impact of emerging technologies to the luxury in relation to digital marketing

1/11/2019

Impact of Emerging Technologies to the Fashion Industry in relation to Digital Marketing

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Contents Chapter 1 - Introduction ......................................................................................................................... 2

1.1 Overview ....................................................................................................................................... 2

1.2 Research Objectives ...................................................................................................................... 2

Chapter 2 – Overview of Traditional Marketing ..................................................................................... 3

2.1 Introduction .................................................................................................................................. 3

2.2 Product .......................................................................................................................................... 3

2.3 Price .............................................................................................................................................. 5

2.4 Place .............................................................................................................................................. 6

2.5 Promotion ..................................................................................................................................... 6

2.6 Conclusion ..................................................................................................................................... 7

Chapter 3 – The 7 P’s of Marketing......................................................................................................... 8

3.1 Introduction .................................................................................................................................. 8

3.2 Physical Evidence ........................................................................................................................ 10

3.3 Process ........................................................................................................................................ 11

3.4 People ......................................................................................................................................... 11

3.5 Conclusion ................................................................................................................................... 12

Chapter 4 – Critical Review of the impact of Digital Marketing in relation to the Fashion Industry .... 13

4.1 Introduction ................................................................................................................................ 13

4.2 Website ....................................................................................................................................... 13

4.3 Traditional Online Marketing ...................................................................................................... 14

4.4 Social Marketing.......................................................................................................................... 15

4.5 Mobile Marketing ....................................................................................................................... 16

4.6 Offline Marketing ........................................................................................................................ 17

4.7 Conclusion ................................................................................................................................... 17

Chapter 5 – The Future of Digital Marketing ........................................................................................ 18

5.1 Introduction ................................................................................................................................ 18

5.2 Artificial Intelligence ................................................................................................................... 19

5.3 Mobile Technologies ................................................................................................................... 20

5.4 Cloud Computing ........................................................................................................................ 20

5.5 Conclusion ................................................................................................................................... 21

Chapter 6 – Conclusion and Recommendations ................................................................................... 22

6.1 Conclusions ................................................................................................................................. 22

6.2 Recommendations ...................................................................................................................... 22

References ............................................................................................................................................ 23

Chapter 1 - Introduction 1.1 Overview The manner of doing business has evolved over time (Kulkarni, et al., 2012). The creation of the World Wide Web and its use in the business sector created electronic commerce, now referred to as e- commerce, which is defined as “all electronically mediated information exchanges between an organisation and its external stakeholders” (Chaffey, 2015). This was followed by the creation of the concept of e-business which is “the digital enabling of transactions and processes within a firm, involving information systems under the control of the firm” (Laudon & Traver, 2016). 1.2 Research Objectives This report is going to focus specifically on the impact of emerging technologies to the fashion industry from the perspective of digital marketing. The definition of digital marketing is “the application of the Internet and related digital technologies in conjunction with traditional communications to achieve marketing objectives” (Chaffey & Ellis-Chadwick, 2016). In order to meet the focus of this report, there are four research objectives. Firstly, an overview of traditional marketing. This will lead to analysis of the 7 P’s of marketing. Subsequently, there will be a critical review of the impact of digital marketing to the fashion industry. Finally, there will be a discussion on the future of digital marketing. These research objectives are important to gain knowledge and understanding of the overall importance of digital marketing but at the same time provide a detailed insight into areas which must be considered by a business which wishes to take advantage of digital marketing and achieve the best possible outcome. The focus on the fashion industry will identify the areas in which emerging technologies have had an impact by providing real life examples. The future element is important as it will give an insight into how emerging technologies will continue to develop and change the way in which businesses can reach their markets. All of the information discussed will then be concluded and some recommendations will be made of how a business, especially in the fashion industry, should take advantage of emerging technologies in relation to digital marketing.

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Chapter 2 – Overview of Traditional Marketing 2.1 Introduction “Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably” (The Chartered Institute of Marketing, 2015). Advances in technology have allowed the evolution of marketing, although the objectives identified have remained the same. Digital marketing is the achievement of the marketing objectives using electronic communications technology (Chaffey, 2015). The 4 P’s of Product, Price, Place and Promotion, known as the marketing mix, was proposed by Jerome McCarthy in the 1960s (McCarthy, 1993).

