Localspeak

Hermès v. LVMH – Are Brand Loyalists Buying It?

3 August 2011

Last month Localspeak began to track online brand sentiment using the robust new social media analytics tool Insight Workbench from NetBase .

Our first Insight Workbench study tracked online consumer sentiment for the Netflix brand in the US and English-speaking Canadian markets—over a 30-day period prior to and following the company’s announcement it would be increasing the subscription price for its Internet film and TV program service. Insight Scorecard results revealed a significant decline in net sentiment by brand loyalists, who obviously felt betrayed by the brand. As the Netflix share of cost buzz skyrocketed, our Scorecard shifted. By the end of July, it showed price, movie selection and streaming quality had been replaced by cord-cutting chatter, with consumers expressing their intent to consider other options, even keeping cable.

This month we turned our attention to the luxury goods sector, tracking social media sentiment in the US, UK and English-speaking Canadian markets for the crown jewel of the luxury goods sector—

— Hermès , the 175-year old family-run business currently in the midst of hostile takeover attempts by Bernard Arnaud, CEO of global luxury conglomerate LVMH .

Disambiguating Brand Hermès
In setting up our Hermès study, a word cloud overview revealed unrelated data which we were able to delete right from the cloud. For example, in our UK sample we discovered a suspicious yellow “problem” word cloud tag had isolated complaints – but not about the Hermès luxury brand, rather a sloppy and unreliable courier service. As we further refined the study, Insight Workbench’s brand filter wizard indicated the Hermès brand would require some disambiguation, executed by a check-off of basic topic exclusion terms harvested from the sound bites. These included references to courier services, Greek gods, and mythology, as well as British military aviation, the Falklands, and World of Warcraft, to name a few.

Historically the luxury goods sector has been reluctant to sell their brands via the Internet, fearing that, in some way, it would ostensibly dilute brand status. But our Hermès analysis showed regardless of a brand’s strategy (or lack thereof), social media conversations happen. And so, albeit latecomers to the worldwide web of social media, luxury brands now have entered the fray with an official online presence.

While social media passion for the Hermès brand runs high in the US and UK markets, it trails with nominal mentions in the English-speaking Canadian markets. So rather than focusing our eyes on the elevated net sentiment Hermès signature products enjoy globally, we focused sentiment in the UK and US surrounding the brand’s perceived takeover by the luxury behemoth LVMH .

Measuring Impact of An Event: Custom Trends Tab Filter
In exploring custom insights and the ability of the custom brand filter in the Trends tab to generate these insights, we were lead to further qualitative research on the impact of social discourse. Filtering our Hermès topic for the UK, then filtering by LVMH in the Trends search panel, we noticed sentiment chatter first began to spike in October 2010, following LVMH’s increase in Hermès holdings to 17.1%. Sentiment spiked again in March 2011, and peaked a third time in June. While the June spike was triggered by a financial event—the falling of Hermès shares by more than 5% after rival LVMH announced it had ‘no intention’ of launching a takeover bid—the March spike was a direct result of something unrelated: the much-publicized anti-Semitic tirade of John Galliano, star designer at LVMH’s House of Dior. The tirade proved to be quite a nasty reminder that “bling” can blind even the most elite brands.

Hermès UK Sentiment Runs High
With social media brand sentiment for Hermès running high in the UK market—by the end of 2010 LVMH had acquired a 20% stake in Hermès—the hint of any takeover that might taint the brand’s elitist cache elicited a wealth of impassioned consumer comments. While LVMH continues to insist its interest in the brand lies in creating “partnerships” and synergies,” some Hermès brand loyalists aren’t buying it:

LuxeChroniclesJontyFulminates The mere thought that #Hermès could become as vulgar & common as #LouisVuitton completely depresses me! #luxury

As you can imagine, Hermès’ family chieftains have gone on the offensive, providing media with “colorful” depictions of LVMH and its CEO . A few of these online sound bites caught our attention:

“Hermès does not need the entry of any shareholder in its capital,” Albaladejo said. “We are rather a house of high craftsmanship rather than a luxury player.”
Guardian

Hermès’s CEO Calls It ‘the Pretty Flower’ That LVMH Could ‘Kill
Since LVMH chief Bernard Arnault sneakily positioned himself for an eventual takeover of Hermès back in October, he’s been called a number of fantastically imaginative names by the Hermès family, including “a mosquito buzzing around” and “a visitor in the garden.

Perhaps owing to the fact Hermès is a European company, US trending showed spikes in sentiment at different intervals than those in the UK. Much of the social chatter in the US regarding the corporate battling seemingly appreciated the grand theatrics being played out in public by Hermès and Mr. Arnaud, who has been accused even by his own countrymen as using “vulgar American” tactics to take over the Hermès brand. The following online post may have best captured American attitudes on the ongoing dramedy:

@thinksplendid
Liene Stevens
I feel like I need a bowl of popcorn for this LVMH vs. Hermès showdown.
4 Nov

While Hermès throws its considerable weight and hefty affluence into the boxing ring, only time will tell whether the family owners can continue to thwart the hostile rounds.

Birkin Bag Phenom
An uninitiated disciple of Hermès I was curious as to the relative share of buzz and sentiment between the luxury brand’s signature products. Running another UK net sentiment filter for the iconic Kelly bag revealed almost equal share of social buzz as LVMH maneuvering had generated in the past year. Still intrigued about the brand’s handmade bags, whose cache also comes with their long waiting lists, I noticed the conversation level about the Birkin bag garnered a greater three-fold share of UK social buzz than its Kelly counterpart or the LVMH rumblings.

US Net Sentiment Varies By Gender
In pursuit of more trend-tracking brand sentiment insight, we took a look at the US market to see if we could gather any social sentiment insights by gender surrounding the LVMH challenge. Interestingly, as the US charts below show, American males and females both showed discrepancies by gender in net sentiment for the three benchmark events we had tracked in October 2010, and March and June of this year in the UK. We further noticed that among US males there existed a closer net sentiment correlation to overall UK sentiment surrounding the LVMH incursion in October 2010 and the stock dip last month, with the biggest discrepancy reflected in overall UK LVMH net sentiment regarding the March Galliano incident (100%) and US male sentiment (50%).

While US females sentiment trended at variable intervals over the past year overall, the most significant benchmark difference across all samples was reflected in net sentiment over the March Galliano tirade where US female gender sensibility may have come in to play (27%), as compared to US Males (50%) and the overall UK sample (100%). If further research showed female sensibility to be the underlying sentiment, this could contribute negatively to Hermès brand equity among US women, where Hermès has a solid following. With regard to the LVMH move on Hermès, benchmark net sentiment also trended differently. Further qualitative research would shed insight on why and help explain the underlying reasons.

Reliable Social Media Event Trend Tracking
Tracking a brand’s trend over time is an effective way to measure the impact of an event through a filtered lens. Netbase’s Insight Workbench, a highly accurate, robust tool to quickly and economically capture reliable social media analytical insights, can be used to qualify the effectiveness of these events, including a new advertising or PR campaign, product launch, theatrical release, political speech, investment sentiment, brand positioning, pricing, and more.

In subsequent posts, we’ll examine the advantages inherent in using social media tools to expand and protect brand equity, drive product innovation and refine marketing messaging to gain competitive actionable insights through listening and analytics. We will continue to compare social brand sentiment, emotion and behavior cross-culturally, as well as product attributes, brand category differences, and gender analyses.