Luxury Products And Consumer Behaviour

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05/06/17 Marketing Reference this

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This chapter reviews related literature pertaining to the study of (a) Brand, (b) Consumer Brand Perception with regards to the attributes like celebrity endorsement, store design and presentation and country of origin effects,(c) Luxury products and (d) Consumer Behavior with respect to luxury consumption.

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The Singapore luxury fashion industry is becoming extremely competitive where top brands from around the world are competing for the market share. The development aspect has also shown that customers no longer want to incline themselves towards cost effective products but look for premium and branded goods to fulfil their need for a sophisticated and global lifestyle (Keller, 1993). Since most of these brands have luxury products that are similar in terms of the quality and price it becomes difficult for the consumer to make a purchase decision. In this situation, brand perception is the key discriminating factor that can assist a consumer’s decision to select one brand over the other.

3.1 Brand

An American marketing firm says that “Brand is an art and foundation of marketing” and defines brand as a name, term, sign, symbol or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors (Kotler 2000:435). A company makes the product and the consumer buys the brand (Kapferer, 1996). The main element that differentiates a product and its brand is the consumers’ perception and the feelings towards the components’ of the brand (Achenbaum, 1993). Therefore a brand is not a name, logo, colour scheme or a design; it is about the customer’s perception. Customers believe in what they have experienced from the product than believing the advertisement (Newell and Godin, 2003). For example, when consumers buy luxury fashion products from brands such as Armani or Christian Dior, the past experience with a particular brand is the key aspect that backs the consumer’s perception.

Brands help marketers to gain that extra mile in a competitive market by upholding differences between other competitors. There are many different components in a brand, which are packaging, advertising, brand name, promotion, product and presentation. Widely known brands are asset to any company. A brand gathers loyal consumers by years of good consumer experience and heavy investments on quality and on the advertisements of the product. Brand source is where consumers could identify the product, where the product and the brand are associated together, which creates a brand image in consumers’ mind (Kotler, 2003).

The huge percentage of the luxury fashion market in Singapore is controlled by consumers and not by brands. The reason for this is that Singaporeans have multiple choices and there always seems to be ten different choices for one product! This makes the consumers to look for different price levels, qualities and brands. According to Yang (2007), the consumer perception about a brand is more or less the same as the perception about an unknown human being, such as what their values are, what does the brand stands for, how it looks and so on. However, consumers’ perceptions are not always right. For example, if a consumer is asked why they buy a particular product the answer given by the consumer is very rational. No one can jump into conclusions with the rational answer given by the consumers as they may buy a particular product because of several personal reasons like price, quality, country of origin etc. Or, the reason might be simply because that is the only brand available in the market.

Understanding the relationship between the brand and the consumers is also vital in order to know how consumers form perceptions about luxury fashion brands leading to purchase decisions. Knowingly or unknowingly, consumers consider the possessions as a part of themselves (Belk, 1988). Therefore consumers wish to purchase luxury brands as these high end brands are a way to convey social meaning and a short cut social acceptance (Auty and Elliott, 1998). The purchase of luxury brands helps the consumers convey the message to the group members that this is the way they are liked to be noticed within the group thereby improving the social belongings (O ‘ Shaughnessy and O ‘ Shaughnessy, 2002). Therefore, luxury brands are considered important an important role in the construction of self (Carroll, 2008). Thus, the idea of improving their self image makes consumer perceive that purchasing luxury fashion brands will help them find a fit within their aspired group.

3.2 Consumer Brand Perception

The concept of brand perceptions has been a subject of study for many researchers and has become vital for the activities in the business environment. Studies have recognized that brand awareness and brand image are the two components of brand perception (Keller, 1998). Having only awareness about a brand is not a good enough reason for a consumer to make the purchase decision but the brand has to give products that are valuable to the consumers as well as be different from the others (Fill, 2002). Brand perception is defined as a process by which an individual receives, selects and interprets stimuli to form a meaningful and coherent picture of the brand (Schiffman, 2001). Brand image is the perceptions of the brand reflect due to its associations in the consumers’ minds (Keller, 1993). These associations can be the store design and presentation, brand endorsements, country of origin or any other customer benefits (Aaker, 1991). Therefore, our study is mainly focused on these the consumer perceptions of brand quality, price, country of origin and celebrity endorsement.

