Investigation of luxury consumption In London: Arab Consumers value perceptions of luxury brands

Transcription

1 Investigation of luxury consumption In London: Arab Consumers value perceptions of luxury brands 1. Research Background The focus on the concept of luxury goods in the field of marketing has a long history. Luxury goods consumption was studied by Veblen (1899) when he launched his first publication, The Theory of Leisure Class, which addressed the concept of conspicuous consumption. This stressed that the main purpose of having expensive products and services is as a symbol for wealth and status. Approximately half a century later, the Veblen Effect was codified by Leibenstein (1950) to identify a positive relationship between quantity demand and price in the marketplace for luxury products. According to Giacalone (2006), Leibenstein (1950) broke the traditional demand theory in economics because he stated that the preference for goods rises by increasing their prices. Lesbenein also added the snob and bandwagon effects. The first means that the preference for goods decreases by increasing the number of buyers, whereas the second states that the demand for goods increases because they follow others in their reference groups who have already purchased the goods (Tynan, 2010). Veblen, bandwagon and snob effects were supported again by Vigneron and Johnson (1999). However, it is clear that the previous findings offer a new perspective of consumption that relates to subjective benefits. Subsequently, Belk (1988) discussed an extended self-concept and emphasized the importance of possessions of luxury goods because it is considered as reflections of consumers identities. This view is consistent with the view of Vigneron and Johnson (1999), who referred to the subjective intangible benefits of the consumption in addition to functional importance. Later, Dubois and Duquesne (1993) stated in their pioneer study that there is a strong positive link between consumption of luxury goods and cultural changes. Besides, income is a necessary drive but not sufficient to buy luxury goods. It is clear from the previous view that luxury goods were not strongly managed by economic factors. Moreover, Dubois and Paternault (1995) point to the scarcity of brand as an essential factor to the existence of luxury brands, which will lose their character as luxury if they are over diffused. However, Catry (2003) argues for the possibility of the replacement of the real scarcity by perceived rarity maintained through rare ingredients, or information based rarity, or sustainability through strategies of techno-rarity enabled by innovation. An alternative approach to conceptualising luxury goods was made by Vickers and Renand (2003), who considered luxury goods as symbols of personal and social identity. This approach is consistent with the views of Jevons (2007) and Buchanan- Oliver et al. (2008) who propose differentiating between luxury and non- luxury goods in terms of the mix of their components on three dimensions: functionalism, experientialism and symbolic interactionism (Tynan et al. 2010). More recently, Vigneron and Johnson (2004) classify two major dimensions of luxury value perceptions: personal and non-personal perceptions whereas Berthon et al. (2009) offer a theoretical perspective that explains consumption of luxury goods by three distinct value dimensions: the objective (material), the subjective (individual) and the collective (social). However, a careful review of the existing marketing literature revealed that there have been few attempts to clarify the value dimensions of luxury brands. In other words, this concept is 1

