This study explores how the fashion and product designers of luxury and premium brands envision the direction of product innovation. The findings include valuable support for the luxury brand strategy of moving towards innovation in sustainability, customization, and developing the new concepts of rarity of experience and luxury sports products.

Nowadays, customers have become increasingly dissatisfied with accepting products and services offered by suppliers. Instead, they are involved in product development as co-productor (Prahalad & Ramaswamy, 2004). There are diverse types ranging from online discussion to virtual design enabling customer involved in co-creation activities related to product support. “Customer design” enables the firm to have possibilities enhancing the whole value of product design during development process (Fuchs & Schreier, 2011). However, some of scholars have found that customers cannot always play a useful role in luxury product design. Fuchs and Schreier (2011) studied that buyers can easily observe the source of design, which damage the image of co-designed product. That is because luxury product always played as a specific label of wealth and states to some extend (Ko & Phau, Aiello, 2016). Thus, this study draws from co-creation theory to investigate the specificity of online luxury design, using an experimental method. We analyze and discuss the diverging affection of luxury design held by co-creation idea innovativeness and behavior intensity, and the role played by sponsoring firm and community members.

While product design is intrinsically linked to brand building and to the definition of luxury, consumers’ sensitivity to luxury products and to design is usually addressed separately. Yet, for optimal marketing-oriented decisions, they need to be brought together. Furthermore, while design is intrinsically linked to luxury, little research focused on its influence on the symbolic and the economic value of brands. This research specifically delves into the mechanisms behind how brand-level attitudes can be influenced by product-level sensitivity to product design. Building on the value theory, it investigates to what extent the product design enhances luxury brands value. Based on a data set collected on 125 individuals, a partial least square analysis was used. It contributes and extends literature on branding, design and luxury in three distinct ways. Firstly, this research distinguishes two antecedents of the product design that are the social and the individual drivers. Secondly, it reveals the mediating role of the product design between social and individual drivers, on one hand, and luxury brands symbolic value (through brand love and brand equity), on the other hand. Thirdly, it confirms the creation of economic value through the positive influence on willingness to pay a premium price. In terms of managerial implications, this study reveals the importance for luxury brands to develop sensory branding through product design. It especially points out the added-value of design for luxury brands’ equity, its role in fostering brand love and in increasing luxury brands turnover.

Innovation in technology has led to the growth of hybrid products, which demonstrate features of more than one product category (Rajagopal & Burnkrant, 2009). This trend is evident in the luxury market (e.g., the Tag Heuer Connected wearable, a hybrid of a luxury watch and a computing device. The combination of technology and luxury can pose challenges in the design and marketing of such devices. This could be a problem for new hybrid luxury products, which consumers typically evaluate in terms of symbolic meanings rather than functional utility. In this research we build on and contribute to the product design literature as we propose a model in which the characteristics of aesthetics, symbolism, functionality, monofunctionality (how many different tasks a product delivers on), and ergonomics are antecedents that drive usage intention for luxury hybrids, specifically wearables. First, we find that perceived ergonomics and perceived multi-functionality influence perceived overall functionality of wearables, which then has a positive effect on intention to use those products. Perceived aesthetics appears as an important characteristic for wearables, as mediation analysis shows it has an indirect effect on use intention, both through perceived symbolism and overall functionality of those hybrids. Such order of effects within product design characteristics has not been explored before and our findings yield implications for academics and practitioners.

