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Why do luxury firms struggle to build customer loyalty through e-commerce? — A case study of Karl Lagerfeld.

Master thesis

MSc: Business Administration

Entrepreneurship and Management in the Creative Industries

Author: Zhengnan Li

Student number: 13538519

Submission date: 22-06-2022 (Final version) EBEC approval number: 20220323120318 Supervisor: Aldo Do Carmo

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Statement of originality

This document is written by [Zhengnan Li] who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of the completion of the work, not for the contents.

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Abstract 3

Introduction 4

Part 1 - Theoretical framework 8

Ch1 - Characteristics of e-commerce 8

1.1 E- Loyalty 8

1.2 Benefits of E-commerce 10

1.3 Features of E-commerce 11

Ch2 - Characteristics of luxury brands 13

2.1 Veblen Good 13

2.2 Luxury brands 15

2.2.1 Elements of the luxury brand 15

2.2.2 Exclusivity 16

2.2.3 The experience economy 17

Ch3 - Conceptual Model 19

3.1 E-commerce in the luxury brands: 19

3.2 Low level of customer loyalty in E-commerce 21

3.3 Customer loyalty in the luxury brand 22

3.4 Customer loyalty in E-com luxury 24

Part 2 - Investigation and Analysis 27

Ch4 - Methodology 27

4.1 Case Karl Lagerfeld 29

Ch5 - Investigation and Analysis 30

5.1 Characteristics of E-commerce 30

5.1.1 Information accessibility 31

5.1.2 Efficient and Convenience 33

5.1.3 ·Promotion and sales 35

5.2 Characteristics of Karl Lagerfeld 36

5.2.1 Rarity and exclusivity 36

5.2.2 Status symbol 38

5.2.3 Authentic Value 39

5.2.4 Multisensory experience 43

5.3 Conflicts between e-commerce and Karl Lagerfeld 45

5.4 Customer loyalty 47

5.5 Unexpected findings 49

5.6 Discussion 53

Ch6 - Conclusion 55

6.1 Limitation of the study 56

6.2 Personal learnings 58

References 59

Annex 1 Interviewees 64

Annex 2 Interview: (20 mins) 64

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Abstract

Digitalization has already been a prevalent trend in the fashion industry, yet luxury brands are not "in love" with e-commerce. Therefore this study looks into why do luxury firms struggle to build customer loyalty through e-commerce? To identify the elements that contribute to the conflicts between the luxury firm and E-commerce, the study compares theoretical perspectives with an examination of a real-world case – Karl Largerfeld. The data for this single case study on the accessible luxury brand Karl Lagerfeld was collected through semi-structured interviews with the company's personnel. The primary finding of the study is that the prolonged period of sales promotions on E-commerce conflicts with Karl Lagerfeld's luxurious brand value and premium pricing. Therefore, the weakened brand value from a long period of sales leads to the loss of loyal customers. However, unexpected findings also exist in the study. The efficiency and convenience of E-commerce do not conflict with the brand itself to deliver multi-sensory experiences. Furthermore, due to the brand position, the information accessibility does not conflict with the

exclusivity and rarity, and the symbolic function of Karl Lagerfeld. Lastly, the low transaction cost does not affect the authentic value and multi-sensory experience of Karl Lagerfeld. This study examines the reasons why Karl Lagerfeld has difficulty using e-commerce to establish client loyalty and brings guidelines to other luxury brands. The study cautions other luxury firms to be wary of discounting strategies on e-commerce. And insisting on creating multisensory experiences, and authentic value for customers.

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Introduction

"Luxury bags make your life more pleasant, make your dream, give you confidence, and show your neighbours you're doing well." As fashion designer Karl Lagerfeld noted about luxury products, an increase in the standard of life motivates people to consume luxury brands in terms of improving social identity.

In the late 1990s, the rise of luxury corporations, such as LVMH and Richemont propelled the luxury business from a niche to a mainstream thriving industry (Donzé, 2018). With the rise of Generation Z, digitalization has already become a common trend within the fashion industry. Digitalization is inevitable since it brings more market opportunities to the fashion industry (Okonkwo, 2010). Given the rapid development of digitization and internationalization, especially during the pandemic time, people's lifestyles have changed to be virtual and remote, and E-commerce democratized the relationship between customers and luxury brands (WWD, 2021).

The path ahead towards digitalization for the sector is more apparent for the industry as it stabilized and deepened the establishment of the customer relationship, especially after humans entered the pandemic era (WWD, 2020).

Surfing on the trend, luxury brands are an important economic segment of the fashion industry, with the majority of them participating in E-commerce. Burberry, for example, as a pioneer in the luxury industry, constructed an E-commerce channel to create an emotional connection with the younger generation to enhance sales

revenue, then it became one of the most successful apparel brands on digital channels (Burberry, 2021). Additionally, luxury businesses continue to innovate in

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e-commerce; for example, Louis Vuitton launched Soundwalk to introduce virtual products (Okonkwo, 2009). What's more intriguing is that Karl Lagerfeld has launched a limited-edition NFT (non-fungible token) featuring Karl's caricatures in the fashion market (Socha, 2021).

Some of the Companies in the luxury fashion industry, on the other hand, have been reluctant to develop e-commerce due to the challenges of retaining brand identity and customer loyalty (Geerts, 2013). As a symbolic cultural product, keeping the exclusive characteristic is essential for the luxury brand to offer a prestigious atmosphere and inspire a deep connection with the customers (Heine, 2012). Furthermore, the rarity theory is generally applicable in the luxury brands domain, which implies the trade-off between brand awareness and brand exclusivity (Riley & Lacroix, 2003).

Many studies have discussed the controversy surrounding the E-commerce technology adopted by luxury brands; however, few have discussed why the e-commerce phenomenon would weaken luxury brands' characteristics and make them too accessible to mass markets, thereby struggling to keep the loyalty of high-end customers. Even though E-commerce is an opportunity for brands to increase sales, increased sales do not necessarily mean increased customer loyalty, as it already is supported by literature from Xie and Lou (2020) that luxury brand exclusivity is related to customer loyalty. Customer loyalty is critical for luxury firms, as the financial expenditures associated with purchasing luxury goods are higher (Shukla,Banerjee, & Singh., 2016).

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Thus, the primary objective of this thesis is to determine why it is incompatible for luxury companies to embrace E-commerce, and why, as a result, luxury brands are struggling to keep consumer loyalty during the process of digitization. The goal of this thesis led to the formulation of the research question:

Why do luxury firms struggle to build customer loyalty through e-commerce?

— A case study of Karl Lagerfeld.

Investigating the topic is both academically and practically valuable. At a time when not all luxury companies have wholeheartedly accepted digitalization, the study is worthwhile. This research implemented a single case study strategy to address the research topic. The case study analyzes the accessible luxury brand Karl

Lagerfeld's e-commerce scenario, revealing the difficulties the luxury brands

confront in becoming digital, delving deeper into the subject of why luxury firms are struggling with maintaining client loyalty in the process of digitization. This is an exploratory and inductive type of study, so it requires new insights and in-depth information to investigate the research. Due to the semi-structured interviews’

adaptability and exploratory nature, they are more appropriate for this research.

