Chair: JeeHye Christine Kim, INSEAD, Singapore
Paper #1: Impact of Status Maintenance Motivation and Political Ideology on Luxury Consumption
JeeHye Christine Kim, INSEAD, Singapore Brian Seongyup Park, INSEAD, Singapore David Dubois, INSEAD, Singapore
Paper #2: How Pinning Nordstrom Means Buying Macys:
The Relationship of Social Media, Self-Concept, and Luxury Purchase Intentions
Lauren Grewal, University of Pittsburgh, USA Andrew Stephen, University of Pittsburgh, USA Nicole Verrochi Coleman, University of Pittsburgh, USA Paper #3: Quenching the Desire for Luxury: Successful Lower-end Luxury Brand Extensions Satiate Brand Desire
Vanessa Patrick, University of Houston, USA Sonja Prokopec, ESSEC Business School, USA
Paper #4: The Advantage of Low-Fit Brand Extensions:
Addressing the Paradox of Luxury Brands Silvia Bellezza, Harvard Business School, USA Anat Keinan, Harvard Business School, USA
SESSION OVERVIEW
“Let me be surrounded by luxury, I can do without the ne-cessities!”
-Oscar Wilde With a revenue growth twice that of global GDP, the luxury industry, expected to reach €250 billion threshold this year, has re-ceived a lot of recent managerial and academic attention (Bain 2013).
Particularly, central to researchers had been the question of what mo-tivates people to consume luxury goods. Three main motivations for luxury consumption have been identified as (1) signaling status, (2) expressing one’s identity, and (3) boosting self-contentment (Belk 1985; Han, Nunes, and Dreze 2010; Richins 1987; Veblen 1899).
In this session, we seek to deepen our understanding of what moti-vates luxury consumption by bringing together four papers examin-ing each of these drivers more in depth, from multiple perspectives.
The session will start with a focus on examining how motiva-tion to signaling status impacts luxury consumpmotiva-tion. The first pa-per by Kim, Park and Dubois, extends our current understanding on how status motivation impacts luxury consumption by distinguishing status-maintenance motivation from status-enhancement motivation and explores how the two status motivations interact with political ideology to impact luxury consumption. Grewal, Stephen and Cole-man will then move the discussion forward to the second motivator, motivation to express one’s identity. Using a highly marketing-rel-evant context, social media, the authors show that expressing one’s ideal-self through online affiliations with luxury products on social media (e.g., Pinterest) reduces desire for luxury by enhancing psy-chological ownership of luxury brands.
Shifting discussion from non-owners to owners, the last two pa-pers examine the role of the third motivator, self-contentment, in lux-ury consumption. In the third paper, Patrick and Prokopec propose that whether owning a downward-extended luxury product increases or decreases desire for luxury products depends on whether one’s desire can be contented with owning a downward-extended luxury product (i.e., desire specificity). Finally, Bellezza and Keinan
dem-onstrate that low-fit downward brand extensions (e.g., Ferrari video game) as compared to high-fit downward brand extensions (e.g., Fer-rari city car) enhance the brand image by boosting self-contentment for luxury brand owners.
Across an integrated set of four papers, we explore a coher-ent theme of what motivates one to consume luxury brands from multiple perspectives, building connections from one motivator to another and from non-owners to owners. Furthermore, we seek to advance connections with managers by presenting four papers that are highly practical and managerial. First paper explores a variable (political ideology) that is easy to be identified and utilized for man-agers while the second paper focuses on a highly marketing-relevant context, social media and the last two papers address the dilemma often faced by managers of luxury brands, namely, how to extend the market without diluting brand power. Altogether, this session raises a question of how different motivators interact with characteristics of consumers (e.g., political ideology and social media activity) and brand (e.g., brand structure and extension) to ultimately shape con-sumers’ desire for luxury brands. We believe our session will attract audiences from diverse background including researchers in motiva-tion, branding, conspicuous consumption and social class as well as managers of luxury brands.
Impact of Status Maintenance Motivation and Political Ideology on Luxury Consumption
EXTENDED ABSTRACT
In marketing, it is well established that people consume luxury goods to signal status (e.g., Han, Nunes, and Dreze 2010; Richins 1987; Veblen 1899). Accordingly, the use of status appeal is easily found in advertisements. For example, Audi tells consumers to ‘up-date your status’ with their car while BMW tells consumers that ‘the symbol on your hood is more than a logo—it’s a reminder’. While the two luxury cars make similar appeals related to signaling status, the two differ in their messages greatly. Audi motivates consumers to improve and enhance their status with their car whereas BMW motivates consumers to remember and retain their status with their car. This distinction corresponds to what researchers in management have recognized as distinct dynamics of status (Chen, Peterson, Phillips, Podolny, and Ridgeway 2012) which we refer to as status-enhancement motivation and status-maintenance motivation. While prior research has recognized the two as distinct, little is known about how the two compare to each other, therefore, in this research, we fill this gap by exploring the two jointly in our studies.