With consumption increasingly shifting to online and mobile, the physical retail environment has been called into question. However, not all facets of a physical experience can be substituted virtually (Anderson & Eckstein, 2013; Johnson, Kim, Mun & Lee, 2014, Piotrowicz & Cuthbertson 2014, Verhoef, Kannan, & Inman, 2015). The enduring quest for real, tangible experiences with real people and in real environments is one reason for the acknowledgement of the importance of architectural branding 1 , enabling memorable experiences (Raffelt, 2012). Here, architectural branding plays a key role at the intersection of consumer behavior, marketing management, and design. Furthermore, one can also observe the trend of forward brand verticalization in retail: with brands increasingly strive towards direct distribution, they open and manage more retail stores themselves (Kahn, Inman & Verhoef, 2016, Nierobisch et al. 2017, Teufel & Zimmermann, 2015, Tischer, 2014). This is especially true for the luxury industry, where brands are looking for ways to attain more control over the brand in order to steer highend customer experiences (Wiedmann & Hennings, 2013, Deloitte Touche Tohmatsu, 2015). Therefore, demand to develop good architectural branding in retail and to improve retail design strategies for current and future challenges is crucial. During the last five years, marketing scholars, renowned management consulting firms, and the popular press have examined the role of brick and mortar as one aspect of an omnichannel strategy in a world of increasing digitalization (Anderson & Eckstein, 2013; Bauer, Beil, & Wege, 2014; Piotrowicz & Cuthbertson 2014; Worden, 2013; Verhoef, Kannan, & Inman, 2015). The importance of architecture in general and retail design as a specialization thereof in marketing strategy has been broadly acknowledged (e.g. Kotler, 1973; Kotler & Rath, 1984; Martineau, 1958; Münster & Haug, 2017). Although, there is only little research focused on architectural branding (Raffelt, Littich & Meyer, 2011; Raffelt, Schmitt & Meyer, 2013). This is likely caused by its position at the intersection of the research fields on retail stores (e.g Kent & Stone, 2007; Kirby & Kent, 2010; Borghini, Diamand, Kazinets, Mccrath, Muiz, JR., & Sherry, JR., 2009; Hiss; 1987; Kozinets, Sherry, DeBerry-Spence, Duhachek, Nuttavuthisit, & Storm, 2002), brand experience (e.g. Brakus, Schmitt & Zarantonello, 2009; Pine & Gilmore, 1998; Schmitt 1999), and atmospherics (e.g. Kotler, 1973; Donovan & Rossiter, 1982; Rayburn & Voss, 2013; Spence, Puccinelli, Grewal, & Roggeveen, 2014). Here, articles primarily focused on store design in general (e.g; Kent & Sone, 2007; Kirby & Kent, 2010; Meyers-Levy & Zhu, 2008),flagship store design (e.g. Borghini et al., 2009; Hiss; 1987; Kozinets et al., 2002), or were primarily published in retail management journals. However, in marketing and management research, there are limited journal publications about the role of physical stores in the luxury industry in times of digitalization. Dion & Borraz (2015) stated that luxury brands recently followed the strategy to build very costly and unique boutiques with star architects, which have become sacred places. The role of store design in the luxury industry is even scarcer. In two case studies, Jiang, Nagasawa, & Watada (2014) investigated the role of store design for the brands Bally and Tod's in Japan. Thus, this research project aims to fill this research gap and extend the research in the field of architectural branding in the luxury industry, investigating role of physical stores in an omnichannel construct and to gain a deeper knowledge on how to sustainably tangibilize brands in modern and future luxury retail environments, answering the following question: What is the role of store design for luxury monobrand stores in a digital economy? This research project will apply an inductive and exploratory research method, implying a qualitative research design. It will build upon existing literature in the mass market and draw from two studies using in-depth interviews with academics and practitioners from the field of marketing and retail primarily working in the luxury industry to gain more insights about the role of physical stores in this specific industry. One study will focus on ways to make brands tangible in store. The other study will lay its focus on how a omnichannel strategy supports luxury brands in offering a superior in-store experience. Furthermore, results from a workshop with executives from brands with high-end positioning will be taken into account as well as expert interviews about the role of store design in general. These four studies will be presented in an aggregated manner during the conference. The overall contribution of this project is to provide insights about the role of brick and mortar retail design in the luxury industry and thereby extend research in the field or architectural branding in retail.

Given the recent modest growth of the personal luxury good market and the urge to face difficulties through innovative brands’ marketing communication strategies, this paper examines the potentialities of tactical associations between luxury fashion brands and furniture design. Results indicate that there can be positive repercussions deriving from luxury fashion brands and furniture design interconnections. In particular, associations with collectable furniture design may help to define and enhance brands’ luxury values whilst providing consumers with innovative and creative luxury brand experiences. Future expectations in this market show a compound annual rate (CAGR) of 3% to 4% through 2020, to just about €280 billion. This is dramatically slower than the past fast growth experienced from the mid-1990s to the late 2000s. In this scenario, luxury fashion managers and marketers must envision new strategies to succeed and surpass competition. In order to be competitive and successful, luxury brand managers must take into account current market dynamics and find pertinent and substantial solutions. This paper shifts its attention to the identification of how in such a difficult scenario different cultural industries can meet in order to mutually enhance their circuits of value. Some studies have demonstrated that in order to meet such new global challenges, luxury fashion firms may discover strategic opportunities in art (Codignola, 2016). Given their symbolic connotation and aesthetic value, high-end furniture design items are more and more perceived as art works exchanged in art auctions or fairs, collected and purchased by collectors, exhibited in galleries or museums. At the same time, furniture design goods show some divergences from conventional art works (i.e. functionality, reproducibility, etc.) and some correspondences with fashion goods. By observing the luxury fashion sector, one may then find--for different sets of reasons--more than one interesting intersection with the furniture design sector. By taking into account the furniture design sector within its specific market features and goods, this paper argues that through furniture design LFBs can develop engaging creative and innovative brands’ marketing communication strategies. Compared to art, such strategies would be able to add value and strengthen LFBs’ luxury features even in a more effective way.

