Discuss the below:
Objectives of Research
(i) To establish the role of loyalty programs in the development of a proficient luxury brand.
(ii) To determine the luxury retailers or brands that offers loyalty programs
(iii) To elaborate the influence of loyalty programs on the marketing of luxury products
Loyalty Card for Luxury Products
1.0 Introduction
Luxury brands are mainly singled out into a common pool of slow adopters in the context of digital, primarily because there is high disinclination from the commodity consumers to purchase high-ticket products through the online platform or even directly from stalls. Majority of stores openings aimed at attracting huge luxury brands are usually glitzy scenarios often preserved for the fashion insiders, celebrities and the press fraternity (Brooks 2010). For instance, the Valentino, a luxury dealer based in Italy and making $6,980 dresses brands commonly called the cocktail dresses among other luxurious products, the company has in its plans to welcome certain regular clients to mingle about with the stars and subsequently charge them for such a privilege (Roebuck 2012). This is a luxurious intervention into revenue accumulations.
1.1 Background
Loyalty brand programs have been essential for the implementation of extensive sales of luxury products worldwide. However, for any loyalty program to yield significant benefits, it should be in a position to accomplish numerous values. In particular, it should create values through the virtue of value addition as opposed to subtraction. Besides, the program should also allow customers to spend points on products they would not obtain using self-driven initiatives as dictated by their financial abilities (O'dell and Pajunen 2000). The program must also have names for points as well as the exact program. Finally yet importantly, the program must be able to create tiers that would place luxury brand users at the top of the consumers pyramid. This factor often gives them status based on interaction with the actual brand or supplier sites.
As mentioned earlier, the Valentino has found that dying for the pumps is no longer sufficient to maintain sales within the context of an upswing. On the contrary, the top-end fashion retailers provide critical experience besides supplying their wares in expectations that the clients who have had an encounter with their workshop or have ever met a designer would develop fortified ties with the respective brand. In essence, virtually all things have grown to become extremely experiential as deduced from the speech of Valentino's brand and consumer development director, D' Angelo. This firm was bought away by the Qatar's Mayhoola for Investments at a price of approximately €700 million (Roebuck 2010).
The bought away factor provided a proficient phase of providing direct exclusivity, which translates to a unique experience for the customers. Some of the luxury retailers provide their consumers with an opportunity for early access to products particularly within the specific stores over a limited period of time. For instance, the closely held store, Lanvin has an established minimum of five black python handbags with a price tag of $4,000 to the top customers who can also visit their stores located on the Mount Street in the London city on or before a given date prior to the expiry of a given period of time (Widzer 2008).
On the other hand, Gucci, which is the general maker of the mink jacket priced at $8,200, has also been inviting its top clients to its fashion shows, Cannes Film Festivals and the equestrians' events. Besides, another company under the ownership of PPR has also begun to offer tours to its workshop located at Florence to its top clients grouped under the A-listers (Mintel International Group Ltd. 2001). This initiative is one aimed at engaging the customers in values at the ultimate DNA of Gucci. According to the company CEO, the main intention is to assist the clients in understanding the extent of the company's tradition, quality and overall passion behind the supreme accomplishment and subsequently wining their loyalty to the business (Thayer 1998). This matter is very essential in the sense that the personal luxury good market worth $283 billion is faced with the weakest growth from the onset of global financial crisis. These programs among others provide discrete platforms upon which the performance of luxury premises is established in a bid to increase customer frequency into the business (Paustian 1999).
The luxury marketers in the contemporary business environment face pronounced resistant consumer base. Such consumers are immune to advertisements based on the product image and prestige. The modern consumers are highly affluent with little probability to give any chance to new brands. For the luxury products that have not taken significant progress in the market by building loyalty programs, there are major rooms for the establishment of concrete loyalty programs to support the market performance of the business (Grady 1995).
