Relationship between Individuals Personality and Consumption of Luxury Brands - Example

of the of the number Consumer Behaviour Introduction Luxury goods are defined as those goods the possessionand display of which elevates the owner’s prestige in the society apart from contributing to any functional utility. People in general have an inclination to consume goods that are beyond their daily necessities. Consumers’ brand awareness acts as a tool for suppliers to mould consumer’s preferences and in the long run these changes are reflected in general consumer behaviour. In this paper the terms ‘luxury goods’ and ‘prestige goods’ have been used synonymously. The paper focuses on the relationship between individual’s personality and lifestyle and consumption of luxury brands. The term ‘prestige preference’ was coined in the later years of the twentieth century and the concept relates to an individual’s penchant towards purchasing goods from certain specific stores in which the store layout, ambience, price and quality of goods available are symbolic of brand and modern fashion. Consumption of certain brands of goods is believed to render a sense of exclusivity and identity of “high brand awareness and perceived quality” (Husic and Cicic 231). On one hand, brand conscious customers patronize certain specific brands and it influences their purchasing decisions to a large extent. On the other hand, this allows the suppliers to have a strong customer base, retain level of sales and incorporate a level of differentiation in their products on the basis of brand name, packaging and presentation. All these factors play a major role in marketing and advertising strategies of these firms. There are different motivations behind individuals’ preferences of products and these motivations are influenced by the socioeconomic backgrounds of the individuals. Various kinds of interactions occur between the customer and the elements in the environment external to the individual. Vigneron and Johnson have defined five prestige preferences according to the motivations acting behind these preferences. The effects of these preferences on consumption behaviour are named as the Veblen Effect, the snob effect, the bandwagon effect, the hedonist effect and the perfectionist effect (Vigneron and Johnson 3-4). Consumption of luxury brands is supplemented by increase in the income level. Average level of income in the economy has increased hierarchically since 1990s. However, the most dramatic pattern of increase in income level is found in the elite class. There is huge income inequality among the social classes in the developed countries, particularly in the United States. However, this issue is beyond the scope of our paper and we shall focus on the expenditure pattern of the high and middle classes of the society on luxury brands. The topic presented in this paper is ‘the effect of individual perceptions, personality and lifestyles on consumption pattern of luxury goods’. This topic holds high importance in current economic scenario and is relevant in the decision-making process of formulating marketing strategies. This paper would provide insights on the motives behind consumers’ choice for certain products, their inclination towards spending variable proportions of income on luxury goods, and their reactions to issues like social status, prestige and identity, fashion or trend. Since business in luxury brands in increasing at a rapid pace, identification and analysis of these factors is highly pertinent to framing effective marketing strategies by the firms operating in luxury brands markets. Personal recommendations are provided on the basis of the results of these analyses to improve performance by these firms. These are aimed at benefitting the marketing procedure followed by such firms keeping in mind the consumption perspectives of the consumer. Analysis of consumer behaviour Luxury is a concept associated to a level higher than mere necessities. It refers to the satisfaction of the desire level above the basic necessities for living a standard livelihood. The suppliers of luxury goods are in the business of creating such desires and satisfying them. Understanding the true concept of luxury and its varying perspectives from the points of view of the societies at different levels of development and cultural background is very important. It not only shows new avenues for growth of the organizations but also helps them figure out the ways to sustain that growth (Managing Luxury Brand Growth). Sales figures are rising at an unparalleled rate around the world across all sectors. If there is significant growth in sales of all products, the sales figures of luxury brands might be marred. In order to revive and retain the glamour of luxury brands in the minds of the consumers companies are tirelessly making studies about the tastes of the consumers and update their lines of products according to demand. In this process, with passage of time, they are also modifying the preferences of the consumers through aggressive marketing of their products and brand promotion. The concept of luxury varies among individuals depending on their social and economic background. Vigneron and Johnson have explained this multifarious and intricate subject in a simple manner. They have identified and elaborated five most prominent aspects of consumption behaviour, related to luxury brands, depending upon results from various researches. The five recognizable effects on consumer behaviour are elaborated below: Veblen effect: Some products are termed as luxury goods in public opinion. Such goods are better known for their conspicuous consumption which in turn plays a dominant role in shaping individual’s preferences. Consumers under the Veblen effect consider price an important indicator of status. Their primarily motive behind making conspicuous consumption is to make an impression on others. Snob effect: This effect arises from both interpersonal effects and personal notions of the consumer. Limited availability of