2 poorly understood and investigated (Berthon et al. 2009). Therefore, this study aims to address the gap in the literature and to help further increase our understanding of the various vale dimensions that constitutes of luxury goods from consumers perspectives. Creating high value of luxury goods is critical to marketers in today s global marketplace. Providing high value of luxury goods will result in purchase intention and ultimately increase profits. The significance of purchase intention in the context of brand consumption has been supported by many scholars (e.g. Dubois and Paternault, 1995; Yoo and Lee, 2009; Zeithaml, 1988).Therefore, this study focuses on purchase intention, which has a wide implications and will often have positive impact on an individual s actions (Ajzen and Driver, 1992; Pierre et al., 2005; Schosser et al., 2006). 2. Research Gap The importance of luxury brands in consumers lives is increasing in addition to the luxury market is contributing a large amount of economic action in the industrialized world (Vigneron & Johnson, 2004). This market, including business sectors such as fashion and accessories, leather goods, wines and spirits, hospitality and concierge, jewellery and watches, cosmetics and fragrance, automobile, transport and selective contribution, had been estimated by McKinsey and Co at more than $ 90 billion in 1998, gradually growing to an $ 180 billion global industry in 2009 (Vickers and Renand, 2003; Chadha and Husband, 2006; Okonkwo, 2009). In Britain, consumer expenditure on luxury goods increased by 50% between 1994 and 2004 to a 7% for non-luxuries (Keane and MCMillan, 2004). Justifications for this remarkable increase in demand may be complicated, but researchers and practitioners can drive this phenomenon to a variety of factors: (1) the economic recovery in most western nations and the unshackled economic growth in South- East Asian countries (Kitchen et al. 2008); (2) flexible payment systems such as credit cards which have contributed significantly to the diffusion of luxury goods (Sonimers 1991; Kardon 1992; de Moulins 1993). Consequently, luxury goods management has converted to a significant part of marketing of particular interest to practitioners (Vickers and Renend, 2003). Due to the increase of internationalisation and competition in the marketplace, many managers are trying to discriminate their goods by raising the level of an added value to compensate for the high price charged. This can be achieved by using the label Luxury to their good offerings or have particularly selected their goods offerings in the luxury products niche (Vickers and Renend, 2003). Although there is a dynamic growth in the global luxury market, it is critical for luxury researchers and marketers to understand what are the value dimensions of luxury brands from consumer perspectives and how their perceptions of the values impact their buying behaviour (Sibels et al. 2009). As to my knowledge, limited empirical research to capture the value dimensions that constitute luxury brands has been carried out in this area (Vigneron & Johnson, 2004; Vickers & Renand, 2003) and most of the research in this emerging field is mainly conceptual (Vigneron & Johnson, 1999; Berthon et al. 2009; Siebels et al. 2009). Broadly speaking, researchers agree that there is no clear understanding about the value dimensions that constitute luxury brands because the various value perceptions associated with luxury goods are poorly understood and under-investigated (Tynan et al., 2010; Berthon et al., 2009, P. 45; Wiedmann et al., 2009; Vigneron & Johnson, 2004). Therefore, the purpose of this research is to address the gap in the literature concerning this area of research by developing and empirically testing a model for value dimensions of luxury brands which 2

3 could significantly extend the validity and reliability of the theoretical foundations (Tynan et al., 2010; Shukla & Purani, 2011). This research also aims to investigate the impact that the value dimensions of luxury brands have on consumer satisfaction. In other words, the statement of the problem is what the value dimensions of luxury brands are and how these dimensions impact on buying behaviour? In addition, past research studies identify several dimensions and sub dimensions of value perceptions. However, further studies may provide benefits in considering other value dimensions like relational value (Shukla & Purani, 2011). Therefore, this study will consider testing the relational value dimension and its influence on attitude towards luxury brands. Because consumers' consumption process is not merely built on the functional and symbolic value associated with luxury brands, Soutar and Sweeney (2001) indicates that the rarity value should also be considered for prestigious goods. This also stems from the commodity theory which states that any commodity will be valued to the extent that it is unavailable (Brock, 1968). For the previous theoretical debate, the present study meets the strong recommendations by considering the rarity value in the model. 3. Research Questions The specific research questions are presented below, to further exhibit how the study objectives are integrated into the current research. 1. What are the different value perceptions associated with luxury goods that impact on the attitude towards luxury goods? 2. What are the consumer value perceptions that contribute to a positive or negative influence on attitude towards luxury brands? 3. What impact does the attitude towards luxury brands have on the purchase intentions? 4. Research Aim and Objectives This research aims to investigate the dimensionality of luxury value and its impact on attitudes toward luxury brands in the fashion sector and how attitudes toward luxury brands contribute to building purchase intentions within the context of the hand bags category because hand bags are the engine that drives luxury brands today (Thomas, 2007, p. 168). This aim is achieved by the following objectives: 1. Address and explore conceptually the various luxury value perceptions among the Arab consumers. 2. Compare the impact of various luxury value perceptions on attitudes toward luxury brand. This involves specify the perceived values that most likely have a significant impact on attitudes toward luxury brands. 3. Develop and empirically assess a conceptual framework concerning the relationship between attitudes toward luxury brands, its antecedents (perceived values) and its consequences (purchase intentions). 4. Investigate the impact of attitudes toward luxury brands on purchase intentions. 3

