Luxury Flashcards
How do we define a luxury good?
Goods such that the mere use or display of a particular branded product brings the owner prestige apart from any functional utility
How do you define status?
- The relative position or standing of things or especially persons in a society
- Relative rank in a hierarchy of prestige
Where does status have its root from?
Status has its roots in ancient society, in which every person had a “place” in the social hierarchy. Historically, this place was attained either through birth (e.g., born into nobility or an upper class in the caste system) or by ordainment (e.g., knighted by the king)
When did the status roots start to evolve?
This changed during the Age of Enlightenment (roughly the beginning of the eighteenth century) as a person’s worth began to be judged according to his or her achievements, which frequently brought great wealth (De Botton 2004). A reliable connection was made between merit and worldly success; well-paid jobs were secured primarily through intelligence and ability. The rich were not just wealthier; they were “better.” They merited their success, and as such, affluence increasingly became a marker of social status. Wealth and social status have been inextricably linked ever since.
What does the Theory of Leisure class argue?
- In his classic treatise The Theory of the Leisure Class (1899), economist and sociologist Thorstein Veblen argues that the accumulation of wealth is not really what confers status. Rather, what confers status is the evidence of wealth, which requires its wasteful exhibition—behavior he describes as “conspicuous consumption.”
- Examples of this: As examples, Veblen notes that the leisure class used silverware, hand- painted china, and high-priced table linens at meals when less expensive substitutes could work as well or better. Members of this class bought fine silverware not to convey food into their mouths but to display that they could afford such things. Veblen notes that the examples he put forth, including manicured lawns, the latest fashions, and exotic dog breeds, confer prestige to owners because of the items’ lofty price tags.
What does contemporary research in marketing recognize?
- The symbolic role of possessions in consumer’s lives
- People make inferences about others based on their possessions
- These inferences can reflect someone’s success, measured by the things someone owns
- The objects that symbolize success tend to be high in price in absolute or relative terms
How do higher prices make consumers feel?
- In some ways, higher prices them- selves make consumers feel superior as one of the few who can afford to buy the product (Garfein 1989).
- Consumers will pay a higher price for a functionally equivalent good because they crave the status brought about by such material displays of wealth (Bagwell and Bernheim 1996).
Why is price not everything that matters?
Who uses a brand is integral to the brand image and helps explain why consumers are attracted to certain brands and shy away from others (Sirgy 1982). Brand choice can send meaningful social signals to other consumers about the type of person using that brand (Wernerfelt 1990).
Who are consumers influenced by?
- The symbolic meaning consumers derive from a particular brand is often based on associations between the brand and its users or the “type” of consumer who buys that brand (Muniz and O’Guinn 2001).
- Consumers are influenced by their own group (Bearden and Etzel 1982; Whittler and Spira 2002)
- Those they aspire to be like (Escalas and Bettman 2003, 2005), and
- Those with whom they want to avoid being associated (White and Dahl 2006, 2007).
Who is Thorstein Veblen
An economist and sociologist best known for his classic treatise The Theory of the Leisure Class (1899)
What are the tests the study uses to determine need for status?
- Eastman, Goldsmith, and Flynn’s (1999) need-for-status scale, which comprises statements such as “The status of a product is irrelevant to me” and “I would pay more for a product if it had status,”
- Likert Scale: Respondents indicated their level of agreement on a seven-point Likert scale.
What is a sumptuary law?
Adjective
- Regulating or controlling expenditure or personal behavior
- Intended to regulate personal habits on moral or religious grounds.
- Use the adjective sumptuary to talk about rules that control spending. You’re most likely to see it in historical documents, in the context of “sumptuary laws” or “sumptuary regulations.” This adjective denoting restrictiveness in spending or behavior has fallen out of fashion in the modern age, and perhaps just as well: it looks confusingly similar to sumptuous, whose meaning is opposite in spirit. Both words are derived from Latin sumptus, which means “expense or expensive.”
Middle Ages Background to luxury?
