Consumer Behavior and Status Consumption - Term Paper Example

Status consumption Introduction Consumption is considered to be one of the pillars of business and economic activities in this world. However, contemporary consumption pertains to utilization of goods and services to obtain or enjoy utility. Marketers have developed a new concept where consumption of ordinary goods and services is accompanied by image and status. There are different views proposed by different scholars on the standard definition of status consumption. Eastman, Goldmsith and Flynn (1999) define status consumption as adhering to social and cultural stratification and ranking in a given society. Consumers seek to create an impression or image to other people in the society. The most common form of status consumption is ownership of certain products. Such products are usually uncommon either due to restrictive prices or limited production capacities of producers of such. Applbaum (2004) says that consumption of such status endorsing products is not all about fulfilling needs but also has to do with psychological and emotional benefits such as elevated self esteem. Additionally, consumption of that nature must be envisioned to affect the social bearing and ranking of that consumer. This paper thus explores the major issues pertaining to status consumption drawing information from relent journal articles and books. Consumer Behavior and Status Consumption There are three levels of status from a social approach; status by assignment, status by achievement and status by consumption (Applbaum (2004). In their paper, ‘Status consumption in consumer behavior: scale development and validation’ Eastman, Goldsmith and Flynn (1999, p. 42) define status consumption as ‘the motivational process by which individuals strive to improve their social standing through the conspicuous consumption of consumer products that confer and symbolize status both for the individual and surrounding significant others.’ Smith (p 25) says that status consumption is a “cultural pattern that overtly connects possession of material goods with prescribed modes of behavior held to be appropriate for particular levels of social standing.” Silver (p. 10) again links consumption of goods and status and introduces the term “positional goods’. By this he implies that status consumers will go for goods and services that will earn them a status in the society. Kumar (2010) observes that marketers have exploited status consumption by pricing some products way above the average price. This deviates from the nature of man as a rationality whereby he seeks to optimize utility with the least costs. But why is this? Chang (2005) cites Sproles and Burns (1994) who say that “some products are perceived to communicate a certain image, social role or status.” The author adds that “for the purpose of achieving higher perceived social class and social status, many consumers are motivated to purchase and display expensive clothes and other accessories to show that they have the ability to afford luxury items” (p.5) Trends in status consumption So one may ask, is status consumption all about pricing? O’cass (2002) writes that the social image created by consumption of a product is the result of creative marketing in collaboration with effective packaging and promotion that allow marketers to charge premium prices. It can thus be deduced that while pricing is an important element in allowing a certain brand to be considered as status symbol, the marketer has to first fine tune the market into accepting the brand as premium. In the modern globalized world, status consumption is responsible for the success of certain brands in the market. O’cass (2002) argues that in the modern global village, individual consumers have taken to creating an elevated image through consumption of certain products not based on their utility or price but rather the impact that the brand will have on their social ranking. He says that international brands are now more available in local markets. A ‘smaller world’ has also implied increased competition and product imitation. Consumers who are status conscious have responded by consuming the most unique products in the market. Smith (2002) notes often times there is an misplaced assumption that status consumption is a reserve for the wealthy. He acknowledges the contribution of purchasing power in creating this misconception. He says that status consumption exists at different social statuses depending on purchasing power an aspect called democratization. Nonetheless the idea of status was a precinct for the bourgeoisie between the 16th and 19th century. He however says that the modern status consumption by the middle class cannot be compared to the bourgeoisie because economic conditions are so different. Influences of Status Consumption Income level or purchasing power is one of the major forces that drive ordinary consumption. This also applies to status consumption though there are a number of other forces that differentiate status consumption from ordinary consumption. Relatively higher purchasing power for households encourages status consumption particularly brands. Nonetheless, there has been an increasing trend where consumers in developing countries engage in conspicuous consumption even if this comes on the expense of not satisfying their basic life needs for expensive and luxurious. The cultural environment influences consumer behavior. O’cass (2002) observes that until recently, the Japanese society has been shy towards status consumption because the society upholds humility. He says that households with higher purchasing power than other households have exhibited the same consumption patterns and have utility are considered foremost rather than status symbol. Demographic factors such as family size and composition also influence status consumption. The higher the number of family members the higher the possibility of family members gains a sense of loyalty to the family and hence embarks on creating an identity and achieving a social status through status consumption. Nonetheless, a larger family may experience low purchasing power implying that the family has little to invest in status consumption. Disruption of the family structure is also a common trigger for status consumption. Roberts et al (2004) indicate that a family disruption may have an actual or a perceived effect status of such a family. Therefore, in an attempt to restore the family to a social status same as the one before the disruption, members may embark on status consumption. They give an example of a family that has lost both parents. Children left behind are likely to seek status consumption to compensate for the loss of parents. Similarly, a person may react in the same manner upon losing a partner. Among the various drivers of status consumption, purchasing power seems to have the greatest influence. Applbaum (2004) writes that individuals have a tendency to change their lifestyles according to change in their financial power. He argues that an individual is likely to have an eye for more classy brands if he/she can afford it. The sub-conscious idea on such changes in consumption might not be the utility