3.2.1 Consumer Perception process

Before we explain the associations of the brand image it is important to know the consumer perception process in order to understand how exactly consumer form perception towards a brand or the product. Perception is such a basic function that occurs at the subconscious level that we take it for granted without really knowing the process of its occurrence (Schiffman, 2001). In terms of consumer behavior, perception is referred to as a process where in a consumer develops awareness about a product or a brand and interprets accordingly and assigns meanings to them to fit into his or her frame of reference (Walters, 1989). The past likes, dislikes, experiences and beliefs form the individual frame of reference (Van der Walt, 1991). The consumers go through five distinctive stages before they form a perception i.e. exposure, the consumer perception process consists of five processes i.e., exposure, attention, organization, interpretation, retention and then make the purchase decisions (Hawkins et al, 1992).

EXPOSURE

ATTENTION

ORGANIZATION

INTERPRETATION

RETENTION

PURCHASE

DECISION

Fig 3: Consumer Perception Process

Source: Hawkins et al, 1992

Exposure occurs when the stimuli comes in the range of one of the sensory receptors either intentionally or accidently. This exposure could be hundreds of products or advertisements an individual comes across on any given day (Belch et al, 1995). Attention occurs when the consumer gives attention or notices the advertisements. If the consumer does not focus on the stimuli i.e. the advertisement, attention does not occur though he or she has been exposed to it. This is the first most important stage from the markets point (Assael, 1992). Organization can be defined as the combination of pieces of information that are put together to form a single piece of information as a whole and retain the final meaning (Assael, 1992). For example, an advertisement board may show a celebrity flaunting a designer luxury bag with brand logo and a tag line. The consumer collects these pieces of information and puts them together and forms a meaning out of it. The meaning may be perceived differently by different consumers based on their level of understanding. Interpretation is defined as a process in which the consumers retrieve the previous experiences from the long term memory and attach to the stimulus (Mowen, 1993). The expectations in terms of what the stimulus must be like are also taken into account while interpreting the message. This is the second most important stage because the purchase decisions are based on this stage to some extent. One drawback at this stage is different people interpret differently due to the personal liking and bias (Mowen, 1993). Retention refers to the storage of the information that has been evaluated in the minds of the consumer so that this information can be retrieved in at the required time (Van der Walt, 1991). The entire perception process is a failure if the information is not retained by the consumers. Finally, consumers make the purchase decisions based on the perception they have formed about the product or the brand.

Further, we study how the three key attributes influence the consumer brand perception. The attributes are:

Store Design and Presentation

Country of Origin

Celebrity Endorsement

Each of these is reviewed in the following sections.

3.3 Store Design and Presentation

The literature review is focused on the store design and environment of leading luxury fashion brands in Singapore and how it has an impact on the consumer perception which influences them in making the final purchase decision. A consumer makes perception about various attributes such as the display, the music, lighting, the arrangement and the overall architecture (Schlosser, 2001). These attributes as a whole constitute the store image (Milliman, 2000). The store image can be defined as the consumer’s perception about the depending on the stimuli they receive (Peter, Olson, 2005).These are the first the first elements that a consumer observes and makes a perception (Schlosser, 2001). Therefore having a good store atmosphere for increasing the store image in the minds of the consumers is no more an option but a requirement (Saffer, 1996) as it’s the main reason that attracts consumers’ to enter the store (Peter, Olson, 2005). The following diagram suggests that by incorporating all the attributes such as availability, organization, space, service, signage, products and displays will appeal to the consumers by making the shopping experience convenient and hassle free leading to consumer values such as satisfaction and happiness. These values henceforth help in enhancing the brand image in the mind of the customers further affecting their purchase decision positively (Kent, Kirby, 2009).

Positive Perception

Fig 3.1: Store Design & Presentation – Attributes affecting consumer perception

Source: Kent and Kirby, 2009.