a product enhances snob consumers’ preference for that product as they perceive that product as unique and exclusive. Price is an indicator of uniqueness for snob consumers and they often avoid buying too popular brands. Bandwagon effect: Some people desire to own branded products in order to conform to the social group they belong to. Possession of such products is a symbolic marker denoting group membership. Bandwagon consumers attach more importance to the effect of consuming luxury goods. Price is just an indicator of quality for these consumers who consume luxury goods to elevate their position in the society. Here, interpersonal effects play a dominant role in consumption decisions of the individual. Hedonic effect: Some people relate to their personal values while purchasing luxury goods and do not get influenced by interpersonal effects. They are inner directed consumers and consume these goods for the sheer motive of deriving personal pleasure. Such customers place very less importance on price and do not consider it a sign of prestige. Perfectionist effect: Some consumers consider price to be the indicator of quality. Higher product prices would attract such customers and induce them to make more purchases. Perfectionist consumers buy and consume luxury brands owing to their higher prices than their non branded counterparts since they feel that the high priced goods would deliver higher quality and in turn higher utility. The Generation-Y The members of the Generation Y or Gen Y are born approximately between the year 1977 and 1994 (Chao et al. 10787). Therefore, in the present decade this bulk of population comprises the youth or adult population. This generation is technologically literate, trend-setters in fashion industry and expects instantaneous gratification. These people are well accustomed with the media, are internet savvy and eager to experiment with new products. They are also financially equipped and hold moderate to high disposable income. Hence they are extremely potential customers and might be converted to loyal brand followers with efficient marketing strategies. They offer excellent growth opportunities to the firms as well as present the greatest challenge to the consumer goods sector since more numbers of marketers are focusing their attention on this population group (Chao et al. 10787). In the United States the baby boomers are the high target population for the luxury brands industry. Baby boomers are those people that were born after the Second World War and presently represent the most affluent population group in the US (Okonkwo 72). Detailed study reveals the reason behind their affluence even in the current economic downturn. This segment of population has just emerged from their prime income years or is still into the final years of employment. Their children have mostly grown independent and do not live on parent’s income any more. This allows them to enjoy consumption freedom and make high level of expenditure on luxury commodities. Personality and lifestyle The lifestyle of people is influenced by both the prevailing socio economic status and the current changes in the environment. Researches made in the recent past proved that there exists a strong correlation between occupation structure, history of consumption pattern, and socio-economic status. Studies show that ownership of high disposable income coupled with high socioeconomic status often bears positive relation to consumption of prestige goods (Soltow 33). The expenditure pattern of these people in clothing, food and amusement can be distinguished from those belonging to the lower income bracket. Passage of time also affects the preferences of people and influences their personality. The Gen Y customers reflect a pattern of expenditure which is much different than the stereotypical consumption habits of the generation X. The personality and lifestyle of the Gen Y population bears a significant responsibility for this change. The new generation adults are more self-reliant than their forefathers and lead more independent lives. Their lifestyle is affected by tradition as well as modernity. Shopping has been extended to the level of culture and the practice of Sunday shopping is a good example (Daniels 3). Interpersonal effects tend to manipulate the lifestyle of the Gen Y largely. The younger generation are often found to be under the bandwagon appeal. Peer pressure is an example of this effect and it influences the lifestyle of this generation (Bandwagon Appeal). Access to internet connections has increased and high-speed connections have become cheaper nowadays (Okonkwo 187). This has changed consumers’ perception towards online shopping. Online shopping is a step forward for the marketers of luxury brands. Online shopping provides the customers the opportunity to enjoy pleasure of shopping from the comfort of home and get their orders delivered at their doorstep. This arrangement goes very well with the act of hunting for luxury goods. Potential customers might browse through the websites of the brands for the sake of spending a leisurely hour or as a part of entertainment and end up placing orders for some products that have caught their attention. Technology The advances in technology is influencing the livelihoods of population to a great extent; wider social networks and media have made flow of information smooth and fast. Payments for purchases are nowadays frequently made through the plastic money and over the internet. This facility has brought a major turn in the spending pattern of the people. Since luxury goods are not always low priced, consumers avail the credit facilities to satisfy their tremendous desire to possess luxury brands (Chadha and Husband 177). The young adults are more prone to use internet for making random purchases since they represent the section of population that spend maximum hours on the internet. Increased awareness has improved security options regarding online modes of payments. Good after-sales services, easy-to-use and