Figure 1. The Marketing Mix (Bakhshi, 2014)

These are the four controllable variables that a business should consider and manage in order to meet the business objective and the needs and wants of the target market. 2.2 Product Arguably the most important element of the marketing mix is product, as without one, you would have nothing to market. There are many types of product, they can be tangible or intangible, a good or a service, or a combination of both. The product should be designed and produced with the aim of satisfying the target market and there should be a demand for it within that market (Acutt, 2017). All products have a life cycle of four major stages; introduction, growth, maturity and decline.

Figure 2. Product Life Cycle (Easey, 2009)

However, in the fashion industry, the nature of the products and the market means that the life cycles can be different to those of products in other industries (Spragg, 2017). The introduction of a product into the fashion industry can take a longer time frame as new fashions take time to gain acceptance. Growth will happen as the product gains acceptance in the market but as a result of this competition increases due to the wider appeal of the new product. The product enters the maturity phase when it has reached the mass appeal, creating the maximum amount of sales and revenue, but the competition will be at its highest. This stage is usually the longest phase of the cycle. When the product begins to go ‘out of fashion’ the decline stage begins and many competitors begin to leave the market.

Figure 3. Television Advertisement of Product (https://www.tvadsongs.uk/tag/littlewoods- advert-music/)

Traditionally, products are marketed through television advertisements as it is the most effective way for customers to be able to see the product and gain an interest into it. Television advertisements of fashion products, such as clothing and shoes, are particularly successful due to the advertisement

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creating an appeal for that particular product, regardless of the stage in the life cycle, as the customers want to ‘shop the look’. 2.3 Price In the marketing mix, price is considered the most difficult aspect to comprehend due to the many different components linked to the making of the product. Ultimately, price is the value that is placed on the product, what the customer is prepared to give in order to gain the product. It is the only element of the marketing mix that generates revenue. The main aim when setting a price is to gain a profit. The price of the product has a significant impact on the entire marketing strategy as well as directly affecting the sales and demand of the product as it must be set at a price that the customers are willing to pay (Kotler, et al., 2017). There are four main pricing strategies that a business should explore in order to decide upon the price of a product. These are: premium pricing, when the company focuses on the pricing of the product to indicate its distinctiveness in the market place; penetration pricing, the price of the product is set lower than competitors in order to try and gain a share of the market; economy pricing, the price is set as low as possible to gain price-sensitive customers; and price skimming, where the price is set high upon release and lowered in sequential steps (Baines, et al., 2017). The choice of strategy will depend upon the aims and objectives of the business and the stage of the product in the life cycle. In the fashion industry, there are companies which use all of these pricing strategies. For example, designer brands such as Gucci use premium pricing, high street retailers such as New Look use penetration pricing and Primark uses economy pricing. It can be argued that all businesses in the fashion industry use price skimming, as many products are reduced in price once they begin to go ‘out of season.’

Figure 4. Traditional Price Promotion Poster (https://www.shopsilverburn.com/events/debenhams-winter-sale)

Above shows a poster which is a traditional form of marketing. Its shows a price promotion which is commonly used in the fashion industry to push sales of products at various stages of the life cycle, particularly those in introduction and decline as that is when a business wants to create more demand

for the product. It is states that the promotion is available in-store and online as to appeal to all potential customers. 2.4 Place This element of the marketing mix is the consideration of how the product will be provided to the customer (Martin, 2014). The way in which product reaches the market, through different intermediaries, is known as the channel structure. Channel structure varies according to the type of product to be distributed. There are many different distribution strategies a business can adopt. These include: intensive distribution, where the product is placed in as many outlets as possible; exclusive distribution, where only one outlet offers the product; and selective distribution, where the product is placed in a small number of carefully chosen outlets (Brassington & Pettitt, 2013). In the fashion industry, many retailers offer multiple distribution channels.

