Impacts of Luxury Fashion Brand’s Social Media Marketing on Customer Relationship and Purchase Intention

Abstract

Luxury brands have always been fashion industry leaders,with admirable aesthetic value and innovative yet traditionalbusiness management. The brands constantly struggle to secureprofits by providing novel value to customers through qualityproducts and services, customer management, retail strategies,and innovative marketing mixes. However, the recent entry ofnumerous fashion brands in the luxury market coupled withdecreased sales related to economic downturns have led to newchallenges for luxury firms. Because the luxury fashionbusiness is considered high value-added with guaranteed highprofit margins and secure regular customers, the lower sectorshave begun to heat up the competition. To survive the recent unforeseen challenges of heatedcompetition, they have turned toward marketing communicationusing social media. Social media are the two-waycommunication platforms that allow users to interact with eachother online to share information and opinions. Use of socialmedia sites such as Twitter and Facebook has alreadyexpanded to almost every luxury fashion brand and beenevaluated as business take-off tools. With the increased use ofsocial media as a means of marketing communication forluxury brands, it has become necessary to empirically analyzethe effect of social media marketing (SMM). Thus, the studypresented here investigated the effects of this SMM oncustomer relationships (involving intimacy and trust) andpurchase intention. A preliminary test was conducted in order to draw a sampleof a luxury fashion brand for this study. Self-administratedquestionnaires with visual stimuli were used to collect datafrom luxury consumers in the Seoul area. Respondents wererestricted to consumers who had purchased any luxury fashionbrand item within the previous two years. Among 150questionnaires distributed, 133 questionnaires were finallyemployed for statistical analysis. Principal component analysis using varimax rotation wasconducted to figure out the properties of luxury fashionbrands’ SMM. The social media contained five properties:entertainment, customization, interaction, word of mouth, and trend. Factor loadings ranged from .84 to .52. Cronbach’s αlay between .80 and .88, demonstrating adequate constructreliability. Multiple regression analysis was conducted to test the effectsof SMM on customer relationship (i.e., intimacy and trust) andpurchase intention, as well as relationship between customerrelationship (i.e., intimacy and trust) and purchase intention. Results show that entertainment has a significant positive effecton intimacy (β=.25, t=3.48, p<.01), trust (β=.34, t=5.75,p<.001), and purchase intention (β=.31, t=4.32, p<.001). Otherpositive effects are customization on trust (β=.13, t=2.28,p<.05), interaction on purchase intention (β=.25, t=3,54,p<.01), word of mouth on intimacy (β=.14, t=1.92, p<.05)and purchase intention (β=.19, t=2.65, p<.01), and trend onlyon trust (β=.32, t=5.30, p<.001). It seems that entertainment,customization, and trend were satisfying what customersexpected from a luxury fashion brand. Because the luxuryindustry aims to provide value to customers in every waypossible, the brands should focus on providing freeentertainment content, customized services, and trend forwardsocial media site which all act positively toward enhancingcustomer relationship. Trust has a significant relationship withpurchase intention (β=.34, t=4.85, p<.001). Since the trustvariable within a customer relationship was only significantlyassociated with purchase intention, the mediating effects ofcustomization and trend were found. The study proves the effectiveness of luxury brands’ SMMon both customer relationships and purchase intention, andproposes a strategy to enhance the brands’ performance bydefining specific factors influencing both. The result show thatthe chosen brand’s SMM includes distinctive elements incomparison to old-fashioned marketing performances. Everyproperty found in luxury brands’ SMM positively influencedcustomer relationships and purchase intention, withentertainment affecting more variables than any otherproperties. Luxury brands should heavily supply anentertainment aspect of social media contents and activities. Every activity enabled by use of the media, such as creatingrelationships with other users, providing customized service andfree entertainment contents, and obtaining genuine informationon personal interest should all be entertaining. By focusing onproviding such features, customer relationships and purchaseintention will be enhanced. Concerning the association betweencustomer relationship and purchase intention, trust and purchaseintention were highly related. Customers’ trust wasstrengthened via interaction with other users as well as brandon social media sites. Trust gained while enjoying entertainment and communication provided on the sites seemsto contribute greatly toward a luxury brand’s profit. With the growing interest of luxury fashion brands inproviding luxurious value to customers in every way possible,using social media appears to be appropriate for retaining oldcustomers and attracting cross-shoppers. As competition amongluxury fashion brands becomes more intense by providingplenty of alternatives to customers, the brands’ prosperityseems no longer quite so promising. The importance ofmanaging customers as valuable assets cannot be emphasizedmore. As such, more luxury brands should engage in socialmedia marketing activities to anticipate a positive contributionto the brands by providing new luxury value to customers.