Research on motivation has shown that focusing on discrep-ancy to the desired state is more motivating than focusing on the current state (e.g., Carver and Scheier 1990, 1998; Koo and Fishbach 2010). In our context, these findings suggest that consuming luxury brands to reach a desired state (i.e., status-enhancement motivation) would be more motivating than consuming luxury brands to keep the current state (i.e., status-maintenance motivation). Contrarily, in this research, we propose that this dynamic depends on one’s belief system, political ideology which varies from liberal to conservative.
According to Jost and his colleagues (2003), political ideology is a powerful belief system that stems from one’s motivation to see the world as preferred and can have consequential impacts on variety aspects of life. Relevant to our theorizing, they have shown that po-litical conservatism is adopted as motivation to keep the world
sta-bilized increases. Given that consuming luxury goods to maintain current status matches well with the core motivation of political con-servatism, we posit that political conservatism enhances valuation for luxury brands when they are consumed for status-maintenance motivation as compared to status-enhancement motivation. Across four studies (three reported here), we demonstrate that status-main-tenance motivation as compared to status-enhancement motivation increases one’s preference for luxury goods as political conservatism increases.
In Study1, we test our main argument that status-maintenance motivation as compared to status-enhancement motivation increases preference for luxury brands as political conservatism increases.
Participants first indicated their political conservatism on a 7-point scale (1-extremely liberal; 7-extremely conservative). Afterwards, they were randomly assigned to one of the two status motivation conditions and wrote about 2-3 ways by which they can maintain (improve) their social standings. Subsequently, participants proceed-ed to a purportproceed-edly unrelatproceed-ed task on brand evaluations. Participants evaluated three luxury and three non-luxury automobile brands and indicated how much they desire purchasing a car from each brand.
In the analysis of this study and all the studies afterwards, we con-trolled for variables which prior research has shown to influence preference for luxury such as age, gender, income, education and ethnicity, however, our results do not change with or without co-variates (Chevalier and Mazzalovo 2012; Graham, Haidt, and Nosek 2009). As expected, the interaction between status-motivation type and political conservatism was significant (p=.032). More important-ly, a floodlight analysis revealed that status-maintenance motivation increased preference for luxury brands significantly more than sta-tus-enhancement motivation when political conservatism was high, starting at .7 SD above the mean of political conservatism (β=.31, p=.049). However, this difference disappeared when political con-servatism was low (p=ns @-1SD).
In order to address shortcomings that could arise with using real brands, in Study2, we test our hypothesis using a hypothetical brand. The procedure was similar to study1, except this time, in-stead of brand evaluation, participants read a print ad of a headphone framed as luxury versus non-luxury and indicated their willingness-to-pay for the headphone. A three-way GLM on WTP with status-motivation and product framing as categorical variables and political conservatism as a continuous variable revealed a significant three-way interaction(F(1,295)=5.66, p=.018). Crucially, the two-three-way in-teraction between status-motivation and political conservatism was significant in the luxury condition (F(1,144)=9.25, p=.003), but not in the non-luxury condition. Consistent with findings from Study1, status-maintenance motivation increased WTP for a luxury head-phone significantly more than status-enhancement motivation when political conservatism was high, starting at .3 SD above the mean of political conservatism (β=26.45, p=.035), but this difference disap-peared when political conservatism was low (p=ns @-1SD).
Finally, we test our hypothesis using a real automobile purchase dataset from 38,939 automobile buyers who disclosed their politi-cal ideology. Building on prior research suggesting that higher SES individuals have motivation to maintain their current status whereas lower SES individuals have motivation to enhance their current sta-tus (Ellemers, van Knippenberg, de Vries, and Wilke 1988), we used current SES as a proxy for whether maintenance versus status-enhancement motivation is salient. Consistent with results from prior two studies, republicans purchased more luxury cars when status-maintenance as compared to status-enhancement motivation was salient (i.e., high current SES), but no such difference was found for liberals. In sum, we provide converging evidence for our argument
that status-maintenance motivation as compared to status-enhance-ment motivation leads to higher preference for luxury brands as po-litical conservatism increases.