Figure 5. Sales Channels generating greatest revenues (Peerless Research Group, 2013)

This graph shows the sales channels that are currently generating the greatest revenues and a projected view of those same channels in two years. 2.5 Promotion Promotion is important to the marketing mix as it can boost brand recognition and sales. There are five principal marketing communication tools known as the promotional mix.

Figure 6. Promotional Mix (Bhasin, 2017)

Advertising is “a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future” (Richards & Curran, 2002).

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Figure 7. Traditional Newspaper Advertisement

The nature of advertising has evolved with emerging technologies and a change in the economy, culture, and social values (Baines, et al., 2017). Personal selling entails one to one communication which generates direct contact with customers (Bhasin, 2017). The role of direct marketing is to drive a response and shape the behaviour of the target audience with regard to a brand and is used to create personal communication with customers or potential customers (Baines, et al., 2017). Sales promotion is designed to be a short-term tactic in the hope of persuading a potential customer to buy the product, therefore boosting sales. Public relations is important to the promotional mix as it is used by a business to influence the way in which it is perceived by stakeholders, in the hope of creating mutual goodwill and understanding. By integrating all these elements, a business can co-ordinate what they say and when they say it, develop relationships with key customers, suppliers and stakeholders and ultimately acquire and retain customers. 2.6 Conclusion To conclude, all elements of the marketing mix are important to a business in order for the marketing to be successful. However, each of the elements need to have the right balance depending upon the target market to be addressed. A business must have a product that customers want, at a price they are willing to pay, it should be easily purchased and they should make the target market aware of these factors.

Chapter 3 – The 7 P’s of Marketing 3.1 Introduction Digital technologies have expanded the definitions and scope of the elements of the traditional marketing mix. When a business is developing its online strategy in relation to its product, decisions can be divided into those affecting the core product, the fundamental features of the product that meet the user’s needs, and the extended product, the additional features and benefits beyond the core product (Chaffey, 2015).

Figure 8. Extended Product – Warranty (https://www.ugg.com/uk/warranty.html)

The Internet has had a big impact on the price element of the marketing mix. It has increased price transparency making differential pricing easier for customers to become aware of, it has placed a downward pressure on price and created new pricing approaches and strategies, such as auctions where customers can place bids for items they would like to purchase (Chaffey & Ellis-Chadwick, 2016).

Figure 9. Auction Site – eBay with Fashion Category (https://www.ebay.co.uk/b/Fashion/bn_7000259675)

It can be argued that the Internet has had the greatest implication on place due to its capability of a global reach (Allen & Fjermestad, 2001).

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Figure 10. International Shipping enabling Global Reach (https://www.riverisland.com/international)

The Internet has created new channel structures whilst also creating channel conflicts. The introduction of an Internet channel means that a business can sell direct, increasing profitability, but subsequently threatening distribution arrangements with existing partners (Chaffey, 2015). The internet provides a new marketing communication channel that can be used to promote the product and provide customers assistance in the buying decision (Chaffey, 2015). Digital technologies are changing the communication process, the channels through which we communicate and the number of touchpoints encountered by integrating approaches in order to deliver messages to the target market (Chaffey & Ellis-Chadwick, 2016).

Figure 11. Promotion of Offers and Communication Channels (https://www.pinkboutique.co.uk)

By the end of the 1970’s the traditional 4 P’s approach was not considered useful for all products, especially those with a strong service component. Two American scholars expanded the traditional marketing mix to include an additional 3 P’s of Physical evidence, Process and People (Booms & Bitner, 1981) which will be explained below with examples.

Figure 12. The Extended Marketing Mix (Martin, 2014)

3.2 Physical Evidence The physical evidence element of the mix is “the environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service” (Booms & Bitner, 1981). For example, in the fashion industry, physical evidence would be the building, the store layout and proof of purchasing.

Figure 13. Proof of Purchasing (https://www.pinkboutique.co.uk/)

It can also be the website that the customers will use to purchase the product or use the service, it should be easy to use and regularly updated to be effective at keeping the customers satisfied. Digital technologies and techniques are becoming increasingly important in providing physical evidence which can support or detract from the other elements of the marketing mix (Oxford College of Marketing, 2016).

