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LUXURY BRAND ONLINE MARKETING USING XIAOHONGSHU 2

Running head: LUXURY BRAND ONLINE MARKETING USING XIAOHONGSHU 1

Luxury Brand Online Marketing Strategy using Xiaohongshu Platform

(A Case of Louis Vuitton)

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Table of Contents

Abstract 3

Chapter 1: Introduction 4

1.1 Background 4

1.2 Rationale for the Study 6

1.3 Aim and Objectives: 8

Chapter 2:  Literature Review 9

2.1 Background 9

2.2 Online (Internet) Branding 10

2. 3 Factors Affecting Online Branding 13

2.4 The role of social media In Online Branding 15

2.5 Marketing Luxury Products 17

2.6 Live streaming for Online Branding 18

2.7 Livestreaming and Selling Luxury Products Online in China 21

2.8 Analysis of the Chinese Market for Foreign Luxury Brands 25

2.9 Recent shifts in the Chinese Luxury Market 26

Chapter 3: Research methodology Plan 29

3.1 Research Design 29

3.2 Data collection Method and Types of Data 30

Chapter 4: Data Analysis 31

Chapter 5: Discussion 37

Chapter 6: Conclusion 53

Chapter 7: Recommendations 55

Abstract

In recent decades, companies and brands have realized the significance of developing and establishing an online presence. The ongoing, Covid-19 pandemic has only served to exacerbate the move to digital marketing. Digital marketing has become a significant for brands and companies and brands across the globe, enabling them to continue commercial activities as other routes to the market and to the customer are cut off. The rise of internet technology has captured the attention of many luxury brands, marketers, and researchers allowing them to study market trends, forecast market demands, and meet a wide audience within a shot time-span. Digital marketing can be described as activities or processes facilitated by emerging technologies to create, communicate, and deliver value for consumers and other stakeholders. For luxury brands it is imperative to integrate certain digital marketing technologies such as big data, internet of things, and product design into their marketing strategies to establish their brand presence. Therefore, this paper will highlight digital marketing strategies based on the based on the platform of Xiaohongshu.

Key words

luxury brands, Online promotion, Xiaohongshu, marketing management

Chapter 1: Introduction

1.1 Background

With the vigorous development of ‘ science and technology ‘ and ‘ social economy ‘, the intersection between ‘ social ‘ and ‘ e-commerce ‘ continues to emerge, forming the integrated development model of ‘ social media + online shopping ‘. The social field has gradually become the blueprints of the development of e-commerce enterprises. Taking Xiaohongshu as an example, this paper studies the unique marketing mode of this community-sharing e-commerce APP. From the perspective of marketing, this paper analyzes the market positioning, marketing mode and marketing strategy of Xiaohongshu, summarizes the characteristics and successes in its development process, and puts forward optimization suggestions for deficiencies, exploring the promotion of luxury brands through the Xiaohongshu platform. In the United States and Europe, there are home TV sales channels like QVC or HSN. Many high-end beauty brands, such as Clarins, enter the U.S. market through such channels, and even Sephora has been displayed on HSN for a long time. People should not forget that customers’ view of live broadcasting (and TV home sales channels) is that it is “cheap” and suitable for mass brands, but if well done, it is also suitable for some high-end brands. That is to say, with the right marketing strategy, the promotion of Xiaohongshu platform can increase the audience of consumers and open up a larger market.

With the growing importance of “direct to consumer” (D2C), luxury brands are embracing digital technologies in their marketing at a pace never seen before. Brands that were once averse to implementing any form of online marketing strategy now feel the need to establish themselves digitally, given the uncertain global economic landscape as a result of the ongoing pandemic. In today’s competitive business environment, the market for luxury brands is growing rapidly due to shifts in societal and cultural norms. Initially, luxury brands were dependent on traditional marketing strategies to target their high value customers, but now they have been a shift in market dynamics, luxury brands are not targeting millennials and generation Z who represent a huge proportion of the global market. Digital technologies have become fundamental elements of the luxury goods industry; the influence of social media and mobile technology not only impact the e-commerce market but also the offline market as well. Over the recent years, luxury brands have adopted new strategies of promoting their products and interacting with their customer base, resulting in revolutionary social media marketing strategies.

This paper will highlight the success Xiaohongshu (little red box), as A Social E-Commerce Platform. The platform which focusses on fashion and beauty, is a medium where customers can post and share shopping tips, product reviews, and stories in the form of videos, texts or pictures. The platform has evolved into a credible source of product recommendation from users and like-minded customers. Since its inception in 2013, the platform has considerably grown to create a thriving community of customers, stakeholders and brands thorough continuous interactions, engagement, and reliable information sharing. Taking Xiaohongshu as an example, this paper studies the unique marketing mode of this community-sharing e-commerce APP. From the perspective of marketing, this paper analyzes the market positioning, marketing mode and marketing strategy of Xiaohongshu, summarizes the characteristics and successes in its development process, and puts forward optimization suggestions for deficiencies, exploring the promotion of luxury brands through the Xiaohongshu platform. In the United States and Europe, there are home TV sales channels like QVC or HSN. Many high-end beauty brands, such as Clarins, enter the U.S. market through such channels, and even Sephora has been displayed on HSN for a long time. People should not forget that customers’ view of live broadcasting (and TV home sales channels) is that it is “cheap” and suitable for mass brands, but if well done, it is also suitable for some high-end brands. That is to say, with the right marketing strategy, the promotion of Xiaohongshu platform can increase the audience of consumers and open up a larger market.

1.2 Rationale for the Study

In late 2019, the novel coronavirus pneumonia broke out and swept the globe in a very short time, which had a great impact on the world’s apparel industry. The flow rate of consumers has been greatly reduced, resulting in a serious contraction of the real economy. After a period of depression, with the gradual easing of the epidemic, the logistics industry has gradually recovered, many clothing brands have turned to the expansion of online business. Internet has the characteristics of trans time and space transmission, which just overcomes the limitation of time and space in the process of brand marketing during the epidemic period.

Most of the live platforms selected by luxury brands are the third-party e-commerce platform or short video platform. The net friends who watch live broadcast on the third-party e-commerce platform have strong desire to buy, most of them belong to the old users of e-commerce platform, and are willing to pay for clothing brands and so on. Consumers only need to pick up the mobile phone at home, they can easily explore the fashion treasure of various luxury brands and appreciate the style of new fashion products. In addition, the live broadcast interface of e-commerce platform is highly connected with the purchase interface. The friendly operation interface makes it easy for the audience to purchase goods under the recommendation of the host, reducing the time cost and energy cost of people’s offline shopping in the past, creating a very good environment for consumption, stimulating people’s purchasing desire, and even increasing the quantity of impulse consumption to a certain extent.

On March 26, 2020, Louis Vuitton, one of the luxury brand giants, launched a live broadcast on Xiaohongshu, which greatly attracted the attention of Chinese consumers. Louis Vuitton is the first luxury brand to broadcast live on Xiaohongshu. It is the first time that luxury brands use Xiaohongshu to broadcast live. Since then, more than 20 luxury brands have settled in Xiaohongshu to carry out a series of publicity activities, such as displaying new product pictures and sharing brand clothes. Louis Vuitton invited Chinese fashion blogger Cheng Xiaoyao and actor Zhong Chuxi to introduce the fashion items of the 2020 summer series in the live studio of Xiaohongshu, and also explained the source of inspiration for this summer’s new products. And Louis Vuitton received 15000 viewers in an hour of live broadcast on the Xiaohongshu. But it was this live broadcast that brought in a flood of bad reviews. All of them are accusing Louis Vuitton of being changed. As a result, the live video of Louis Vuitton in Xiaohongshu has been deleted by the whole network, and even the playback cannot be found. Why? What kind of goods are suitable for e-commerce live broadcasting to promote? Is it not appropriate to match Louis Vuitton brand culture and such e-commerce live broadcast?

Live broadcasting has become a cultural consensus of mainstream media. The core of its formation is certainly the interest and hobbies of members themselves, but emotional logic is the key to the condensation of the group. Some scholars point out that emotional logic is fundamental in Internet action, especially for interest groups. In 1954 Drucker pointed out that customers buy and consume not products but values. Zeithaml believes that customer perceived value is a comprehensive evaluation of products or services after customers weigh the benefits and costs when acquiring products or services. Sweeney and Soutar believed that customer perceived value of durable goods can be evaluated from four aspects : functional value ( price ), functional value ( quality ), emotional value and social value. It attempts to positively guide consumption through the establishment of perception and cognition of the brand, combined with media publicity and current affairs hot spots, and touch emotional resonance and emotional interaction.

1.3 Aim and Objectives:

The purpose of this paper is to explore the brand promotion of luxury goods based on the platform of Xiaohongshu. With the fashion and community of Xiaohongshu, we can lead luxury goods into the public. Through the unique marketing strategy of the platform, combined with the emotional needs of consumers, we can use effective ways to promote the brand. Taking Louis Vuitton’s first live broadcast in Xiaohongshu as an example, this paper explores the reasons for its failure, analyzes the coping strategies, and formulates a set of reasonable, effective and suitable marketing strategies for luxury goods, which must be different from ordinary live broadcast.