3.3.1 Two Dimensional Conceptualization of Store Atmosphere

A model suggested by Wright and Noble (1999), indicates the two dimensional view of the store atmosphere influencing the consumer attitudes and buying behavior. They continue to explain that the perceptions of the store atmosphere vary from consumer to consumer depending on their interpretations. However, this perception comprises of two elements, the functional attributes and the affective attributes.

STORE

CUSTOMER

ATMOSPHERE

FUNCTIONAL

DIMENSIONS

AFFECTIVE

DIMENSIONS

CONSUMER BEHAVIOR AND ATTITUDES OUTCOME

Fig 3.2: Two Dimensional Conceptualization of Store Atmosphere

Source: Wright and Noble, 1999

The functional dimensions include attributes such as price, quality, sales representatives and attractiveness of the store (Samli et al, 1998). Other researches confirm that the store image is characterized by the functional attributes (Darden and Babin, 1994). These attributes help in forming the overall impressions about the brand or the product (Haynes et al, 1994). Affective dimensions refer to the intangible characteristics such as in store emotions such as arousal and pleasure that the stores atmosphere invokes from the consumers (Darden and Babin, 1994; Kotler, 1991). Studies continue to indicate that the stores atmosphere is a vital component in influencing the consumer purchase process (Sherman et al, 1997). Even elements such as music, lighting, temperature and scent influenced consumer perception which eventually made the consumers spend more time in the stores and shop more that intended (Donovan wt al, 1994). Therefore it is evident from the above literature that the store atmosphere plays an important role in influencing the image of the store in the minds of the consumers.

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Studies have also shown that the location or the state in which a consumer comes across a product influences their perception about the brand (Shavitt et al, 1992). For example, when a consumer views a luxury bag of Louis Vuitton in a state of the art showroom, he or she will connect this to scale of social standings such as style and status, but when the same product is viewed in the manufacturing unit; it will be perceived as any other average product. Researchers have argued that even the stores have a social image and this image is communicated to the consumers’ through the store design, presentation and atmosphere (Kotler, 1991). For example, the atmosphere in a Louis Vuitton store will justify the type of consumers’ who utilize the products of the brand.

In conclusion, the study of store design and presentation gives a fair idea on the level of influence it has on the consumer purchase decision.

3.4 Country of Origin Effects

The following study is intended to observe the influence of country of origin on a Singaporean consumer’s perception of luxury fashion products. Since the 1960’s this topic has drawn interest in the buying behavior literature and has always been a strong determinant of a products quality perception and a fundamental factor in consumer purchase decisions (Schooler 1965). Many studies suggest that the country of origin influences consumers in many ways such as product choice, perceived risk and particularly in evaluation of product in terms of quality perception and purchase intention. (Liefeld, 1993; Papadopoulos, 1993; Kaynak et al., 2000; Li et al., 2000; Brodowsky, 1998; Chao, 1998; Huddleston et al., 2001).

The country of origin is defined as the region to which a particular brand is perceived to belong by its consumers (Thakor & Kohli, 1996). Johansson, Douglas & Nonaka (1985) define country of origin as a country that is typically associated with a product regardless of the actual place of manufacture. When consumers have insufficient brand information, judging the quality of a particular product becomes complex (Thakor & Kohli, 1996). Thus the country of origin can be used to form an association with the brand thereby making the purchase decision simpler for the consumer. For example, sometimes consumers may not have enough knowledge about the Louis Vuitton brand except for a fair idea that it is a French based luxury product. This country information is adequate for this consumer to make a positive perception of the product and thereby making a quick purchase decision.

Many researchers have confirmed that the country of origin has a considerable effect on the consumer perception. Consumers perceive products based on which country it has been sourced or originated from (Chinen, 2000). Also many studies indicate that the country of origin has a substantial influence on consumer product assessment and decision making process (Solomon, 2002).