Marketers often attribute the premium charged on a luxury brand over a value brand to innovation in product form (Von Hippel 1986). One way of conveying this innovation is through the use of perceptual cues which use visual depiction of a product (Gregan-Paxton, Hoeffler, and Zhao 2005). Consequently, what we think of as high fashion or innovation in product form is essentially novelty in the perceptual cues of a product (Cox and Cox 2002) and it is known that moderate levels of novelty can increase complexity (or incongruity) of product design and is in general, favored by consumers (Cox and Cox 2002). However, despite the fact that novelty in form offered in high fashion or complex products is expected to bring value, we predict that novel designs are perceived as more favorable depending on their positioning as luxury (value) brands. In detail, we expect that value brands more than luxury brands benefit from novelty of form and that peripheral cues in product design informs a sense of brand authenticity which drives preferences. Past research showed that a product’s positioning in advertising moderates the effect of schema incongruence on product evaluation (Noseworthy and Trudel 2011). When products with a moderately incongruent design are positioned based on their functionality, they are evaluated more favorably. Conversely, when products are positioned based on experiential dimensions, this effect is reversed, and moderately incongruent designs are evaluated less favorably. We believe that these relationships can be explained using the perception of hedonic or utilitarian benefits offered by the product. In general, consumers are motivated by utilitarian concerns until they think that they have earned the right to indulge in hedonistic consumption (Kivetz and Simonson 2002). With congruent products, consumers may infer functionality from memory, and they are therefore liberated to indulge in hedonic pleasure. With incongruent products, however, consumers must work out the functionality of the product for themselves. Thus, we expect that brand positioning will influence the way novel designs are evaluated on functionality, such that novel designs are perceived as more functional in the value (vs. luxury) brand positioning (H1). Also, we predict that consumers of luxury brands will prefer prototypical designs to novel ones (H2). Recently, Stanton, Townsend, and Kang (2015) analyzed automobile market and showed that consumers prefer novel designs if their consideration set includes allpossible automobiles, but changed to prototypical designs, when the consideration set was entry-level automobiles. In addition, Hagtvedt and Patrick (2014) revealed that altering the form of a product has a more positive impact on product evolutions in a utilitarian context rather than a hedonic one. This is because luxury brands have a greater capacity to be extended into other product categories due to their hedonic potential, namely their ability to provide emotional benefits (Hagtvedt and Patrick 2009). Based on these findings, we postulate that brand positioning will moderate the influence of product design on functional evaluations and perceived comfort, such that only under the value (vs. luxury) brand positioning, individuals will prefer novelty over typicality. Lastly, given the consumers’ motivation of luxury brands for conspicuous consumption and desire for authenticity (Beverland and Farrelly 2010), we predict that consumers will avoid novel designs in a luxury brand. We believe this to be true because in order to convey the status which such consumers seek, the brand must be instantly and easily recognizable to others. In this case, a novel design can be a threat to this transmission of status, and may bring about less favorable evaluations of the brand. As a result, a novel design, even a moderately incongruent one, will be seen as a violation of the brand’s authenticity and the diminished authenticity will therefore explain the less favorable evaluations. Thus, we expect that for value (vs. luxury) brand positioning, brand authenticity will mediate the effect of product design on evaluations (H3). To test our hypotheses, a pilot study was conducted in advance to identify whether luxury positioning would influence the perceptions of functionality when evaluating the same novel design. Participants (N = 102; 63.7% female; Mage = 35.78) were recruited in an online panel and were randomly assigned to one of two conditions of brand positioning: a value brand positioning or a luxury brand positioning. The experiment was a between-subjects factorial design and from the pretest, Serafini brand