Highlights in Business, Economics and Management
PEER 2023
Volume
13
(2023)
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Luxury Brand Prada's Digital Multinational Marketing Strategy
in China
Muhan Chen
College of Communication Arts and Sciences, Michigan State University, Michigan, United States
chenmuha@msu.edu
Abstract.
With the gradual popularity and rapid development of digital media, many luxury brands
have started to adapt to transnational digital media platforms in order to strengthen their connection
with international consumers. The cultural background and complex consumer composition of
different countries bring new opportunities and challenges to luxury marketing. Therefore, this paper
collects literature and data related to the luxury brand Prada so as to reveal the current situation and
shortcomings of Prada's transnational marketing in China. The research shows that Prada has
achieved good results in its digital marketing in China, but it still lacks platform segmentation,
differentiation, online and offline integration, and localized marketing. Through a critical qualitative
analysis of these data, the researcher finds that Prada needs to optimize its transnational marketing
strategy in terms of providing different marketing strategies for different platforms, integrating digital
marketing, and adding localized elements.
Keywords:
Qualitative research, luxury brands, digital marketing.
1.
Introduction
The development of technology is constantly changing people's living habits and consumption
behavior. These changes have also affected the marketing strategies and sales models of companies.
As a result, companies must learn to take advantage of digital marketing and explore new ways to
communicate with consumers in order to build closer relationships between them and companies.
The business value of digital marketing to companies is immeasurable; in 2022, the total amount
of consumption affected by digitalization reached $4 trillion, accounting for about half of the global
retail sales [1]. However, digital marketing also offers new challenges to companies. The relative
cheapness of digital sales channels makes it easy for businesses of almost all sizes to reach. In addition
to this, digital marketing takes on a fragmented form. The fragmentation and personalization of
information on the Internet make it difficult for companies to effectively communicate their brand
messages to their target consumer groups. As each country's economy continues to grow, the
purchasing power of international consumers is also increasing. Some emerging market countries are
gradually becoming targets for the world's leading luxury brands. In the past three years, China has
rapidly developed international e-commerce, and online retail sales account for more than half of the
global online retail sales [2]. Therefore, luxury brands need to innovate and develop their original
marketing models more so as to conduct digital marketing across borders.
Unlike ordinary brands, luxury brands have a small audience and high marketing costs. However,
there is a relative lack of research on the marketing of luxury brands in the digital market environment.
Based on the broad prospect of luxury industry in the multinational market, researchers believe that
it is necessary to conduct in-depth research on the multinational digital marketing of luxury brands.
Therefore, this paper aims to explore the digital marketing of luxury brands, so as to help luxury
brands find a balance between international markets and their own brand image. This paper collects
literature and data related to the luxury brand Prada to summarize a fact-based and observable analysis.
By uncovering potential problems, this paper aims to help find the right marketing strategy for the
luxury brand Prada.
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2.
Digital Marketing
2.1.
Concept of Digital Marketing
Digital marketing refers to the use of digital communication channels to promote products and
services. It uses social media, search engines, and other forms of the Internet to facilitate potential
communication between brands and consumers. Digital marketing has two important characteristics.
First, digital marketing is mainly spread through fragmented information. The development of a
digital society has led to a trend of fragmentation in the way the public learns about information and
the content they receive. This fragmented information includes clickstream data, consumer reviews
and ratings, hashtags, and social interaction data. This data is useful to help brands understand user
behavior, develop marketing strategies, and measure the effectiveness of marketing results [3].
However, the large amount of data increases the uncertainty and disruption for brands to filter
information during the marketing process. Therefore, brands need to filter the nuisance factors and
screen effective information in the marketing process. Second, digital marketing is integrated into
multi-channel marketing. Due to the convenience and extensiveness of digital, digital marketing can
achieve close integration of various channels. In sales, integrated digital marketing enables a series
of processes for disseminating product information, collecting payment and after-sales service.
According to Ira Kaufman's theory, an integrated digital marketing strategy usually consists of four
basic steps: establishing core values, promotion, converting traffic and evaluation [4]. This kind of
integrated marketing can be responsive to customers' individual needs. On the other hand, companies
can plan and coordinate their marketing activities across different channels in a unified way to avoid
the negative impact of inconsistencies in different communications. In the integrated marketing model,
brands need to use diverse communication methods to deliver brand values among target groups.
2.2.
Advantages of Digital Marketing
With the continuous development of the media, traditional radio and television gradually lost their
social influence. Instagram, Twitter and other social media have demonstrated their amazing
communication in just a decade or so. Therefore, brands that rely solely on traditional media
marketing are no longer able to adapt to the new era of commercialization. Companies need to
improve their marketing methods and use new digital media to gain competitiveness.
