1410389265 Juraj imi

UNIVERSITY OF APPLIED SCIENCES BFI VIENNA

DEGREE PROGRAMME EUROPEAN ECONOMY AND BUSINESS MANAGEMENT

DISPOSITION

Importance of marketing communication on social media:

How do luxury fashion companies build customer relationships by
utilization of Instagram ?
BACHELOR THESIS SEMINAR WINTER TERM 2016: EUROPEAN ECONOMY
Name of supervisor: Dr. Johannes Asel, MIM, LL.B.
Name of student:

Juraj imi

Immatriculation number:

1410389265

E-Mail:

jurajsismis13@gmail.com

Mobile number:

+436607030906

Vienna, 25.09.2016
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Abstract
The subject of this thesis is successful marketing communication on Instagram among luxury
fashion companies with advices how to effectively use this application to maintain and develop
customer communication and reach more customers. My study is further divided into theoretical
part which consists from general information about social media, marketing communication and
luxury fashion industry. This study does not analyze other social media platforms and also focus
had been narrowed only on luxury fashion sector. Articles and theses are used to present the
findings. The empirical part of this study compares Instagram profiles of three representative
luxury fashion brands namely Gucci, Prada and Louis Vuitton and analyze visual content they
post together with responses from their followers.
Keywords: Social media, marketing communication, luxury fashion, Instagram

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Table of content
1. Research topic and problem outline..................................................................... 4
2. Formulating the research question(s) and objectives........................................7
3. Research Design ..................................................................................................9
4. Preliminary structure............................................................................................10
5. Literature References (preliminary)..................................................................12

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1. Research topic: problem outline and significance

The Internet is swiftly increasing its role in the consumers daily life. People are using the
Internet for their information search, which has also become a fundamental part of the
purchasing process. According to study made by DEI Worldwide (2008) 1 following statistics have
been provided: 70% of consumers have visited social media sites to get some information about
the products; 49% of these consumers have made a purchase decision based on the information
they found on the social media profiles of companies; 60% said they were likely to use social
media profiles to pass along information to other people online; and 45% of those who searched
for information via social media sites engaged in word-of-mouth. With a steeply growing amount
of consumers all around the globe, social media are continuously increasing in importance within
a commercial context.
In the former times, the only way for a company to communicate with its customers was through
traditional marketing channels. These channels consisted of print, TV and radio. After the
emergence of online marketing this approach has changed radically 2. In the past when
companies have been using traditional ways of marketing the customers have been barely able
to give some feedback to a company, whether it was positive or negative one and also
communication between companies and customers was very poorly developed. For a couple of
years already it is obvious that we live in the digital era, where communication online took a
predominant place. According to Kotler et al. (2008)3 the marketing communication is equally
important for company success as product and price are. In a very short period of time the
internet and social media has become an extensive part of peoples life which offers great
opportunities for any company in any industry or sector to interact with customers on a whole
new level and to enhance and refine their marketing strategy effectively 4. Over the past few
years, majority of companies created profiles on social networks, especially in the fashion
industry and people have become overwhelmed with the content they post on their profiles. This
does not, however, mean that marketers do not still value traditional marketing but its
prominence has changed5.
___________________
1

DEI Worldwide (2008)

Kabani (2010) 1.
3
Kotler et al. (2008)
4
Trong (2015)
2

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5

Kabani (2010) 2-3

Being present in the social media platforms has become an important part of the whole customer
communication process for all luxury fashion companies. The brand new technologies and social
media networks have enabled companies to market its products and brand in a whole new way.
In terms of marketing, this has created many possibilities for companies to communicate with
their customers.
According to Trusov, Bucklin, and Pauwels (2009) 6 social networking sites can be described as
networks which connect friends in order to establish social or professional relationships. It is
extra important to have a long-lasting relationship with the consumers, who nowadays are
basically partially in charge of the company and its reputation. According to GfK (2013) 7, and
their Brand Benchmark Study, long lasting customer relationships can be directly turned into
revenue for the companies.

Social media profiles of fashion companies are serving as the easiest mean of communication
that connects customers directly with companies. It became also much easier for customers to
express themselves by asking direct questions via online feedback platforms or leaving
comment under visual content shared by company on their Instagram profile. Keller (2013)8
argues that word-of-mouth marketing based on the communication is really huge challenge
nowadays because of the shareability on social media. Consider word-of-mouth as not just
"nice to have," but a game-changing element of today's marketing mix (Keller, 2013, para. 14) 9.
He also argued that those companies which are able to gain positive feedback in form of
comments or shares on their social media profiles are the companies which will gain enormous
success in the upcoming years.

In the past it were the companies who were in charge over the customers, but times have
changed rapidly. Especially the development of the web from 1.0 to 2.0 brings a power shift from
the companies to the consumers10.