was chosen as a luxury brand and New Balance brand was chosen as a value brand. Then, Participant saw an advertisement that featured the novel shoe design and indicated their perceived functional efficacy, the concept (value-luxury) of a presented product, and perceived status conferred by purchasing the product. As expected, participants saw Serafini as more of a luxury brand (M = 4.76) than New Balance (M = 3.92) and indicated that purchasing the same product by Serafini conferred more status to someone (M = 4.83) in comparison to purchasing the same product by New Balance (M = 4.22; t(100) = 2.18, p < .05). Importantly, participants viewed the novel design featured in the luxury brand advertisement of (Serafini) as less functional (M = 4.95) in comparison to the novel design featured in the value brand advertisement (New Balance; M = 5.50; t(100) = 2.19, p < .05) although the design of the two products were the same (H1 supported). Next, in Study 1, we intended to identify whether brand positioning would influence typical designs of a product in the same way that it would novel designs. Participants (N = 263; 59.7% female; Mage = 38.03) were recruited in an online panel and were randomly assigned to one of four conditions in a 2 (brand positioning: value vs. luxury) × 2 (product design: typical vs. novel) between-subjects factorial design. In this study, however, we used a fictitious watch brand (Dali) to manipulate the brand positioning. Manipulations were adopted from Hagtvedt and Patrick (2009). Like pilot test, pretestconfirmed that the manipulations worked as intended (Mvalue = 4.85; Mluxury = 5.67; t(39) = 2.19, p < .05) and participants rated Dali as having different abilities to confer status (α = .81; Mvalue = 4.43; Mluxury = 5.26; t(39) = 2.68, p < .05). After, each participant saw an advertisement that featured the new product and that corresponded to the randomized condition that they were assigned and responded to the questionnaires asking their perceived functional efficacy, overall attitudes toward the product, perceived comfort as well as the measures for the manipulation checks. As expected, result showed that in the absence of luxury brand positioning, the novel design was evaluated more favorably (M = 5.00) than the typical product design (M = 3.90; F(1, 259) = 18.74, p < .001). This effect was consistent with past studies that demonstrate the moderate incongruity effect (Noseworthy and Trudel 2011; Meyers-Levy and Tybout 1989; Mandler 1982). However, in the presence of the luxury brand positioning, this difference was not significant (Mnovel = 4.46 vs. Mtypical= 4.25; p = .41). Also, an analysis of functionality indicated that in the value brand condition, the novel design was perceived to be higher in functionality (M = 4.88) than the typical product design (M = 4.39; F(1, 259) = 4.25, p < .05). However, in the presence of the luxury brand positioning, this difference was not significant (Mnovel = 4.57 vs. Mtypical= 4.79; p = .35). Finally, analysis of comfort indicated that in the value brand condition, the novel design was perceived to have more comfort (M = 4.45) than the typical product design (M = 3.82; F(1, 259) = 6.97, p < .01). However, in the presence of the luxury brand positioning, this difference was not significant (Mnovel = 4.14 vs. Mtypical= 4.33; p = .44). Thus, the results supported H1 and H2. To replicate the observed effects and to identify the underlying mechanism, Study 2 was followed. Same recruitment method and experimental design in Study 1 was used with a fictitious camera brand OLEG. Pretest confirmed that the manipulations worked as intended. Experimental procedures were similar to Study 1. However, this time, brand authenticity was measured (Morhart et al. 2015) in addition to the measures used in Study 1. Again, result indicated that in the absence of luxury brand positioning, the novel design was evaluated more favorably (M = 4.85) than the typical product design (M = 3.92; F(1, 209) = 10.30, p < .005) and in the presence of luxury branding, this difference was not significant (Mnovel = 4.50 vs. Mtypical= 4.57; p = .80). Also, result showed that in the value brand condition, the novel design was perceived to be higher in functionality (M = 4.79) than the typical product design (M= 3.89; F (1, 209) = 11.75, p < .001) and in the presence of the luxury brand positioning, this difference was not significant (Mnovel = 4.44 vs. Mtypical= 4.51; p = .79). Regarding comfort, in the value brand condition, using the camera with the novel design was perceived to be more comfortable (M = 4.49) than the typical product design (M= 3.82; F(1, 209) = 