The extent of impact on brand image perception by the country image has also been supported (Hsieh and Lindridge, 2005; Kotler and Gertner, 2002; Stennkamp et al., 2003). A declaration made by Takhor and Lavack (2003) says that the brand origin or the country of origin is a vital factor that plays a key role in establishing a brand perception. When a brand comes into the market it and reaches the consumers, it will have an association with its country of origin. Investigations have been carried to prove that the culture of the country to which a particular brand belongs to have a direct impact on the way in which consumers make brand evaluations and perceptions (Kenny and Aron, 2001). The references a consumer makes and the inferences a consumer gives to brands on hearing or seeing information about a brand is referred as the culture of brand origin or country of origin. Likewise, our research will also prove the impact of country of origin information on consumer brand perception. For example, when a consumer reads or hears about Gucci, he or she automatically associates it with its country of origin which is Italy. Italy is known for its fashion and is considered as a house of fashion where fashion is embedded in its culture. Therefore, when evaluating the brand, the consumer takes this country of origin information into account and makes a relative perception which in this case is positive.

The knowledge and the familiarity about a products country of origin influence how a consumer perceives the quality of that product (Hong & Wyer, 1999). While assessing the quality of luxury products, the country of origin played a more important role then the price of the product (Heslop & Wall, 1991). According to G├╝rhan-Canli and Maheswaran (2000), consumers usually choose shortcut such as country of origin or brand origin as the basis for evaluating and judging the product quality. Hong and Wyer’s (1999) studied consumer product evaluation by comparing the product attributes and the country of origin and discovered that the consumers are most likely to use country of origin as a basis and associated it to product attributes such as product quality thereby influencing the consumer brand perceptions. For example, Armani and Dolce and Gabbana have Italy as their country of origin. Italy is known to have produced numerous quality fashion designers ever and has established a belief among fashion consumers and has communicated a superior image of product quality. Once the consumers are aware of such information about the country, it becomes effortless for them to associate this information to the product and thus influencing the brand quality perception.

In the early stages, the country of origin was mistaken to be the country in which the product was manufactured (Nebenzahl et al., 1997) or the name of the country that appeared on the ‘made in’ tag. It was only during stages the concept of country of design become known which referred to the country in which the product was designed and developed (Jaffe & Nebenzahl, 2001). Due the forces of globalization, many organizations have opted to shift their manufacturing operations to various nations. Therefore in most cases the brand origin and the country in which the product is manufactured are different. When the brand comes to life it comes with the ‘Made In’ tag. This ‘made-in’ tag will not affect the consumers’ purchase intentions as long as the country of origin is strong (Haubl, 1996). Since consumers are aware of the country of origin, they may refer to that country when evaluating the brand in spite of the product being produced in a different county than the brand origin. For example, Armani’s country of origin is Italy; many of their products are being manufactured in China. But since Armani’s country of origin is deeply rooted in the consumers’ mind, it of little or no concern to the consumer where the product is being manufactured, they will still consider the country of origin information while evaluating the product or the brand. According to Hui and Zhou (2003), different levels of equity i.e. high equity and low equity brands can be used to study the differential effect between country of origin and country of manufacture. The results of this study confirmed that the country of manufacture information did not influence the product evaluation for high equity brands. Conversely, if the country of manufacture has a lower image than the country of origin, it negatively influences the product evaluation and is most likely for low equity brands than high equity brands. For example, though some of Armani’s products are manufactured in China, cause of the high equity status the brand holds among consumers’, the country of manufacture information has no effect on the product evaluation.

Country stereotypes are an influential factor which plays an important role during product evaluation and purchase decisions (Piron, 2000). Examples of country stereotypes are: Germans are known to be very hard working or the Chinese are known to be polite etc. The main purpose of the studies carried out by Piron (2000) was to determine the extent to which country of origin information plays an influential role on the consumers’ purchase intention. The outcome of the study pointed out that the country of origin information may not be an important factor while purchasing products but would certainly influence consumers’ buying decisions when the purchase is made on luxury products and goods rather than essentials (Piron, 2000). In our study, we are talking about luxury brands such as Armani, Louis Vuitton and Gucci which are headquartered in Italy or France. These countries have been stereotyped as being the originators of fashion. Therefore, knowing the country of origin of the above mentioned brands will surely play an influential role on the buying decisions as these are luxury products and not necessities.

