Maybe the Time Has Come for Luxury Brands to Embrace the Internet

Successful consumer luxury brands hold a unique position in marketing. As high-end specialty products, luxury brands are often viewed by consumers as offering benefits that are several levels above mass-market brands. These brands obtain this position not only because of the qualities of the product itself but through other marketing elements, such as unique promotions and premium pricing. As we note in our Product Decision tutorial, specialty products also follow an exclusive product distribution strategy. Of course, one reason distribution is exclusive is because the number of potential customers is quite small compared to products targeted to a wider market. But another reason distribution is limited is that many buyers of luxury products need personalized attention when considering a purchase. For example, luxury car dealers, such as Maserati, have very few outlets but the ones they do have are staffed by salespeople, who are experienced in dealing with high-end customers.

While there may not be many people who will purchase a car online, other product categories that are easily purchased over the Internet, such as jewelry, clothing and fashion accessories, also are lacking in luxury sellers. Some luxury brands choose not to sell online because they are concerned a product, which built a reputation for being unique and exclusive, will lose this perception given the openness of the Internet. Additionally, some marketers of luxury products believe it is necessary to build close personal relationships with customers, something that is much easier to do face-to-face than through social media or online chat.

But with consumers now becoming much more comfortable shopping online, the days of limiting sales of luxury products to in-person purchasing may be coming to an end. As discussed in this Washington Post story, a leading marketing research group, McKinsey & Co., has released a report that takes aim at luxury brands’ reluctance to sell online. They suggest the target market for these brands is becoming more accepting of online purchasing of expensive products. Additionally, they say luxury brands need to become more aggressive in promoting their products online as today’s customers are much more interested in learning about products by spending time on their computer or mobile device, rather than through personal contact with salespeople.