       

Chapter 2:  Literature Review

2.1 Background

In recent decades, companies and brands have realized the significance of developing and establishing an online presence. The ongoing, Covid-19 Pandemic has only served to exacerbate the move to digital marketing. Digital marketing has become a paramount for brands and companies and brands globally, enabling them to continue commercial activities as other routes to the market and the customer is cut off. The rise of internet technology has captured the attention of many luxury brands, marketers, and researchers allowing them to study market trends, forecast market demands, and meet a broad audience within a short period. Digital marketing involves adopting and utilizing emerging technologies to create, communicate, and deliver superior performance, consumer satisfaction, and create shareholder value. For luxury brands, it is imperative to integrate certain digital marketing technologies such as big data, the internet of things (IoT), and product design into their marketing strategies to establish their brand presence. Therefore, this paper will highlight digital marketing strategies based on the platform of Xiaohongshu.  

           With the growing importance of “direct to consumer” (D2C), luxury brands are embracing digital technologies in their marketing at a pace never seen before (Desai, 2019). Brands that were once averse to implementing any form of online marketing strategy now feel the need to establish themselves digitally, given the uncertain global economic landscape because of the ongoing coronavirus pandemic (Achille & Zipser, 2020; Balis, 2020). In today’s competitive business environment, the market for luxury brands is growing rapidly due to shifts in societal and cultural norms. Initially, luxury brands were dependent on traditional marketing strategies to target their high-value customers, but now they have been a shift in market dynamics, luxury brands are not targeting millennials and generation Z, who represent a huge proportion of the global market (Chaturvedi et al., 2020; Rodrigues & Rodrigues, 2019). Digital technologies have become fundamental elements of the luxury goods industry; the influence of social media and mobile technology impacts the e-commerce market and the offline market (Alalwan et al.,2017). Over the recent years, luxury brands have adopted new strategies of promoting their products and interacting with their customer base, resulting in revolutionary social media marketing strategies.2

2.2 Online (Internet) Branding

           The use of the internet and social media technologies has been engrained in every aspect of life. In addition, the rapid technological improvement in digitization poise businesses and brands to exploit this opportunity to reach a wide global audience conveniently and cost-effectively (Scholz & Smith, 2019). Consequently, brands are adopting new digital marketing technologies to create value for their customers and, at the same time, maximize their profitability. Among the emerging trends resulting from the rapid digitization, Online/internet branding is increasingly recognized as an essential marketing strategy for business survival in the present complex business environment (Dilham et al.,2018). Therefore, it is important to define some terms that are important in this context.

           Brand: It can be defined as an intangible business concept or idea that helps people identify a particular company or product. Creating a solid brand image is imperative for business growth and survival. Since it helps shape the people’s perceptions about the company, their products, or services. A brand image is critical for the survival and competitiveness of companies that deal with luxury products since many people want a brand that they can identify with (Bilgin, 2018; Coelho, 2018). Brands have a strong influence on customer purchasing behavior and engagement, and creating a solid brand presence is imperative for business survival.

           Branding: Refers to the process of developing a strong and positive customer perception about a company and its product and service offerings. Branding entails combining several elements such as product design, logo, mission statement, vision, and consistency to create a strong and positive impression in the mind of the customers. Effective branding is essential in helping a company differentia itself from its rivals and at the same time establish a strong and loyal customer base (Bilgin, 2018; Coelho, 2018). Creating a unique brand gives a company a competitive advantage and helps retain and attract new customers at a lower cost. This is evident in popular luxury brands that have established themselves, such as Apple, Hermes, and Louis Vuitton. It is imperative for established brands to consistently maintain their brand image through brand management.

Brand Management: Brand management is a marketing strategy that exploits new initiatives and techniques to increase the perception of a product or service over time. Effective brand management allows a company to achieve maximum profitability objectives and establish a strong and loyal customer base through a positive identity with a brand and strong brand awareness (van der Westhuizen, 2018). Moreover, effective brand management helps boost brand awareness, manage brand equity, support new brand products, and adequately position the brand in the market.

Internet branding: Also called online branding, is a function of brand management that exploits the internet, emerging digital technologies, and social media channels as a means of positioning the brand in the market. Branding has increasingly improved as a result of rapid digitization and advancements in internet technologies. As the race for digital marketing technologies takes shape, Online branding increasingly becomes important brand management and marketing strategy (Foroudi, 2019; Mabkhot et al.,2017). Brands are exploring new strategies and various internet platforms such as social media, search engines, online marketplace, live streaming platforms, and online broadcasts to establish a strong brand presence, build relationships with customers, and build brand awareness. The importance of internet branding is much more important in the current business environment, where a huge proportion of the world’s population uses the internet daily (Scholz & Smith, 2019; Jacobson, 2020). In fact, even well-established brands are investing considerable amounts of resources in creating a strong online presence and reputation. Evidently, online branding strategies have had a massive impact on business expansion. It is critical in the current environment where the internet and social media technologies are integral in customers’ everyday lives. 

           The internet provides several opportunities for companies to effectively establish their online presence and enhance their global reach (Obeidat, 2021; Christopher, 2021). For example, in the current business environment where physical interactions and engagement have been compromised due to the ongoing Pandemic, online branding and marketing are becoming increasingly important since product features and quality can only be communicated over the internet. Therefore, brands with an established online presence are at an advantage, especially during this current situation (Wang et al., 2020). Fundamentally, the internet aligns products and companies in several ways; barriers to entry are extremely low, negligible user switching costs, price is no longer a differentiating factor, and therefore the main determinant factor for purchase is the brand. Internet branding involves leveraging internet tools and digital technologies in a company’s marketing efforts. The primary objectives of online branding are to increase customer engagement with the brand and, in turn, increase the demand for the brand’s product and services.

           Even though the internet and emerging digital technologies present an opportunity for brands to position themselves in the market, several factors are critical for online branding success. Factors such as price, reputation, attribute level are imperative for online branding success. In addition, the quality of information sharing over the internet is another critical factor for online branding. 

2. 3 Factors Affecting Online Branding

i) Trust: Over the internet, consumers rely on the information provided on the company’s website or social media page to evaluate the quality and features of a product or service. Therefore, trust is imperative in purchasing products online and often influences purchasing behavior (Gianfredi et al., 2019; Atapattu & Kulathunga, 2018). The internet lacks certain elements that are associated with buying, such as feeling, touching, or smelling the product. Furthermore, physical engagement with the seller is none existent. Therefore, presenting the right information will have a great influence on whether a customer buys a product or not. Successful online branding requires brands to reduce ambiguity and enable customers to make purchases with lower levels of uncertainty, resulting in increased online trust (Tian et al., 2018). In the same context, the reputation of the company is similarly important in establishing online consumer trust. Fundamentally, brand trust is critically important for building strong customer loyalty towards the company and its product offerings. Low brand trust reduces the probability of purchases and, therefore, might jeopardize a brand’s profitability and survival. 

ii) Word of mouth: In online marketing and competition, word of mouth other than the product itself is the most important factor in building an online brand. The internet allows companies to communicate, open up, and involve consumers. In the present digital age, where most of the customer base is online, this provides a great opportunity for companies to know people’s perceptions towards the company, products, and even services (Chen & Yuan, 2020). Online communication with customers enables the company to increase brand awareness through engagement and interaction with the customers. Therefore, a brand must communicate based on a consumer perceptive. Word Mouth communication has a significant impact on brand trust on the internet. Since word-of-mouth spreads faster over the internet than in the offline environment, negative word-of-mouth communication can have a disastrous impact on the business since it will generate complaints and negative e-reviews (Hu et al., 2019). Such a scenario will damage the brand image and customer trust and make it difficult to manage, communicate and control the damage (Buttle & Groeger, 2017). However, the internet is an ideal place to make information about a product go viral and build a strong brand reputation.

iii). Technology and design: In the offline market environment, customer and brand relationships are forged through physical communication and face-to-face interactions. For online branding to be successful, brands must deliver the same offline elements and even much more by leveraging available technologies (Cheng et al.,2020). To achieve this effectively and to increase the time spent by customers on the brand’s online site, the design must be convenient to use, visually appealing, and easy to navigate through. It must present a holistic visual presentation to the customers to capture their attention. The company should present the brand and its products in such a way as to keep customers engaged and attached to the site (Alalwan et al., 2017; Molinillo et al., 2020). This, in turn, will establish a strong online brand and probably create strong brand loyalty. Given that “looking good” is often considered as “being better,” brands must make the website to be visually appealing as possible. However, the appeal should not override usability.

iv) Emotional connection: when brands connect with the customers’ emotions, the rewards are huge. This is because emotionally connected are more engaged with the brand, and therefore generate more leads and sales in the long run (Chand et al., 2021). In the present business environment, digital technology allows businesses to actively involve customers and directly share information. This ultimately creates an enhanced shopping experience that connects with the customer’s emotions. The internet provides an interactive quality that allows brands to establish an emotional connection between consumers and their products (Sheth & Kim, 2017). For example, fostering interactive online communities, personalizing a user’s internet experience, and allowing customers to co-create online content greatly facilitate customer engagement and loyalty. Effective leverage of digital technologies and tools can help brands connect with the consumer’s emotions and therefore can guarantee increased repeat visits and time spent on the website and increased future recommendations.

2.4 The role of social media In Online Branding

The relevance of social media and emerging digital technologies cannot be ignored in the current business environment. In particular, the internet has become an integral part and a common way of life in recent decades. The increasing popularity of social media channels has forced businesses to align their marketing strategies and business operations to exploit this new opportunity. At present, there are over three billion internet users and nearly two billion social media users globally (Ibrahim & Ganeshbabu, 2018; Tabellion & Esch, 2019). Therefore, nearly four out of five people of the entire global population interacted through the internet. Nearly half the social media users use the internet to search and view their favorite brands. Moreover, Millennials and Generation Z are prominent social media users, and often they can influence how businesses operate and advertise their products to capture this young market audience. 