How Pinning Nordstrom Means Buying Macys: The Relationship of Social Media, Self-Concept, and Luxury
Purchase Intentions EXTENDED ABSTRACT
Past research has demonstrated that consumers use luxury prod-ucts as a way to affiliate with desired reference groups and to signal self-concepts (Berger &Ward, 2010). With social media, consumers can affiliate with luxury brands online. As social media has been shown to fulfill a variety of social needs such as self-expression and self-presentation (Gosling et al., 2007), it stands to reason it can also fulfill ownership needs. Psychological ownership can provide many of the same benefits to consumers as traditional ownership (Pierce et al., 2003). Therefore, the rise of social media sites that allow consumers to engage with brands in visual and customizable formats has allowed consumers to curate self-images of themselves through luxury brands and products online.
The purpose of the current research is to demonstrate how social media allows consumers to engage with luxury brands in a way that promotes psychological ownership and identity signaling; lowering purchase intentions of luxury products. We believe that when social media enables consumers to visually curate their ideal-self through products and brands, this enhances psychological ownership of lux-ury products and fulfills identity signaling purposes that have been traditionally associated with luxury, negating the need for purchase.
Study 1 (N = 52) tested the effect of self-concept on WTP for luxury with a 2 group design (self-concept: actual, ideal). Partici-pants were all Pinterest users who pinned 5 “luxury” items that rep-resented who they actually are (actual-self) or who they wish to be (ideal-self). Afterwards, participants were shown a Louis Vuitton suitcase and asked to provide their WTP. Participants in the ideal-self condition were willing to pay significantly less for the suitcase compared to those in the actual-self condition, B=-276.98, t(50)=-2.253, p=.029. This study suggests that when consumers feel a gen-eral sense of luxury ownership, it will decrease preference for luxury goods only when they have made the connection of their ideal-selves to luxury.
Study 2 (N=125) explored the moderating role of public versus private signaling of luxury. In a 2 (self-concept: actual, ideal) x 2 (signaling: public, private) design, participants imagined engaging with a new Facebook feature that showcases brand preferences. The feature was described as either “private for their eyes” or “public to their whole social network”. Participants then found 5 items that represented their actual or ideal-self that they would add to this fea-ture. Afterwards, participants, in a seemingly unrelated survey, were shown a map of a regional mall. They were asked to indicate stores they wanted to shop at. Using a zero-inflated Poisson to analyze the number of luxury stores chosen, we found a significant interaction where participants in the ideal self-condition chose less luxury stores than those in the actual-self condition only when the new feature was public, (B= -.707, χ 2 (4) = 5.10, p=.024).
Study 3 (N=330) explored the role of network size on luxury purchase intentions. In a 2 (self-concept: actual, ideal) x 3 (signaling:
full network, close network, private) design, participants engaged with the same stimuli as study 2. We had an additional “close net-work” condition where the app could only be seen by designated
“close friends/family”. We found a significant interaction for willing-ness to pay for the Louis Vuitton suitcase, F(5,324)=4.385, p=.013.
Looking at the simple effects, we found no significant differences in WTP for the private or close-network conditions. In the full-network condition, participants in the ideal-self condition were significantly less willing to pay for the suitcase (M=148) than those in the actual-self condition (M=324), p=.002. These two studies provide support for the idea that ideal-self presentation online only negatively im-pacts luxury purchase intentions when there is a public affiliation with luxury.
Study 4 (N=49) explored the moderating role of psychological ownership. Pinterest users interacted with their existing boards in a 2 group design (self-concept: actual, ideal). Afterwards, participants were asked about their sense of ownership of the board’s contents and in a seemingly unrelated survey were then shown a mall to in-dicate store choices. Using a zero-inflated Poisson to analyze the number of luxury stores chosen, we found a significant main effect of self-concept. Participants in the ideal self-condition chose less luxury stores than those in the actual-self condition, (B= -0.46, χ 2 (2) = 6.14, p=.013). Testing the proposed moderation of measured psychological ownership for luxury purchase intentions, we found that the direct conditional effect of self-concept on purchase inten-tion through psychological ownership was negative and significant but only at average and higher (+1SD) levels of psychological own-ership.
Study 5 (N=286) explored varying levels of “ownership” online to determine what ownership is necessary for decreased luxury pur-chase intentions to occur. Pinterest users were randomly assigned in a 3(ownership: pin, like, control) x 2 (self-concept: actual, ideal) de-sign. Participants found 5 pins that represented their actual or ideal-self; and were either allowed to pin them, like them, or paste them into our survey. We found a significant interaction for the WTP for the Louis Vuitton suitcase; F(5,280)=3.091, p=.047. Looking at the simple effects, we only found a significant difference in WTP for the pinning (i.e. full ownership) condition. Participants in the ideal-self condition were WTP significantly less for the suitcase (M=248) than those in the actual-self condition (M=573), p=.018. These two stud-ies provide support for the idea that ideal-self presentation online only negatively impacts luxury purchase intentions when there is felt-psychological ownership of luxury.