This is a single case study, it provides guidelines on what the luxury brands should pay attention to when operating E-commerce while also enhancing client loyalty.

Due to the dynamic and competitive character of the luxury market, employing brand-enhancing strategies can guarantee complete competitiveness (Bruce &

Kratz, 2007). It is critical for luxury brand management to have a suitable

E-commerce strategy, especially during periods of digitization. Customer loyalty

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research is significant for luxury companies because it represents a commitment to a luxury brand, which is essential for the company to stand out in a fiercely

competitive market (Shukla, et al., 2016). The findings of the study can be used as a guide to assist other luxury brands to avoid potential risks in digitization

operations. Academically, this study is based on the exclusivity principle and Veblen effects of luxury brands, and it expands the scope of the theory to the E-commerce field. Also, this study fills a research gap about the relationship between

E-commerce and luxury brands in keeping customer loyalty, as well as offers new insights on luxury industry management in general, particularly in the digital era.

The following part introduces the outline of the study. The theoretical framework elaborates on the existing literature corresponding to the research question's elements. Chapter one introduces the characteristics of E-commerce. Chapter two focuses on the characteristics of luxury brands. The conceptual model gives a clear theoretical foundation for answering the research question. It defines how luxury brands are using E-commerce strategies in detail to emphasize customer loyalty which will be explored in the case study. And it gives the theoretical relationship between E-commerce and luxury brands. Part two explains the methodology and process of data analysis, as well as the findings of the analysis. The conclusion, suggestions for future research, and limitations of the study are included in the last chapter. In the end, the last chapter also provides the personal learnings from doing the research.

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Part 1 - Theoretical framework

To start with investigating why luxury brands are struggling with keeping customer loyalty by adopting e-commerce, and better understanding the following Karl Lagerfeld case study, it is imperative to introduce the concept of E-commerce and the characteristics of luxury brands first. And the trade-off luxury brands are facing in operating e-commerce in the fashion industry. This leads to the subsequent theoretical framework, which elaborates on the aforementioned contents and comprises current literature reviews about the characteristics of both E-commerce and luxury brands. In addition, the conceptual model provides theoretical

perspectives on E-commerce in luxury brands and customer loyalty in luxury brands' operations.

Ch1 - Characteristics of e-commerce

1.1 E- Loyalty

E-commerce is any “internet” commercial activity that conveys internal and external relationships so that producing values and capitalize on market opportunities

(Damanpour & Damanpour, 2001). Customer loyalty in E-commerce means the repetition of buying behavior in E-retailing (Asfar,Nasiri, & Zadeh, 2013). More specifically, E-security and E-trust affect E-loyalty, E-security denotes that the

website secures client data and respects customer privacy; E-trust is established on the website's technology and service (Asfar et al., 2013). In general, E-commerce services should not abuse client information to induce users to register an account on the website in order to complete a purchase; furthermore, E-trust is based on prompt responses, robust online functionality, simple payment options, and information accessibility (Asfar et al., 2013). Most notably, E-commerce is

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leveraging technology to simplify the payment process and boost the efficiency of web functions to increase E-loyalty (Asfar et al., 2013). Establishing comprehensive E-security and E-trust is advantageous for the E-retailing market in fostering

customer loyalty (Asfar et al., 2013).

Besides, several elements can influence a customer's loyalty to an e-commerce site: customizability, interactivity, cultivation, care, community, choice, convenience, and character (Srinivasan et al., 2002). If a website is highly tailored, it indicates that customer transactions will be more efficient, indicating a good connection between customers and products and showing a sufficient understanding of the requirements of customers (Srinivasan et al., 2002). In terms of interactivity, it refers to the capability of a website's customer support systems to engage with customers (Srinivasan et al., 2002). With an effective interaction system, the algorithm can distribute desired products to customers faster than the bare memory search process, which is crucial for improving customer loyalty (Srinivasan et al., 2002).

Cultivation entails using discounts and incentives to strengthen relationships with customers, as well as frequently offering sales promotions and information to customers to keep them loyal (Srinivasan et al., 2002). Customer care and

community are the elements of customer service in E-commerce, which signals the attention to details of the website and facilitates word-of-mouth (Srinivasan et al., 2002). Choice and convenience are the defining characteristics of E-commerce, which is characterized by a vast selection of product categories and a

straightforward payment method (Srinivasan et al., 2002). Lastly, a creative website is critical to attracting customers, as it brings entertaining experiences into the

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shopping process and it signals the character of the web (Srinivasan et al., 2002).

All of these elements are necessary for keeping E-loyalty.

1.2 Benefits of E-commerce

The adoption of e-commerce by luxury firms is a typical Business-to-Customer pattern (Gupta, 2014). E-commerce is penetrating people’s daily life and giving both customers and businesses opportunities to increase the benefits. By

implementing E-commerce, businesses may get access to new market prospects;

additionally, electronic channels initiate businesses to minimize transaction costs, expedite delivery, and enhance convenience (Damanpour & Damanpour, 2001).

Reducing the transaction cost is an essential benefit of E-commerce since establishing E-commerce replaces the operation of complex "brick-and-mortar"

companies (Damanpour & Damanpour, 2001). E-commerce differs from

conventional business since it eliminates commercial transactions; there are no paper documents between clients and the company (Niranjanamurthy et al., 2013).

Customers obtain information and make purchases via e-commerce due to lower transaction costs, simple access to information, and the opportunity to locate the most competitive pricing (Gupta, 2014). Furthermore, coupons and deals are widely available at online stores (Niranjanamurthy et al., 2013). Customers can enjoy the lower price online compared with shopping on-site.

The most attractive benefit of E-commerce is convenience (Niranjanamurthy et al., 2013). There is no waiting in line for customers, and online stores extend the normal opening hours, so customers could shop at any time without considering

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location or time (Niranjanamurthy et al., 2013). Hence, customers save time and money while researching products because E-commerce eliminates supply chain intermediaries which breaks down the geographic and temporal boundaries (Gupta, 2014). Breaking down the physical stores implied being freed from shelf space restrictions, this allows online stores to dramatically increase the number of stocks of the products (Niranjanamurthy et al., 2013). This also contributes to the

expansion of online customer options (Niranjanamurthy et al., 2013). Furthermore, E-commerce improves the transparency of the pricing (Gupta, 2014). This allows customers to compare prices across several search engines and choose the best deal (Niranjanamurthy et al., 2013). Due to the accessibility and availability

characteristic of the websites, the pricing information is revealed to the mass market and the public can obtain the information inclusively (Gupta, 2014).

Moreover, the technologies adopted in E-commerce also improved the quality of the shopping process. To optimize and guarantee the process of online experiences, security information systems, payment systems, and communication systems apply the appropriate technology (Goel, 2007).