_________________________________________________________
6

Trusov, Bucklin, and Pauwels (2009)

GfK (2013)
8
Keller (2013)
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9

Keller, (2013), para. 14

Pitt, Plangger, R. Berthon & Shapiro (2012)
Today, the user of social media is in the center of the happening when it comes to design,
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cooperation and community on the internet11. Luxury fashion companies cannot only create the
kind of online content they want to create, but also they must take into their account what their
followers (customers) want to see in their feed on any given social network in order to preserve
the luxury value of a company, become more popular, keep the old customers and create new
ones. According to (Bagozzi and Dholakia 2002)12 customers who become fans of these brand
fan pages tend to be loyal to the company, and are much more open to receive information
about the brand. The huge importance and popularity of social media marketing also led to a
competition among companies and had a huge impact on the luxury fashion industry as a whole.

Companies must be innovative and find variety of ways how to create content which is
successfully promoting their brand, sharing their message and creating new customer base
because customers are always trying to find new ways to filter the feed and receive only the
content and information they really want13. Customers are much more interactive online than
ever before. Today, customers can engage with brands more explicitly and much quicker with the
two-way flow of communication, rather than the old-fashion and traditional way of retrieving
information14. This power shift will force companies to come up with strategies on how to
manage the shift, trying to reduce the negative impact and make benefits from the positive 15
which can be truly a challenging task nowadays.

______________________________________
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Pitt et al (2012)
Bagozzi and Dholakia 2002
13
(Neher (2013), 1-2
14
Grunig (2009) / Lewis (2010)
15
Ogden (2013)
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2. Formulating the research question(s) and objectives

Drawing on the above mentioned observations it can be summarized that with the
emergence of internet and rapidly increasing number of its users the social media plays a big

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role in marketing as a whole. My study aims to determine that being active on the Internet is
indispensable for being up to date and shape the customer communication. It also helps a
business to place the customer communication on a truly global dimension. I described that
social media has special importance to luxury fashion brands, as consumers are mainly
visually oriented and consider their luxury products a part of who they are through the impact
the goods have on consumers social status. Luxury brands depend more on images than
words to maintain the mystery and uniqueness in their communication 16. Instagram has
increased its popularity faster than any other social media platform, and this is what makes
Instagram so special17. Also the outcome of the survey conducted by Uzunian (2013) 18
showed that Instagram is the social network with rapidly growing popularity for all fashion
companies. Therefore I consider that communication on the more visual platforms like
Instagram seems to be more appropriate for luxury brands then classic partly visual
platforms like Facebook or Twitter. In my work I also identify how do followers (customers)
influence the choice of online content posted by luxury fashion brands. Comparison of 3
representative brands of luxury fashion sector, namely Louis Vuitton, Gucci and Prada have
been conducted based on the visual content on their profiles together with customer
responses on given posts.

______________________
16

Kapferer & Bastien (2012)

Klie (2015)
18
Uzunian (2013)
17

According to above mentioned arguments this thesis intend to answer following main
question: How do luxury fashion companies build customer relationships by utilization of
Instagram ?

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Also, this thesis will investigate the following sub-questions:

(1) How does social media and Instagram function ?
(2) Why should Luxury fashion companies pay special attention for relevance of social
media marketing ?
(3) How does visual marketing communication works?
(4) How can company create an attractive Instagram profile and expand the customer
base ?
(5) What mistakes could be avoided when luxury fashion brands join Instagram ?
(6) How does reaction of followers (customers) influence further decisions of companies?

Anchor papers used in order to address previously listed problems:

1. http://www.sciencedirect.com.sci-hub.cc/science/article/pii/S1094996812000060
2. http://michaelhaenlein.eu/Publications/Kaplan,%20Andreas%20-%20Users%20of%20the
%20world,%20unite.pdf
3. http://www.sciencedirect.com.sci-hub.cc/science/article/pii/S0148296311003584

3. Research outline

Literature review

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A systematic literature review is defined as a research which is able to address much

broader questions than single empirical studies. According to Baumeister & Leary (1997)
systematic literature reviews aim to address the problems by identifying, critically evaluating
and integrating the findings of all relevant, high-quality individual studies addressing one or
more research questions. Systematic literature reviews are objective, transparent and
replicable. In particular the chosen relevant literature is analyzed 19. Theoretical part of this
thesis is divided into 3 parts: social media marketing, Instagram and luxury fashion industry.
This study used books, magazines, articles, reports and peer-reviewed academic journals in
order to analyze the problems and answer main question together with sub-questions.