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3.3 Process Processes are the methods through which a service is executed and delivered to the customer (Martin, 2014). The systems and processes a business uses directly affects the execution of the service they intend to carry out. The process should be tailored to the individual business, be accurate and precise in order to minimise the costs. A business within the fashion industry must consider the following things in their process: procedures, controls, accessibility, information flows, payments, booking, speed and time of delivery.

Figure 14. Time of Delivery Information (https://www.dpdlocal.co.uk/)

The process can be standardised which makes customer expectations easier to manage and companies that offer the service are consistent around the world (Baines, et al., 2017). 3.4 People Considered as one of the essential elements of the marketing mix, people includes everyone who is involved in the product or service whether directly or indirectly (Acutt, 2017). This aspect considers those who are employed by the business to: design, develop and manufacture the product, do market research to establish demand and determine customer needs, mange the supply chain and provide support services.

Figure 15. Support Services (https://www.missguided.co.uk/help)

If the business successfully acquires employees that genuinely believe in their products, it is highly likely that the employees will perform the best they can, in turn providing a superior service to the customers. 3.5 Conclusion Extending the marketing mix to include physical evidence, process and people alongside product, price, place and promotion connects the marketing function much closer to human resource management and operations (Riley, 2018). All seven elements should be carefully considered in order to meet the marketing objectives as each of the elements interlink.

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Chapter 4 – Critical Review of the impact of Digital Marketing in relation to the Fashion Industry 4.1 Introduction “There are four features of online marketing that distinguish it from traditional marketing channels. Compared to traditional print and television marketing, online marketing can be more personalised, participatory, peer-to-peer, and communal” (Laudon & Traver, 2016). There are five main elements a business must consider in order to build a comprehensive multi-channel marketing plan.

Figure 16. Multi-Channel Marketing (Laudon & Traver, 2017)

4.2 Website A website is the first step a business should take when it comes to establishing an online brand as it is key to establishing initial relationships with customers. The main function of a website is to establish the business identity through branding and work alongside the businesses other marketing activities.

Figure 17. ASOS Website (https://www.asos.com)

A businesses website is the main form of marketing that can convert potential customers into actual customers, most other forms that will be discussed later, will be aimed at driving and persuading potential customers. In order to create an effective website, a business in the fashion industry should consider: planning, by identifying the target market and the aims and objectives of the website; design, by deciding the ‘look and feel’ of the site and using any branding techniques; development, putting the website together and keeping the content updated; testing, to ensure all elements work in the expected way; and deployment, when the website is made available to the world (Ryan, 2017). 4.3 Traditional Online Marketing Traditional online marketing includes search engine marketing, display ad marketing, e-mail and permission marketing, affiliate marketing, viral marketing and lead generation marketing. The use of e-mail was one of the first e-marketing technologies to be used as there are five main advantages to a business of using this form of marketing. E-mail marketing can be conducted at a lower cost in comparison to other forms of marketing, they have a faster delivery and response rate, it is a ‘push’ promotional tool as opposed to a ‘pull’ tool, it is more appropriate for niche markets and the performance and contribution of e-mail campaigns can be easily tracked as to its effectiveness (Reynolds, 2010).

Figure 18. E-mail Marketing (https://www.matalan.co.uk/)

Search engine advertising is the use of search engines to gain direct sales. There are different types of search engine advertising such as organic search, where inclusion and ranking on the search is unbiased and social search, where fewer, more relevant trustworthy results are found. Search engines such as Google use keyword targeting and placement targeting approaches. The aim of keyword targeting is for the advertiser to gain a high ranking for its advertisement by bidding for the use of keywords to place the advertisement higher on the search. Placement targeting is used by the advertiser to get the advertisement seen a set amount time (Reynolds, 2010).

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Figure 19. Keyword Advertising on Google

4.4 Social Marketing Social marketing involves the use of online social networks and communities such as Facebook, YouTube, Instagram, blogs and forums. Social media attracts huge audiences from around the world which makes this form of marketing so attractive to businesses. Figure 20. below shows the number of active users some of the most popular platforms has as of October 2018.