4 5. Why Arab Consumers? West End Company, which represents 600 premium retailers in London, showed that Arab shoppers spend 15 times more than the average UK shopper. Arab Consumers are largest spenders in the UK: Shoppers from the Middle East account for 35% about of the luxury goods market in Britain (Thinkethnic, 2012). 6. Methodology To accomplish the aims of this research, an empirical study is carried out in two stages qualitative and quantitative. The study commences with a qualitative research phase in order to: (1) attain a more profound understanding of the topic, (2) refine and revise the preliminary research model and hypotheses, and (3) purify measures for the questionnaire (Churchill, 1979). In addition to purely qualitative methods, pluralistic research has gained popularity in marketing research in recent decades, where qualitative methods are used in conjunction with quantitative methods, to investigate a domain that has received relatively little attention to date (Deshpande, 1983; Zinkhan and Hirschheim, 1992). Therefore, a quantitative study is preferred for the next phase of this investigation. A self-administered questionnaire to measure each of the constructs of the study will develop on the basis of the reviewed literature and the qualitative study to quantify, supplement and complement the first phase. A self-administered questionnaire will distribute among Arab consumers of luxury brands. Descriptive statistics for the entire sample will be done using SPSS To test the measurement model and the hypotheses of this thesis, structural equation modeling (SEM) is a multivariate data analysis technique that has been widely used for instrument validation and model testing in research in marketing and other disciplines. In the current study, SEM will be used to validate the conceptual framework and test the hypothesized relationships among variables. 7. Hypotheses Code H1 H2 H3 H4 H5 H6 Hypothesis Rarity value will have a positive impact on attitude towards luxury brands. Materialistic value will have a positive impact on attitude towards luxury brands. Self- directed symbolic value will have a positive impact on attitude towards luxury brands. Other directed symbolic value will have a positive impact on attitude towards luxury brands. Relational value will have a positive impact on attitude towards luxury brands. Utilitarian value will have a positive impact on attitude towards luxury 4

5 brands. H7 H8 Attitude towards luxury brand will have a positive impact on purchase intention of luxury brands. The impact of utilitarian value on attitudes towards luxury brands will be mediated by country of origin. 8. Conceptual Framework Rarity value Perceptions Materialistic value Perceptions Self- directed Symbolic Other directed Symbolic Consumer Satisfaction Brand Loyalty Relational value perceptions Utilitarian value perceptions Country of Origin Figure 1: Conceptual model for the Luxury value dimensions 5