Sumptuary laws specified in minute detail what each social class was permitted and forbid- den to wear, including the maximum price an article of clothing could cost. For example, grooms could not wear cloth that exceeded two marks, and knights could wear apparel up to six marks’ value but were forbidden from wearing gold, ermine, or jeweled embroidery
What was the rationale for the sumptuary laws in the middle ages as they pertained to clothing?
The rationale was to reserve particular fabrics and ornamentation for certain social classes to distinguish them and uphold order within the social hierarchy. A case in point was the extravagant wardrobe of Elizabeth I (1533–1603), which provided visible proof of her divinity and signaled her special place in society (McKendrick, Brewer, and Plumb 1983, p. 76).
When did the sumptuary laws as they pertained to clothing break down?
By the eighteenth century, a blurring of partitions in social classes led to the demise of all sumptuary laws (Berry 1994, p. 82); yet the use of personal effects as markers of status persists.
What does the democratization of luxury imply?
Today, anyone can own a purse, a watch, or a pair of shoes, but specific brands of purses, watches, and shoes are a distinguishing feature for certain classes of consumers.
How should we think about the democratization of luxury and the nuances around it and status?
- Status signaling (signaling intentions) - how consumers perceive themselves and want others to perceive them. Their items either associate them with a group or disassociate them with a group.
- For example, a woman who sports a Gucci “new britt” hobo bag ($695) signals something much different about her social standing than a woman carrying a Coach “ali signature” hobo ($268).
- The brand, displayed prominently on both, says it all. Coach, known for introducing “accessible luxury” to the masses, does not compare in most people’s minds in price and prestige with Italian fashion house Gucci.
- But what inferences are made regarding a woman seen carrying a Bottega Veneta hobo bag ($2,450)? Bottega Veneta’s explicit “no logo” strategy (bags have the brand badge on the inside) makes the purse unrecognizable to the casual observer and identifiable only to those “in the know.”
According to brand prominence study, why do consumers choose a particular brand?
- Consumers often choose brands as a result of their desire to associate with or resemble the typical brand user
- Furthermore, self-presentation concerns lead consumers to avoid choosing a product associated with a dissociative reference group.
- Associative and dissociative motives are not necessarily opposite sides of the same coin; a desire to associate with one group does not imply a desire to dissociate from opposing groups. For example, a Harley-Davidson Riders Club member need not abhor Suzuki or Kawasaki motorcycles or want to distance him- or herself from their owners.
Brand Prominence Study - What two vectors do they separate consumers on?
- Wealth
- Need for Status
What are the Four P’s of luxury?
- Patrician - the elites in ancient Roman times
- Parvenu -
- Proletarian
- Poseur
Who are the haves in the Four P’s
- Patricians
- Parvenu
Who are the have nots in the Four P’s
- Proletarian
- Poseur
How do you define a Patrician?
- Etymology: We label the first category “patricians,” after the elites in ancient Roman times.
- Summary: A wealthy consumer that is low in need for status and only wants to associate with their own kind. They pay a premium for quiet goods only they can recognize.
- Associations: Patricians signal to each other. They use quiet signals.
- Disassociations: They don’t try to disassociate with anyone
What is the detailed rationale for a Patrician?
Detailed Explanation: Patricians possess significant wealth and pay a premium for inconspicuously branded products that serve as a horizontal signal to other patricians. Feltovich, Harbaugh, and To (2002) use game theory to argue that “high types” (i.e., those who are high in wealth, productivity, or some other valued attribute) sometimes avoid obvious signals that should separate them from low types because they are concerned with separating them- selves from medium types who use such signals. In our model, however, patricians are principally concerned with associating with other patricians rather than dissociating themselves from other classes of consumers. They use sub- tle signals because only other patricians can interpret them, a byproduct of which is that they avoid being misconstrued as someone who uses luxury brands to differentiate them- selves from the masses. In summary, patricians are high in financial means, low in their need to consume for prestige’s sake, and keen to associate with other patricians. What is a challenge to the definition of a Patrician and their motives?