Free Essay

Consumption of Luxury

In: Social Issues

Submitted By nicklub
Words 1303
Pages 6
The unlimited variety of goods is offered to consumers in a modern world. But how a buyer makes the choice in a modern market flooded with products and services of all kinds? What are the motivations, motives and other factors which affect his or her con- sumer behaviour? These questions remain the most important for everyone engaged in trading relationships and are crucial in marketing of products and advertisement design spheres. The thesis work is aimed to study consumer‟s choice motivations for a branch of products in a limited area of research.
Author focuses her study on a particular type of goods, affordable luxury products, and motivations of a target consumer group to buy it.
Such limitation is considered adequate, as it allows us to study subject thoroughly, using smaller sample size of respondents and draw conclusions that can be used as a base for further researches.
Respondents‟ group is formed by the luxury products‟ consumers. They are divided into two groups, the introverts and the extroverts, using test type questionnaire, based on Carl Jung‟s personality theory.
The aim of the study is to find out a relationship between introverted and extroverted types of personality and motivations for status consumption of affordable luxury goods.
The research questions are: “Does a personality trait affect motivations for consumption of luxury goods?”, “Which motives are typical for a certain type of personality?”
The study brings together researches on status consumption motivations and Jung‟s the- ory of introversion - extroversion dimension of a personality by looking at possible connection between personality type and person‟s motives for consumption.
The short theoretical frame of reference is presented by previous researches made on luxury goods consumers‟ segmentation by Han et al., Husic and Cicik; and researches
on status consumption of luxury goods by Scheetz, Heinemann, Shukla, as well as Jungian theory of personality types by Carl Jung.
2.1 Definitionofluxurygood
Socio-economic science gives various definitions of concept “luxury goods”. Some of the definitions underline special features of luxury products: “Luxury goods can be dif- ferentiated from normal or "non" luxury goods by the extent to which they exhibit a dis- tinctive mix of three important dimensions of instrumental performance in terms of functionalism, experientialism and symbolic interactionism” (Vickers, Renand 2003 pp. 459-478).
Some express the attitude of people towards it:
“Luxuries are the extras in life that make it more fulfilling, more rewarding, more com- fortable, more enjoyable” (Danziger 2005 p. 56).
Other definitions explain luxuries in terms of economic and marketing trends:
“Luxury good, an economic good for which demand increases more than proportionally as income rises; contrast with inferior good and normal good” (Luxury good 2010).
“A luxury good exists if the income elasticity of demand is positive and greater than one” (Economic Glossary 2008).
“Luxury goods markets are characterized by very high sensitivity to economic upturns and downturns, high profit margins and very tightly controlled brands” (WordIQ 2010).
An explanation of the term “luxury goods” can be found in the etymology of the word “luxury”:
“Word luxury comes from Latin “luxuria”, which means excess or “extras of life” (Danziger 2005 p. 51).
Author considers that Pamela N. Danziger‟s explanations of luxury product in terms of metaphysics and applied psychology is the most relevant for this research: “‟s all about consumer‟s fantasies, hopes and dreams and not really about physical or mate- rial realm” (Danziger 2005 p. 50).
Also Danziger suggests definition, which states that luxury is “that which nobody needs but desires” (Danziger 2005 p. 51).
The thesis research focuses on affordable luxury products. The affordable luxury brands target young consumers and offer highly fashionable products, characterised by price within a reach of a middle-class income.
2.2 Target group of research
An important issue for the understanding of status consumption is defining affordable luxuries‟ consumers group. Han, Nunes, and Drèze offer the following segmentation of luxury brands‟ consumers:
1.Patricians are super-rich who pay a premium for inconspicuously branded products. They do not look for explicit signaling but largely focus on subtlety.
2. Parvenus are probably the nouveau rich who have suddenly amassed big futures and are trying show they have arrived. They love explicit signaling.
3. Poseurs are fakers. They buy fake goods to demonstrate their affinity to the above two groups. They would also use explicit signaling.
4. Proletarians are the left outs in socio-economic status. They do not buy luxury goods and do not signal either (Han, Nunes, and Drèze 2010 pp. 15-30)
Figure 1. Signal Preference and Taxonomy Based on Wealth and Need for Status (Han, Y. J., J. C. Nunes, and X. Drèze “Signaling Status with Luxury Goods: The Role of Brand Prominence,” Journal of Marketing, 74 (4), 15-30.
As shown on the picture, four groups are defined according two dimensions - their “wealth” and “need for status”. Additionally, each group‟s longings for dissociation and associations are represented by black and white arrows.
However, Paurav Shukla noticed that Han‟s et al. segmentation is not a strict rule:
For example, can a consumer be a patrician and parvenu at the same time? For example, what if the consumer is actually using a Hermis Berkin (discreet signaling) bag with Chris- tian Laboutin shoes (explicit signaling)? Similarly, can a consumer be a patrician and po- seur at the same time. For example, a consumer may use a Seville Row tailored suit with a fake Mont Blanc. What need to be understood is that there are no water-tight compart- ments when segmenting luxury consumers. Certainly, there will be consumers who will be- long to only one category however, that segment may not be the largest segment for any luxury brand. (Shukla 2010).
Another segmentation of luxury products‟ consumers defines only two groups: so-called “snobs” and “new money” consumers (similar to some extent to parvenus in previous segmentation). It is explained by Husic and Cicik (2010):
Therefore, the authors assume that respondents can also be divided into either snobs or “aristocracy” and bandwagon consumers or “new money”. Bandwagon consumers may be conceptualized as the antecedent of the snob effect. Even though snobs and followers buy luxury products for apparently opposite reasons, their basic motivation is essentially the same: whether through differentiation or group affiliation, they want to enhance their self- image. Only they are doing it differently; the new flashy money will use LV bags full of lo- gos, while snobs will a pay higher amount for a Hugo Boss hidden brand label.
These segmentations are useful in understanding of division of luxury consumers. How- ever, when author wants to define the characteristics of thesis‟s researched group, she cannot accept any of them as absolute.
Target group, considered in the thesis research, consists of people of different behav- iours. On one hand, some consumers can be involved in loud signalling through use of luxury products. On the other hand, some of them, might not engage in signalling at all, or do not use loud signals. This can be explained by personal style preferences, work dress code obligations, brand‟s or line design‟s characteristics.
Author cannot fully accept the grouping – “parvenus” or „new money‟. The criterion for choosing respondents is not the way consumers earn their wealth, but the fact of con- sumption of luxury goods, neglecting money situation and ability to spend them. Exam- ple: a young student can spend most of her student financial aid on a luxury bag, being almost in a starvation next month to buy it. Somebody might buy luxury goods on credit.
Author does not take into consideration the consumers, who use fake products. Excep- tionally rich people, consuming premium luxury goods, are out of research, even though status consumption is also common for them.

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