There are three advantages of digital marketing compared to traditional media. First, digital
marketing helps brands to raise brand awareness. There are a large number of users on social media
who are quickly browsing and sharing information every day. Brands can take advantage of this to
effectively give users access to information about their brands. For example, users can keep track of
the brand's launch date and launch price. In addition, the volume of information pushed by social
media will take up additional space on electronic devices. Therefore, this information pushes help
brands reach users more frequently and deepen their awareness of the brand. Second, digital
marketing helps increase user stickiness. Compared with traditional marketing methods, the diversity
of social media communication is more conducive to increasing active user engagement. Informative
appeal emphasizes factual information about the brand, thus allowing consumers to think logically
about the reasons for purchase. Conversion appeal posts emphasize the positive outcome of purchase
through positive images, videos and music. Compared to the former, conversion appeal helps brands
engage their target audience more effectively by giving users sensory gratification or social
recognition, thus increasing user stability and stickiness [5]. Third, the cost of digital marketing is
lower. The information delivery method of the Internet has a strong interactive nature. With the
development of social media platforms, users are more willing to actively obtain and share
information. Therefore, compared with traditional forms of marketing, companies can reduce a large
amount of physical advertising investment and marketing costs.
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3.
Prada Digital Marketing Strategy
3.1.
Prada's Digitalization Process in China
The pace of Prada's digital transformation has been slow. From 2014 onwards, a large number of
luxury brands began to cooperate with Chinese e-commerce platforms such as Tmall and Jingdong.
It was not until 2017 that Prada began to launch an e-commerce function on its Chinese website [6].
Prada initially adopted a marketing model of splitting sales between physical stores and online stores.
By counting purchases, Prada then selected the products to be sold in its physical stores and flagship
stores. However, Prada's initial digital marketing in China did not achieve better sales. Later, Prada
started to be present in major e-commerce sites in China, such as Taobao, the largest e-commerce
platform in China, and another brand of Prada, MIU MIU, was present in Jingdong, and opened a
limited-time online store in WeChat. At this point, Prada's e-commerce presence has reached almost
all Chinese netizens.
Prada's digital transformation is starting to get on the right track. From 2018 onwards, Prada
resumed earnings growth. According to the financial report in December 2020, Prada's market value
exceeded HK$100 billion. Patrizio Bertelli, CEO of Prada Group, said that the digital strategy had a
significant effect on the Group's profitability improvement. After that, Prada started to enhance the
online store experience according to Chinese consumers' usage habits. Prada set up navigation
systems within most of its websites and introduced a modular framework to optimize the user
experience. In addition to the expansion and optimization of online channels, Prada is also getting
closer to Chinese consumers through localization, such as Prada's flash mob in Chinese food markets.
In 2022, PRADA chose Chinese artist Cai Xukun as the brand's spokesperson [6]. With the popularity
of the young artist, Prada tries to tap into the market of young Chinese consumers and further build
brand recognition. However, compared with other brands, Prada's revenue is slightly lagging behind.
2022, Prada's first-half net income of 1.9 billion euros, up 22.5% year-on-year. 28% growth rate of
LVMH's first half performance, Hermes' sales also improved 26% year-on-year. As a result, the Prada
Group has proposed the Prada 365 digital marketing strategy, which aims to create a fully integrated
communication platform in all dimensions.
4.
Analysis of Marketing Strategies
Since luxury brands are characterized by distance and personalization, luxury brands generally use
high-end communication media. However, there is a big contrast between the characteristics of the
luxury brand Prada and the entertainment of social media platforms. Therefore, Prada's digital
transformation did not bring a good revenue boost. Prada's 365 digital marketing strategy has not
built a complete integrated user ecosystem. There are weak links in the user ecosystem, such as
payment, pickup, and after-sales parts. This resulted in the overall digital brand experience for users
not meeting offline standards. Facing the challenge, Prada's communication strategy needs to be
optimized and adjusted.
4.1.
Lack of Platform Segmentation
Prada segments its market according to different factors, such as age segmentation, gender
segmentation, income segmentation, etc. [7]. However, Prada does not have detailed platform
segmentation on its digital platforms in China. This leads to a high homogeneity of Prada's marketing
model on each platform. Prada has created official accounts on the larger Chinese social media
platforms Weibo and Xiaohongshu, as well as on the Chinese version of TikTok. However, Prada has
only 690,000 followers on the Chinese version of TikTok. The number of Prada followers in the
Chinese version of TikTok, which has an active population of 700 million, suggests that most users
are unaware of the existence of this top luxury brand on TikTok. On Xiaohongshu, Prada has less
than 60,000 followers. The Chinese version of TikTok is a platform dominated by videos, and
Xiaohongshu is a platform dominated by pictures and texts. However, comparing the marketing
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contents of TikTok and Xiaohongshu, Prada often uses videos and longer text introductions on both
platforms. Long text introductions are boring for TikTok users who are used to a fast pace, while
video content does not appeal to Xiaohongshu's users. This shows that Prada has not segmented the
marketing methods of the major platforms in China.