Empirical part
In the empirical part of this thesis the research was focused on visual analysis of Instagram
posts by three luxury fashion companies namely Gucci, Louis Vuitton and Prada. Data for the
analysis have been collected on brands official Instagram account.
In order to make this analysis possible I used my personal Instagram account to observe and
analyze visual posts by these brands. Since I am the follower of all tree brands I was able to
do so for a few months. I also engaged in liking and commenting certain posts. All visual
posts that took part in this analysis were coded. Coding may be described as the
deciphering or interpretation of data and includes the naming of concepts and also explaining
and discussing them in more detail (Flick et al., 2004).20

____________________________________
19
20

Flick et al. (2004)

Baumeister & Leary (1997)

4. Preliminary structure

Title page
Statutory Declaration
Table of Contents
Abstract
1. Introduction
1.1 The purpose and relevance of this thesis

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1.2 The structure of the thesis

1.3. Research problem
1.4. Research questions and objectives

2. Theoretical framework
2.1 Social media marketing
2.1.1 Definition of Social Media
2.1.2 Social media is growing its importance
2.1.3 Social Media Marketing
2.1.4 Social Media and Luxury Fashion
2.1.5 Marketing communication on social media
2.2. Instagram
2.2.1 Definition of Instagram
2.2.1.1 Basic terms
2.2.1.2 Functions of Instagram
2.2.1.3 History of Instagram
2.2.2 Instamarketing
2.2.2.1 Branding on Instagram
2.2.2.2 Visual marketing communication
2.2.2.3 Companies on Instagram
2.2.2.4 Advertising on Instagram
2.2.3 Profile on Instagram
2.2.3.1 How to create attractive profile
2.2.3.2 How to get followers
2.2.3.3 How to use hashtags
2.2.3.4 Mistakes to avoid
2.3 Luxury fashion industry
2.3.1 Definition of Luxury and Luxury Fashion Brands
2.3.2 Luxury Brands Online
2.3.3 Luxury customers

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3. Analysis of subject
3.1 Basic information about the company
3.1.1 Louis Vuitton
3.1.2 Versace
3.1.3 Gucci
3.2 Activities of companies on Instagram
3.3 Visual analysis
3.4 Qualitative content analysis
3.4.1 Visual posts on Instagram
3.4.2 Comments by followers
3.4.3 Hashtag analysis
3.5 Summary

4. Discussion
5. Conclusion
5.1 Findings
5.2 Suggestions for further research
6. References
7. Appendices
7.1. Louis Vuitton
7.2. Prada
7.3. Gucci
7.4. Explanations

5. Literature References (preliminary)

Bagozzi, Richard P. and Utpal M. Dholakia (2002), Intentional Social Action in Virtual
Communities, Journal of Interactive Marketing, 16, 2.
DEI Worldwide. The impact of social media on purchasing behavior. Engaging Consumers
Online. Retrieved 21th September 2016 from www.deiworldwide.com/files/DEIStudy-Engaging%
20ConsumersOnline-Summary.pdf, 2008.

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Flick U., Kardoff E. and Steinke I. (2004). A companion to qualitative research. London: Sage
publications Ltd.
GfK. (2013). Press Release. Retrieved 22th September 2016 from
http://www.gfk.com/us/newsand- events/press-room/press-releases/pages/in-brands-gen-yconsumers-value-buzz.aspx.
Kabani, S.. 2010. The zen of social media marketing. Benbella Books, Inc. Dallas, Texas.
Kapferer J. and Bastien V. (2012). The luxury rules: break the rules of marketing to build luxury
brands (2nd edition). London: Kogan Page.
Keller, E. (2013). Word-of-Mouth Goes Mainstream, Is Now Measureable. Three Useful Insights
for Marketing's Not-So-Silent Partner. Retrieved 17th September 2016 from
http://adage.com/article/guest-columnists/word-mouth-mainstream-measureable/239501/
Kim A.J. & Ko E., (2010) Do social media marketing activities enhance customer equity? An
empirical study of luxury fashion brand, Journal of Business Research, Volume 65, Issue 10,
P1480-1486, Retrieved 14th September 2016 from
http://www.sciencedirect.com/science/article/pii/S0148296311003584
Klie, L. Firms should embrace Instagram. 13 of March 2015. Insight. CRM Trends and News
Analytics.
Kotler, P. & Keller, K.L. (2012). Marketing management. (14. ed., Global ed,). Harlow: Pearson
Education.
Lewis, K. (2010). Social media and strategic communication: Attitudes and perceptions among
college students. Public Relations Journal, 4(3).
Neher, K. Visual Social Media Marketing #VSMM. 2013. First Edition. Boot Camp Publishing,
Cincinnati, Ohio.
Ogden, D. (2013). Customer service power shift: The social media revolution. My customer.
Retrieved 22th September 2016 from http://www.mycustomer.com/feature/experiencesocialcrm/power-shift-social-media-revolution/165883
Pitt, F.L., Plangger, K., Berthon, P.R. & Shapiro, D. (2012). Marketing meets Web 2.0, social
media, and creative consumers: Implications for international marketing strategy. Business
Horizons 2012, 55, Kelley School of Business, Indiana University.

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Trong, T. 2014. A status analysis of current digital marketing: a case study of Kauneusstudio
FAB. Laurea University of Applied Sciences.
Trusov, Michael, Randolph E. Bucklin, and Koen Pauwels (2009), Effects of Word-of-Mouth
Versus Traditional Marketing: Findings from an Internet Social Networking Site, Journal of
Marketing, 73, 5.
Uzunian, M. (2013). For Business, Instagram Is King. Retrieved 20th September 2016 from
http://blog.sumall.com/journal/instagram-for-business-king.html#more-2604

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