informative websites, satisfactory delivery systems and money back guarantees; all these services have improved with advances in technology. The websites have become efficient distribution channels for retailers (Chevalier and Mazzalovo 348). The luxury brands retailers are being able to get a better share of the international market through online sales. They grab customers’ attention by making innovations over and above the conventional e-shopping websites. Websites of luxury brands portray ease of navigation and are more eye-catching than the others. This conforms to the desires of the individual who has a high disposable income and has the inclination to adopt trendy consumer goods. Although not all individuals in the high income bracket enjoy extravagant shopping experiences, the number of people that enjoy doing so is on the rise. One can blame the aggressive marketing strategies of the luxury brands producers and their rampant product promotions for this phenomenon. The customer base of luxury brands is increasing at an increasing rate since the last few decades. Marketing implications and discussions The global market for luxury goods is expanding significantly. The brand image is a very important factor in this market. Brand image includes any specific identity of the product that associates it with the mother company that produces it or the subunits of the company that operates under the particular brand name. The name, symbol, product design, packaging or other characteristics of the product such as colour or smell contribute to its brand image. The brand image of a product is capable of building up popular perception regarding the product’s quality and desirability. Hence consumers and suppliers are equally concerned about the branding of luxury items. The above discussion has shed light on one aspect very prominently; luxury items are not very cheap and the customer base is founded on the upper middle class population of the society. However, the concept of luxury goods is evolving. Some goods that were considered luxury items fifty years ago are now listed as necessary items by the people above the poverty level. Thus suppliers must update their information database regarding the economic, social and political environments of the society in which they are operating. Regular research on consumer preferences through quantitative surveys is highly recommended, which would allow suppliers to excavate new avenues for launching products as well as experiment with product varieties by launching them in existing markets. Form perspective of suppliers, sales of luxury products is increasing and from the consumers’ perspective, more number of consumers is entering the social class that can afford luxury products. The market for luxury goods is not competitive, but monopolistic. Suppliers must act smartly in deciding the price-quantity combination to be offered so as to make a fine discretion between the classes of consumers that can become their patrons. In simple words, luxury goods can remain so if they can be afforded by some and desired by many. Luxury items are mostly aesthetic objects that are capable of producing sensitive response within the target audience. Consumers are on the lookout for consuming these products with the desire to gain more pleasure than utility. Therefore these products should deliver satisfaction in all levels starting from an attractive packaging to pleasant shopping experience to enhancing social status. Originality of design, beauty of display and elegance of presentation encourages the customers to touch the product and enjoy its feel good effect. In this context marketing procedures play a strategic role. Rather than directly hammering on the customers to buy the products, marketers might make a superfluous advertising of the goodness of the product features. The advertisements might involve shootings in an exotic location to appointing a celebrity brand ambassador for the product. These firms might also get their products endorsed by some high profile personalities. This influences customers’ purchasing decisions since the endorsements act as boosters for the effectiveness of the product. Finally, the price of luxury goods is intentionally kept high to satisfy the mentality of snob and perfectionist customers. From economic perspective, as long as the prices would remain high, the products would remain scarce. If luxury items become very easily available in the market at easily affordable prices they become the common consumer goods for the mass. Hence they close their luxury identity. Therefore marketers need to take route to alternative methods of pushing sales in a competitive market by not bringing down product prices to a very affordable level. Works cited “Bandwagon Appeal.” Kennesaw. n.p., 2002. Web. 8 Mar. 2013. Chadha, Radha and Paul Husband. The Cult of the Luxury Brand: Inside Asias Love Affair with Luxury. London: Nicholas Brealey Publishing, 2010. Print. Chao, Chen Wei et al. “What drives college-age generation Y’s perceived value on high speed rail.” African Journal of Business Management 6.43 (2011): 10786-10790. Print. Chevalier, Michel and Gerald Mazzalovo. Luxury Brand Management: A World of Privilege. New Jersey: John Wiley & Sons, 2008. Print. Daniels, Simone. “Gen Y Considerations for the Retail Industry.” Buseco. Australian Centre for Retail Studies, 2007. Web. 8 Mar. 2013. Husic, Melika and Muris Cicic. “Luxury consumption factors.” Journal of Fashion Marketing and Management 13.2 (2009): 231-245. Print. “Managing Luxury Brand Growth.” KPMG. KPMG International, 2006. Web. 8 Mar. 2013. Okonkwo, Uche. Luxury Fashion Branding: Trends, Tactics, Techniques. New York: Palgrave Macmillan, 2007. Print. Soltow, Lee. Distribution of Wealth and Income in the United States in 1798. Pittsburgh : University of Pittsburgh Pre. Print. Vigneron, Franck and Lester W. Johnson. “A Review and a Conceptual Framework of Prestige-Seeking Consumer Behavior.” Academy of Marketing Science Review 1999.1 (1999): 1-15. Print. Read More