Well-known country of origin for the product will have a positive significant impact while unknown country of origin will have significant negative impact (Koubaa, 2007). Products that originate from more developed countries will be positively evaluated that those which are from the less developed countries (Lin & Strenquist, 1994). Consumers’ often have a perception that the developed countries such as Germany, France, Japan and USA make the best products. They purchase German cars, Japanese electronics and French and Italian designer fashions (Piron, 2000). These countries are not only known for their engineering and designs but have also projected an image that exhibits a very elegant and fashionable lifestyle that attracts the consumers. Therefore consumers have a positive perception of luxury fashion brands such as Louis Vuitton and Armani as they originate from developed countries that have always portrayed an image where fashion is considered as a part of their lifestyle.

A study conducted by Far Eastern Economic Review’s (FEER) on Asia’s lifestyles indicated that most of the consumers from the Asian countries considered products from European countries when it comes to the purchase of luxury fashion products (‘Despite Crunch’, 2002). By purchasing luxury fashion products that originate from countries like Italy, France, Germany or Spain, many consumers’ feel that they are closer to that particular countries’ lifestyle (Dubois & Claire, 2003). Therefore, by the above review it is quite clear and evident that a consumers’ perception towards luxury fashion product is affected by the country of origin and the country or origin information is an influential factor in the product evaluation and consumer buying decision process.

3.5 Celebrity Endorsement

Celebrities are highly important and valuable to brands especially in the luxury fashion sector (Okonkwo, 2000). Organizations have used celebrities as a part of their marketing strategy in order to support their brand image (Erdogan, 1999) and create favorable associations leading to positive brand knowledge (Carroll, 2008). In the past, there has been vast amount of literature available which has focused on celebrity endorsement in terms of its positive and negative effects and the attributes of a celebrity endorser such as attractiveness, likeability, familiarity, trustworthiness and expertise (Till and Busier, 2000; Bush, 2004; Erdogan and Drollinger, 2008). Previous studies have indicated that the use of celebrities for brand endorsement have positively affected consumer buying behavior in terms of clothing style and product choice (Brown and Basil, 1995). There has also been evidence that the perceived image of celebrities has a positive impact on product buying behavior (Goldsmith, Lafferty, and Newell, 2000). This literature will give a deeper insight on the use of celebrity endorsement influencing consumer brand perception and consumer purchase decision of luxury fashion brands.

Celebrity endorsement is defines as “an individual who enjoys public recognition and uses this recognition on behalf of a consumer good by appearing with it in an advertisement” (McCracken, 1989, p.311). Movie stars and sports stars are the most widely used celebrities for product endorsement (Shimp, 2003). Usually, celebrities enjoy recognition and often have the power to influence an individual or a group of people towards the endorsed product which will positively affect the consumers’ brand choice behavior (Alsmadi, 2006). Experiments suggest that in certain situations, celebrity endorsement can enhance recall and helps in assessment of the products (Clark & Horstman, 2003). Studies have also indicated that the consumer buying behavior is affected considerably when the message comes from a well known person (McCracken, 1989) and particularly, when consumers feel they can identify themselves with the individual (Baker, Tagg and Erdogan, 2001).

McCracken’s (1989) used to the meaning transfer model to explain the connection between the celebrity, the product and the consumer. This is a three stage process that involves the creation of the celebrity image, transfer of meaning from the celebrity to the brand and finally transfers of meaning from the brand to the consumers (Schlecht, 2003). When the celebrities endorse certain brands some of their meanings such as success or beauty which describe what they represent get transferred to the brand or the product. Finally when evaluating the brand, the consumers associate themselves to the meanings the celebrities represent which makes their purchase decision simpler (McCracken, 1989). This can be explained with an example. As a celebrity, Madonna has acquired meanings such as elegance, sophistication, attitude and beauty. When endorsing for Dolce and Gabbana, these meanings are transferred on to the brand and its products. Eventually, this makes the consumer purchase decision simpler as they relate to the meanings represented by the celebrities which lies within the brand and its products (Khatri, 2006).

