Social media marketing for luxury brands: parasocial interactions and empowerment for enhanced loyalty and willingness to pay a premium

Purpose This research aims to unravel the intricate relationship between luxury brands' social media marketing strategies (i.e. communication and engagement) and their impact on consumers' willingness to pay a premium and brand loyalty. Design/methodology/approach A large online consumer panel was used to conduct an online survey of 381 consumers. Partial least squares structural equation modeling was adopted for hypothesis testing. Findings The study's outcomes indicated that (1) perceived interactivity and perceived openness positively influence social media brand communication, (2) social media brand communication and engagement are positive determinants for consumer empowerment and parasocial interactions, (3) consumer empowerment and parasocial interactions positively influence willingness to pay a premium and (4) parasocial interactions (but not consumer empowerment) positively influence brand loyalty. Research limitations/implications The study offers significant theoretical implications by unraveling the mechanism of social media marketing for luxury brands, which is under-researched in the current literature. More specifically, the study reveals the process of how social media brand communication and engagement reinforce luxury brand outcomes through parasocial interactions and consumer empowerment. In addition, the study provides empirical evidence to delineate the role of interactivity and openness in enhancing social media brand communication. Moreover, the study extends past research that emphasized initial adoption outcomes such as attitude and purchase intention by probing luxury brand loyalty and willingness to pay a premium. Practical implications By effectively strategizing social media marketing, luxury brand marketers can promote brand loyalty and willingness to pay a premium. Luxury brand marketers should concentrate on establishing parasocial interaction with consumers by designing optimal social media brand communication and engagement. To this end, luxury brand marketers should consider integrating the elements of interactivity and openness in their communication with consumers. Originality/value The study offers valuable insights for luxury brand marketers aiming to capitalize on the potential of social media marketing to enhance their revenue generation and customer retention. The study advances past luxury branding research by validating the role of consumer empowerment and parasocial interactions in luxury brands' social media marketing.