1.3 Features of E-commerce

The main features of E-commerce technology are ubiquity, information accessibility, cheapness, and fast and convenience. The most distinctive feature of E-commerce is ubiquity. The ubiquity allows the websites to extend the brands’ traditional

working hours, so it breaks the physical time for the customers to enter the purchasing process (Sikander, 2012). The ubiquity illustrates the accessibility of information, while the transparency of information reduces the transaction costs of

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E-commerce (Sikander, 2012). The low cost of E-commerce is a result of the ease of access to product or service information, which enables clients to rapidly obtain comparative pricing (Gupta, 2014). As a result of the Intelligence technology, the low cost of entry into the industry provides customers with more opportunities to access the vast catalogs of products (Moriset, 2018).

Another significant feature of E-commerce is cheapness. E-commerce allows both the client and the company to substantially decrease transaction costs while also disseminating information on a larger scale without compromising the quality of the material (Lee, 2001). The low cost of E-commerce will bring low marginal cost, however, it also brings more new entrants into the same market (Goldmanis et al., 2008). The low search cost of E-commerce affects the changes in market structure and market share and depending on the competitive advantage compared with the competitor, there is a possibility that the firm exits the market entirely (Goldmanis et al., 2008).

In addition to the ease and ubiquity features mentioned above, convenience is an important element of E-commerce, such as free delivery, self-service, multiple payment options, and simple access to a broader range of information (Salehi, Abdollahbeigi, Langroudi &Salehi, 2012). This feature dramatically influences the customer purchase intent and drives the growth of the brands’ revenue (Salehi et al., 2012). Personalization and customization are additional characteristics of E-commerce technology, which are part of the components of the convenience of E-commerce. The development of Internet technologies enables websites to deliver customized content to customers, thereby capturing their interest (Gupta, 2014). For

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example, tracking the customers’ behavior by using cookies on the website, then pushing the customized advertisements to target customers (Niranjanamurthy et al., 2013).

Besides, the website design also facilitates the convenience of e-commerce;

navigation design, visual design, and information design are crucial components of website design (Salehi et al., 2012). A satisfactory E-commerce service could result from a balance of these factors motivating customers to continue purchasing the brand online (Salehi et al., 2012).

Ch2 - Characteristics of luxury brands

2.1 Veblen Good

Thorstein Veblen (1899) stated that wealthy clients generally purchase conspicuous products with higher prices to indicate their social identity. The Veblen effect is applicable to luxury products in general, as there is a phenomenon whereby reduced selling prices result in the annihilation of the brand image (Bagwell &

Bernheim, 1996).

From an economic standpoint, there are several startling observations in the luxury study field about the relationship between demand and price. Contrary to the fundamental law of quantity demanded, the Veblen effect in the consumption of luxury brands relates to the phenomenon of conspicuous consumption; it refers to the increase in demand for a consumer's goods as a result of a higher rather than a lower price (Leibenstein, 1950). According to the economist Thorstein Veblen

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(1899), Veblen goods are those that are exclusive and function as a status symbol, closely resembling luxury goods. Thus, premised on the notion of conspicuous consumption, luxury goods can serve as a symbol demonstrating the customer's social identity (Veblen, 1899). The Veblen effect stands on the perspectives of luxury products’ price and customers’ consumption level, therefore, explaining the underlying logic of the principle of exclusivity of luxury brands. The principle

demonstrates a distinctive feature of luxury goods: a premium price is paradoxically positively associated with the consumption decisions of customers (Truong &

McColl, 2011).

As nowadays overstatement has been accepted by global culture, customers' purchase intention for luxury brands is to cultivate the desire to be distinctive and distinguish themselves from others (Phau & Prendergast, 2000). Even though luxury brands stand on the opposite of the “necessary goods”, which feature high entrance barriers created by the prices, selective distribution, and aesthetic

dimensions (Kapferer, 2017). Wealthy individuals are keen to buy high-priced luxury products as a way to demonstrate and express their affluence or show their

aesthetic knowledge about the designs (Veblen, 1899).

The consumption of luxury brands, as claimed by Veblen (1899), is motivated by two reasons: "invidious comparison" and "pecuniary emulation”. The former indicates that the wealthy individuals consume the luxury goods to differentiate themselves from the social environment; the latter implies that the lower class consumes the luxury goods out of vanity to prove that they belong to the higher class (Bagwell & Bernheim, 1996). In brief, the Veblen goods theory asserts that

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luxury goods, defined as those with a premium price but equivalent functionality to the normal brands, are unaffected by price increases because they act as a

barometer of a potential customer's social status (Truong & McColl, 2011).

2.2 Luxury brands

2.2.1 Elements of the luxury brand

In general, the socio-psychology domain shapes the definition of luxury brands;

nevertheless, as the dynamic competitiveness and volatility of the luxury brands market evolve, more and more brand management and business management scholars have begun to devote themselves to the field. For brand managers, understanding the concept of the "luxury brand" is the first step to take since the brand that devotes heavily to understanding brand management will become more competitive in the market (Kernstock, Brexendorf & Powell, 2017). A luxury brand encapsulates a symbol, an implied value proposition, and a personality

(Seringhaus, 2005). Luxury brands have been seen as having a low ratio of

functional usefulness to price, but a high ratio of intangible and situational utility to price (Balasyan & Casais, 2018). However, there has yet to be a consensus on a definition of a luxury brand in the academic field due to the concept of a luxury brand being highly relative, and the perception of luxury fluctuates with the passage of time and age (Eunju et al, 2019).

So far, five dimensions of defining luxury brands have already been confirmed by the past research literature. Dubois et al (2001) claimed that the definition of luxury brands is determined by the customer’s perception of the five elements: exclusivity,

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authentic value, prestigious image, premium pricing, and deep connection with customers. To stand out in the extremely competitive and dynamic luxury industry, companies must embrace the five corporate branding factors (Kernstock,

Brexendorf & Powell, 2017).

According to the concept of a luxury brand and customer intent, brand exclusivity is significant because it is the luxury brand's marketing tool for providing value to customers (Balasyan & Casaia, 2018). The functions and emotions associated with the rarity and exclusivity that luxury brands provide to their clients contribute to the development of authentic values that promote consumption intentions through the satisfaction of customer demands (Balasyan & Casaia, 2018). Authentic values comprise both tangible and intangible benefits (Kapferer, 1998). Authentic values do not merely indicate the provision of a product to clients; they require the creation of works of art, signaling aesthetic value and superior quality of the products

(Kapferer, 1998). Lastly, The prestigious image is also established on the excellent quality of the craftsmanship and multi-sensory experiences that the brands created (Kapferer, 1998).