In addition to the meaning transfer model, there were other important studies that show how the consumers relate themselves to celebrities. There are different reasons that drive the consumers to relate which is entertainment and fun or intense attachment or pathological urge (McCutcheon et al., 2002). Further the process of identification will give us a deeper insight into how consumers are influenced by celebrities (Kelman, 1996). He suggested that the process of identification will assist an individual in getting influenced by another person or group. Identification is a process where an individual adopts the behavior of another person or group for enhancing the individuals self image (Kamins, Brand, Hoeke, Moe, 1989). This process is assumed to be related to characteristics like attractiveness and likeability that determine the extent of celebrity influence on consumer perception and purchase decision (Shimp, 2003).

Source attractiveness (similarity, familiarity, likeability and attractiveness) and source credibility (expertise, persuasiveness, and trustworthiness) are the main general attributes that determine how celebrities influence consumer perceptions and purchase decision (Shimp, 2003)

According to the source attractive model, consumers generally respond positively towards brands that endorse attractive people and effectiveness further depends on the familiarity, liking, and similarity of the endorser (McGuire, 1985). Therefore, celebrities who are attractive tend to influence consumer perception and generate purchase intentions (Carroll. 2008). A celebrity spokespersons’ physical attractiveness has a positive impact on brand recall, attitude towards the brand and purchase intent (Kahle and Homer, 1985). Attractiveness does not mean just physical attractiveness; it can be certain characteristics such as intellectual skills, personality traits or lifestyle that can persuade the consumers to make the purchase decision (Shimp, 2003). If the consumers find a particular celebrity attractive they try and identify themselves with the celebrity and further seek for some kind of relationship by adopting similar preferences, attitudes or belief’s (Belch and Belch, 2001).This make the consumer feel a part of the celebrity as well as the company or the brand which influences’ the consumer perception and purchase decision (Belch and Belch, 2001). For example, Dolce & Gabbana have endorsed Scarlett Johansson as their brand ambassador. Apart from being one of the most beautiful women in Hollywood, she is also a great actress and a fashion icon. In one of the advertisements, Dolce & Gabbana have represented her in such a way that the images capture passionate feminine moments like a women applying makeup in the privacy of her bedroom. Such advertisements will easily catch the eye of the consumer in a flash because the person representing this is extremely famous as well as very attractive. This persuades the consumer which leads to a purchase decision. Likeability refers to the degree to which a celebrity is admired by the consumers (Belch and Belch, 2001). Familiarity is the popularity the celebrity has among the consumers (Belch and Belch, 2001).

Similarity refers to the resemblance between the consumer and the source (celebrity) in terms of the age, gender, ethnicity and social class (Shimp, 2003). According to him, this attribute is of great importance because consumers’ like individuals who share similar characteristics which further increases the trust due to the gender, age or ethnicity match. A consumer gets influenced more easily when the message is delivered by an individual with whom the consumers’ sees some sort of similarity (Belch and Belch, 2001).

Credibility refers to the tendency to trust or believe someone (Shimp, 2003). Credibility involves an individual’s positive characteristics like skills and experience that will affect the consumers’ acceptance of a message (Ohanian, 1991). Celebrities who are considered as credible sources have the highest influence on consumer attitudes and purchase intentions (Goldsmith, Lafferty & Newell, 2000). The behavior of the consumers tends to change when the individual is perceived as a credible source. Moreover, consumers believe an individual who they perceive to be trustworthy in terms of honesty and ethics and an expert in the respective field (Belch and Belch, 2001). The degree to which an individual is confident in communicating the message he or she considers being the most valid is called trustworthiness (Ohanian, 1991). Once this attribute is well perceived, the message delivered by an individual is more effective and will me more easily incorporated. Expertise is referred to the extent to which an individual is perceived to be valid in his or her assertions. It is the individuals’ knowledge and experiences that influences the consumers’ perception of an endorsed brand (Belch and Belch, 2001). Further, the purchase intentions of a consumer are influenced by the perceived expertise of a celebrity (Ohanian, 1991). Other studies suggest that as long as the celebrity is perceived to an expert, the consumers’ opinion towards the endorsed brand will surely change (Shimp, 2003). Also, the credibility on expertise makes the product more desirable and improves the perception on quality (Khatri, 2006).

Respect refers to the perceived quality which is reflected from an individual’s accomplishments and personal

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