The concept of the metaverse and non-fungible tokens has become ubiquitous, and fashion and luxury companies are faced with the need to define a thorough strategy to tackle its business impact. Despite some brands acting at the forefront of NFT adoption, the utility of the infant technology remains unclear. By conducting a 2x2 factorial design experiment, this research creates insights into guidelines for NFT strategies for fashion and luxury companies. First, the high importance of connecting NFT offers with experiences is confirmed. Second, a coherence of values between NFT technology and the luxury industry was illustrated. Finally, the experiment suggested a high difference in perceived utility of real-world asset NFTs and digital asset NFTs for mainstream brands, while the difference could not be proven in the case of luxury companies. In conclusion, the NFT strategy matrix was developed, which introduces four dimensions of brand loyals, brand collectors, fad enthusiasts and fad curious differentiated by their brand loyalty and desired NFT utility. This framework aims to provide a tool for fashion and luxury companies to cater their holistic NFT offering to different customer groups. In general, it is advisable to move from digital asset NFTs toward real-world asset NFTs in order to engage consumers with rare experiences in a virtual or physical setting and deploy the technology as an experiential marketing tool.
Table of Contents
1. Introduction
2. Literature review and theoretical framework
2.1 Introduction to blockchain
2.1.1 Technological functionality
2.1.2 Second generation of blockchain and NFTs
2.1.3 NFT project classes
2.1.4 Outlook for Blockchain and NFT technology
2.2 The industry of fashion and luxury
2.2.1 Definition and industry overview
2.2.2 The new notion of luxury
2.2.3 The relevance of Experiential marketing
2.2.4 Fashion and luxury’s approach to Experiential marketing
2.3 NFTs in fashion and luxury
2.3.1 Coherence of values
2.3.2 Industry NFT projects
2.3.3 Critical assessment
2.4 Sub-conclusion and research question
3. Methodology
3.1 Research philosophy and theory development
3.2 Research approach and design
3.2.1 Data collection
3.2.2 Data preparation
3.2.3 Research ethics and delimitations
3.2.4 Data validity and reliability
4. Data analysis
4.1 Data overview
4.2 Hypothesis testing
4.2.1 Descriptive statistics
4.2.2 Analysis of variance
4.2.3 Correlations
5. Discussion
5.1 The importance of experiences
5.1.1 Experience realms in RWA NFTs and DA NFTs
5.1.2 Business approach to experience management
5.2 The relationship of NFT type and Brand type with NFT utility
5.2.1 Diffusion of NFT type and Hype cycle
5.2.2 High NFT utility in luxury
5.2.3 Luxury DA NFTs with highest utility
5.2.4 Business assessment
5.3 Recommendations for fashion and luxury companies
5.3.1 The NFT strategy matrix
5.3.2 Implementation and advantages of NFT strategy matrix
6. Conclusion
Objectives and Research Focus
This research aims to investigate the perceived utility of Non-Fungible Tokens (NFTs) within the fashion and luxury industry. It seeks to understand how fashion and luxury companies can leverage this technology to foster consumer engagement and establish a sustainable competitive advantage in the context of the "Luxury 3.0" paradigm.
- Analysis of the current theoretical landscape surrounding blockchain technology and the luxury industry.
- Application of the "Experiential Marketing" framework to explain NFT utility.
- Empirical investigation of consumer perceptions via a 2x2 factorial design experiment.
- Development of the "NFT strategy matrix" as an actionable tool for brand managers.
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2.3.1 Coherence of values
„NFTs exist for the same reason that fashion exists—[they] help us belong to one tribe.“ -Ian Rogers (Chief Experience Officer Ledger, Digital strategy consultant LVMH).