6 References: Ajzen, I. and Driver, B.L. (1992), Application of the theory of planned behaviour to leisure choice, Journal of Leisure Research, Vol. 24, pp Belk, R.W. (1988), Possessions and the extended Self, Journal of Consumer Research, 15(2), pp Berthon, P.R., Pitt, L., Parent, M. and Berthon, J-P. (2009), Aesthetics and Ephemerality: Observing and Preserving the Luxury Brand, California Management review, 52(1), PP Brock, T. C. (1968), Implications of Commodity Theory for Value Change, Psychological Foundations of Attitudes. New York: Academic Press. pp Buchanan-Oliver Margo, Brodie Roderick J, Huang Diana (2008) Refining the dimensions of the brand in the service economy. Paper presented at Thought Leaders International Conference on Brand Management. Birmingham Business School. Catry, B. (2003), The great pretenders: the magic of luxury goods Business Strategy Review, 14(3), pp Chadha, R. And Husband, P. (2006), The cult of the luxury brand: inside Asia s love affair with luxury. London: Nicholas Brealey International. Churchill, G.A. (1979). A paradigm for developing better measures of marketing constructs, Journal of Marketing Research, 16, de Moulins 1993) Deshpande, R. (1983). Paradigms lost: On theory and method in research in marketing, Journal of Marketing, 46, Dubois, B. And Duquesne, P. (1993), The market for luxury goods: Income versus Culture European Journal of Marketing, 27(1), pp Dubois, B. And Paternault, C. (1995), understanding the world of international luxury Brands: the dream formula, Journal of Advertising Research, 35(4), pp: Giacalone, J. (2006), The Market For Luxury Goods: The Case of The Comte Colbert, Southern Business Review, 32(1), pp Jevons, C. (2007) Towards an integrated definition of brand. Birmingham Business School: Paper presented at Thought Leaders International Conference on Brand Management; Kardon, E. (1992), Consumer Schizophrenia: Extremism in the Marketplace, Planning Review, Vol. July/August, PP Keane, M. J., McMillan, Z. (2004), Above and beyond, Brand Strategy, 30 November, PP Leibenstein, H. (1950), Bandwagon, Snob and Veblen effects in the theory of consumer demand, The Quarterly Journal of Economics, 64(2), pp Nueno,J. And Quelch, J. (1998), The mass marketing of luxury Business Horizon, 41(6), pp Okonkwo, U. (2009), The luxury brand strategy challenge, Journal of Brand Management, 16 (5/6), pp Pierre, C., Morwitz, V.G. and Reinartz, W.J. (2005), Do intentions really predict behavior? Self-generated validity effects in survey research, Journal of Marketing, 69 (2), pp Purani, K. And Skukla, P. (2011), Comparing the importance of Luxury Value Perceptions in Cross-national contexts, Journal of Business Research, 10(07), PP. 6

7 Schlosser, A.E., White, T.B. and Lloyd, S.M. (2006), Converting web site visitors into buyers: how web site investment increases consumer trusting beliefs and online purchase intentions, Journal of Marketing, Vol. 70, pp Shukla, P. (2011), Impact of interpersonal influence, brand origin and brand image on luxury purchasing intentions: Measuring interfunctional interactions and a cross national comparison, Journal of Business World, 46(), PP Sonimers, M. J. (1991), Marketing & Research Today (Netherlands), Vol. February, PP Soutar, J. And Sweeney, G. (2001), Consumer perceived value: The development of a multiple item scale, Journal of Retailing, 77(2001), PP Twitchell, J. B. (2002), Needing the Unnecessary: The democratization of Luxury, Reason. August/September, pp Tynan, C. Mckechine, S. and Chhuon, C. (2010), Co-creating value for luxury brands, Journal of Business Research, 63(11), PP Thomas, D. (2007), Deluxe: How luxury lost its Luster. New York: The Penguin Press. Veblen, T. (1899), The Theory of Leisure Class. Reprint, New York: Penguin Books. Vickers, J. And Renand, F. (2003), The marketing of Luxury Goods: an exploratory study- three conceptual dimensions The marketing review, 3(4), pp Vigneron, F. and Johnson, L. (1999), A Review and a Conceptual Framework of Prestige-Seeking Consumer Behaviour, Academy of Marketing Science, Available online at: +Prestige Seeking+Consumer+Behaviour&hl=en&as_sdt=0&as_vis=1&oi=scholart Vigneron, F. and Johnson, L. (2004), Measuring perceptions of luxury brand, Brand Management, 11(6), pp Wiedmann, K. Hennigs, N. And Siebels, A. (2009), Value-based segmentation of luxury consumption behavior, Psychology & Marketing, 26(7), pp Yoo, B. and Lee, S-H. (2009), Buy genuine luxury fashion products or counterfeits? Advances in Consumer Research, Vol. 36, pp Zeithaml, V.A. (1988), Consumer perceptions of price, quality and value: a meansend model and synthesis of evidence, Journal of Marketing, Vol. 52, pp Zinkham, G.M., and Hirschheim, R. (1992). Truth in marketing theory and research: An alternative perspective. Journal of Marketing, 56 (April),