4.2.
Lack of Differentiation
Differentiated development is the keyword of digital marketing. If the communication content
lacks differentiation and innovation, it is difficult to effectively communicate the brand values
conveyed. Although Prada sometimes gets a high level of buzz because of its outstanding content,
however, it is difficult to maintain this buzz. In TikTok, the number of likes reached nine thousand
on January 21, 2023. However, the average number of likes on Prada's account in TikTok since then
is only about 300. Homogeneous content is difficult to ferment buzz on each platform, and therefore
difficult to convert traffic into sales. Therefore, Prada needs to differentiate its marketing in different
digital areas to cater to the habits of users on different platforms and increase traffic on them.
4.3.
Lack of Integration between Online and Offline
While most brands are carrying out omni channel marketing, Prada's online and offline integrated
marketing process is relatively slow, especially in multinational marketing. When asked if their online
and offline store experiences were different, a financial person who had been buying Prada on Tmall
said she preferred to browse online [8]. She stated that the physical experience may not appeal to
shoppers who are used to shopping online and that she feels that in-store salespeople can be snobbish.
Therefore, a portion of users who are used to online shopping may not be accustomed to the offline
marketing environment and activities. In addition, although Prada has a large number of online stores
in China, these flagship stores do not impress users. In the reviews of the online stores, some people
reflected that "Prada's online store which looks like any fast fashion store [9]." Users who are used to
enjoying Prada's offline shopping, they do not like the single, minimalist online shopping atmosphere.
Like other brands, Prada uses shouted exaggerated performances and simple and boring sets for live
streaming. This live atmosphere is contrary to the luxury brand's usual emphasis on high-end, scarce
attributes. Even when celebrities are invited to the live stream, Prada's cumulative online viewership
is low. In general, Prada's current online and offline experience model is rather fragmented. How to
make a balanced diversion and conversion of online and offline consumption is also a new problem.
4.4.
Lack of Localization
For international luxury brands, launching merchandise that caters to localization is one way to
achieve explosive growth in instant traffic. However, Prada's localization model in China is facing a
crisis, and Prada's vegetable market is a cross-border marketing campaign made by Prada in
collaboration with Shanghai's online market, Wuzhong Market. During the event, the appearance of
the bazaar was wrapped by a big PRADA logo, like the visual elements of the show. The bag design
used the Jacquard pattern released in the new season. During the event, the price of fruits and
vegetables, fish and flowers sold in the market remained the same, but the wrapping paper was all
printed with Prada's logo. This sense of contrast attracted a large number of people. On weibo, the
topic of "Prada vegetable market" was read 1.142 million times and discussed 3292 times by October
11, the end of the campaign [10]. However, just when the campaign was at the climax of the positive
reviews, the campaign took a turn for the worse. In some photos that appeared on Weibo, some young
people were first photographed holding up the vegetables they purchased, but after turning around
and exiting the food court, these people threw the goods into the trash while keeping only the bags.
The waste of food and vanity were criticized by a wide range of netizens, and the Prada vegetable
market event was discussed with more than twice the heat of the previous peak. Positive online
sentiment slipped to 58% from 73% before the event came to light, and negative sentiment rose from
3% to 19%. Prada’s reputation as the luxury brand hosting the event was somewhat diminished.
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Prada's offline flash mob events in other countries were successful, yet they suffered from a word-
of-mouth crisis in China. This is due to the fact that Prada's offline flash events in other countries are
mainly located in bakeries in Paris, malls in New York and revolving sushi in Tokyo. The audiences
of these offline consumption locations are highly overlapping with the audiences Prada originally
wanted to attract. Prada's marketing campaign in China was intended to attract young Chinese
consumers, as Parisians buy kosher and Japanese buy sushi as part of their daily life. However,
shopping at food markets is not a mainstream lifestyle for young Chinese people, especially in fast-
paced cities. With the ferment of social media, most young people who walk into the market are not
the consumers Prada originally targeted, but young people who follow the media tend to follow the
trends. This marketing method attracts a lot of traffic, but it doesn't appeal to the main target audience.
The uncontrolled behavior of these groups’ leads to undesirable negative fermentation. Prada
originally wanted to achieve through the viral spread of social media localized marketing has caused
the failure of the results. This shows that Prada did not do enough localized market research, and did
not match the target audience.
5.
Suggestions
5.1.
Offer Differentiated Marketing Strategies for Different Platforms
Prada needs to increase the differentiated presentation of its platforms. Prada needs to focus on the
strengths and audience groups of each platform and develop different digital marketing strategies.
