Defining the
luxury construct
According to Nueno and
Quelch (2007, p. 100), luxury brands’ “ratio of functionality to price is low”,
but their “ratio of intangible and situational utility to price is high”. A
luxury brand is not only premium-priced product, but instead shares characteristics
that differentiate them from premium and non-luxury brands. For instance,
premium quality, heritage of craftsmanship, recognisable design, limited supply
and distribution, global distribution are some of the main components of the
luxury construct (Nueno and Quelch 2007, pp. 100-101). Kapferer (1998, p. 96)
defined the luxury construct from the perspective of the consumer and as a
result of the different perspectives of consumers he concludes that this
concept is relative. The features that characterise the luxury product
according to customers include beauty, excellence and uniqueness; creativity;
timelessness and international reputation; and rarity (Kapferer 1998, p. 96).
The relativity of the luxury context thus not only arises from the different
importance that consumers attach to these features but also from the
possibility that luxury brands can possess these features to various degrees or
even completely lack some of these features.
Social media include
Internet-based applications that are based upon the ideological and
technological constructs of Web 2.0 and that enable users to create and
exchange user-generated content (Kaplan and Haenlein 2010, p. 61). Popular
social media sites include Facebook, YouTube, Instagram, Twitter, LinkedIn and
so forth. They provide marketers with various opportunities to reach and engage
audiences and build stronger relationships with them. SMM designates the online
communities, use of social networks, and various online media for different
purposes related to marketing, sales, public relations and customer service
(Barker et al. 2012, p. 3). The main components of SMM are creating buzz;
building ways that enable brand fans to promote a message themselves; and
encouraging user participation and dialogue (Barker et al. 2012, p. 3). The
goals of SMM activities are to build brands, i.e. to increase brand awareness,
improve brand perception, to develop ideas for marketing strategies, research
consumer behaviour, enhance brand reputation and image and engage consumers in
a brand experience (Barker et al. 2012; Tuten 2008, p. 26).
In the luxury segment,
SMM is still considered a relatively new frontier. While many luxury brands
resist from utilising SMM due to the risk of diluting the brand image other
luxury brands, such as Burberry and Louis Vuitton are present on social media
and try to find new ways of engaging with their fans. Kim and Ko (2012)
examined the effects of the SMM activities of luxury fashion brands on the
purchase intention and customer equity. Their study measured value equity,
relationship equity and brand equity. Kim and Ko’s study (2012) differs from
the present study in two ways. First of all, their concept and dimensions of
brand equity are different than the one adopted in the present study. They
included these aspects: “brand awareness, perceived value, brand personality,
brand association, and perceived uniqueness” (Kim and Ko, 2012, p.1482).
Secondly, their survey was conducted with Korean consumers whereas the present
study is conducted with consumers from different nationalities. The luxury
fashion industry in the Korea is only “into its mature stage” (Kim and Ko,
2012, p.1485) and therefore the examination of the influence of SMM on brand
equity of luxury brands should be replicated in other cultural settings.
Furthermore, Godey et
al. (2016) also analysed the SMM efforts of leading brands in the luxury
sector, Burberry, Dior, Gucci, Hermès, and Louis Vuitton. These authors found that
the impact of SMM on luxury customer-based brand equity as reflected in brand
awareness and brand equity differs very significantly across the four countries
included in their survey (Godey et. al. 2016, p. 7). This implies that some
country-specific characteristics can moderate the impact of SMM on these
aspects of brand equity. On the other hand, the impact of SMM on consumer
response, as reflected in brand preference, brand loyalty and willingness to
pay premium price, was similar across the four countries (Godey et al. 2016, p.
7). In this regard, the strongest impact was established in the level of
consumer's brand loyalty (Godey et al. 2016, p. 7). Furthermore, Lee and
Walkins (2016) found that video blogs lead to positive luxury brand perceptions
but that this positive impact is dependent on the characteristics of the
blogger such as physical and social attractiveness. Kim and Ko (2010, p. 164)
conducted a survey in the Seoul area whose findings proved the effectiveness of
luxury brands’ SMM on both customer relationships, and more precisely on
purchase intention, intimacy and trust. These authors first identified the
different elements of luxury brands’ SMM which included “entertainment,
customization, interaction, word of mouth, and trend” Kim and Ko (2010, p.
