eThesis - School of Business electronic theses

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The global market for luxury goods has witnessed a phenomenal growth over the past decades. Along with the increasing demand that stems from increased purchasing power, emerging markets, and new wider consumer groups, traditional luxury brands have faced a fierce competition caused by new forms of luxury such as masstige and luxurious fashion. Likewise, the rapid growth of social networks and social media has fundamentally transformed the business environment, and the whole society. Digital networks have facilitated companies and consumers to build online consumption communities, which supports the recent shift of marketing focus on relationships and co-creation of value. Consequently, luxury brands have started to use social media for advertising and relationship marketing. Due to the dynamic and interactive digital environment the importance of brand stories has become even more apparent.

While brand communities and online communities are widely studied, luxury brands and social media based brand communities (SMBBCs) have not received yet much academic attention. This study takes the approach of SMBBCs to investigate the influence of consumers' participation in luxury brand's social media on brand experience, and on key dependent variables in consumer behavior research: brand affect, brand trust, and brand loyalty. The purpose of this study is to examine the effectiveness of social media, and to contribute to the research on social media brand communities and brand-consumer relationships, as well as luxury brands.

The study proposes a theoretical framework that combines two empirically developed constructs: brand experience, and brand affect/trust-brand loyalty constructs, and tests the model within a social media based luxury brand community context. The data were collected as an online survey from various social media, which resulted in 333 valid responses from consumers who follow a luxury brand's social media. The study is quantitative by nature, and uses structural equation modeling (SEM) as the main method of analysis. To further examine the influence of participation on the focal construct, brand experience, analysis of variance (ANOVA) was also conducted.

The results support the reasoning that participation in luxury brand's social media affect consumer behavior. Social media following influences brand experience that accumulates in the long run, but participation affects also rapidly consumers new to the brand. Further, active participation and passive participation appear to have equal influence on brand experience. The findings reveal the chain of effects from brand related stimuli to brand affect, brand trust, and brand loyalty, and confirm the importance of affect in building brand loyalty.