6.34, p < .01). However, in the presence of the luxury brand positioning, this difference was not significant (Mnovel = 4.06 vs. Mtypical= 4.25; p = .46). Lastly, mediated moderation analysis (Hayes 2012; Model 8; bootstrapped with 10,000 draws) found that only when design presented was typical, was there mediation through authenticity (95% confidence interval [CI]: .07, .86), but not when presented with the novel design (95% CI: -.60, .24) and thus, provided support to H3.Overall, three studies showed that while product evaluations and functional inferences with novel designs are higher for value brands, they are not for luxury brands. Also, we provided perceived authenticity as an underlying mechanism. From our findings, we provide four theoretical contributions. First, by showing that only value, not luxury brands benefit from novel product design, we demonstrated that brand positioning is another moderator to the effect of schema incongruity that consumers prefer a moderately incongruent product design over a congruent design or an extremely incongruent design (Noseworthy and Trudel 2011; Meyers-Levy and Tybout 1989; Mandler 1982). Second, although the research in product design and innovation has shown that the novelty in perceptual cues may signal innovativeness to consumers and thus engender favorable product evaluations (Gregan-Paxton, Hoeffler, and Zhao 2005; Cox and Cox 2002), we found that such novelty in perceptual cues in product design may not work in certain circumstances – when the product is positioned as luxury. Third, this research contributes to the understanding of luxury branding by offering evidence that prototypical designs benefit luxury brands because they increase perceived authenticity. Fourth, we broaden the research on authenticity in the aspect that merely having a novel or fashion forward design may impair authenticity and cause unexpected results. Managerially, we provide guidelines in that although brands benefit from novel designs in general, the manager of a luxury brand should be cautious when changing the design of a luxury good, especially ones in which functionality and comfort are important attributes. In other words, a luxury brand manager should adopt fashion and design in a way that is beneficial to the consumer. Some luxury brands, such as Porsche, are well-respected for their innovation, while other luxury brands, such as Louis Vuitton create value through promotion of a particular lifestyle (Reddy and Terblanche 2005). For brands that are particularly sought for their functional benefits, like Porsche, the importance of the impact of novel designs on perceptions of authenticity is particularly important. In addition, managers must be aware that novelty is not always perceived the same way. Consumer inferences on functionality and comfort can be elicited for fashion forward designs for value brands, where the novelty of design is used as a strategic tool. Nevertheless, when it comes to the luxury products, this effect might not appear and impairs brand authenticity. To extend our research, potential future research may examine the effect of novel designs on inconspicuous luxury goods. When conspicuous consumption is decoupled from the luxury brand, it is doubtful that prototypical designs would still be favored among consumers of luxury brands. Also, future research could examine the effect of other kinds of innovation. In our research, we mainly examined the product form and design as a method of innovation. However, it is possible that other kinds of innovation method can be used (i.e., change in product concept) and thus, can be potential future research topics. Finally, we believe that how other kinds of positioning might influence the relationship that we revealed could be studied further. For example, there are instances where value brands try to create a luxury line. In such instances, the effect of authenticity may differ from what we observed.

오늘날 한국 사회에서는 명품 소비의 대중화가 진행 중에 있으며, 물질주의 즉 효용성을 지닌 대상에 대한 소유보다, 소비 행위가 타인의 시선을 중시하는 경향을 보이고 있다. 많은 선행 연구가 있었듯이 명품 소비의 주목적은 바로 과시 욕구에 있었으며, 이는 곧 명품이 자신의 사회적 지위를 만들 것이라는 외부신호화(external signaling) 현상으로볼 수 있다. 명품디자인으로 평가되기 위해서는 예술작품과 같이 원본성(Originalitaet), 일회성(Einmaligkeit), 높은 가격 그리고 진품성(Echtheit)으로 구분되는 객관적 특성이 요구된다. 또한 명품 디자인이 사회학적 의미를 지니기 위해서는 주체적 인식 차원에서의 이해가 요구되며, 이 두 가지의 요소를 통해 “지위상징”으로써 사물이 과시적 대상이 되는 것이다. 본 연구는 발터 벤야민(W. Benjamin:1892-1940)의 사유 개념인 아우라(Aura)를 중심으로 명품디자인의 객관적 특성 내부에 위치하는 지각적 요인들에 대하여 고찰하였다. 이를 위해 제 2장에서는 아우라의 실체와 디자인의 관계에 대하여서 서술하였으며, 제 3장에서는 명품디자인에 주체적 인식차원에 작동하는 예술가치, 숭배가치 그리고 지위제로서 디자인에 대하여 고찰하였다. 이를 통해 기만적 가상의 대상이 아닌 주체적 인식 대상으로서의 명품디자인의 실체를 이해할 수 있는 단서가 포착하고자 하였다.