TikTok is the main activity platform for the younger generation. Prada needs to establish new
cooperation with young bloggers. As an example, Prada can use the offline interactive activities of
head bloggers to promote the consumption of the younger generation. The brand could invite bloggers
to follow the latest Prada-themed hashtags and initiate invitations for users to participate. Prada also
needs to focus on differentiation before and after the platform campaign. Differentiated operations
can effectively turn campaign buzz into actual sales. For example, Prada can refer to Tencent's
differentiated operation in the luxury flat brand show campaign. Before the start of the live show on
Tencent's platform, Prada can unveil the exciting preview of the show with the help of WeChat mini-
video and so on. This helps Prada capture users precisely in the information flow. On the day of the
live broadcast, Prada can achieve a short time big exposure with the help of Tencent video. After the
event, Prada can combine the habits of new generation consumer groups to create hot play, such as
emoji packs.
5.2.
Integrated Digital Marketing
The integration digitalization of luxury goods is a complicated process. The digital transformation
of luxury goods is not just from offline to online, from stores to outlets, but needs to integrate a new
integrated user ecology. The behavior trajectory and consumption logic of consumers integrated into
this ecology is the key to integrated marketing. Prada can use the multiple services of China's digital
platform to achieve the integration of online and offline. WeChat's circle of friends, video number,
etc. can realize to divert a large number of users. After that, WeChat's small programs and public
numbers can help ferment the content. Based on consumers' tendency to search for content and
consumers' comments, brands can be informed of consumers' purchasing decisions. A lot of online
marketing can help the brand to attract traffic from online to offline.
Prada also needs to channel offline to online, and it can establish a more convenient payment
method based on Chinese consumers' payment habits. Due to the development of the logistics industry
and electronic payment industry, many foreign e-commerce companies such as Shopbop, Farfetch
and Amazon have opened cross-border transfer and support the Alipay payment business, Prada can
cooperate with domestic and foreign payment industry and logistics industries to integrate the
payment path. This will help solve the problem of difficult payment and pickup for online users. At
the same time, Prada needs to focus on improving the quality of customer service for online services,
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so as to ensure the uniformity of standards for luxury brands online and offline. All these ways help
Prada to better divert offline users to online.
5.3.
Increase Localization Characteristics
PRADA needs to avoid unconscious reference to its own cultural values in the process of
multinational marketing. Prada should always maintain a high degree of cultural sensitivity and
improve the cultural adaptability of the brand. PRADA can refer to Gucci's innovative localized
customization service. Through the DIY customization service, customers can personally participate
in the process of making Gucci handbags for the Chinese New Year. Users can choose their own
accessories to show their own personal style of Gucci handbags. This shows the brand's sincerity and
captures the consumers' demand for self-expression. Most importantly, PRADA needs to conduct
detailed localized market research and listen to the voice of local consumers.
6.
Conclusion
Based on the current context of widespread digital media and constant challenges to traditional
channel marketing strategies, this paper examines the strengths and weaknesses of luxury brand
Prada's current digital marketing and offers suggestions for optimization. Prada was late to launch e-
commerce in China, but Prada has proven that it can reinvent itself in the digital age. Over the past
few years, Prada has taken many steps to increase brand awareness and user loyalty in the Chinese
market. Prada has partnered with a large number of Chinese e-commerce platforms for digital
marketing and has continued to enhance the online store experience. However, Prada's revenue has
not shown an advantage over other brands. The study found that Prada did not segment its digital
marketing in China according to the characteristics of different platforms in terms of platform
segmentation, nor did it make the most of differentiated and integrated marketing. In addition,
because Prada has not fully grasped the Chinese market environment and human characteristics, it
has caused Prada to deviate in catering to localization. In the coming years, Prada should make good
use of the communication methods and communication characteristics of different digital platforms
to create and maintain a good user base from different platforms. Secondly, Prada needs to establish
an integrated online and offline integrated marketing model, so as to give consumers a complete
luxury consumption experience. Third, Prada needs to increase product marketing that is more
relevant to Chinese habits and introduce more personalized experience models. This study aims to
help luxury brand Prada to re-examine the characteristics of Chinese consumers in order to better
understand and approach them through digital means. The limitation of this paper is the high level of
subjectivity. The analysis and arguments in this paper are subjective due to the researcher's research
approach of using mainly inductive studies for analysis. In future research, the researcher expects to
use a combination of qualitative research leading to more in-depth data analysis, for example, by
developing questionnaires to interview consumers. In the future, there is much room for deepening
and developing digital marketing theories, and therefore the researcher expects to conduct in-depth
research through new marketing theories to help luxury brands address digital challenges.
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