Simple facts: Luxury consumption and its influencing factors

In the English dictionary, the word “luxury” is originated from “Luxus”, a Latin word that initially meant “extreme fertility” and later evolved to obtain the meaning of “waste and intemperance”. This concept is absorbed in most European languages ​​and, to be precise, is used to describe certain aspects of the production, use, expenditure or a lifestyle that tend to consume more than unnecessary regarding various commodities.
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In the English dictionary, the word “luxury” is originated from “Luxus”, a Latin word that initially meant “extreme fertility” and later evolved to obtain the meaning of “waste and intemperance”. This concept is absorbed in most European languages ​​and, to be precise, is used to describe certain aspects of the production, use, expenditure or a lifestyle that tend to consume more than unnecessary regarding various commodities.

Nowadays, luxury is considered to be products that are unique, scarce and rare, also known as non-living necessities. It is a belief that luxury goods are those that are very original and high pricing, items that most people cannot afford. In fact the concept covers a wider range. Certain luxury goods make to the scope of this industry by means of adding functions according to the original basis and therefore becoming of the low practical value and pricy. This counts as another reason for the explosion of luxury business. A majority of luxury goods are expensive but neither necessary nor practical, such as designer bags, haute coutures and high-end cars. Highly priced private jets and yachts are of course also in the category of luxury products.

From an economic point of view, luxury consumption is essentially a high-end consumer behavior without presetting judgements. In the social sense it presents an advanced symbol in personal taste and improved quality of life. People may have different mentalities, sometimes so severe as to spell unsettling feelings about this imbalance or quality. In this case, the society does have very contradictory opinions about luxurious consumption.

Theoretical research on luxury has flourished over the past 20 years. Despite the point by mainstream economists that luxury goods are products or services with high income elasticity of demands, the concept of luxury is constantly evolving. It changes with times and brings different representative products and marketing tactics in different periods. All all research on luxurious marketing has never stopped and will continue to enhance the great charm of luxury.

Factors influencing luxury consumption

The generation of demands to make luxury purchases for consumers is greatly influenced by internal and external variables. External variables include social pressure, trends and stimuli from marketing campaigns; internal variables include consumer motivations, experiences and characteristics.

Dawn R. Deeter-Schmelz et al (1995) firstly proposed a PRECON (a preliminary report of the prestigious consumer) scale trying to explain the motivations and behaviors for prestige clothing shopping from a more external perspective, which was composed of four factors, namely premium quality, fashion, patron status and store atmosphere. The model was then modified (Dawn R. Deeter-Schmelz et al, 2000) and tested (Melika Husic, Muris Cicic, 2009). To define each parameter of the newly modified model:

1. Brand image and quality: consumers tend to relate premium quality, prices and brand names very much to prestige preferences or even self concept. When making a luxury purchase, consumers expect to buy high quality products in a more prestigious store.

2. Store atmosphere: for consumers who expect to obtain luxury experiences, the store atmosphere plays a very important role in building up a luxury vibe. Tangible and intangible factors include decorations, store layout, salesforce, lightening, sensory equipments and even environment surrounding the building.

3. Patron status: this refers to the social status or the income level of the customer base of luxury brands. Potential clients take into consideration this factor too due to the fact that they tend to project the brand value as a method of self expression. Therefore it is important to have other clients of the same brand belong more or less to the same social group.

4. Fashion involvement: this factor demonstrates the extent to which certain clients interact with the brand or its product. The higher level of involvement, the more often clients refer to the brand as a symbolic meaning.

Later in 2009, Melika Husic and conducted a research based on the modified PRECON scale. According to them, however, store atmosphere and fashion involvement, have little influence on luxury purchases:

  1. Brand image and quality:impact huge and positive.
  2. Store atmosphere: no huge impact 
  3. Patron status: impact huge and negative.
  4. Fashion: no huge impact.  

Researchers later on switched to employ a more personal approach to understand the motivations for buying luxury, apart from the external aspect which usually emphasizes for example the motivation to buy luxury brands so as to display status or impress others. Reality is, in such an industry where purchases are made based voluntary willingness instead of compulsory necessity, socially oriented motives are not enough to let us know the deep reasons behind this phenomenon. Therefore Vigneron and Johnson (1999) proposed a model of “prestige-seeking consumer behavior (PSCB)”, which categories five prestige consumption values leading to luxury brand consumption: perceived conspicuous value, perceived unique value, and perceived social value, perceived functional value and perceived hedonic value. 

