Luxury Brands in Instagram and Generation Z Dissertation

Introduction

Generation Z becomes a prominent factor in the world market. Born between 1995 and 2013, these individuals are expected to comprise a third of the world’s total population by the end of the decade. According to the report by the OC&C (2018), members of Generation Z wield over 44 billion dollars in purchasing power. These individuals represent a lucrative market for new and old luxury brands, as the generation as a whole has been exposed to luxury throughout their entire lifetime.

At the same time, Generation Z is one of the most frequent users of social media and the Internet. In developed countries like the US, Europe, or wealthy countries of the Persian Gulf, the number of individuals with social media accounts varies from 80% to 95%. One of the most popular social media outlets for sharing images is Instagram. According to Lee et al. (2015), the total number of unique users of Instagram exceeds 300 million, with over 70 million photos being shared on a daily basis. This platform has immense potential for luxury brands to advance their products to the new generation of customers.

The aim of this study is to discover the ways luxury brands can maximize the effectiveness of their marketing campaigns using Instagram. A better understanding of their customers’ preferences, underlying motives, and Instagram advertising techniques would lead to a successful brand expansion and substantial increases in sales as Generation Z takes over. New luxury brands would find the results of the research useful for establishing themselves in the changing realities of the market.

The methodology of the study includes three self-administered questionnaires to be distributed on paper and online to individuals between 13 – 23 years of age in schools, colleges, and universities across the US. To statistically analyze the data, a generalized linear model would be employed.

The structure of this dissertation is as follows:

• Introduction section: Outlines the background and rationale for the study, briefly describe aims and objectives, methodology, and other structural parts of the work.
• Scholarly evidence: Provides the most recent insights of other research done on the subject of Generation Z in relation to marketing, luxury brands, and the use of social media.
• Methodology: Describes the means of determining and selecting the sample, the means of acquiring quantitative data, and the means of data dissemination as well as statistical analysis.
• Findings: Describes the results of the study after the data is statistically analyzed.
• Research implications and limitations: Synthesizes the data and provides an analysis of how it could improve the pool of existing knowledge. The limitations of the study could also be found here.
• Practical implications: Covers the ways the data could be used by luxury brands to advance their products on social media.
• Conclusions: A short summary of findings, implications, and analysis.

Scholarly Evidence

Generation Z has a greater potential for brand exposure than any other previous generation, due to the widespread use of the Internet and general attunement to high-tech communication technology. American Academy of Pediatrics ([AAP] 2013) provides data on recent developments in Generation Z. According to their article, adolescents and teenagers between 13-18 years of age spend over 11 hours exposed to various forms of social media. In the US, 88% of the adolescent population has access to high-speed internet, and over 75% own smartphones with Internet access. This data can be used to form the backbone for the rationalization of the proposed study, as it means luxury brands have the potential for 11 hours of daily brand exposure in most teens using social media outlets.

Generation Z is stated to have positive reactions towards social media advertising, preferring it to standard marketing exposure mechanisms, such as television, radio, or paperback advertisements. According to Duffett (2017), this trend is closely associated with several factors, such as the widespread use of smartphones for accessing the internet and the interactivity of connection between the customers and the sellers. While television and radio present the product in the form of one-way communication, social media allows potential customers to interact with the brands and extract the information that informs their desire to make a purchase. However, the same study also notes the effects of a purchase funnel, meaning that each individual attitude component becomes increasingly harder to achieve. This, despite the interactivity of the system, Generation Z still follows the communications effects pyramid.

The users of popular media services, such as Instagram, can be roughly divided into 3 groups, based on the reachability potential for luxury brands. The first group includes the fans of a particular brand or product (Lipsman et al., 2012). These individuals are the easiest to reach and the most likely to respond positively to an advertisement. The second group is much larger and involves friends of fans. These people are less likely to be interested in purchasing any luxury brand products than the first group, but are still more likely to respond, because of their affiliation with their friends (Lipsman et al., 2012). The last group includes random users with a general interest in products that the brand is positioned in. They are the largest and most randomized group in terms of advertising appeal.