164). The usefulness of the study lies in its efforts to identify the impact
that each one of these properties had on the key concepts, intimacy and trust,
and purchase intention. The results revealed that entertainment has a
significant positive effect on all three concepts; customization impacted trust
positively; interaction had a positive impact on purchase intention; word of
mouth on intimacy and purchase intention; and trend only on trust (Kim and Ko
2010, p. 164). These results demonstrate how important the particular SMM
activities are in determining the impact on the brand. The present study will
utilise this model and will analyse the impact of SMM on brand equity on the
basis of these five properties.
1.2. Brand
equity
Brand equity arises
from the higher level of confidence that consumers have in a brand than they
the confidence they have in competitor brands (Lassar, Mittal and Sharma 1995,
p. 11).
This confidence in the brand results into
consumers’ loyalty but also willing and being ready to pay a premium price for
it (Lassar, Mittal and Sharma 1995, p. 11). This is why it is every brand’s
goal to build strong brand equity. Brand equity has been evaluated from two
different perspectives – financial and customer perspective (Lassar, Mittal and
Sharma 1995, p. 11). The financial perspective of brand equity refers to the
financial asset value that the brand generates for the business whereas
customer-based brand equity reflects the consumer response to a brand name
(Lassar, Mittal and Sharma 1995, p. 12). The present study will focus and
analyse the customer-based perspective of brand equity in order to investigate
the particular value of the luxury brands to the consumers.
The concept of brand
equity has been defined in different ways. For instance, Keller (1993, p. 2)
and Kamakura and Russell (1991) defined customer-based brand equity as the
impact that brand knowledge has on consumer response to the marketing of the
brand. There are two components brand knowledge: “brand awareness and brand
image” (Keller 1993, p. 2). Brand awareness refers to brand recall and
recognition among consumers whereas brand image is the set of associations
associated with the brand that consumers have in their minds (Keller 1993, p.
2). Based on the above definition, there are several important considerations.
Brand equity reflects consumer perceptions rather than objective parameters; it
reflects the global value that a brand has; it reflects the value assigned to a
brand originates from the brand name and not only from its physical
characteristics; brand equity is a concept relative to competitors; and it has
a positive impact on financial performance (Lassar, Mittal and Sharma 1995, p.
13).
Scholars have proposed
several models of brand equity (Aaker 1996; Brandt and Johnson 1997; Keller
2003). According to Aaker (1996, p. 105), brand equity comprises of four
consumer-based categories and these include loyalty, perceived quality,
associations and awareness. Loyalty according to Aaker (1996, p. 106) is the
core dimension of brand equity and is reflected in the amount a customer is
ready to pay for the brand compared to another brand; and in customer
satisfaction measured on the basis of the last experience with a
product/service (Aaker 1996, p. 108). The key association component of brand
equity typically involves image dimensions unique to the brand (Aaker 1996, p.
111). To measure brand associations it is useful to incorporate brand
personality, organisational associations and the value of the brand (Aaker
1996, p. 111). It is also very important according to Aaker (1996, p. 114) to
measure differentiation because it is considered as a key brand association.
Finally, the four component, awareness, consists of several levels including
“recognition, recall, top-of-mind, brand dominance, brand knowledge and brand
opinion” (Aaker 1996, p. 114).
Other authors agree
with Aaker (1996) on some of the components (Table 1). For instance, as already
mentioned Keller (1993) argued that brand equity consists of brand awareness
and brand associations. Agarwal and Rao (1996, p. 246) suggest that brand
equity should be measured on the basis of overall quality of brand name and
purchase intention. According to Kamakura and Russell (1993, p. 10), brand
equity can be identified based on two major sources. This is managed by
dividing brand value into tangible elements such as product features, and
intangible components such as brand name associations. The strength of their
approach is that it provides a measure of brand value based on actual purchases
behaviour in the marketplace unlike other studies which have been based on what
is preferred -which is acquired with surveys- and self-reported attitudes
(Kamakura and Russell 1993, p. 199). Srivastava and Shocker (1991) argued that
brand equity comprises of two components – brand strength, which constitutes
the brand associations held by customers, and brand value. Berry (2000, p. 130)
found that service brand equity originates from brand meaning and brand
awareness. Brand meaning is shaped by customer experiences with the company and
brand awareness is shaped by the external brand communications and the
company’s presented brand (Berry 2000, p. 130). Similarly, Tuten (2008) also
defined brand equity as a concept developed from the high levels of brand
awareness and strong, favourable, unique perceptions of the brand’s image
(Tuten 2008, p.178).