2.2.2 Exclusivity

The luxury brand’s primary trait is its exclusivity. Establishing and maintaining a strong brand identity is the only way to thrive in management and competition, emphasizing the necessity of maintaining exclusivity in the luxury apparel market (Okonkwo, 2009; Balasyan & Casais, 2018). One of the statements about keeping rarity and exclusivity from the past literature is connecting their brand image with art pieces which are called an art-based strategy (Mase & Cedrola, 2017). Why do

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customers consume the luxury brand, firstly, customers’ consumption intention is built on the eagerness to enhance their social status and identity, which is related to the self-concept theory (Eunju et al., 2019). On the other hand, the willingness to be unique in the social environment is another reason for consuming luxury brands, it requires the luxury brand to be exclusive so that it meets the customer’s desires to be different in the society (Eunju et al., 2019).

2.2.3 The experience economy

Another crucial characteristic of luxury goods is the purchasing experience.

Postmodern customers are demanding the experiences of markets that are based on creativity, interactivity, and connectedness (Atwal & Williams, 2017). Therefore, luxury brands incorporated external stimuli to influence the customer perception of the total experiences (Wiedmann et al., 2013).The brands leverage the visual, aural, tactile, olfactory, and gustatory perception components inherent in luxury experiences to build a long-term positive brand image (Wiedmann et al., 2013).

This phenomenon is defined as the experience economy. Pine and Gilmore (2011) defined the experience economy in terms of two pillars: first, cocreation in the experience's formation; and second, the translation of experiences into memorable events. Considering the first pillar, new experiences initiate customers' desire to be more engaged and interactive with the brands; standing on the second pillar, the experience should elicit enjoyable and meaningful sensations in customers (Pine &

Gilmore, 2011). As a result, the companies stage experiences and amplify the product's characteristics to make the shopping experience memorable (Atwal &

Williams, 2017). Thus, experience marketing entails providing clients with sufficient

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information to boost the in-depth and tangible experiences that drive them to make purchases (Pine & Gilmore, 2011).

Commonly, luxury brands are offering customers experiential activities during the purchasing process. Pine and Gilmore (2011) indicated experiential activities involve four realms which are entertaining, educational, escapist, and esthetic.

Luxury brands have to achieve the aesthetic and entertainment dimensions of the experiential principles since those dimensions prompt the customers to all other senses in the luxury stores and improve the intensity of the customer (Atwal &

Williams, 2017). For example, luxury brands actively collaborate with artists and architectural designers to enhance the visual merchandising of the flagship stores.

Furthermore, some of the luxury brands installed fancy Bristo inside of the stores to improve the engagement and entertainment of the in-store experiences (Atwal &

Williams, 2017). Architects Jun Aoki and Peter Marino designed the new boutique building of Louis Vuitton in Tokyo, which is ranked one of the top 10 most beautiful luxury stores in the world (nssmag.com, 2021). The aesthetic and entertaining components of experiential events engage clients' senses and immerse them into the experience (Atwal & Williams, 2017).

Thus one of the biggest differences between the traditional brands and the luxury brands is in the experiential activities the luxury brands offer, customers consume the products not only for the products or services but for the experiences that

express authentic values. Luxury brands use a multi-sensory strategy to accomplish the aesthetic and entertaining dimensions of the experience, which aims to

strengthen the client relationship (Wiedmann, Hennigs, Klarmann & Behrens,

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2013). The sensory strategy has the potential to foster an intimate attachment between customers and brands, resulting in the customer's favourable perception of the brand-specific experience (Wiedmann et al., 2013). For luxury brands that are seen as sensory products, adopting a multi-sensory experience strategy is crucial for establishing efficient marketing communication and addressing positive

customer perceived values (Wiedmann et al., 2013).

Ch3 - Conceptual Model

3.1 E-commerce in the luxury brands:

The incompatibility features of the classless Internet and exclusive luxury brands result in a paradox between the two. As a crucial brand marketing and sales strategy, e-commerce has immense potential for luxury enterprises; it broadens market opportunities while enhancing efficiency and profits (Chang, Jackson &

Grover, 2003). Because it reduces the cost of delivering services and eliminates geographical barriers (Thompson & Corner, 2005). Adapting to ubiquitous digital connectivity is becoming increasingly crucial for a business's competitiveness enhancement (Balasyan & Casais, 2018). However, given the rarity, exclusivity, and inaccessibility associated with luxury brands, this is incompatible with the

accessibility attribute of E-commerce (Kapferer & Bastien 2009; 2012). In other words, the marketers of luxury brands always experience the tradeoff between brand value and accessibility (Ishihara & Zhang, 2017). As stated by Karl Lagerfeld, E-commerce lacks “the unique feel and sophistication of luxury materials, refined tailoring and extraordinary attention to detail found in luxury fashion.” It means that

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luxury brands must be aspirational and be perceived as somehow exceptional and unique, but they may also need to be considered as pertinent to a larger customer base in the ability to continue consistent sales and profit growth over time (Kapferer

& Pierre, 2016).

Because of the widespread use of E-commerce in the luxury business as a result of the internet's ubiquity, the need to maintain exclusive status is becoming

increasingly important (Balasyan & Casais, 2018). As exclusivity is a primary way for luxury brands to distinguish themselves from other fashion brands.

Meanwhile, It is vital for luxury brands to deliver a blend of emotion, image, and personality through their identity (Seringhaus, 2005). The biggest difficulty luxury brands face in implementing E-commerce is that they must preserve their intangible values and exclusivity features through the use of internet technologies

(Seringhaus, 2005). However, the task that luxury businesses face in increasing sales by operating E-commerce leads to the risk of oversupply, which is inconsistent with ensuring a limited supply and keeping products exclusivity (Okonkwo, 2009).

Furthermore, the most obvious phenomenon of the E-commerce dilemma is the inequality of physical and online shopping experiences that luxury brands can offer respectively. Consumption of luxury goods is based on intricate features such as the innovative and emotional appeal of products, as luxury brands are viewed as

sensory experiences (Okonkwo, 2009). The opulent environment of flagship stores and the exceptional services offered by front-line staff at the point-of-sale elevate consumers' physical shopping experiences, highlighting the customer's social position throughout the activity (Theong, Parsons & Yap, 2013). Besides, visiting

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the flagship stores on high fashion streets in a prosperous city also signals a

high-class social status, which stimulates consumption desires (Throng et al, 2013).

On the opposite, implementing E-commerce results in a disconnect with intended niche shoppers owing to a lack of personal interaction between sellers and products (Okonkwo, 2009). Customers are unable to detect the craftsmanship and perfection of luxury items when shopping on the internet because it is easily reversible and it provides highly uniform information (Okonkwo, 2009). The less powerful sales process on the internet reduces the emotional resonance with the clients, as it is difficult for people to sense the product on the website (Okonkwo, 2009). Therefore, the visual design of the luxury brand websites is essential for representing the lifeblood of the brand, it is necessary to transfer a strong brand identity onto the website (Okonkwo, 2009). E-commerce should establish and reinforce brand identity to provide customers with a sense of belonging, social status, and emotional value (Theng so et al., 2013).