           The success of social media as an essential digital marketing strategy is attributable to its highly interactive features that enable uses to share their daily experiences both in the social and business environment. In addition, digital technologies allow for the creation and sharing of User Generated Content (UGC) (Roma & Aloini, 2019; Koivisto & Mattila, 2020). Social media allows for sharing of written and visual media such as videos and photos. Users can interact with each other through likes, comments, and tags. Social media platforms are increasingly becoming important digital marketing and online branding tools that can reach a wide audience within a short time and conveniently (Appel et al., 2020). Popular platforms include Facebook, Twitter, Instagram, Linked In, Snapchat, Pinterest, Xiaohongshu, WeChat, and several others.

           With the emergence and rapid spread of the coronavirus pandemic, social media has emerged as an essential marketing tool. Social media marketing entails using social media and the internet as tools to connect and communicate with consumers. Social media has been described as the most important marketing mix element. Social media allows companies to communicate, inform, and persuade customers to purchase their products using a consumer-centric approach (Mason et al., 2021). Brands must engage with their customers on social media platforms and direct the flow of communication to generate maximum impact. Therefore, in the present business environment, brands are investing more in digital advertisement and marketing. It is estimated that over 80 percent of globally successful brands use some form of social media marketing to reach their customers. Therefore, such brands need to invest in SCM and create visually appealing content to increase brand visibility, improve brand image, and connect with their customers. The commonly used platforms for SCM are Facebook, Instagram, Twitter, and YouTube. However, it is crucial to select a digital platform that aligns with the brand’s spirit, goals, and mission. 

2.5 Marketing Luxury Products

           With consumers of luxury products spending most of their time on the internet using mobile devices, luxury brands are adapting to this thread to survive, thrive and establish their position in the digital market. Luxury brands must implement digital marketing strategies to utilize the opportunity created by the internet and digital technologies to reach a wide customer base. Luxury brands can employ various strategies in their digital marketing to facilitate customer engagement and, at the same time, increase the brand’s visibility. One of the most effective strategies that luxury brands can use to promote their products create an online brand presence is by leveraging the benefits of visual social networks (Klostermann et al., 2018): In recent decades, there has been a massive proliferation of social media sites that combines visual elements that have gained huge popularity and following. For example, TikTok, Instagram, Facebook, and YouTube have millions of users each day; this provides a viable opportunity for luxury brands to target and reach these audiences. 

           When marketing luxury goods and build an effective online brand, visual appeal is an important element to consider. It is crucial to incorporate visual elements that would capture consumers’ attention and invoke their interest in the product (Romão et al., 2019). Social media platforms that incorporate visual elements such as videos, stories, and photographs are gaining popularity. Publishing visual content on social media platforms is the most effecting way of boosting user engagement. In contrast to traditional texts, photos and videos significantly attracts views, likes, comments, and feedback. A captivating visual image or an interesting video will draw people’s attention as they scroll through their favorite social media posts and feeds. Sharing an image or video that is more appealing than a typical text and will attract more attention to the brand and its products. Therefore, visual contents need to be used strategically to impact and influence the audience. 

           As the consumption of short visual content and photographs increases, Luxury brands can leverage this trend to promote their products and build a strong emotional connection of the customer with the brand and its products. Therefore, brands should utilize social media visual platforms that combine style, user experience, and functionality (Romão et al., 2019). The platform should be easy to use and ensure that it increases customer value. For example, visual platforms such as Pinterest and Xiaohongshu provide a great opportunity for luxury brands to increase awareness and promote the product. Xiaohongshu, a live streaming platform, has proven to be quite effective in promoting luxury products due to its huge popularity among Millennials and Generation Z of the Chinese luxury market. One trend that has experienced massive development recently is live streaming or live broadcasting (Gilbert, 2019). This development has expanded to almost all business sectors with an online presence. In 2019, nearly 80 percent of all internet traffic was related to video streaming. Although it started as a niche platform, popular social media platforms such as YouTube, Facebook, Twitter, and Instagram have rapidly adopted live streaming. It allows brands to live stream live and share genuine, behind the scene experiences with their current and prospective customers (Lu et al., 2018). Live streaming provides a unique experience and opportunity for marketers since it is what the present what the present social media user prefers.

2.6 Live streaming for Online Branding

           As governments-imposed curfews and lockdowns to curb the spread of the novel coronavirus pneumonia outbreak, the impact of the Pandemic was felt by fashion and luxury brands worldwide. Store closures and cancellations of fashion events dramatically reduce the flow of customers and purchases. This led to the contraction of the global economy, which further impacted consumer purchasing power. Consequently, luxury brands adopt new strategies for interacting and engaging with their customers; many luxury brands have sought to establish and expand their online presence by incorporating digital technologies. Internet technology characterized by trans time and space transmission overcomes the time and geographic barrier caused by the Covid-19 Pandemic. 

           Live streaming or live transmissions is no longer a novelty but a fundamental necessity for the present-day competitive business environment. Live streaming and transmissions have increasingly increased the effectiveness of digital marketing through different social networks. Increasingly social media platforms are adapting to this new trend to increase interactions and engagement with their customers (Xie & Youn, 2020). More luxury brand marketers are implementing live streaming in their digital marketing strategies as they attempt to broadcast their products in real-time through shared user experience to create a sense of originality and closeness (Nguyen et al., 2021). Live streaming entails the live transmission of media such as text, videos, and pictures, recorded and simultaneously transmitted in real-time. It involves any type of media transmitted and played simultaneously without necessarily having to download it. Today, several social media channels media, video games, and television broadcasts can be streamed live. Digital technologies are increasingly adapting to this technology to enable brands to connect and interact with their customers. In addition, many luxury and fashion brands are increasingly using this platform to increase customer and create awareness about the brand, connect with the target audience, and measure the digital impact that a product can generate from the target audience.    

           In the recent decade, there has been increasing video content consumption; it is estimated that four in five people would rather watch a video than read a blog. As a result, several social media platforms such as Facebook, Instagram, TikTok, among several others, have live streaming features to increase user engagement. The increasing consumption of short video content has served as a foundation for luxury and fashion brands to incorporate live streaming in their digital marketing strategy (Chou, 2017). Live streaming has surpassed other digital marketing strategies due to the accessibility; Consumers can stream live media content regardless of their location in the world by only picking their mobile devices and explore the treasure of various luxury brands and appreciate the style of new fashion products. Live streaming provides an opportunity for consumers to get to know a brand better and trust them before making a purchase. Live streaming provides an opportunity for customers to learn about the brand characters and their environmental behaviors. A live streaming strategy is vital for building customer trust and relationships since companies can directly address customer concerns and issues (Wang & Lee, 2020). Another fundamental aspect of live streaming that makes it effective as a marketing tool is the incorporation of the e-commerce platform with the purchase interface. This increases it convenience and makes it easy for the users to make purchases thus saving time and energy in contrast to traditional offline shopping. Live streaming creates a unique shopping experience, stimulates buying impulse, and increases consumer value.

           Live streaming platforms provide a great opportunity for luxury brands to reach a huge audience; due to the increasing popularity of short video content, luxury brands can attract several people and make them aware of their products, products, and service offerings. Secondly, the increasing development of smartphone technologies and internet connections means more people can easily Livestream video content while commuting to work, during work breaks, or even while relaxing at home, thus increasing brand engagement and awareness. Live streaming also is a great opportunity for brands to interact with a wide audience regardless of the social niche or population dynamic. This is imperative for increasing product visibility and credibility, which allows the company to establish customer trust (Kim & Sullivan, 2019). In particular, real-time communication with customers and behind-the-scenes tours brings a closer connection with the brand and helps customers understand the brand better, and might further recommend the brand and its product offerings to friends and peers.    

2.7 Livestreaming and Selling Luxury Products Online in China

           It is evident that E-commerce in China is highly developed and successful and that the global COVID-19 Pandemic-associated lockdowns and restrictions further helped propel its growth. It is estimated that over 700 million of the total Chinese population shop online through various e-marketing platforms such as Alibaba and others. Moreover, China has the highest rate of e-commerce customers than any other country and has the highest e-commerce sale sales, three times higher than the United States. In China, live streaming e-commerce is rapidly growing and becoming more popular. Sales from live streams have grown considerably over the years. While millennials and Generation Z have driven this, middle-aged and older adults in China are joining this trend. 

           For e-commerce live streaming, a typical session has four fundamental components: A video stream, where a host display and share information about a product, and then answer questions from the audience. The second component is the list of products being promoted, giving a detailed description of the products and their usage. The third component is the chat area, allowing users to type questions, comment, and engage with the host and other users. And the fourth component is a reaction button, where users can send their feedback, displayed as animated emojis. Livestreaming has grown dramatically in China (Chen, 2021). This has been propelled by the huge population and consumption of short media content. This is because live streaming creates an enjoyable shopping experience, reliability and enables merchants to sell from multiple locations. Users get to enjoy a unique shopping experience since Livestream sessions show them how the products look, how they are made, and how to use them. 

           Livestream sessions also foster customer interaction and engagement by being highly social and interactive; they display product details up close, helping customers become aware of the product. In addition, live stream session provides opportunities for customers to have their questions answered, which provides an opportunity for customers to learn about a product. Although users cannot ask the host questions directly, they can type messages, which end up in the chat history where everyone in the live session can see and react. An example of a Livestream platform and a credible e-commerce platform is Xiaohongshu.

