Luxury

Question 1

How do we define a luxury good?

Answer 1

Goods such that the mere use or display of a particular branded product brings the owner prestige apart from any functional utility

Question 2

How do you define status?

Answer 2

• The relative position or standing of things or especially persons in a society
• Relative rank in a hierarchy of prestige

Question 3

Where does status have its root from?

Answer 3

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)

Question 4

When did the status roots start to evolve?

Answer 4

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.

Question 5

What does the Theory of Leisure class argue?

Answer 5

• 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.

Question 6

What does contemporary research in marketing recognize?

Answer 6

• 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

Question 7

How do higher prices make consumers feel?

Answer 7

• 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).

Question 8

Why is price not everything that matters?

Answer 8

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).

Question 9

Who are consumers influenced by?

Answer 9

• 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).

Question 10

Who is Thorstein Veblen

Answer 10

An economist and sociologist best known for his classic treatise The Theory of the Leisure Class (1899)

Question 11

What are the tests the study uses to determine need for status?

Answer 11

• 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.

Question 12

What is a sumptuary law?

Answer 12

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.”

Question 13

Middle Ages Background to luxury?

Answer 13

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

Question 14

What was the rationale for the sumptuary laws in the middle ages as they pertained to clothing?

Answer 14

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).

Question 15

When did the sumptuary laws as they pertained to clothing break down?

Answer 15

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.

Question 16

What does the democratization of luxury imply?

Answer 16

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.

Question 17

How should we think about the democratization of luxury and the nuances around it and status?

Answer 17

• 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.”

Question 18

According to brand prominence study, why do consumers choose a particular brand?

Answer 18

• 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.

Question 19

Brand Prominence Study - What two vectors do they separate consumers on?

Answer 19

• Wealth
• Need for Status

Question 20

What are the Four P’s of luxury?

Answer 20

• Patrician - the elites in ancient Roman times
• Parvenu -
• Proletarian
• Poseur

Question 21

Who are the haves in the Four P’s

Answer 21

• Patricians
• Parvenu

Question 22

Who are the have nots in the Four P’s

Answer 22

• Proletarian
• Poseur

Question 23

How do you define a Patrician?

Answer 23

• 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

Question 24

What is the detailed rationale for a Patrician?

Answer 24

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?

Question 25

What is the challenge to rationale for why Patrician’s consumer the way they do?

Answer 25

Challenge to this notion: 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.

Question 26

How do you define a Parvenu?

Answer 26

• Etymology: “parvenus” (from the Latin pervenio–, meaning “arrive” or “reach”).
• Summary: Wealthy consumers that are high in need for status. They use loud luxury goods to signal to the less affluent that they are not one of them.
• Associations: Parvenus want to associate themselves with other haves. They use loud signals.
• Disassociations: They want to disassociate themselves from the have-nots.

Question 27

What is the detailed rationale for a Parvenus?

Answer 27

Detailed Explanation: Parvenus possess significant wealth but not the connoisseurship necessary to interpret subtle signals, an element of which Bourdieu (1984) refers to as the “cultural capital” typically associated with their station. To parvenus, Louis Vuitton’s distinctive “LV” monogram or the popular Damier canvas pattern is synonymous with luxury because these markings make it transparent that the handbag is beyond the reach of those below them. However, they are unlikely to recognize the subtle details of a Hermès bag or Vacheron Constantin watch or know their respective prices. Parvenus are affluent — It is not that they cannot afford quieter goods — but they crave status. They are concerned first and foremost with separating or dissociating themselves from the have- nots while associating themselves with other haves, both patricians and other parvenus.

Question 28

How do you define a Proletarians?

Answer 28

• Associations: Proletarians do not engage in signaling
• Disassociations: Proletarians do not engage in signaling

Question 29

How do define Poseur’s?

Answer 29

• Etymology: “poseurs,” from the French word for a “person who pretends to be what he or she is not.”
• Summary: Those who are high in need for status but cannot afford true luxury use loud counterfeits to emulate those they recognize to be wealthy.
• Associations: Poseur’s aspire to be have’s. They mimic the Parvenu’s
• Disassociations: Poseur’s want to disassociate themselves from the have-nots

Question 30

What is the detailed explanation for a Poseur?

Answer 30

Detailed Explanation: Like the parvenus, they are highly motivated to con- sume for the sake of status. However, poseurs do not pos- sess the financial means to readily afford authentic luxury goods. Yet they want to associate themselves with those they observe and recognize as having the financial means (the parvenus) and dissociate themselves from other less affluent people. Thus, they are especially prone to buying counterfeit luxury goods. If brand status is important to a person, as it is with poseurs, but is unattainable, a person is likely to turn to counterfeit products as cheap substitutes for the originals (Wee, Tan, and Cheok 1995). This implies, and we subsequently show, that fake handbags should disproportionately be copies of luxury handbags that are conspicuous or loud in displaying the brand—the kinds of goods the parvenus favor—but because of their discounted price are especially appealing to poseurs.

Question 31

What is a griffe?

Answer 31

• (from the French word for “scratch”), or a set of special signatures, for their brand.
• Similar to Brand DNA & Brand Identity

Question 32

Why is a griffe important?

Answer 32

• Developing a griffe allows you to have the subtle cues that identify their products as their own even in the absence of an explicit logo or brand name.
• The griffe allows patricians to signal associative desires to each other without sending the dissociative message that parvenus do when they signal using loud products.
• Along with developing a griffe, firms should educate certain target customers about these subtle but recognizable details.

Question 33

What are the implications of the brand prominence study to marketers?

Answer 33

• Luxury goods manufacturers must consider advertising to everybody.
• Parvenus should believe that proletarians and poseurs know the brand and will recognize them as wealthy when they display it. If the brand were unknown to the general public, it would not serve as a dissociative signal.
• In addition, when advertising to the masses, the message must be aspirational rather than functional
• Finally, it may prove useful for luxury goods manufacturers to reassess the traditional pyramid approach to luxury. Conventional wisdom depicts a “trickle-down” theory of status. For example, haute couture is notoriously unprofitable for design houses but a necessity in appealing to those who aspire to have $100,000 custom-made dresses with more moderately priced designs. The notion is that luxury brands must appeal to the crème de la crème of clientele for less sophisticated consumers to find their wares attractive. This may not always be the case. Indeed, it seems that label-conscious parvenus cannot recognize, and thus may not be aware of, much of what the patricians are buying, whether it is their $3,500 bottles of Krug Clos d’Ambonnay champagne (not $125 Dom Perignon) or $1,350 Bottega Veneta wedge-heel shoes (not $200 Betsey Johnson wedges).