Even though Aaker’s model
is widely used and recognised it is useful to take into consideration a more
recent model of brand equity, the one proposed by Keller (2003). Building
strong brand equity, according to Keller’s model, involves four steps:
establishing the proper brand identity, or in other words identifying the
breadth and depth of brand awareness; developing the appropriate brand meaning
by creating strong, positive and unique brand associations; promoting positive
brand responses; encouraging brand relationships with customers characterized
by active loyalty (Keller 2003, p. 107). On the basis of these four steps
Keller (2003) developed six brand building blocks.
The first building block, brand
salience, measures different aspects of the awareness of the brand and how
easily and how frequently the brand is evoked in the mind of the consumer
(Keller 2003, p. 108). The depth of brand awareness refers to the level of
likelihood that a brand element comes to mind; and breadth of brand awareness
refers to the range of purchase and usage in which the brand element is evoked
(Keller 2003, p. 108). The second building block, brand performance, measures
the degree to which the product meets customers’ functional needs (Keller 2003,
p. 108). Keller named five key types of attributes and benefits that according
to him form the basis of brand performance, primary components and additional
features; product reliability, durability, and serviceability; service
effectiveness, efficiency, and empathy; style and design; and price (Keller
2003, p. 113). The third block, brand imagery, refers to the ways people think
about a brand abstractly, rather than brand’s functionality (Keller 2003, p.
113). In other words, imagery refers to the intangible characteristics of
brands, such as user profiles; purchase and usage situations; brand personality
and values; and history, heritage, and experiences (Keller 2003, p. 113).
Keller argued that there are five dimensions of brand personality, sincerity,
excitement, competence, sophistication and ruggedness (Keller 2003, p. 115).
The fourth building block, brand judgments refers to the personal opinions
about and assessments of brands, which consumers develop by combining brand
performance and imagery associations (Keller 2003, p. 115). These judgements
can be developed towards aspects such as quality, credibility, consideration,
and superiority (Keller 2003, p. 115). The fifth building block, brand feelings,
refers to customers’ emotional responses and reactions (Keller 2003, p. 118).
Keller proposed several key types of brand-building feelings, warmth, fun,
excitement, security, social approval and self-respect (Keller 2003, p. 118).
Finally, the sixth building block, brand resonance, measures the nature of this
relationship and the degree to which customers think that they are “in sync”
with the brand (Keller 2003, p. 120). Four dimensions of brand resonance are
possible according to Keller (2003, p. 120) and these include behavioural
loyalty; attitudinal attachment; sense of community; and active
engagement.
It is evident that
Keller’s and Aaker’s model have many things in common. More precisely, both of
these models take into consideration the following indicators: brand loyalty,
brand awareness, perceived quality/brand judgements, brand
associations/performance and imagery associations. While Aaker (1996) deals
separately with perceived quality Keller (2003) perceives brand quality
perception as element of brand judgements. Similar to this, while Aaker (1996,
p. 111) defines brand associations as image dimensions unique to a brand,
Keller (2003) speaks of imagery and performance related associations.
Therefore, in summary, the above review of the literature demonstrates the
breadth and width of the concept of brand equity and the different perspectives
that scholar takes as to the dimensions of brand equity. After careful
consideration of these findings and the already established definitions of brand
equity in the literature this study generated six dimensions of brand equity:
brand salience, brand performance, imagery, judgements (including indicators
such as quality and consideration), feelings and resonance (including
indicators such as loyalty, attachment, community and engagement). These
dimensions are selected because of the widely used measurement model developed
by Keller (2003) in studies aiming at measuring brand equity.
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