This inclination to refer to the personal touch as an explanation for luxury purchases was then again explored and tested by H.Y. Kim et al. (2011), using the new model composed of 4 personal values: 

1. Life enrichment: certain consumers place into luxury consumption a deeper meaning or a cultural development in their lives. Some even regard it as a motivation to pursue a better living.

2. Self- gifting: some consumers simply make purchases to give themselves gifts so to get a sense of enjoyment or happiness.

3. Self- identity: In fact the consistency of brand values of luxury and the self-image perceived by consumers is an important variable in the luxury consumer market. Based on this fact, consumers may integrate the symbolism of luxury brands into their own identity, or at least support or extend their identity through the brand values of luxury goods.

4. Self- directed pleasure: consumers make purchases to simply make themselves happy no matter how no others behave or what the society values.

Based on a sample of 316 US citizens who had made a luxury fashion purchase in previous 3 years, results show that self-directed pleasure (β=.25, p<.001), self-gifting (β=.20, p<.001), and self-identity (β=.11, p<.05) have a huge and positive impact on targets’ intention to purchase luxury fashion brands.

This research further more emphasized the personal aspect contributing to luxury purchase. A higher level of self-directed pleasure (capability to display your own unique personalities), self-gift giving (pleasure brought by an excellent offering of service and products) and self-identity (to feel a strong sense of belonging or community to the brand) results in a higher level of intention to purchase. 

References

Glyn Atwa  and Alistair Williams(2009), Luxury brand marketing — The experience is everything!; Journal of Brand Management (2009)16, 338–346.doi:10.1057/bm.2008.48; published online 13 February 2009

Phau, I. and Prendergast, G. (2001) Consuming luxury brands: The relevance of the “rarity principle”; Journal of Brand Management 8(2): 122–137  

Katherine N. Lemon & Peter C. Verhoef (2016), Understanding Customer Experience Throughout the Customer Journey; Journal of Marketing: AMA/MSI Special Issue, Vol. 80 (November 2016), 69–96, ISSN: 0022-2429 (print) & 1547-7185 (electronic), DOI: 10.1509/jm.15.0420 69  

Chungwha Ki, Kangbok Lee, Youn-Kyung Kim, (2017), Pleasure and guilt: how do they interplay in luxury consumption?; European Journal of Marketing, Vol. 51 Issue: 4, pp. 722-747, https:// doi.org/10.1108/EJM-07-2015-0419

Melika Husic, Muris Cicic, (2009), Luxury consumption factors; Journal of Fashion Marketing and Management: An International Journal, Vol. 13 Issue: 2, pp.231-245, https:// doi.org/10.1108/13612020910957734

Moraes, C., Carrigan, M., Bosangit, C. et al (2017),Understanding Ethical Luxury Consumption Through Practice Theories: A Study of Fine Jewellery Purchases;J Bus Ethics (2017) 145: 525. https://doi.org/10.1007/s10551-015-2893-9

Hye-Young Kim, Jeong-Ju Yoo, Dooyoung Choi Graduate Student, Jieun Kim Graduate Student & Kim K. P. Johnson (2011); Personal Luxury Values Associated with Fashion Brand Consumption: An Exploratory Analysis of Demographic Variations in the United States;Journal of Global Fashion Marketing, 2:3, 130-138, DOI: 10.1080/20932685.2011.10593091  

Vigneron, F., & Johnson, L.W. (1999). A review and a conceptual framework of prestige-seeking consumer behavior; Academy of Marketing Science Review, 1999, 1, 1-15  

Dawn R. Deeter-Schmelz, Jesse N. Moore & Daniel J. Goebel (2000); Prestige Clothing Shopping by Consumers: A Confirmatory Assessment and Refinement of the Precon Scale with Managerial Implications; Journal of Marketing Theory and Practice, 8:4, 43-58, DOI: 10.1080/10696679.2000.11501879  

Deeter-Schmelz, D., Dawn, R., Moore, J., Goebel, D. and Solomon, P. (1995), “Measuring the prestige profiles of consumers: a preliminary report of the PRECON scale”, in Engelland, B. and Smart, D. (Eds), Marketing Foundations for a Changing World: Proceedings of the Annual Meeting of the Southern Marketing Association, Southern Marketing Association, Orlando, FL, pp. 395-9  

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