3.2 Low level of customer loyalty in E-commerce

The role of e-commerce for luxury brands is growing in prominence since it

significantly aggregates purchasing power (Seringhaus, 2005). However, there is a widely held perception that the Internet conveys a low level of customer trust (Seringhaus, 2005). Even if clients place a high valuation on the brand, this does not guarantee loyalty to the E-commerce site (Seringhaus, 2005).

Based on the E-loyalty part indicated in chapter two, intercity is highly influencing customer loyalty in E-commerce. In more detail, the brands adopt a combination of visual images, audio tracks, and other visual techniques to replicate the original in-store experience on the internet (Seringhaus, 2005). However, this will result in

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information overload, obscuring the E-commerce content (Seringhaus, 2005).

Consequently, the difficulty stems from the incapacity of the online website to replicate the ideal in-store experience. Furthermore, there are some online security problems that are fundamental for the establishment of the luxury brand

E-commerce, which is related to customer satisfaction level. Transparency of information and data security represents the brand's commitment to protecting consumers' privacy, which may result in increased customer loyalty (Seringhaus, 2005). However, some the non-selling luxury brand websites fail to recognize the importance of curating the customers’ information (Seringhaus, 2005). As a consequence, in contrast to the high level of consumer loyalty associated with a luxury brand, the insecurity of information results in low levels of trust on the Internet (Seringhaus, 2005).

Furthermore, luxury brands selling online are concerned with higher risks, not only about payment method insecurity and absence of multisensory experience but also counterfeits with strong discounts (Hennings, Wiedmann & Klarmann, 2012). To avoid risks, customers prefer to experience the actual products before purchasing the luxury goods rather than simply clicking and paying online, except in situations where the customer has a limited amount of time (Hennings, Wiedmann &

Klarmann, 2012).

3.3 Customer loyalty in the luxury brand

Consuming luxury brands entails a higher acquisition cost due to the additional financial sacrifice, and as a result, consumers are expected to demonstrate a higher level of devotion and trust to a luxury brand than to a commonly purchased brand (Shukla, Banerjee & Singh, 2016). Customer loyalty refers to customers' willingness

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to commit to a certain brand over time and develop an emotional attachment to it to preserve a valued relationship (Shukla et al., 2016). Therefore, Creating emotional value is critical for luxury brands to maintain customer loyalty since it reflects the strength of the link between customers and the brand (Theng et al., 2013). The emotional values between customers and brands tend to result in premium experiences with feelings of closeness and involvement, which underpins the

accomplishment of purchasing decisions (Theng et al., 2013). Luxury brands should put more effort into building emotional attachment with their customers to maintain long-term sustainable consumer loyalty, as the added value underlines the client's stronger connection with the brand over time (Theng et al., 2013).

According to previous research, there are primarily two ways to develop the emotional value of luxury brands to preserve long-term client loyalty. First, by implementing a storytelling strategy that contributes to the reciprocal relationship between the brand and the client, luxury brands can elicit emotion from the

customer (Theng et al., 2013). Genuine storytelling is founded on an insight into the client's lifestyle and ambitions, these stories should be aspirational and compelling enough to foster greater customer relationships. (Theng et al., 2013). Apart from storytelling, second, the exceptional functional benefits of the products, including the tailoring and types of fabrics used in their production, will attract high-end buyers with an appreciation for the brands' knowledge and artistic aesthetics

(Theng et al., 2013). Improved utilitarian benefits will grasp not only the high-income customers but also attract middle-level income customers to build emotional

attachment and customer loyalty (Kim,2019).

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Overall, strengthening the emotional connection with customers contributes to long-term customer loyalty. This is not, however, the only way to gain customer loyalty. A few studies mentioned that due to the unique and rare traits of luxury brands, their legitimacy is another critical element in attracting customers (Shukla et al., 2016). Since the luxury brand is a product of society, customers' desire to

enhance their prestige and social position motivates them to maintain relationships with luxury brands (Shukla et al., 2016; Theng et al., 2013).

3.4 Customer loyalty in E-com luxury

The following section incorporates a diagram that depicts the relationship between luxury brands and e-commerce.Diagram 1 presents the conceptual model which includes the elements that influence customer loyalty in E-commerce and luxury brands. It provides an overview of the reasons why luxury brands are having difficulty retaining customer loyalty and illustrates the theoretical conflicts between the nature of luxury brands and E-commerce.

As shown in the diagram, the left part is the characteristics of the E-com and the right part includes the characteristics of the luxury brands. According to the past literature, the inherent characteristics of the two cause the consequences that luxury firms are struggling to integrate E-commerce and maintain customer loyalty.

As demonstrated by the diagram, firstly, customers are satisfied with e-commerce due to the ease with which information can be easily accessed. However, the feature of ubiquity conflicts with the exclusivity and rarity nature of the luxury brands. Because the accessibility of information will diminish the function of signaling the social identity of buyers intending to purchase luxury products.

Ubiquity is incompatible with luxury brands, which forces the brands to enter the

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mass class market. Therefore, if luxury products are increasingly accessible, they may lose their status symbol-function and contradict their exclusive nature.

The second E-commerce trait is efficiency and convenience, and the purchasing procedure is as efficient as possible due to the absence of payment intermediaries.

Eliminating shopping intermediaries shortens the time required to shop for premium goods. But the luxury brands sell sensory products, they create multi-sensory shopping experiences for customers to enjoy the process of purchasing the luxury products. Because luxury products are distinguished by their authentic value, superior quality, and aesthetic value, adopting an efficient and time-saving

e-commerce method will eliminate the luxurious experiences and make it harder to deliver the products' aesthetic values to customers.

Promoting and incentivizing sales is the third important element of E-commerce.

Since the Veblen effects on luxury brands, there will be a contradiction between the strategy of E-commerce and luxury brands. Consumption of luxury brands at a premium price is intended to be conspicuous; the premium price reflects the customer's social position; hence, lowering the pricing of luxury brands online will damage the brand's image and lessen customers' consumption intentions. As a result, the lower price of E-commerce is incompatible with the premium pricing structure of luxury brands, further diminishing the brand value.

Lastly, the primary advantage of E-commerce is the reduction of transaction costs;

businesses spend less on operating online storefronts than they do on

"brick-and-mortar" stores. While luxury brands are mandated with the duty of

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creating experiences and dreams for their clients, purchasing online removes the essential luxurious atmosphere, rendering the storytelling strategy ineffective (Xie &

Lou, 2020). Collaborating with artists, decorating flagship stores, and offering fancy drinks for customers are part of the experiences of purchasing luxury brands.

Lowering the transaction cost will inevitably diminish the entertainment experience and premium aesthetic values associated with luxury products. To summarise, the characteristics of E-commerce are diametrically opposed to those of luxury brands, which explains why it is difficult to maintain client loyalty online.