           Xiaohongshu has established itself as a successful e-commerce live streaming platform. Founded by Mao Wenchao and Qu Fang in 2013, Xiaohongshu is one of the fastest-growing video streaming platforms with over 300 million subscribers as of 2019. Millennials and Generation Z represent a bigger percentage of their active users. The platform allows the users to share and live stream short videos and photos on beauty, fashion, travel, food, and other daily life experiences (Jin & Yu, 2021). As one of China’s most popular live-streaming platforms, Xiaohongshu provides a great opportunity for international luxury brands to penetrate the massive Chinese market. The platform is special for marketers due to several reasons.

I). Young, high-purchasing power demographic

           Currently, the Xiaohongshu platform has over 300 million active users, representing millennials and generation Z who have a high taste for luxury and uses popular brands as a form of self-expression and identity. According to statistics from research, over fifty percent of the users are below 30 years, and a significant proportion is females (almost 80%). This is essential for marketers since females are the biggest consumers of luxury, beauty, and fashion products. In addition, young millennial females as the main active user group (Zhao et al., 2020). Xiaohongshu provides an effective and efficient platform for marketers to sell and advertise beauty products, cosmetics, skincare, and other fashion products. In addition, owing to its popularity among China’s millennials and Generation Z, the e-commerce platform is a digital marketing strategy platform for luxury brands that intends to target and reach a young and urban market demographic. 

II). Thriving Online Community

           The e-commerce platform has succeeded in creating and establishing an interactive online community. The platform allows its users to share and engage with others through informative content and media about products, reviews, beauty, and skincare tips. In addition to making and sharing their media content, users can interact and engage with each other through likes, comments, and even following and subscribing to their favorite brands (Song & Lu, 2021). Another important feature is that the platform allows users to share content externally through other platforms such as WeChat and Weibo. To maintain its consistency, the platform places great emphasis on authenticity, does not allow self-advertising, and strictly prohibits abusive content. Enforcing these policies helps to build trust and credibility among users. In addition to commenting and sharing posts, the platform uses advanced algorithms to create a “customized homepage based” on user popular search and browsing histories.  

III). Extensive word-of-mouth marketing

           Traffic generated by the platform and several active, high-profile users has further helped promote and create brand awareness. Key-Opinion Leaders (KOLs) share and post useful product tips and media content on fashion, beauty, shopping experiences, and lifestyle and create interactive information sharing. Brands often work with The KOLS often to introduce and promote their products to new audiences, thus increasing awareness, engagement with the brand and even purchases (Zhao et al.,2020). A single online exposure by A KOL can significantly create product awareness since several followers can view the details of a product, and the brand can gather feedback and future market demands (Zou & Peng, 2019; Jin & Hu, 2021). And suppose users find the product to be convenient and attractive. In that case, they can also share it among their cycles which might make it go “viral,” thus significantly raising brand awareness and help generate leads for the community and its products. 

IV). Direct link to an E-commerce market

           Xiaohongshu launched an E-commerce store, “RED store,” which enables users to directly buy goods from traders after reviewing recommendations and product details to further establish its success. The store provides credible product details and information, and therefore uses do not need to worry about product authenticity. In addition, the store directly connects customers with merchants and therefore helps to save time and cut on middleman costs. Moreover, companies and brands can create official accounts or digital stores to advertise, store and even sell their products by interacting with consumers. This is an effective strategy to maximize brand awareness and profitability. The platform further helps brands to grow by providing logistics, customer services, and advertisement support.   

2.8 Analysis of the Chinese Market for Foreign Luxury Brands

           It is estimated that by the year 2025, China will account for nearly 41 percent of the global consumption of luxury products. Presently, the Chinese global market is vital for many foreign luxury brands. The Chinese luxury market continues to grow, providing a great marketing opportunity for brands to penetrate this massive market. Moreover, recent events such as the Coronavirus pandemic and rapid technological improvement in digitization shift have led to a further shift to online marketing. The expansion in luxury demands started in the 1990s, and the number of consumers of luxury products continues to grow. In addition, it is projected that the Chinese market for luxury products will continue to expand as a consequent of the “tsunami of the new middle class” and globalization. 

           Since the 1990s, foreign luxury brands became aware of the huge prospect of the Chinese luxury market. Several foreign brands opened stores in China in the 1990s, such as Hermes in 1997 and Chanel in 1999. However, luxury demands by the new economic and middle-class elites were fulfilled by traveling to western countries to make purchases. Presently, there are many luxury stores and shops in China that bear close resembles the original brands. In the current Chinese luxury market, millennials and Generation Z are the main consumers. Approximately 43% of the consumers of luxury products were born in the 1980s and 1990s. This generation uses social media daily, and they are major consumers of short media content. In addition, these generations are accustomed to seeking products online and also visiting bring and mortar stores to buy luxury products (Yang et al., 2020). This trend is described as ROPO “Research online, purchase offline. Millennials and Generation Z often force luxury brands to shift and adapt their marketing strategies to accommodate their demands due to their relevance in the global luxury market.

           The Chinese luxury market has significantly grown over the years and is set to surpass the United States luxury market by 2025. The most popular luxury products in the Chinese market are “ready-to-wear” products, jewelry, and handbags. The top ten luxury brands trading in China are Chanel, Dior, and Hermès are the top 3, and the rest include; “Louis Vuitton, Burberry, Versace, Giorgio Armani, Prada, Gucci, and Montblanc.” These brands are popular and have a strong brand reputation among millennials and Generation Z (Li et al., 2021). The Solid reputation of a foreign luxury brand invigorates strong interest and desire among Chinese consumers. Brands with a strong brand image, for example, due to their long history or associations with a celebrity, become more popular among young Chinese consumers. Since wearing such brands in China elevates one’s social status. 

2.9 Recent shifts in the Chinese Luxury Market

i. Digitization

           Technological improvement and rapid digitization are the cornerstones of every luxury brand in the Chinese market. Many luxury brands consistently increase their digital market to cater to the growing need to reach a wide digital audience. Since Chinese Millennials and Generation Z are the primary consumers of luxury products, they consistently use mobile devices and the internet to influence how luxury brands interact with them (Yang et al., 2020). Now luxury brands are working with influencers advertise and promote their products. 

ii. Counterfeits challenge.

           Nearly 80% of counterfeit products in the global luxury market can be traced back to China.   For instance, the luxury industry loses sixty billion euros every year due to counterfeits. The effect is not only financial but the brand image is destroyed as well. Also, it diminishes trust and brand credibility, which further impacts purchases. Counterfeits also force brands such as Louis Vuitton to invest huge sums of money in tackling counterfeits and protecting their brand image. 

iii. COVID-Pandemic.

The global coronavirus pandemic impacted the demand and supply of luxury products. The Pandemic affected supply since many factories in western countries was shut down. Secondly, luxury stores and shops were shut down due to imposed quarantines and lockdowns, and customers could not make luxury purchases. However, as the Pandemic continues to wane globally, purchasing luxury products continues to pick in the Chinese market.

9.0. Future Outlook

Over the past decades, traditional marketing has drastically changed as brands transform into a more convenient and effective digital marketing strategy. Digital transformations have sent ripples across the global business environment. New digital marketing techniques have dominated the brand’s operations and social media marketing campaigns from the shift in target, focus, and strategy. In particular, the fashion industry has had to change and adapt to changing customer demands and preferences to create value for the customers and keep them engaged in the process. Social media and emerging digital technologies create a great opportunity for brands and marketers to meet the new customer and market demands.  

           As we progress further, we will experience an increasing adoption of innovative technologies that transform how brands, marketers, and consumers interact to create value and achieve their objectives. For example, brands and marketing platforms adopt technologies such as artificial intelligence to analyze customer demands and search patterns and leverage information from search history and social media platforms to help brands understand customer behavior and market demands (Sterne, 2017). Chatbots will also continue to be an important part of online branding where brands can communicate directly with consumers through instant messaging in real-time regardless of the time or location (Arsenijevic & Jovi, 2019). Lastly, personalization and product customization will continue to expand. The modern customer demands an emotional connection with the product and brands. Brands that can meet this demand will continue to stand and occupy a central portion of the market. Therefore, brands must constantly strive to produce content and marketing that creates value for the customer through personalized media content, products, and services. 

Chapter 3: Research methodology Plan

It is necessary to consult the website and literature, collect and collate relevant data, set up a questionnaire to collect data, if necessary, compares and analyzes the e-commerce communication of luxury goods under the guidance of emotion, and summarizes a good and healthy operation mode, especially the law of flow realization, that is, people’s willingness to consume luxury goods. It needs to be noted that how to lead the establishment of correct values, spread the concept of luxury, but not just advertising, and even have false evaluation, protect the brand reputation, obtain real feedback emotional appeal, and take corresponding measures to protect the real information and emotional value perceived by users are the problems to be solved. According to the data, the proportion of social e-commerce users under the age of 24 in China is the highest, reaching 34.31 %, followed by users aged 25–30, accounting for 26.53 %, while users over the age of 30 use social e-commerce for shopping, indicating that most of the social e-commerce users in China are concentrated among young people. More than half of Xiaohong ‘s hundreds of millions of hot people consume makeup, so live bloggers interact with fans mainly by teaching makeup knowledge, a platform that focuses on young women between 18 and 30. So in the conduct of the survey, interviews will be 18-30 years old women as the main target group.