This comment represents the immense importance of community within the sector, which has also been analyzed further by fashion and luxury magazine Highsnobiety in collaboration with BCG. According to them, brand perception is beyond companies’ control and rather steered by the community nowadays. Consumers engaged in a physical or virtual community own the decision power over new trends (Highsnobiety & BCG, 2022). Within this context, they introduce the concept of cultural pioneers, who are consumer innovators and trend setters, even before early adopters. Brands need to understand their cultural relevance by engaging in an ongoing dialogue with their audience (Highsnobiety & BCG, 2020). This paradigm shift and changed perception of luxury allows values to exist in a digital space as well (Fernandez, 2022a). Web 3.0’s inherent rise of the metaverse, a space for consumers to create online lives, lets brands curate their customized digital environments to engage in community building (Joy et al., 2022). That’s where NFTs come into play as a decentralized opportunity to own virtual goods and track their movement through different metaverses (Hazan et al., 2022). The compatibility of NFTs and Luxury 3.0 stems from four distinctive features: rarity, innovation, possession and a sense of belonging. According to Angeloglou, Strategic Missions Director at Louis Vuitton, both concepts establish a connection to culture in their essence (CPP-Luxury, 2022). While NFTs in a Web 3.0 context represent a democratization of ownership, the new paradigm in a Luxury 3.0 context is guided by democratization of access.
Summary of Chapters
1. Introduction: Presents the rise of NFTs within fashion and luxury and establishes the central research question regarding the utility of this technology for consumer engagement.
2. Literature review and theoretical framework: Analyzes the functionality of blockchain, the shift in the luxury paradigm, and establishes the conceptual link between Experiential Marketing and NFT adoption.
3. Methodology: Details the pragmatist research philosophy and the 2x2 factorial design experiment used to empirically test consumer perceptions of NFT utility.
4. Data analysis: Presents the statistical evaluation of the survey results using ANOVA, revealing key insights into how NFT type and brand association influence consumer preference.
5. Discussion: Synthesizes the empirical findings with theoretical frameworks and introduces the NFT strategy matrix as a practical guide for companies to segment their customer base.
6. Conclusion: Summarizes the study’s findings and reiterates that a combination of RWA and DA NFTs, mapped to specific customer segments, is crucial for future brand success.
Keywords
Non-Fungible Tokens, NFTs, Fashion Industry, Luxury Brands, Luxury 3.0, Experiential Marketing, Blockchain, Digital Ownership, Consumer Utility, Metaverse, RWA NFTs, DA NFTs, Brand Strategy, Factorial Design, Brand Loyalty
Frequently Asked Questions
What is the primary focus of this research?
The research explores the utility of Non-Fungible Tokens (NFTs) specifically for fashion and luxury companies to effectively engage customers and gain a competitive advantage.
What are the central themes of the work?
The core themes include the intersection of blockchain technology, the business of fashion and luxury, post-consumerism, experiential marketing, and the evolving digital landscape known as Web 3.0.
What is the core research question?
The central question is: „What is the utility of NFTs in fashion and luxury as perceived by consumers?“
Which scientific method is applied?
The author employs a quantitative, exploratory approach using a 2x2 factorial design experiment to analyze consumer data, supported by ANOVA (Analysis of Variance) for hypothesis testing.
What topics are analyzed in the main part?
The main part encompasses a review of blockchain and NFT functionalities, the sociological shift toward "Luxury 3.0," the application of Pine and Gilmore’s experience realms, and the empirical testing of various NFT types in combination with brand associations.
Which keywords characterize the work?
Key terms include NFTs, Luxury 3.0, Experiential Marketing, Blockchain, RWA (Real-World Asset) NFTs, DA (Digital Asset) NFTs, and Brand Loyalty.
Are Real-World Asset (RWA) NFTs considered more useful than Digital Asset (DA) NFTs?
The study found that, generally, respondents perceived higher utility in RWA NFTs (hybrid products) compared to pure DA NFTs, suggesting that functional aspects currently carry more weight for mass appeal.
How does the "NFT strategy matrix" assist brands?
The matrix segments consumers into four categories—Brand loyals, Brand collectors, Fad enthusiasts, and Fad curious—based on their brand loyalty and desired utility, helping brands tailor their specific NFT strategies accordingly.
Did the experiment reveal any unexpected results for luxury brands like Gucci?
Yes, contrary to expectations, the study found that DA NFTs specifically for luxury brands like Gucci showed exceptionally high perceived utility, suggesting that luxury houses can successfully build digital ecosystems that attract high engagement.
- Citation du texte
- Laura Schneider (Auteur), 2022, The rise of non-fungible tokens (NFTs) in fashion and luxury, Munich, GRIN Verlag, https://www.grin.com/document/1298717