Instagram is used, primarily, as a picture-sharing social media service. Due to the affiliation between Facebook and Instagram, the latter often finds exposure alongside text-based information provided by the former (Lee et al. 2015). The primary motivations for using Instagram differ. The primary five reasons, as indicated by Lee et al. (2015), are social interaction (14.14%), archiving (14.07%), self-expression (13.58%), escapism (11.03%), and peeking (9.40%). While escapism and archiving are not marketable motivations for luxury brands, it is possible to exploit social interaction and self-expression for advertising purposes. Peeking can be used to provide spoilers, insides, and previews of upcoming products, generating additional interest and exposure. Lee et al. (2015) state that age and gender do not have a direct correlation to the reasons cited above, meaning that they could be applied for Generation Z as well as other generations. This lack of variance can be explained by the fact that the majority of Instagram’s users are comprised of Gen Z and Gen X.

While Instagram offers ample opportunities for presenting luxury products in the form of photos and images, it is important to recognize the factors that make certain photos more popular than others. According to Jang et al. (2015), two primary factors motivate the exposure of images on Instagram. The first factor is the appropriate tagging. Using large numbers of popular tags is likely to get more exposure, but less feedback. At the same time, popular and appropriate tags are associated with a greater number of likes, comments, and shares (Jang et al., 2015). The second factor is the presence of a person in the photo. Luxury items are associated not only with high quality, beauty, and expensive materials but also with self-expression. This is particularly true for daily items, such as clothes, shoes, makeup, watches, and smartphones. The presence of a genuine user (as opposed to a paid actor or a model) might generate more genuine feedback, exposure, and interest in the product.

However, simple tagging and honesty of the images are not enough. According to Marwick (2013), a big factor in the promotion of photos with luxury brands are the persona and the timeliness of the photos. Instagram is full of the so-called micro-celebrities, which have substantial numbers of followers based on their image, presentation, and personalities alone. While conventional celebrities like actors, sportspersons, musical idols, and others have more viewers per capita, the total number of followers for micro-celebrities far exceeds them. The concept of timeliness is also a very important one. As described by Marwick (2013), specially-prepared photos that are posted on a later date (latergram) make many viewers feel like they missed out on important events in a person’s life. Spontaneity is a major contributing factor to both popularity and exposure, which rules out the use of studio models and pre-planned photo shoots.

Customer engagement in Instagram, however, differentiates from one brand to another. Different brands might find social media more or less attractive, depending on what kind of sector they occupy in the luxury industry. Erkan (2015) reports different percentages for customer connection with brands, based on what kinds of products they serve. The highest exposure was found in the electronics market (8.39 ratio compared to the apparel section), followed by media, cars, and sports products (Erkan 2015). Based on likes and comments sections, the apparel section had the lowest engagement out of all major segments. Based on this factor, it could be said that Instagram yields the least results in customer attraction and engagement in the entire luxury sector, which is something that luxury providers should keep in mind. The high popularity of electronics products is likely motivated by the fact that Gen Z users are utilizing the gadgets in question to access social media services, thus making the fire fuel itself.

Numerous luxury brands have already begun adopting social media advertising strategies in order to increase their brand equity and improve their relationships with customers. The study by Godey et al. (2016) explores the relationship between brand equity and various efforts conducted in social media. According to the researchers, one of the most potent and prominent effects of social media is discussion generation. It is highly associated with the concept of word-of-mouth, meaning personal communications between different users about the benefits and merits of certain products over others. Godey et al. (2016) note that customers perceive brands with large followings and discussions in a more favorable way, as they associate word-of-mouth with objectivity and honesty. The reasons for such perceptions are simple – while promotional videos and advertisements can be bought (thus losing their objectivity and credibility), individual experiences are not.

However, other researchers have questioned the effectiveness of word-of-mouth as a means of value perception. Apiraksattayakul, Papagiannidis, and Alamanos (2017) claim that the four primary factors influencing purchase intent in Generation Z customers are perceived social value, perceived price value, perceived benefits, and perceived quality. Risk perceptions, on the other hand, affected sales in a negative manner. Emotional value and word-of-mouth conversations had no significant impact on increasing or reducing sales. While the value of the word-of-mouth aspect remains in question, the results suggest that luxury brands should not try forming emotional relationships with their customers in order to retain their brand image and save money and effort on doing so.

In terms of catering to the demands of the customers, Generation Z is possibly one of the most demanding generations in terms of both appearance and functionality of various designs. According to Varsha, Reshma, and Khyati (2014), the capabilities of Gen Z users to navigate the web in search of information about the product makes it very hard to sell products based on brand name alone. Generation Z is very self-conscious about fashion and public opinion, and purchasing a trendy, yet subpar product may label them as foolish in the eyes of their peers. One of the reasons why Apple Smartphones remain one of the primary luxury brands among all contemporary generations is because of their high-tech functionality and excellent brand status. In addition, Generation Z customers value customizability in their choices of luxury brands, as it enables them to express themselves in a number of different ways.