3.1 Research Design

For this study, the used research design is descripto-explanatory. Descriptive research design intends to point at a state of the reality at a specific time. Such a research design enables us to understand how digital marketing and social media influence the relationship and consumer attitude towards the brand. According to Jann and Hinz (2016), descriptive research design “does not challenge causality and necessitates a common source of data”. The descriptive part of the research is present in the literature review.

3.2 Data collection Method and Types of Data

In this study data was collected and analyzed through various secondary sources including articles, reports, journals, research papers and case studies of major luxury and fashion brands. Quantitative data is important in this study, to determine the relationship between digital marketing and consumer brand engagement and attitudes towards the product. According to the data collected, there is big luxury brand in the Chinese market; many Chinese consumers are willing to purchase luxury since it boosts their social status. Furthermore, according sources Millennials and Generation Z are the prominent users of social media platforms and digital technologies and therefore provide a great opportunity for luxury brands that intends to target a young generation. According to the data, the proportion of social e-commerce users under the age of 24 in China is the highest, reaching 34.31 %, followed by users aged 25–30, accounting for 26.53 %, while users over the age of 30 use social e-commerce for shopping, indicating that most of the social e-commerce users in China are concentrated among young people. More than half of Xiaohong ‘s hundreds of millions of hot people consume makeup, so live bloggers interact with fans mainly by teaching makeup knowledge, a platform that focuses on young women between 18 and 30. So in the conduct of the survey, interviews will be 18-30 years old women as the main target group.

Chapter 4: Data Analysis

The past few years have seen China luxury market grow exponentially. According to Bain and Co., the Chinese luxury market registered a 20 percent growth from 2017 to 2018 to reach $ 295 billion which accounts for one-third of the global market (Lannes, 2020). furthermore, in addition, mainland China’s luxury goods market, recorded a 48 percent growth in 2020 reaching nearly RMB 346 billion (Lannes & Zhang, 2020). This growth was prompted by a decrease in global travel in the wake of the early Covid-19 lockdowns prompted Chinese consumers to turn to national sources for their luxury purchases, sending the domestic market climbing. This increase helped to double China’s overall share of the global luxury market in 2020, to 20%, but the growth in mainland China could not compensate for the consumption of Chinese products lost overseas (Hoque et al., 2020). A major challenge for most foreign brands is the oversaturation of the Chinese market with luxury brands, and therefore only a few brands can perform better, with several failing to make a major impact.

One strategy employed by luxury brands is by integrating digital marketing in their marketing mix. For example, by using social media platforms such as Instagram and Facebook, brands can effectively interact and engage with their customers in real-time. For example, the Chinese live-streaming platform Xiaohongshu has established itself as a successful e-commerce community platform. As one of China’s most popular live-streaming platforms, Xiaohongshu provides a great opportunity for international luxury brands to penetrate the massive Chinese market. The platform is special for marketers due to several reasons.

Louis Vuitton is one luxury brand that has penetrated and gained massive success and popularity in the Chinese market (Cui, Wajda, & Walsh, 2015). According to Gartner L2 Luxury China Index, Louis Vuitton is currently the leading luxury brand in mainland China with massive popularity and brand recognition especially among millennials and generation Z who account for almost 28 percent of the Chinese market. In the past few years, the French luxury house has unregistered “unheard-of growth rates” in mainland Which leaves many luxury brands both domestic and international to try and emulate them on how to succeed in this dynamic market where so many have failed and where and how they can improve in future. To achieve its massive success in the Chinese market, Louis Vuitton has employed the following strategies.

1. A strong focus on young consumers

In its marketing strategy, the luxury brand began reaching out to Generation Z to millennials which turned out to be a brilliant and effective money-making strategy. Presently, the Chinese luxury market is composed mainly of millennials and generation Z who have a high taste for luxury and use popular brands as a form of self-expression and identity. According to available data, over 30 percent of luxury consumers are below 30 years and below which provides a suitable opportunity for luxury brands to target this growing population. Moreover, young consumers are the biggest users of social media channels which creates an ideal opportunity for brands to advertise their products while building a strong brand reputation. Compared to the past, they have been a shift in how luxury brands market themselves, such brands primarily focused on the wealthiest, but with digitization, luxury has become less hostile and more inclusive to all consumers (Christodoulides et al., 2021). Louis Vuitton utilizes an effective strategy based on collaboration and partnership to create an all-inclusive environment. For example, by partnering with young influencers and establishing an online presence, the brand connects and accommodates the emotional needs of younger consumers thus attracting a huge following. Louis Vuitton has succeeded in creating a strong digital presence, for example by exploiting social media channels such as Instagram and Twitter with more than 50 million compared followers, the brand is leading the social media revolution worldwide. While some luxury brands have failed to achieve a breakthrough in the digital revolution, Louis Vuitton has consistently set the pace for social media engagement- an imperative for luxury brands in the current economy. To the Chinese market, Louis Vuitton attracted millennials and generation Z by collaborations with other streetwear such as “extreme” and by levering the power of Key-Opinion Leaders (KOLs). For example, the brand collaborated with the TV celebrity Kris Wu, as their brand ambassador in China which set fans and haters equally in a frenzy while enhancing social media conversation about the brand.

In China, the brand partnered with the live streaming platform Xiaohongshu. Recently, live streaming has registered massive growth in China providing an ideal opportunity for luxury brands for consumer engagement (Chen, 2021). Livestreaming is highly social and interactive thus facilitating customer interaction and engagement. For example, to promote its 2020 summer collection in mainland China, the brand worked used live streaming services provided by the social commerce platform—Xiaohongshu, the streaming attracted over 15000 users with over 6.25 million comments and likes (Zhang, 2020). Working with Xiaohongshu is an effective marketing strategy since the platform is the fastest-growing marketing platform in China with more than 300 million users as o 2020. In addition, young consumers comprise the biggest proportion of active users which allows them to share and live stream short videos and photos on beauty, fashion, travel, food, and other daily life experiences (Jin & Yu, 2021). This interaction allows for greater customer engagement with the brand.

Working with Xiaohongshu also allows the brand to leverage the power of KOLs who have a huge following especially with young consumers. Traffic generated by the platform creates and promotes brand awareness. KOLs share and post useful information about the product which helps to enhance customer engagement with the brand (Zhao et al.,2020). For example, by partnering with a single KLO, the brand can reach several users at the same time, introduce the product, and get immediate feedback from the audience (Zou & Peng, 2019; Jin & Hu, 2021). For example, following the Covid-19 pandemic, several Luxury brands engaged in a live streaming war in China to fight for the attention of online shoppers and establish a strong online presence in the massive Chinese marketing. For example, Louis Vuitton made its debut on China’s popular social commerce platform Xiaohongshu and become the first luxury fashion brand to work with the live streaming platform to create interactive original content in mainland China. To further boost its online presence, brand awareness, and sales, the brand collaborated with social media influencers Yvonne Ching and Zhong Chuxi both of whom have a huge following on the Xiaohongshu platform. Louis Vuitton engaged with the two influencers to highlight their summer 2020 collection in the brand’s flagship in Shanghai’s Plaza 66.

During the streaming, viewers were able to purchase promoted products, such as a parka with a printed monogram and a new colorway of the Onthego tote bag, in real-time by clicking through links to the official website. The one-hour-long Livestream hosted by fashion blogger Yvonne Ching while wearing the newest Louis Vuitton summer collection was split into different sections; consisting of demonstration of the influencer’s outfit, followed by an interview session with guest celebrity (Zhong Chuxi), who answered questions from viewers about various topics on the brand and its products. Throughout, the Livestream, the fashion bloggers, reminded users where they could purchase new Louis Vuitton products easily via the Xiaohongshu purchase site.

The LV-Xiaohongshu 2020 summer collection Livestream generated positive engagement with the viewers, attracting more than 150, 000 views and millions of comments and feedback from sales associates encouraging viewers to contact and visit them and purchase products from their offline stores. Livestreaming has become and fundamental marketing mix, and will only become more profound for consumers. However, it has both positive and negative aspects since it can draw enhance consumer engagement and risks generating and exposing unforeseen problems. Yet Louis Vuitton’s debut had massive success. The hosts engaged with viewers naturally and established an informative environment for the user. While many luxury brands are still experimenting with the live streaming idea to engage with consumers and promote the brand image, the daring approach by Louis Vuitton proved to be an effective marketing strategy. However, despite the success, the live stream attracted some negative criticism with some views complaining that the setting was not good enough for a luxury brand like Louis Vuitton (Jiang, 2021).

2. Embracing digital innovation

Despite, the current trend in digital innovation, most luxury brands are still lagging and have not integrated a consistent digital marketing strategy. Research has shown that, in recent years, especially in the wake of lockdowns associated with the covid-19 pandemic, more than 90 percent of customer engagement with a luxury brand occurs via social media, and more than 40 percent of luxury products purchases are influenced significantly by content posted on social media (Yu, 2020). This has prompted leading luxury brands, such as Louis Vuitton to engage with social media platforms to create a personalized digital experience or maintain a digital presence that can generate traffic and sales. For example, to boost its presence and sales in Chinese marketing, Louis Vuitton debuted its 2020 summer collection in the Xiaohongshu live streaming platform and recently created a WeChat Mini Program “specifically for the launch of their Virgil Abloh-designed sneakers” (Zheng and Pan, 2020). The WeChat mini-program included all relevant product details and other products to match the designer sneakers such as hoodies and handbags. Through the program, consumers can directly place orders and communicate with Louis Vuitton customer service and contain the physical location of places where customers can get the products (Zheng and Pan, 2020).

