purchase intention. For that reason, future studies might test moderators concerning this in order to reveal the relationship between customer relationship and purchase intention in more detail.
Table 3. Relationship between customer relationship and purchase intention
Independent variable Intimacy Trust Dependent variable Purchase intention -.00 .34 t-value -.01 4.85*** .51 45.55*** R
2

***p<.001

5. Conclusion and Implications

The study presented here has examined the impact of luxury fashion brands social media marketing on customer relationships and purchase intention. Research objectives and hypotheses were developed to meet the purpose of the study and the results were derived through appropriate procedures to reach the conclusions. Findings indicate that luxury fashion brands SMM is a significantly effective marketing medium. Specific results and corresponding implications are as follows. First, luxury brands social media comprise five properties: entertainment, customization, interaction, word of mouth, and trend. The result show that the chosen brands SMM includes distinctive elements in comparison to old-fashioned marketing performances. In evaluating its impact on customer relationships and purchase intention, entertainment and word of mouth had a significant positive influence on intimacy. Trust was influenced by entertainment, customization, and trend, while purchase intention was influenced by entertainment, interaction, and word of mouth. Every property found in luxury brands SMM positively influenced customer relationships and purchase intention, with entertainment affecting more variables than any other properties. Luxury brands should heavily supply an entertainment aspect of social media contents and activities. Every activity enabled by use of the media, such as creating relationships with other users, providing customized service and free entertainment contents, and obtaining genuine information on personal interest should all be entertaining. By focusing on providing such features, customer relationships and purchase intention will be enhanced. These results correspond to a DEI Worldwide report that states that consumers make a purchase decision based on the information posted on social media sites, and consumers using those sites pass along information to others (DEI Worldwide, 2008). While marketing can be characterized as an investment

in improving a firms performance (Srivastava, Shervani, and Fahey, 1998), marketing activities using social media have proven their effectiveness. Recently, previous studies on customer equity have noted that customers can be seen as intangible assets that a firm should wisely acquire, maintain, and maximize like other financial assets (Blattberg, Getz, and Thomas, 2001). In the current competitive marketing environment, customers future behavior is a key strategic asset that must be monitored and nurtured by firms to maximize long-term performance. And customer relationship is what strengthens the bond between customer and brand. Thus, using social media in conducting marketing activities appears to be an appropriate medium for luxury brands. Concerning the association between customer relationship and purchase intention, trust and purchase intention were highly related. Customers trust was strengthened via interaction with other users as well as brand on social media sites. Trust gained while enjoying entertainment and communication provided on the sites seems to contribute greatly toward a luxury brands profit. With the growing interest of luxury fashion brands in providing luxurious value to customers in every way possible, using social media appears to be appropriate for retaining old customers and attracting cross-shoppers. As competition among luxury fashion brands becomes more intense by providing plenty of alternatives to customers, the brands prosperity seems no longer quite so promising. The importance of managing customers as valuable assets cannot be emphasized more. As such, more luxury brands should engage in social media marketing activities to anticipate a positive contribution to the brands by providing new luxury value to customers. As an initial effort to evaluate effects of social media marketing, a visual stimulus employed to measure attributes of social media marketing activities faced difficulties. Moreover, its possible error could not be controlled. Due to the reason mentioned above, limitation follows in generalizing the result of the study. Future study should develop effective instrument to measure social media marketing of luxury fashion brand more appropriately. (Received: August 2, 2010) (Revised: August 16, 2010) (Accepted: August 23, 2010)

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