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Marketing Luxury Goods Online

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Philipp Nikolaus Kluge

The marketing of luxury goods faces a fundamental challenge: balancing sales growth against exclusiveness. In today’s digital world, this trade-off has become even more challenging. A luxury brand’s fragile concept of exclusiveness is seemingly incompatible with the ubiquitous availability provided by the mass medium Internet. The author addresses this trade-off both conceptually and empirically. First, the author conceptually examines the specific marketing-mix for luxury goods in terms of product, price, communications, and distribution management. Second, this marketing-mix is applied to the online environment. Third, the author empirically tests the effects of the online accessibility of luxury goods on consumer perceptions of scarcity and desirability.

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1. Introduction

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Marketing Luxury Goods Online1

1.  Introduction

1.1  Motivation

The phenomenon of luxury fascinates consumers, marketers, and researchers alike. Goods and services designed beyond any necessity are desired by the mass but reserved for the happy few. Brands like Hermès, Rolls-Royce, Cartier, and Patek Philippe create an aura of good taste, finest quality, and exclusiveness. They convey a deeper meaning beyond their functional quality; something individuals desire not only to signal status but also to reward oneself and significant others for meaningful moments in life.

The marketing of luxury goods is built on a paradox: “The more desirable the brand becomes, the more it sells but the more it sells, the less desirable it becomes”, says Patrick Thomas, former CEO of Hermès (Interbrand, 2011). Balancing sales growth against exclusiveness represents the major strategic challenge for luxury goods manufacturers (Kastanakis & Balabanis, 2012, p. 1399; Keller, 2009, p. 293; Wetlaufer, 2001, p. 121). The worldwide market for personal luxury goods has shown strong post-recession growth of 9.2 per cent p.a. from EUR 153 billion in 2009 up to EUR 223 billion in 2014 (Bain & Company & Fondazione Altagamma, 2014, p. 10). Across all categories the luxury goods market realized EUR 865 billion sales worldwide in 2014 (Bain & Company & Fondazione Altagamma, 2014, p. 10). European luxury goods manufacturers, many of them small and medium-sized enterprises, account for about 70 per cent of the worldwide luxury goods...

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