Louis Vuitton’s 2020 summer Livestream debut on the Little Red Book is further proof of the brand’s strategy to invest deeply in digital innovation while also creating a new shopping experience based on interaction and engagement to meet the emerging trend. Little Red Book creates an interactive community where users candidly share products tips, shopping tips, products prices, and fashion styles. During the hour-long live stream session, consumers interactively acquired a wealth of information about Louis Vuitton products and fashion styles, which put them in a better position to purchase such items in the future (Zheng, 2020). The little red book has succeeded in creating and establishing an interactive online community that allows its users to share and engage with others through informative content and media about products, reviews, beauty, and skincare tips. In addition to making and sharing their media content, users can interact and engage with each other through likes, comments, and even following and subscribing to their favorite brands (Song & Lu, 2021).

Following the Covid19 pandemic, the Chinese luxury market has emerged as an important market for luxury brands. This trend is expected to grow as we continue forward with China set to become the biggest market for luxury products by 2025. Based on this context, Louis Vuitton working with Chinese digital platforms such as Xiaohongshu and WeChat brings all the advantages of linking up with established local e-commerce players to generate traffic and at the same time increase customer engagement.

Chapter 5: Discussion

In the last few decades, there have been a rapid transition towards digital marketing the emergence and rapid spread of the Covid-19 pandemic served as a major impetus for luxury brands to establish an online presence in the wake of government-imposed lockdowns and curfews. Many brands shifted to online marketing, and many have realized the significance of establishing a solid digital brand. Digital marketing become a vital necessity during the hard economic times for brands to continue with commercial activities as physical stores were forced to shut down. For luxury brands in particular, the internet and social media technology have become an essential platform giving luxury brand marketers and market analysts to analyze market trends and customer behavior to tailor their products and services to meet they primary objectivities of customer satisfaction and profit maximization.

To establish a strong brand presence, many luxury brands with Louis Vuitton as a pioneer in the digital revolution are adopting emerging technologies to enhance customer engagement with the brand and at the same time achieve superior performance. In dead brands that have adopted such technologies have a greater competitive advantage and can ensure increased customer experience. Establishing an online presence have proven to be highly beneficial to the growth and financial performance of a brand, given the fact that a huge percentage of the luxury consumer users social media. Consequently, brands that were once reluctant to implement and form of digital marketing strategy, have been forced by unforeseen circumstances to establish an online presence (Desai, 2019; Achille & Zipser, 2020; Balis, 2020). In the current era, the market for luxury products have experienced a great shift; initially luxury brands targeted the wealthiest and the most privileged members of the society. Such brands relied mainly of traditional marketing strategies to target their high-value customers. With digitization and globalization, young adults below the age of 30 have become the largest consumers of luxury products. The shift in market dynamics, have prompted luxury brands to focus their attention on millennials and generation Z, who represent a huge proportion of the global luxury market (Chaturvedi et al., 2020; Rodrigues & Rodrigues, 2019).

In the wake of the covid-19 pandemic, the importance of having an online presence was greatly magnified, as most consumers relied on the internet to review products and make purchases. For luxury products, it was observed that, almost 90 percent of customer engagement with the brand and its products occurred mainly via the internet and that nearly 40 percent of luxury product purchases were influenced to some degree by digital content. As a result, digital marketing has become a fundamental component of the luxury good industry, and its impact can be felt equally both in the digital marketplace and offline market (Alalwan et al.,2017). Luxury brands are in the race to implement digital marketing strategies to leverage this emerging opportunity to increase customer interaction and engagement.

The increasing popularity of digital marketing especially for luxury products is a direct attribute of the huge number of social media users. Currently, it is estimated that there are more than three billion internet users and nearly two billion social media users worldwide (Ibrahim & Ganeshbabu, 2018; Tabellion & Esch, 2019). These creates a huge opportunity for luxury brands to reach and interact with a wide customer base effectively and in real time. In addition, studies have shown that almost half of all social media users use social media to interact and search their favorite brands. In recent years, Millennials and Generation Z have emerged as prominent consumers of luxury products, and therefore luxury products have directed their efforts at accommodating the needs of this consumers since their account for almost 21 percent of the global luxury market. In addition, millennials and Generation Z are prominent users of social media and therefore having a digital presence is imperative for business growth and survival in this era.

Drivers of digital marketing

The rapid incorporation of social media in everyday life and as a crucial marketing strategy is attributable to its highly interactive nature that allows users to share their daily experiences and effective interact with virtual communities regardless of the location. Social media eliminates the time and geographical barrier of communication thus creating a virtual community bound by shared values and interests. For example, most social media users engage with other to search and acquire information about various products and services. Furthermore, digital technologies allow users to generate and share User Generated Content (UGC) (Roma & Aloini, 2019; Koivisto & Mattila, 2020) thus increasing their interaction and participation. For example, the social media platform—Xiaohongshu—has become the fastest growing social media site in China due to its highly interactive content, allowing luxury products consumers to share product reviews, fashion experiences, and beauty tips with their peers. The platform also allows users to interact with other through likes and comments. By using such a platform, luxury brands can effectively communicate with their customers and persuade them to purchase their products.

One emerging digital technology that has captured the attention of both marketers and consumers is live streaming. Live streaming has become a fundamental competitive strategy by luxury brands to interact and engage with their customers (Xie & Youn, 2020). More luxury brands are levering this opportunity to highlight their products and encourage users to active participants through creation of user generated content. By encouraging participation, luxury brands can foster a strong emotional connection with their customer thus creating a sense of belonging which translates to increased customer loyalty (Nguyen et al., 2021). For example, to booster is online presence and brand reputation in China, the luxury giant Louis Vuitton was the first luxury brand to use the little red book platform to livestream its 2020 summer collection. Louis Vuitton debuted in the social media platform Xiaohongshu to showcase its new products and therefore increasing product awareness to the massive Chinese market (Chen, 2021).

The platform is considered as an interactive community due to its high interactive nature, allowing users to interact with other and their favorite brands. For example, during the Louis Vuitton one-hour livestream, the streaming generated positive customer engagement, attracting more than 15 000 viewers and millions of comments and likes (Zhang, 2020). This is an effective strategy for the luxury giant, since the debut generated social media conversation about the brand in other social media channels as well such as WeChat and Weibo thus helping to create product awareness though increased consumer interaction and engagement.

Using the livestreaming platform also enable the brand to partner with social media influencers. Of late most marketers have realized the importance of social media influencers and the impact they have on young consumers purchasing behavior. For example, several studies have shown how celebrities influence fashion trends and purchasing behaviors of millennials and generation Z who often look up to them as their role models and a sense of identity. The Xiaohongshu platform, just like other fast-rising interactive channels have realized the importance of influencers as a marketing strategy and often engage with key opinion leaders (KOLs) to attracts customer participation and engagement. Often KOLs have a massive following among millennials and Gen Z have a huge impact in evoking their reaction. Luxury brands partner with KOLs to provide relevant information about the product, the brand, and fashion styles which help to increase the overall customer experience (Zhao et al.,2020). KOLs attract a huge audience and can help the brand receive immediate feedback (Zou & Peng, 2019; Jin & Hu, 2021). For instance, in its debut livestream with Xiaohongshu, Louis Vuitton worked with the fashion blogger Yvonne Ching and guest celebrity Zhong Chuxi, and enabled consumers to get a peak of the new product offerings. During the streaming, the host and guest interacted with consumers and informed viewers where to purchase the promoted products. The live streaming attracted several viewers and positive feedback which highlights the power of live streaming and KOLs in enhancing consumer engagement.

Due to the increasing popularity and consumption of short video content, live streaming has become an important marketing strategy for luxury brands. Through short videos, photos, and interactive content sharing, luxury brands can attract several people and inform them of their products and service offerings. For example, Louis Vuitton, has demonstrated the effectiveness of these strategy by establishing a strong online presence and working with social media influencers and celebrities such as Selena Gomez and others who have a huge following among millennials and Generation Z. live streaming is particularly effective since users can live stream video content at any place and time due accessibility of smartphones and internet connection. Live streaming enables the brand to increase product and brand visibility which is imperative for establishing customer trust and engagement (Kim & Sullivan, 2019). Live streaming allows the host engaged with the brand to communicate in real-time with consumers, inform them and answer their questions about the products. In addition, the live streaming platform enables consumers to get a behind the scene tour of the product and the brand which help to create a stronger connection with the customer. Increased emotional connection translates to overall customer loyalty which is imperative for long term survival and a competitiveness of the brand.

Louis Vuitton And the Chinese Luxury Markets

In the last few years, the Chinese consumption for luxury products has grown significantly and by 2018, the Chinese luxury market accounted for one-third of the global market to reach surpass $ 295 billion (Lannes, 2020). In addition, recent trends have seen millennials and generation Z increase their consumption of luxury products due to the associated sense of identity and social status. Therefore, many luxury brands are exploiting this opportunity by employing various marketing and promotional strategies to penetrate this massive market. For example, Lannes and Zhang. (2020) reports that the Chinese luxury market reached RMB 346 billion in 2020, during the wake of the Covid -19 pandemic as global travel and physical shopping come to a halt (Hoque et al., 2020). Seval luxury brands are engaging in a stiff online competition to establish a presence in the Chinese marketing. However, the success in this market is often impeded by the saturation with both domestic and luxury brands.