Diagram 1

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Part 2 - Investigation and Analysis

Ch4 - Methodology

This study uses a qualitative research method. The qualitative study involves an inductive approach, it encompasses the search for patterns through observation and the formulation of theories for those patterns via a set of hypotheses (Bernard, 2011). Compared with a quantitative study, a qualitative study could offer contextual understanding and insights into a practical problem that is specific to the fashion industry ( Rahman, 2016). Therefore, a qualitative study is more appropriate for this study. Furthermore, a single case study facilitates the development of a thorough and exploratory theory and can more accurately represent the phenomenon addressed by the research topic(Gustafsson, 2017). In addition, compared with multiple cases, a single case is better for developing high-quality in-depth theories (Gustafsson, 2017).The purpose of this case study is to compare the case to the existing theory and assess the obstacles associated with maintaining customer loyalty through the use of e-commerce, which needs new perspectives and profound comprehensions of the topic. The research subject is concerned with practical issues, which makes it more appropriate for a specialized case study to be conducted instead. The case study examined the fashion company Karl Lagerfeld, which is a French firm with its headquarters in the Netherlands and was having difficulty leading its e-commerce business.

Because the research is exploratory and inductive, and new insights are needed to address the research question, the most effective data collection approach for this

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study is the interview (Rowley, 2012). Compared with structured interviews and unstructured interviews, semi-structured interviews balanced the problems of flexibility lacking and easily bias in the other two (Rowley, 2012).Therefore, semi-structured interviews conducted in accordance with the conceptual model described in Chapter three are more easily comparable with the relevant

information, allowing for a more in-depth grasp of the research topic. The interviewees are employees from Karl Lagerfeld's departments; such as E-commerce, design, merchandising, and digital departments, constituting the study's most representative sample. Afterward, the interview transcripts will be analyzed to determine why E-commerce businesses struggle to maintain consumer loyalty. This case study has a total of twelve interviews; each interview lasts twenty to twenty-five minutes and is undertaken by one interviewer and one interviewee.

Adopting twelve interviews because this number can achieve the requisite saturation and variety for the investigation (Guest, 2006). The interviews were conducted at Karl Lagerfeld’s headquarters in Amsterdam, the content of the interviews is recorded, transcribed, and analyzed.

The main data analysis strategy of the study is thematic analysis. As illustrated by Braun and Clarke (2006), with the thematic strategy, the researcher looks for themes and patterns in the qualitative dataset that relate to the research question.

This study seeks to identify patterns among the luxury brand that have adopted e-commerce, different data-based themes need to be structured regarding the research question and the conceptual model; consequently, a thematic approach is appropriate for the study. The investigation of the case will be provided in the following chapters.

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4.1 Case Karl Lagerfeld

The designer luxury brand Karl Lagerfeld is founded by the “Kaiser '' of fashion, Karl Lagerfeld, who was the creative director of Chanel and Fendi. Karl Lagerfeld is not only an iconic designer but also a fast-growing luxury brand based in Paris. As his own namesake fashion brand, it presents a combination of Parisian-inspired styles with a rock-chic (Karl Lagerfeld, n.d.). The brand's DNA is consistent with that of its founder: a forward-thinking mindset blended with the avant-garde (Karl Lagerfeld, n.d.). The brand makes extensive use of the details of the looks of Karl Lagerfeld, cartoon depictions of his famous ponytail outfit, and splattered his hand-writing signatures as the huge logo on the ready-to-wear and accessories (Karl Lagerfeld, n. d.).

Karl Lagerfeld is a developing luxury brand. There are approximately 100

mono-brand places of sale worldwide, featuring notable boutiques in Paris, New York, Moscow, London, Dubai, and Shanghai (Karl Lagerfeld, n.d.). This brand is present in 96 countries and It has grown at a compound annual rate of around 30%

over the last five years, putting it in the company of Gucci, one of the

fastest-growing designer brands during that time (WWD, 2020). All of these achievements are an outcome of the company's digital-first approach;

notwithstanding the pandemic issue, fiscal revenue has been doubled in 2021 compared to 2020 (Socha, 2021) As claimed by the CEO, Pier Paolo Righi (2021), almost 40% of its business is conducted online, therefore, the online channel and E-commerce capacity contribute to the fast growth of the designer brand. However, as mentioned in the conceptual model, it is common sense that there is a trade-off for luxury brands to be digital.

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The case study of a concrete real-world luxury designer brand will highlight the challenges of maintaining customer loyalty and the factors that influence a consumer's satisfaction with the online shopping experience for luxury products.

This study chose Karl Lagerfeld as a case study due to its global prominence within the fashion field, and the reputation of Karl Lagerfeld‘s revolutionary contribution to modern fashion. Meanwhile, the brand's current digital strategy and E-commerce performance best represent the research topic in order to acquire a deeper understanding of the E-commerce difficulties confronting luxury brands.

Ch5 - Investigation and Analysis

This chapter draw upon the key themes and findings by analyzing and investigating the data gathered through interviews. Various patterns and themes, such as the characteristics of e-commerce, the nature of Karl Lagerfeld, and the factors needed to preserve customer loyalty in Karl Lagerfeld are identified. There will be a

discussion of the findings of the conflicts between the features of E-commerce and Karl Lagerfeld. Following the findings, this study will reveal other unexpected

findings on the key themes.

5.1 Characteristics of E-commerce

This session highlights the characteristics of E-commerce in Karl Lagerfeld based on analyzing the data gathered from the interviews. The characteristics of

E-commerce can be summarized as information accessibility, efficiency, and convenience, cheapness.

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5.1.1 Information accessibility

Half of the interviewees emphasized the importance of easy accessibility of E-commerce. Interviewee 2 clearly stated that:

“It is so broad. E-commerce has a bigger assortment because we are not restricted by the store, [...], it is a bit endless almost like not only within the brand, so it is easy to compare with other brands online.” (interview 2)

E-commerce is unrestricted by physical boundaries; hence, it is less complicated for customers to access products and compare with other brands. Interviewee 3

described this online phenomenon as “connecting you wherever you are, anywhere in the world”, Interviewee 6 confirmed that

“You can do it whatever you want to and wherever places you are, it gives people the time for themselves to take it all, [...] easy access to the brand so that customers can experience the brand anytime they want.” (interview 6)

It demonstrated that e-commerce could eliminate physical and temporal barriers and provide customers with an easier option to the purchasing page. Furthermore, interviewee 4 mentioned the benefits of the accessibility:

“[...] ease for customers is an important thing when you are online, the whole internet is on the palm of your hand, so you have exposed to a lot more options than the basic physical stores.”(interview 4)

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Optimizing E-commerce technologies facilitates information accessibility. From interviewee 5, the online shopping experience applies “3D and Avatar technologies for customers to try the clothes”. And interviewee 10 indicated that:

“We just optimized our site with a new programme, which is named Algolia.

[...]. Now we have this better tool for customers to easily search on the site.”