Figure 20. Active Users on Social Media Platforms (Statista, 2018)

Social media platforms allow a business to use all the main advertising formats, such as banner advertisements and sponsorship of content. Having a corporate Facebook page can be considered as a marketing tool as itself, sharing many characteristics of a website.

Figure 21. ASOS’ Facebook Page (https://www.facebook.com/ASOS/)

4.5 Mobile Marketing Mobile marketing includes the use of display banner ads, rich media, video games, e-mail, text messaging, in-store messaging, QR codes and couponing. Marketing directly to mobile devices is considered to be more personal than other forms of marketing. QR codes are barcodes that appear as many black modules in a small square white background. Marketers are placing QR codes on physical objects, such as the product or advertisement, and when the consumers scan the code, it will transport them to the businesses website, a movie trailer or more information, in a form of dynamic promotions (Strauss & Frost, 2014).

Figure 22. Gucci use of QR code (https://www.pinterest.co.uk/pin/227572587390463297/)

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Rich media is a method of communication which usually incorporates the use of videos or graphic advertisement which changes with a mouseover or click. It is used as an interactive form of media as opposed to a traditional image and text display (Techopedia, 2018).

Figure 23. Rich Media Example (https://www.ugg.com/uk/)

4.6 Offline Marketing Offline marketing is the traditional forms of marketing that were used before the creation of the Internet, such as television, radio and newspaper advertisements. Offline marketing techniques can be implemented and used alongside online marketing techniques to support one another, creating a unified strategy. By combining all the marketing techniques, the marketing campaign can be brought full circle, increasing the businesses visibility and attention, both online and offline (Harr, 2018).

Figure 24. Examples of Offline and Online Marketing (Harr, 2018)

4.7 Conclusion Most businesses are likely to adopt a mixture of the different marketing elements in order to meet their marketing aims and objectives. The right methods and techniques must be carefully considered, selected and used at the right time, to the right level in order for the promotion to be most effective either tactically or strategically for the business (Jackson & Shaw, 2009).

Chapter 5 – The Future of Digital Marketing 5.1 Introduction The technology world moves so quickly today that each change accelerates the next. Web 1.0, known as the read-only web, was the starting point. Information could be published in a static form, designed and displayed with text and images but no interaction between the information and the consumer and minimal content creators (Rudman, 2010). Web 2.0 was an extension of the original ideas, principles and underlying infrastructure of Web 1.0 (Anderson, 2007). The change provided greater collaborations as it allowed users to re-use and contribute information, enriching the content distributed on the web (Getting, 2007) and inspired most of the social-networking opportunities, such as Facebook, Twitter and the concept of blogging (Kulkarni, et al., 2012). Web 3.0 is the most current generation of the Web, its definition and name varies, such as the Semantic Web or the Transcendent Web. It provides a link between information sources and allows for personalisation (Kulkarni, et al., 2012).

Figure 25. Web Timeline (Strauss & Frost, 2014)

The future of the World Wide Web, Web 4.0, is considered to be an Ultra-Intelligent Electronic Agent, Symbiotic Web and Ubiquitous Web (Fowler & Rodd, 2013). The Symbiotic Web can interact with the Human mind and Machines in Symbiosis by reading content and animations, executing demands with faster loading speeds, creating superior quality and performance within more commanding interfaces (Hemnath, 2010). There is no solid definition of Web 4.0 but it can be associated with three key technologies: intelligent agents, mobile technologies and cloud computing services (Nedeva & Dineva, 2012). These technologies will now be discussed in more detail.

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5.2 Artificial Intelligence An intelligent agent is a component of artificial intelligence which perceives its environment and request through sensors and actuators, uses collective knowledge and experience from supercomputers and data banks, to make a decision and respond accordingly (Hendricks, 2018). Clothing brand, The North Face, have adopted a cognitive computing technology which can help consumers to decide which jacket from their product range is best for them, based on variables such as geographical location and gender.