For most luxury brands, penetrating and establishing a strong position in the massive Chinese luxury market is highly beneficial. This is because, it is estimated that by the year 2025, the Chinese consumption of luxury products will account for nearly 41 percent of the total global consumption for luxury, making it the worlds largest. Currently, several brands are on a race to establish themselves and create awareness by using various means strategies to build a brand presence such as engaging with local celebrities and influencers, product promotion and aggressive social media marketing (Xu et al., 2021). At the present, several luxury brands even domestic brands have a difficult task to establish themselves. For example, the Chinese market is saturated with luxury brands with strong brand names and reputation (Hoque et al., 2020). Louis Vuitton has set the pace, and many brands are trying to emulate them to achieve success in the Chinese market. therefore, it is imperative to analyze how Louis Vuitton achieved success and established itself as the leading luxury brand in the Chinese market.

It is public knowledge that mainland China is increasingly becoming a lucrative market for international brand. With consumption of luxury items such as “ready-to-wear” products, designer products, jewelry, and handbags having the highest demand especially among millennials and Generation Z (Yu, 2020). The French luxury brand, Louis Vuitton was the first to enter the market, and today is success is used as lesson for most marketers and scholas for luxury brand marketing. Louis Vuitton entered the Chinese market in the early 1990s and since then it became a sought-after luxury brand. In part the success is contributed to the timing of entry. Louis Vuitton entered the Chinese market at a time China was poised to become the world’s largest economy, which meant there was a new class of high- and middle-class individuals yearning to endorse their newly acquired social status by spending on foreign trips and purchasing luxury products (Liu & Zámborský, 2018). For most, the best way purchasing well-appraised western brands such as louis Vuitton and others. Louis Vuitton seized the right moment to enter the Chinese market and established itself in an environment where even local luxury brands have a tough breaking through.

The success of louis Vuitton in China can be attributed to several factors; one of the most important is reputation. Presently, Louis Vuitton is rated among the most valuable luxury brands in the world. The brand has a strong legacy, and even before entering the Chinese market, Louis Vuitton had already established itself as an iconic brand with a rich history. Die to its rich reputation, Louis Vuitton did not have to invest in innovative and new products but rather use its influence to attract new customers. In fact, the brand’s main product has remained consistent through the years, forging a long history that most of the high-value customers what to associate with. As a result, louis Vuitton become a hit in China and has the largest luxury market share.

Another reason Louis Vuitton has succeeded and popular in the Chinese market is its search engine optimization (SEO) strategy. SEO is particularly important in an era where online shopping has become a daily norm. currently, consumers have shifted to the digital market and businesses including luxury brands have realized that they must adapt to this trend or fall into obscurity. In particular, the current generation of luxury consumers including millennials and generation Z who shape the future markets cannot imagine a world without the internet and social media. SEO provides an important opportunity for brands to target this young consumers and Louis Vuitton is at the forefront (Van & Schuling, 2018). Louis Vuitton uses search engine marketing to appeal to the Chinese consumers. To achieve this, the brand has focused on integrating the brand and making it more Chinese, even taking a Chinese name and establishing a Chinese website. For example, the Louis Vuitton official website has clear direction to the Chinese website. The website has been optimized to operate and display more visual content through local search engines such as Baidu (Kornienko, 2018). Consumers can easily search and purchase Louis Vuitton products in a language they can understand and make recommendations. Furthermore, the brand went ahead and established presence in local social media channels such as Weibo which generates conversation about its products and brand awareness. It is also important to note that the brand launched a Chinese e-commerce website to cater for the demands of modern Chinese luxury items consumers.

Another strategy that Louis Vuitton used is connecting emotionally with the Chinese consumers. In sense, based on the Maslow’s hierarchy of needs, people do not really need luxury products, but rather it the emotional satisfaction and sense of identity associated with luxury items that drives purchases. Luxury products often evoke strong emotions, this is what Louis Vuitton based in entry on by relying on its long history and iconic brand reputation. For example, to celebrate its 20th anniversary in the Chinese market, the brand partnered with a Chinese National Museum to display and exhibition titled “voyages”. The main purpose of the exhibition was show people the long heritage of the brand and how the brand has evolved over the years to cater for the growing needs of the consumers (Kornienko, 2018).

Xiaohongshu Marketing mode

           Xiaohongshu, also known as the “Little Red Book,” is equivalent to the western Instagram. It is the best e-commerce platform to get product descriptions, read product reviews, share informative content, learn about fashion/beauty trends, and discover high-quality fashion brands. It provides an important opportunity for business to market their brands since user reviews could directly impact purchases and sales. The platform primarily focuses on premium position brands, and popular overseas brand’s content usually attracts strong user engagement. Xiaohongshu plays an important role in consumer purchasing; it creates awareness and fosters product interest and desire by pushing relevant media content based on user’s search and browsing history (Ren & Liu., 2021). Xiaohongshu makes use of the 4R theory, the closed-loop model, and social media influencers to increase consumer interaction and engagement with a brand. 

Analysis of the Marketing Mode of Xiaohongshu Based On 4r Theory

4R, which stands for Relevance, Relationship, Reward, and Reaction, is a new marketing theory propose by American scholar Don Schultz (Schultz et al., 2007). The theory emphasizes the importance of establishing a new type o active relationship between brands and customers as new trends shape market developments (Cheng, 2021). For example, as market trends are shifting towards digitization, brands and businesses should attempt to forge relationships with their customers more effectively, unlike traditional ones. Xiaohongshu applies the 4R theory to consistently maintain active engagement with consumers of luxury products in the Chinese market, thus providing a great opportunity for foreign luxury brands to reach this audience.    

a). Relevancy

In an ever-changing digital market, relevancy is the key to attracting new customers, retaining existing ones, establishing customer loyalty, and building a sustainable market through an effective relationship with customers (Chandy, 2021). Therefore, the brand and customers are linked together through a relationship characterized by support and mutual respect, which increases customer loyalty to the brand. In today’s market, customers are no longer passive recipients of information but active participants in what information and products are useful or not. Millennials and Generation Z need an emotional connection with a product before buying it. The internet has given young consumers great discourse power, and therefore, brands should conform to this trend by catering to their customers’ personal needs and ideas.   

           Xiaohongshu accommodates this trend by enhancing interactive communication between brands and customers, creating an enabling shopping environment, and building relationships through user-generated content. The content shared on the platform is the link that captures the audience’s interest and establishes engagement with the brand and products. By encouraging user participation and collaborative content creation, the platform creates customer value and a choice platform for marketers to build their brands.  

b). Response 

In the modern competitive business environment—time—is an important determinant of business success. The time taken by brands to respond to the needs of their customers, changes in market trends, and address complaints is crucial to establishing a positive customer interaction and preventing possible customer turnover (Knowles et al.,2020). The Xiaohongshu platform considers this need which is evident in its rapid response to customer demands from forecasting and processing demand, assisting in shopping activities, to after-sale services. The platform’s rich community plays an important role in understanding market demands and create convenient content to accommodate users’ needs and ensure a positive shopping experience.

           In addition, the platform has also introduced various scoring systems such as “small hearts” and “big hearts,” which transform the real user experience into products parameters that can be used to recommend products to other consumers and guide their purchasing decisions. Xiaohongshu has also built a strong international supply chain and logistic system that allow rapid delivery of goods to customers and provide timely after-sale services. This enhanced the reputation of the platform among marketers and customers.

c). Relation

The importance of relevancy and relation is used in attracting and maintaining customer relationships cannot be ignored. While relevancy seeks to attract customers through unique marketing strategies, “relation” seeks to maintain customer relationships and establish life-long customer loyalty to the brand and its products (Gil-Gomez et al., 2020). Particularly, with the increasing significance of meeting the emotional demands of customers, many brands are adopting a customer-experience-centered competitive strategy from the traditional product-centered marketing. The “Xiaohongshu” platform and community has been able to achieve this by increasing customer value through active interaction and co-creation of media content. Moreover, the platform allows users to participate actively in choosing their favorite products and creation of user-generated media content. The platform has succeeded in establishing a strong relationship network of brands and customers, where customers feel appreciated and have a sense of belonging. The competitive advantage of the platform stems from its ability to create a customer-centered experience that enables the platform to attract more customers and retain existing ones. In addition, the direct interaction between brands and customers is fundamental in facilitating customer satisfaction and build customer loyalty. The Xiaohongshu platforms attempt to achieve maximum customer satisfaction by allowing direct and effective interactions between users and brands and connecting media content creators and brands directly, therefore achieving win-win results for all parties. 

d). Reaction

Any organization conduct business activities to pursue and achieve their objectives of maximum output and returns. Any marketing strategy is geared towards generating returns. To achieve this objective, brands must meet customer demands and create value for customers (Narang & Shankar. 2019). Brands must consistently strive to achieve efficiency, which is necessary for business survival and growth. Developing efficient interaction networks is imperative for brands to establish their position in the market. Brands with a well-developed network can compete favorably in the current complex business environment, meet customer demands at a reduced cost, and achieve maximum return. The Xiaohongshu platform has adopted a marketing strategy of “free and charging.” The free and diverse media content published and shared within the platform has attracted many users and generated a positive reputation for the platform. Xiaohongshu also retains and attracts new customers by providing information and services at a very low cost. The free content generates attention to attract many users, while the charging strategy allows Xiaohongshu to generate revenue and profits. The generated revenue is invested back to the platform for technology update, content production, and maintenance of the system to increase value for brands and customers.   

