Customer involvement through social media in the product development process within the luxury goods industry

University essay from Göteborgs universitet/Graduate School

Abstract: Background and Purpose Rapid technology transformation and changing customer preferences are impacting the luxury goods industry. By 2025, 100% of luxury purchases will be influenced by an online interaction and social media channels have hence been considered as an important way to establish relationships with consumers. Furthermore, social media is no longer only acting as a sales and communication tool, it can also be utilized for co-creation with customers in the product development (PD) process in the luxury industry. The case studies in this research therefore aim to reveal how luxury goods companies are utilizing customer involvement through social media in their PD process. Thus, the report has a strong focus on analyzing the perceived challenges and benefits concerning the investigated subject. Methodology The research builds on an extensive literature review of the product development process, customer involvement, social media and the luxury goods industry. To extend and build upon the literature, semi-structured interviews with seven luxury goods companies located in Paris, London, Stockholm and Copenhagen were conducted. In addition, four industry experts were interviewed in order to better understand the complexity and changing circumstances of customer involvement in the luxury goods industry. Findings and Conclusions The empirical findings demonstrate that customer involvement is used to some extent in the following phases: idea, validation, launch and post launch. Furthermore, social media is mainly serving as an informal source of information, in the idea and post launch phases, where the customer is passively involved. However, it has been concluded that due to utilization of social media customer involvement has increased among the majority of the companies. Furthermore, several challenges and benefits have been identified with using customer involvement and the utilization of social media in the PD process. The perceived challenges of using social media may be the reason for not being utilized in a formal way to a greater extent. However, in addition, the empirical findings also reveal several industry characteristics that highly influence the degree of customer involvement and customer involvement through social media. Originality The findings contribute to a better understanding of how luxury companies are utilizing customer involvement through social media in the product development process which has not been done before. The research hence provides to increase the existing knowledge in the academic field but also to help luxury goods companies to understand how other companies within the industry are addressing this phenomenon.

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