Figure 26. The North Face Cognitive Computing Technology (https://www.thenorthface.com/xps)

An application named Markable can find exactly what an outfit is by using image recognition technology to visually recognise things such as item type, colour, fabric and length. It works with images that can be found on websites, social media or personal photos. By drawing round the desired item in the photo, the application can find matches from a database of over 20 million garments, from over 800 brands, which customers can then purchase via the application (Plomion, 2017).

Figure 27. Current Advertisers using Markable (https://markable.ai/)

5.3 Mobile Technologies One emerging mobile technology is facial recognition that is continually been developed to now scan the contours of a face and head, making the technology more accurate and secure (Holland, 2018). Apple were one of the first companies to offer this technology in its product, the iPhone X in 2017.

Figure 28. iPhone X Face ID (https://www.apple.com/iphone/)

Using the facial recognition feature, the owner of the mobile can unlock their phone, confirm the download of applications, allow access to stored usernames and passwords and confirm payments through Apple Pay. It is predicted that through evolution of smartphone sensors, the phone may be able to recognise the owner without scanning them. Instead, it will use other unique attributes such as the tone of voice, a specific movement or even by the pattern of typing of the user (Holland, 2018). This technology could become very useful to marketers. A mobile application could be produced to allow the monitoring of facial expressions of its user, allowing an insight into the level of interest of the user when using the application. Collecting data of this kind would be beneficial to advertisers as they would be able to create more personalised advertisements that fits the user’s interests, emotions and preferences (DeMers, 2017). 5.4 Cloud Computing Cloud computing is Internet-based computing where resources such as servers, disk space, firewalls, back-ups, software and the services need to accommodate and support it, are provided to users on their devices (Technology Marketing Toolkit, 2018). Social Media is the most popular form of cloud computing. As shown previously in Figure 20, Facebook currently has over 2.2 billion active users. Its features allow users to share updates, photos and videos, get notifications when friends like and comment on the user’s posts, play games and use the other applications it has to offer such as Facebook Messenger.

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Figure 29. Social Networks using the Cloud (http://www.bloggingrepublic.com/social-media- and-the-cloud-whats-next)

5.5 Conclusion The Internet is continuously evolving. Even though Web 4.0 is only just been developed and implemented and has not been released to its full capacity yet, the idea of Web 5.0 is in the early stages of development. Therefore, the options a business has to market with today may be totally different to those it may have access to in a years time, and drastically different to those available in ten years. However, traditional marketing has yet to be totally replaced by some businesses so some methods may last the test of time.

Chapter 6 – Conclusion and Recommendations 6.1 Conclusions Overall, a business must have a product that customers want, at a price they are willing to pay, it should be easily purchased and they should make the target market aware of these factors. The additional 3P’s of physical evidence, process and people connects the marketing function to human resource management and operations. All seven elements of the marketing mix should be carefully considered by a business in order to meet their marketing objectives, as each of the elements interlink and therefore have a bearing on effectiveness of each other. Online marketing offers many different features to traditional marketing channels. Compared to traditional print and television marketing, online marketing can be more personalised, participatory, peer-to-peer, and communal. Due to digital marketing, a business has wide variety of options when it comes to marketing. A business may choose to only use one method, or a combination of them all. However, the right methods and techniques must be carefully considered, selected and used at the right time, to the right level in order for the promotion to be most effective either tactically or strategically for the business. The future of the Internet is not conclusive as it is continuously evolving. The developments from Web 1.0 to Web 4.0 has created technologies that would not have seemed possible when the Web was first created. Due to this, the options a business has to market with today may be totally different to those it may have access to in a years time, and drastically different to those available in ten years. However, traditional marketing has yet to be totally replaced by some businesses so some methods may last the test of time. 6.2 Recommendations The recommendations to a business, especially one in the fashion industry, are as follows:

• Give careful consideration to each element of the extended marketing mix and always have the marketing objectives at the core of the analysis, before, during and after implementation.

• Take advantage of all marketing channels available as all forms have advantages and a multi- channel marketing plan is more likely to succeed in comparison to only using one channel.

• Invest in emerging technologies as it will be likely to give a competitive advantage over businesses who do not invest due to a lack of understanding of the importance and the technologies are aimed at making the customers experience easier and more pleasurable.

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