Analysis of Xiaohongshu and the closed-loop model

           In the current business environment, information and knowing how to leverage such information is power; collecting, analyzing, and leveraging the right customer information is the difference between success and failure (Cheng, 2021). Often successful brands collect data on the purchasing behavior of consumers and use such information to outpace their competitors with better marketing and advertising strategies to retain existing customers and attract new ones. Closed-loop marketing is an effective method for collecting and analyzing user information and leveraging such information to provide targeted content based on customers’ tastes and preferences (Chen et al.,2020). Xiaohongshu uses the closed-loop model to generative user-targeted high-quality content that facilitates brand interaction and engagement. When the platform users visit the site, their search and browsing histories are collected, and then such information can be used by brand marketers to adjust their marketing strategies and tailor them based on user preference. The more users view and react to a product; the more information is collected. This approach is multi-directional in that it allows brands to gather relevant information and, at the same time, modify their marketing strategies to fit individual customers.    

           A live streaming platform such as Xiaohongshu captures information from user search and browsing histories and allows brands to optimize their marketing strategies. This data-driven approach to create, share and live stream media content about products and services enables brands to address several customer segments with messaging and content that drives engagement and sales. The platform further allows brands to reach the widest audience possible through word-of-mouth marketing and shared user experience.   

Role of social media influencers in brand promotion

           Social media has become an integral part of daily life and the increasing number of social media users has shape market trends and digital marketing strategies. Marketers started to recognize the significance of social media platforms as vital channels for communicating and interacting with customers. Furthermore, competition and advancement in social media marketing platforms have led to the increased recognition of the importance of social media influencers (Smith et al., 2018; Yuan & Lou, 2020). Social media influencers, referred to as “opinion leaders” or “Key-Opinion Leaders (KOLs),” regularly post and share products information on social media platforms based on experience or recommendation. The direct impact of influencers on sales fueled influencer marketing as a rapidly growing marketing strategy across various marketing industries. In particular, the fashion industry has greatly adopted influencer marketing to drive sales and boost customer engagement and interaction with the brand (Smith et al.,2018). In the fashion industry, the customer is often sensitive, and their purchasing behaviors are greatly influenced by the current fashion- trends. Often, fashion media influencers drive such trends. 

           Influencers are high-profile personalities with massive social media following and who post and share fashion content and have the power to influence their follower’s opinions and purchasing behaviors (Arora et al., 2019). They are considered important players in the fashion industry since they can attract and elicit strong customer interest and reaction about a product. With more than 900 million internet users today, China is the ideal market for brands that what to establish an online market base. This rapid digitization has changed how brands advertise and adopt new strategies to target online consumers. For example, the Xiaohongshu live streaming platforms provide luxury brands the opportunity to establish their online presence by leveraging the services of KOLs. By collaborating with KOLS, a huge community following and positive reputation can easily promote their products. Using KOL is an essential marketing strategy for penetrating the Chinese market, attracting new customers, and developing brand visibility (Moriuchi, 2021). KOLs are marketing professionals and know how to leverage customer information to promote and sell products and therefore helping brands to grow. Xiaohongshu complements the success of KOLs through live streaming features where they can directly interact and communicate with their audience. KOLs are skilled and are skilled in eliciting customer interaction, engagement, and reaction. 

7.4. Role of fashion influencers in promoting a brand

           Fashions influencers are gaining increasing recognition as fundamental elements in the digital marketing mix. The fashion influencer landscape is composed of three essential parties: the influencer, the fashion brand, and a platform that connects the two, and where each party benefits from the relationship. Fashion brands are increasingly adopting fashion influencers to reach and promote new trends and products and teach a wide audience (Chetioui et al., 2020). Fashion influencers play an important role in introducing new products to customers in an authentic way. Therefore, they have a greater impact in creating and spreading product awareness than traditional advertising. In fact, several studies have evidenced the impact of influencers in driving sales, and brands that used fashion influencers to promote their products registered a massive increase in sales and positive feedback (Sudha & Sheena, 2017).

           To attract and retain new customers, fashion influencers must consistently create and share new content on the platform and constantly engage positively with the audience. Xiaohongshu has gained a reputation as an effective platform for host and customer interaction. The platform connects brands and fashion influencers, and potential customers. Xiaohongshu provides a platform that is easily accessible to all players and allows brands to reach their customers through fashion influencers in an authentic way. The platform also creates an enabling environment for shopping through product information, reviews, recommendations, and after-sales services. 

Chapter 6: Conclusion

In the last few years, there has been a great shift towards digital marketing. The current consumer of luxury products especially the millennials and Generation Z cannot imagine a life without mobile devices, internet connection, and social media. As a result, millions of business transactions, purchases, and consumer-brand interactions occur daily through the internet, and therefore brands must implement digital marketing strategies to utilize this lucrative opportunity. Especially for luxury products, establishing an online presence and building a digital brand is imperative in the modern economy. For example, several studies have demonstrated that over 40 percent of luxury item purchases are influenced by content posted on social media channels, therefore, utilizing social media channels to market and promote products will determine the success and competitiveness of the brand.

Digital marketing is a fundamental component of any brand marketing strategy. In the current highly competitive business environment, relying on traditional marketing or simply creating a website is not enough but elaborate strategies are paramount for enhanced success. As a huge proportion of customers are dependent on the internet for everything they need, it has become extremely necessary to establish online visibility, especially for luxury brands. Since digital marketing is accessible for all companies, the challenge for luxury brands lies in formulating strategies to stay ahead of the competition. This is because the luxury market is saturated with brands bringing their products in a market with few barriers of entry. In this thesis, we have analyzed how Louis Vuitton has managed to remain popular and the leading luxury brand in the Chinese market for almost two decades. The brand was used as a model to show how an elaborate digital marketing strategy can have a huge impact on the performance of a brand. In a market saturated with many local and foreign luxury brands, Louis Vuitton has occupied a leading position and is the brand having the biggest market share of the Chinese luxury consumers. This success can be attributed partly to its long history and reputation of excellence and adapting to emerging trends and technologies to meet consumer demands. For example, to boost its presence in the Chinese market, Louis Vuitton exploits various strategies such as search engine optimization, live streaming, and collaborating with social media influencers.

The role of social media influencers in impacting consumer behavior has been identified, and it has been established that for luxury items, consumers especially millennials and generation Z base their luxury consumption behavior based on their celebrity role models. The thesis has analyzed how Louis Vuitton combines live streaming and key opinion leaders (KOLs) to promote its product and boost its online presence. By working with Xiaohongshu, the brand was able to boost its presence and increase social media conversation among young consumers. Xiaohongshu has emerged as the fastest interactive social media platform that allows brands and consumers to interact at a level never experienced before. The platform is considered as an interactive community allowing consumers to acquire product details, fashion styles, and make purchases at the same time, thus increasing consumer experience. Xiaohongshu gives consumers a sense of belonging by allowing them to post user-generated content, share experiences, and shop for items, hence it has become extremely popular among consumers of luxury products. Louis Vuitton leveraged this opportunity by becoming the first brand to Livestream with the social media platform and generated positive feedback from the viewers. The importance of digital marketing and social media in enhancing interaction and consumer engagement cannot be ignored. Given the fact that consumer engagement is the key to customer loyalty and the long-term success of the brand.

Chapter 7: Recommendations

The Chinese market for luxury products is rapidly changing; therefore, luxury brands must position themselves to address the changing needs of their consumers. For example, in recent years, Louis Vuitton has engaged in an aggressive digital marketing campaign to attract young Chinese millennials and generation Z. however, the future of the brand and success on the Chinese market depends on maintaining the young generation of young consumers without sidelining their loyal and mature luxury consumers. A solution to this challenge is to implement marketing strategies that accommodate different niche groups. To maintain its popularity among different demographic groups, the brand can exploit segmentation targeting strategies to satisfy the emotional and physiological needs of its consumers. in brief, Louis Vuitton needs to formulate new growth opportunities without damaging the long-established reputation of the brand. Louis Vuitton must manage the brand exposure in the current digital economy and ensure that exposure meets its reputation. This is important because during the live stream with Xiaohongshu, for its 2020 summer collection, some viewers expressed negative criticism, complaining that the setting did not meet the caliber of a brand of Louis Vuitton’s repute.

Another recommendation is that Louis Vuitton should have a marketing strategy aimed at building long-term customer loyalty. This can be achieved by increasing consumer interaction and engagement using social media channels, social media influencers, and product promotion services. In particular, the brand should endeavor to accommodate the emotional and physiological needs of the Chinese consumer, since most purchase luxury products as a symbol of social status and a form of personal identity. The future of the brand is dependent on sustainable customer loyalty, this is particularly important since it is estimated that by the year 2027, middle-class consumers will account for almost 65 percent of all Chinese households. For example, Bain and Co. research indicates that the average per-capita income will continue to rise among the Chinese urban dwellers. This expanding middle-class and wealthy group will continue to produce first-time consumers of luxury items. Therefore, it is imperative to establish long-term brand loyalty to ensure future success.

Another recommendation for Louis Vuitton is to increase search engine optimization to increase brand visibility among different demographic groups. The brand should use SEO to not only target young consumers but also mature consumers of luxury items as well. This strategy will help increase customer experience which in turn can translate to customer loyalty. for example, by working with various local Chinese social media sites and websites such as Weibo, Baidu, and WeChat, Louis Vuitton can increase its brand visibility in the competitive Chinese market. lastly, the brand can invest measures to curb counterfeits which present a big problem to the reputation of the brand.

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