(interview 10)

With the application of new technology, E-commerce is therefore positioned as user-friendly, allowing customers to access the purchase data efficiently. Therefore, the technology simplified the customers' website navigation.

Interviewee 4 gave the background of the E-commerce situation in Karl Largerfeld:

“After the Corona pandemic the evolvement and competition of E-commerce are constantly increasing, E-commerce becomes a significant part of

business for Karl Lagerfeld. The retails were dropping but E-commerce took the opposite direction.” (interview 4)

And the application of new technologies signals the dramatic development of accessibility and interaction of E-commerce. Interviewee 10 described the information accessibility as:

“When you land on the product detail page you know how to navigate to another page, navigation is really important. [...] The customer journey and

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information are clear. It is super easy to understand what the product is about, how it looks, and then how to purchase a product. [...] We have a huge collection if you for example type pencil skirt in the search bar, and you couldn’t find the pencil skirt because it is not linked correctly then it should be a problem.” (interview 10)

Therefore, for information accessibility, it is essential that the consumers' online navigation experience is simple and unambiguous, and that customers can find whatever they need on the website by applying different technologies.

5.1.2 Efficient and Convenience

Another significant feature of E-commerce is convenience. The convenience of E-commerce originates from the delivery process, customer service, payment methods, and efficient shopping process. Interviewees 1 and 7 answered the feature of E-commerce is being able to “ship to the whole world ”, which

demonstrated the convenient shipment features of E-commerce. Furthermore, the shipment should be fast as well, for example, interviewee 1 described:

“Shiping the product from the warehouse of Karl.com to the customer within 48 hours, we reached this target by 98.5%, we already reached the shipment within 24 hours by 70%.” (interview 1)

Regarding client service and after-purchase care, e-commerce must also provide efficient services.

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“When customers are not happy with the product, [..], the communication should be fast between customers and the brand as well, we need to respond within 24 hours [...].” (interview1)

In interview 5, E-commerce was described as having a "smooth online purchasing experience," emphasizing the convenience of E-commerce in terms of the entire purchasing process. More specifically, as stated by interviewee 8, clients could

"hold the devices and choose the products without traveling," which decreases the expected required shopping time. Furthermore, not only does it breaks the physical barriers but also it conveys safe and fast payment methods, as stated by

interviewee 1 “Karl generates the best payment experiences for the customer by collaborating with different bankings”. Interviewee 10 added, “we have Klarna and after-pay options, and all those payment methods”. The payment methods ensure the smoothness and security of the shopping experience.

E-commerce also offers cross-selling techniques that can ensure the efficiency of a customer's product page search, according to interviewee 1

“When customers click on the Denim jacket, and below the website gives them suggestions on the jeans or an accessory that could match with them.”

(interview 1)

Consequently, by providing product recommendations, the website enhanced the possibility that customers would purchase multiple items. The cross-selling system

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functions as a cyber-style consultant for clients who desire more shopping-related inspiration.

5.1.3 ·Promotion and sales

E-commerce involves a long duration of sales promotions and incentives offered by online retailers. For example, from interviewee 1 “the digital market places have a lot of discounts, like monthly discounts, holiday discounts which go from 15% to 20%.” Interviewee 9 specified:

“We were on sale at the beginning of December until the end of February.

That we are on sale with 30% to 50%, so of course, we made a lot of revenues during that period.” (interview 9)

Interviewee 8 emphasized this point:

“How to keep customers excited about shopping online, the solution is usually using discounts, I think the easiest way is to be honest, coupons”.

(interview 8)

In addition to sales promotions, Karl also provides consumers with various types of rewards. As stated by interviewee 12,

“Rewarding is important, VIP programs, incentives and all type of things, [...]

due to customers are looking for the best deal they can get, [...], the

rewarding systems include customers' early access to the sales, for the top

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customers, we have gifts for them. [...] Or early access to the events.”

(interview 12)

The discounts and incentives serve as an inducement for customers to shop online and as a sales stimulant for the digital marketplace. Overall, E-commerce is

distinguished by its efficiency, convenience, information availability, and greater discounts.

5.2 Characteristics of Karl Lagerfeld

This session explains the main characteristics of Karl Lagerfeld, based on the matrix of luxury brands: rarity and exclusivity, status symbol, authentic value, and multi-sensory experiences. Rarity and exclusivity are determined from the analysis of the limitations of every season’s collections, while the status symbol is

determined by the consumer's psychological viewpoint, authentic value is determined by the brand value it conveys, and multi-sensory experience is responded by a combination of online and offline customer experiences.

5.2.1 Rarity and exclusivity

In general, Karl Lagerfeld does not strive for extreme rarity and exclusivity in terms of collection limitations. However, the main customers of Karl Lagerfeld should gain aesthetic taste in fashion. Even though Karl Lagerfeld is not an haute couture brand, it is obviously more expensive than fast fashion brands, according to

interviewee 3 as a full-price buyer: "We are what you can call the affordable luxury brand." Furthermore, interviewee 9 specified:

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“ We only have one or two styles on Karl.com, we do not have a full collection that can only buy online, also when we have too many sales it takes away the exclusivity.” (interview 9)

The lack of rarity is also demonstrated in the number of stocks KL have for each of the collection, interviewee 9 added:

“We always have a lot of stocks on all the products, which means, in turn, we need to offer these products. [...] We don’t have anything where we can really say it is exclusive.” (Interview 9)

Since its market position is an affordable luxury brand, as a bridging luxury, consequently, Karl Lagerfeld is not especially concerned with scarcity.

However, regarding the target customers that Karl Lagerfeld has, interviewee 1 mentioned:

“Some of the customers of Karl Lagerfeld are Millennials or even Z

generation because the design of our products is quite young, they also need to know a bit about fashion because when they know about fashion they know who Karl is and they stay committed to the brand.” (interview 1)

It demonstrates that Karl Lagerfeld is exclusive when it comes to addressing core clients. As described by interviewee 3, the core customers of Karl Lagerfeld is

“fashion-conscious”, therefore customers must have a fashion sense in order to

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purchase the brand. Nonetheless, it does not indicate the scarcity of production and the limitation of collections and stocks.

5.2.2 Status symbol

Customers' inclination to buy Karl Lagerfeld stems from the brand name it carries, therefore the brand serves as a status symbol for customers to express their

appreciation for Karl Lagerfeld as a legendary fashion designer, while also signaling the customers' fashion taste.