Before printing and subsequent issuing of points, a business must craft it more strategically with capability to encourage affluent customers to be frequent visitors of the brand. More than 75% of the luxury consumers are believed to be pertinent members of at least one loyalty program. Indeed, the loyalty programs pose a powerful appeal to affluent consumers. However, the luxury brands and retailer must comprehend are the main features of their respective brands as perceived by their clients in order to design their loyalty programs to provide unique appeal to the customers (Food Marketing Institute & Willard Bishop Consulting, Ltd.1998).
1.2 Purpose of the Study
Luxury brands have been a major source of potential source of revenue to major economies especially with the growth in emerging luxury markets. Luxury products are often credited with prestigious notion on the users. However, majority of consumers are price sensitive. In order to encourage consumers to becoming frequent consumers of the brands, dealers often create a loyalty program aimed at promoting minor rewards towards boosting the consumption habits of the users besides increasing the frequency of visits to the premises. This paper focuses into establishing the luxury retailers that provides loyalty programs as a mechanism to boost luxury marketing strategy.
Chapter 3 Methodology
3.0 Introduction
This research will involve the collection of critical data on the existing luxury retailers that are manipulating the use of loyalty programs in boosting the brand performances in market. Essentially, the involvement of luxury dealers in the global market is highly extensive and therefore demands wide range research methodologies due to the extensive scope of luxury businesses. In fact, this research will explore the mainstream luxury retailers that offer loyalty programs as mechanism for promoting business performances by promoting its marketing strategy.
3.1 Research Design
Due to the extensive scope of the luxury market, this research will depend widely on surveys using the internet platform. This mechanism will enable it to establish the factual situation of the established loyalty programs across various enterprises globally. Besides, the internet will also provide an interactive segment for email findings for the specific destinations that the researcher will have direct email contacts. Besides, the research will also undertake sample findings on the impacts of loyalty programs on the consumers through face-to-face interviews with the prospective clients. In particular, this study will establish the cognitive behaviors of consumers frequenting into such destinations as Starwood Luxury Hotel that are easily traceable by virtue of observation coupled with face-to-face interview. Finally, this research will also include distributed sample questionnaires with which critical information will be collected from the premises through electronically generated questionnaires as well as hard copies.
3.2 Data Collection
This research will undertake data collection through written questionnaires, which will be distributed to both luxury retailers and the customers, attached to these premises. Besides, interviews will form major data collection methods in finding out the mechanism under which business establishes an effective and sustainable customer base for the luxury products. Essentially, apart from face-to-face interviews, this research will also use telephone-facilitated interviews especially in understanding the customers' experience in the context of loyalty programs amidst high price impacts on the disposable incomes of customers in a series of competitive market environment that supports exclusive selection of consumers. Indeed, researcher will also visit a number of luxury stores in order to observe and interview the proprietors on the customers' response to loyalty program relative to marketing without due loyalty programs are rewards on the customers. Focus groups will therefore form potential sources of data compilation unit in order to establish a central perspective of loyalty programs and its impact on the consumer's behavior in the luxury industry.
3.3 Ethical Consideration
This study acknowledges the importance of clients' confidentiality and seeks to restrain its operations towards retaining a neutral ground on its activities. In particular, while seeking to understand the business framework of the luxury retailers, the study will restrain from interrogating retailers on their personal investments unless under their consent. This move will ensure that the research does not contravene the privacy consideration thus violating the ethical consideration at length. Besides, this research will also provide for the establishment of a relevant framework upon which it will undertake friendly approach to luxury consumers in a bid to understanding their spending behaviors without infringing their rights to privacy by restraining from intimate questions such as, ‘who did you purchase the golden chain for and ‘why'?' among others.
4.0 Potential Implications of the Research
This research is likely to discover the effects of loyalty programs in the marketing framework of the luxury products. In particular, critical inferences of the impact of loyalty cards or programs on the consumers' behavior will form an ideal position for the establishment of concrete measures that would boost the performance of luxury products in a pool of cheap commodities across diverse global economies, which is not the current scenario. In fact, the current global demand for commodities is directly proportional to the price of commodities in the market. This implies that, the higher the price of a commodity, the lower the actual demand in the market. However, a similar trend is likely to occur for the explicit luxury products where high prices imply high demand in pursuit of the benefits attributable to the purchases of luxuries.