Dion and Borraz (2017) support this statement and provide additional nuance towards the perceptions of quality in Gen Z users. The focus of their studies lies in user-designed vs. company-designed fashion brands. According to the research, user-designed clothes and items as perceived as lower quality than company-designed products. Dion and Borraz (2017) state that user-accentuated brands fail to deliver agentic feelings for the consumer, which results in lower sales. These facts must be kept in mind when using Instagram to promote user-centered fashion brands, as the researchers suggest that overexposure might actually backfire on the product.

There is additional support to the fact that overexposure to social media could actually harm certain luxury brands. Athwal, Istanbulluoglu, and McCormack (2018) state that one of the main points of appeal in luxury brands for Generation Z and Millenials alike remains the aloofness of brands. Luxury brands present themselves as distant and not at all customer-centered, which creates an air of exclusivity around them. Entering social media en-masse and using Instagram to display images of products in day-to-day activities might remove the air of exclusivity and affect sales in a negative way. The psychological selling point of luxury brands is in delivering a unique experience, whereas overexposure would make a product seem mainstream. These findings indirectly correlate with those of Apiraksattayakul, Papagiannidis, and Alamanos (2017) in regards to the perceived emotional value of the products.

Although Instagram photos can increase sales and brand exposure, they also might alienate some of the customers. Levecq (2016) states that a portion of Generation Z users does not trust products that they could not physically touch or see, before buying. Instagram, in that regard, offers risks and benefits at the same time. Real-life photos of clothes and items in day-to-day use may ease some of these customers into committing an online purchase, while generating a mundane backlash from other customers, as mentioned by Athwal, Istanbulluoglu, and McCormack (2018). At the same time, Levecq (2018) puts forth the idea that the use of social media, such as Facebook, Instagram, Twitter, and others is no longer a means of generating greater sales but rather a means of brand survival. Social media presence is no longer a brave new strategy but rather a standard for the majority of the industries. This notion could explain why certain companies do not see stark revenue growth from entering social media for the first time, as most customers are already used to it.

The existing body of literature seems to show a lack of research dedicated to social media marketing tools specifically for the luxury segment. Instead, all products, no matter the price and status value for the customer, are using the same tools in order to grab attention, increase sales, and achieve higher brand recognition. Woolley (2015) states that the primary marketing techniques used for Instagram are celebrities endorsing specific products and services followed by users demonstrating recent purchases on Instagram photos. Lastly, companies often use repost lotteries to gain exposure and attention. In order to win a prize, participants are asked to share a photo or an advertisement for a number of users. Woolley (2015) states that the advertisement lottery generates more exposure than sales, as the majority of the participants are interested in free rewards rather than actually buying the product.

Fong and Yazdanird (2014) highlight two more methods of social media marketing often implemented by companies to facilitate e-commerce. Viral marketing is similar in concept to Instagram lotteries, as it involves the spreading of information by users with the help of social media platforms. As indicated in the article, this type of marketing is not particularly effective, as most companies and products implementing it usually do not achieve the desired results. This can be explained by the fact that viral marketing is not target marketing and often finds a way towards individuals who do not seek to buy a particular product. It generates annoyance and harms the brand rather than promotes it. In addition, it is often seen as a tool of scammers and companies with a poor reputation, making it unsuitable for luxury brands (Fong and Yazdanird 2014).

Another form of marketing is guerrilla marketing, which utilizes unconventional means of advertising products. Typically, these strategies are aimed at small companies due to relatively low costs. However, the term guerrilla stands for unique and inventive advertising applications. Instagram could be used as a medium for sharing these types of messages. Fong and Yazdanird (2014) give an example of a large brand, such as Red Bull, engaging in guerrilla marketing by sponsoring Felix Baumgartner (a famous skydiver) in his record-breaking jump from over 128,100 feet high.

It is possible for luxury brands to engage in similar feats and use Instagram as a medium to spread the word. However, the choice of unconventional tactics must be in line with the product. Otherwise, it might damage the company’s reputation in the long run. Customers associate luxury brands with a certain seriousness and class, which these are supposed to represent. Using cheap alternatives for advertising could be perceived as an attempt to get on the same level with the majority rather than remaining a distant and desired brand (Athwal, Istanbulluoglu, and McCormack 2018).

Reference List

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