Customers' desire to buy Karl Lagerfeld products stems from their admiration for the designer himself. This is similar to other high-end luxury brands, for example,

Chanel and Dior,

“Karl Lagerfeld is an exception in the market since we are carrying a very important name of the most important designer, at the same time we are carrying the image of it.” (interview 8)

As stated by interviewee 8, “people purchase the brand as they are following Karl as a star”. This demonstrated that customers are not only purchasing the products but the image of Karl Lagerfeld as a fashion icon. Interviewee 11, the ready-to-wear designer of the brand, stated:

“All of the worlds knows what Karl Lagerfeld did in fashion, so buying Karl Lagerfeld is also something personal, because they just want to buy Karl Largerfeld, [...], since Karl is German raising in France, so all the German

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people love him, so they are loyal to him since he is a god for him at the moment.”(interview 11)

As a result, not only do consumers want to flaunt their fashion knowledge by wearing the products and displaying their fashion sense, but they also want to indicate that they are devoted Karl Lagerfeld fans. Interviewees 3 and 1 specify this point by stating “our customers already have aesthetic taste and are mature

enough” to make the purchases. In addition, as stated by interviewee 8, Karl

Lagerfeld as a brand more “focus on what he will wear”. Since Karl Largerfeld has a strong personality as a fashion designer and is known for his signature rock-chic style and ponytail in public, customers purchase Karl's brand to express their uniqueness in fashion by imitating the fashion icon.

As a result, the brand serves as the shadow of Karl Lagerfeld enabling clients to demonstrate their admiration for his life and his signature style, in the meantime, also displaying the aesthetic preferences of the customers.

5.2.3 Authentic Value

Karl Largefeld's authentic value can be evaluated in terms of the brand value it provides to its customers, as well as the design and quality of its products. The signature “rock-chic” and “Parisian essence” and the unique characteristics of Karl himself are the brand value that is infused throughout the brand. These aspects constitute the brand's DNA, the source of its intrinsic value, and the inspiration for its design. Karl Lagerfeld's authentic values also include the capacity to deliver top service and the ability to create stories.

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On the aspect of the brand value, Interviewee 12 clearly explained:

“Our unique selling point is the fact that we are the owners of the brand, it is the main connection point and link to the brand and Karl himself. we

communicate about Karl, his life, his legacy, there are a lot of people who come to Karl.com because they are fans of him, they know him, they know his name, [...] so that we can also give them a bit of an experience into him and his life.” (interview 12)

Karl Lagerfeld's brand proposition is preserving Karl's DNA and his own personal style, and delivering these qualities to clients so that they may perceive the designer's legacy. Interviewee 5 specifically mentioned:

“It has the name of the designer which I think is super important, we have maintained this rock chic, Parisian essence, and every signal collection is breathing Karl, [...], even though things change and adapt to the new trends but we still are original and unique in the brand essence”. (interview 5)

Therefore, the brand value of Karl Lagerfeld is the history that he created, and they are enhancing this history in every piece of garments that they designed. By

purchasing the brand, people could ultimately feel a connection with the designer.

Also, the design of the products should always follow what Karl wants to wear. For example, as stated by interviewee 6:

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“We have the shirts with the white-collar which is really high demanded. We do a lot of black tailoring that does really well. [...] He is always in black denim and the shirt and the blazer, and the rocky jewelry which is really big and chunky.” (interview 6)

Except for following Karl's DNA, Interviewee 7 proposes that the design itself should feature a twist, as he explains:

“It’s like a black bag, but then with a twist, for example with some extra styles or you see that it with a cool shape, so you know it is not like a classic brand like Hermes,[...], it is cooler.” (interview 7)

So keeping design in a commercial way but also fashionable is important, as mentioned by interviewee 8:

“[...] design something is good, but at the same time not exaggerated, you really need to go straight to the point with, there must be Karl’s name or image but not too much.” (interview 8)

The quality of the products is also part of the authentic value. From interviewee 11

“quality keeps customers come to you, if you give them this T-shirt this season in Astana cotton, the other season in Viscose, you can not keep the quality [...]”

Interviewee 7 added, “it is very important to offer quality, especially with the point of view on sustainability, to buy something that you can wear multiple seasons.”

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Therefore, Karl Largerfeld also focuses on the quality of the products to keep offering authentic value to customers.

Premium service categorized under the authentic value is also a distinctive feature of Karl Lagerfeld. According to interviewee 12

“Customers want to have VIP services in the Karl stores, they want to make a personal appointment so that get personal greeted, they want to sit in the lifestyle area and maybe have, some products pre-selected for them to view again. Personalization if there is a relationship”. (interview 12)

Therefore, the Karl Lagerfeld provides exceptional in-store service to their

customers. Customers visit the flagship stores since they expect to be “treated like the most important person in the whole world”. Their highly trained personnel provides advice and greets clients appropriately, as said by the interviewee 9 “the style advisors that are there to help the customers to match outfits”, which ensures that customers enjoy their shopping experiences in the luxury stores.

Another major feature of Karl Lagerfeld as a luxury brand is its capacity to tell a story to its customers. As indicated above, the key reason buyers purchase Karl Lagerfeld is the designer himself. From interviewee 9 “ the purpose of customers buying the brand is sentimental, they know Karl the person they know what he stands for.” Karl Lagerfeld is a big name in the fashion field, customers want to consume the brand to emulate the fashion icon. The remembrance of Karl and the innovative designs and outstanding quality he stood for brought customers to

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purchase the brand. As a result, the brand continues to narrate Karl's story and

“uses archive sketches” (interview 10) from Karl to develop and modernize the company's DNA.

The brand is continuing to create dreams for clients to remember the icon, as well as collaborating with Karl's friends and models to share his story and history.

Interviewee 3 mentioned: “[...] that is really something about how we present our DNA in our collections, and really captures the customers’ heart by telling the stories.” Karl Largerfeld applied the storytelling strategy by

“Having more textual copy for products, but also more storytelling regarding collaborations, Cara loves Karl collection on the World of Karl is the right track.” (interview 4)

What interviewee 6 mentioned is that “we really need to tell the stories about everything linking to him”. Therefore, this element serves as the primary selling point for acquiring new customers, as the luxury brand is not only selling products but the DNA of the brand.

5.2.4 Multisensory experience

Karl Lagerfeld provides clients with multisensory experiences in the stores. This characteristic consists of multiple components, including touch, vision, hearing, smell, and feel. Visual perception can be applied to product packaging, visual design, display strategies, and product artwork.

From interviewee 1,

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“We want the customers to have a great experience not only on the products but also the packaging. Karl updated the package recently, we have the delicate wrapping boxes with Karl's portrait. [...]. ” (interview 1)

Karl Lagerfeld conveys the brand's DNA to buyers. On the other side, as indicated by interviewee 12, stores could serve as the "display of the brand." According to interviewee 11,

“I need to categorize and organize as much as I can, and the visual can be clearer, the stores should be flawless and professional in their presentation of the items, and they should try to kept tight and tidy and with a nice smell, you need to be professionalism." (interview 11)

Furthermore:

“ We just had an NFT with Antlers, who is an artist we worked previously, there was a super expensive NFT, we gave customers a ticket to visit the store and there is an event where you can meet the artist, and he can make a graphic for you.” (interview 10)

Thus, the stores serve as more than just a location to display things; they should also function as an art gallery, providing customers with an artistic experience

visually. Therefore, the techniques used to display the products should be appealing and professional, resulting in a luxurious shopping experience for customers.

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