attained but rather the impression and image he creates in the society. It is this economic influence that give way to one form of status consumption which this paper discusses next Status Consumption & Conspicuous Consumption The relationship between status consumption and conspicuous consumption remains highly contested. Scholars in consumer behavior have argued that these are two different and distinct behaviors. This s based n the emotional and psychological issues that drive each of them. On the other hand, marketers have often treated the two marketers as one prompting researchers to also study the market as one. Smith (2002) uses the marketers approach to that the two are one and the same thing. He defines conspicuous consumption as purchase and exhibition of expensive products with an intention of implying wealth. O’cass (2002) disagrees with Smith (2002) to say that status consumption and conspicuous consumption are two different things. He says that that status consumption is basically intended to create a class through consumption of certain products while conspicuous consumption is meant to impress other people. For that reason it can be argued that the desire to gain status through acquiring certain brands can lead to a desire to display the acquired products and thus leads to conspicuous consumption. By studying the Asian market, Chang (2005) observed that majority of consumers were motivated to buy expensive items to gain social status but also displayed the same to the public believing that such product were admired by others. From this observation, he deduced that status consumption and conspicuous consumption are one and the same thing. Status Products Marketing As aforementioned, marketers have exploited the association of particular products with affluence and class in given societies. Various products are regarded by marketers as status products or status indicators for the society. Marketers should thus devise ways to determine status-conscious consumers so that they can customize their marketing strategies and promotions accordingly. According to Smith (2002), there exists a close relationship between status consumption and brand diffusion. As status conscious consumers will be interested to figure out whether the extension brand possesses the same value in terms of status as the parent brand. The unique behavior exhibited by status consumers implies that marketers are faced with additional task of identifying consumer patterns for such consumers and serve them well with necessary products. Marketers need to develop special marketing tools and strategies to push their brand sin the market. A marketing strategy for status products should focus on the underlying causes of status consumption; status and display (Goldsmith, Clark & Goldsmith 2006). The marketer should be bear in mind that status-conscious consumers are looking for a certain image the product expresses and not necessary the utility they gain from consuming the product. The major utility under consideration in the mind of the consumer is the impact that ownership of that product will have on his status ranking. To start with, the marketers must first create product and then sell the brand. Smith (2002) says this is very critical in the clothes wear fashion industry where all clothes serve the same purpose but wearers are more interested in the designer’s name rather than the comfort or durability of such products. Veblen’s theory of leisure and class argues that status consumption arises out of competition in the society either by households or individuals. This theory indicates that class or status membership is very helpful to marketers as it segments the market. This makes it easier for status marketers to meet the needs of their market more easily ha in the ordinary marketing case. As earlier indicated, democratization of status implies that marketers have the opportunity of protecting their major brands that target high spenders by introducing less expensive alternative brands from the low income end market while at the same time maintaining the idea of status in consumption of such products (Silver 2002). Status products pricing and presentation The fact that consumers have different perceptions of value and utility on different products and services on offer implies that the amount they are willing to pay for the same product or service varies and the status level the society attaches to it. Marketers are faced with the challenge of identifying the value perception held by different consumers in order to ensure that they pay for a price that is individually fair to each and everyone. While this is has proved difficult, marketers have developed techniques that bring them closer to realizing a situation whereby each customer pays what he feels is worth that product. Silver (2002) notes that use of unitary pricing which groups all consumers in one large segment results in lost profits as some consumers may be willing to pay higher than the set price. They indicate that the regular optimal pricing strategy where consumers are placed in one segment leaves out untapped profits. Individualized pricing comes in to play to reach out to consumers left out by the optimal pricing strategy. Essentially, it targets consumers who might be willing to pay more above the optimal price for a product/service according to the value perception and also those who might be willing to pay above the breakeven price for the firm but below the optimal price The automobile industry offers a great range of example of firms that have opted status products. Toyota Motor Corporation, one of the leading global automaker has launched different brands and products under its parent Toyota brand in different markets in order to compete effectively across different market segments. The Lexus brand is an affiliate brand of Toyota that targets the luxury market but does not bear the name Toyota. In fact the name Lexus is un-Japanese. The firm has managed to present Toyota as a status symbol way above plain ‘Toyota’ cars. This indicated by the fact a close analysis of the major Lexus models in the market have various similar features with other Toyota vehicles. This implies that Toyota has succeeded in marketing Lexus as a status brand by pricing it highly and presenting the brand as an independent entity far away from the plain Toyota which is marketed as utility, simplicity and convenience brand (Stanley 2009). Conclusion Status consumption enjoys a unique blend of needs both for the marketers and the consumer. Individuals and households have to prescribe to what a society views as classy and improves one social ranking. As such, consumer needs are often blurred by the need to gain a better social status. On the other hand, marketers have to elevate their brands through pricing, design distribution and promotion in order to create an impression higher social status around their brand. References Applbaum, K. (2004). The marketing era: from professional practice to global provisioning. London: Routledge Chang, Y. (2005). The perceptions of luxury products as status symbols by Taiwanese college students Feliciano, M. (2004). 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