To our knowledge, this set of studies represents a first attempt to consider how different consumer identities can impact luxury consumption preference based on online self-curation. These studies indicate self-representation online can impact luxury purchase in-tentions. Interestingly, representing one’s ideal self-concept in social media appears to lead to lower purchase intentions specifically for luxury goods only when there is public signaling and a feeling of psychological ownership for luxury.
Quenching the desire for luxury: Successful lower-end luxury brand extensions satiate brand desire
EXTENDED ABSTRACT
The desire that luxury evokes makes consumers all over the world aspire for luxury products and contributes to the success of the nearly $273 billion luxury industry (Reuters 2013). For luxury brand managers it is a balancing act to maintain the desire for a lux-ury brand on one hand and to expand and grow to be profitable on the other. One growth strategy managers have adopted involves the launch of lower-end line and brand extensions to expand the market and reach a larger consumer base (Kapferer and Bastien 2009).
Luxury products are those that provide extra pleasure and flatter the senses all at once (Kapferer 1997). Luxury brands, unlike func-tional brands, are fueled by desire and evaluated based on affective
considerations (Yeung and Wyer 2005) and the promise of pleasure (Hagtvedt and Patrick 2009). When managers introduce lower end extensions it is based on the assumption that when a consumer gets a taste of the luxury product, it simply whets her appetite, leaving her wanting more. The current research demonstrates the flaw behind this assumption to identify when this strategy might backfire.
We argue that a luxury brand can be diluted by a successful brand extension when the lower-end extension is able to satiate the consumer’s desire for the luxury brand experience. Specifically, we identify two factors, desire specificity and prior ownership that in-fluence whether a successful brand extension can dilute the luxury brand.
Desire specificity is defined as the fixation of consumers’ desire onto a specific product/s in the brand portfolio. It is well established that when consumers focus on a specific desired object, little else can interfere with that yearning (Belk, Ger and Askegaard 1996, 2003;
Belk 1997, 2000; Freund 1971, Baudrillard 1972). If desire for the brand is specifically focused on one or more products in the brand portfolio, then brand dilution is minimized. In contrast, if consum-ers’ desire is generally directed to the brand, then the brand may be experienced through any lower-level extension, and the potential for brand dilution is heightened.
Prior brand ownership also secures brand desire. People value objects they own more than objects they do not, which affects the appeal of the good (Aggarwal 2004; Aggarwal and Law 2005; Belk 1988; Gawrosnki, Bodenhausen and Becker 2007). Consequently, successful extensions of luxury brands are more likely to result in decreased purchase intent for brand non-owners.
We investigate these assertions in a set of three studies (two reported here for space considerations). In study 1 (N = 109), de-sire specificity was manipulated between subjects. Participants were asked to imagine that Marie dreamed of owning the signature Chanel suit (anything from Chanel). All participants were told to imagine that Chanel introduced a new purse at a price of €210. We then assessed the likelihood to buy the desired, more expensive, Chanel product that they had always desired to own (1 = very unlikely, 7
= very likely). A repeated measured analysis with the likelihood to buy the desired parent brand before and after the introduction of the extension as the within-subject factor, and desire specificity as a be-tween subject factor revealed a significant interaction, F (1, 107) = 4.003, p < .05. Simple main effects analysis revealed that there was only a significant drop in the likelihood to buy the originally desired parent brand for the participants in the no specific desire condition (5.84 versus 5.38, p < .007); participants in the specific desire condi-tion did not experience any change (5.30 vs. 5.31, p < ns).
In Study 2 (N = 106), we operationalize desire specificity in terms of the presence or absence of a flagship product and use two luxury brands (Chanel and Chloe) that fit this criterion (based on a pretest). The design was a 2 (Desire specificity: Brand with Signa-ture/Brand with No-signature) X 2 (Own: Yes/No) experiment, in which desire specificity was manipulated and ownership was mea-sured. In the flagship condition (no-flagship condition), participants were told that they dreamed of owning the signature Chanel 2.55 bag (anything from Chloe). A Chanel/Chloe new leather bracelet at a price of €199 was introduced. All measures were similar to study
In Study 2 (N = 106), we operationalize desire specificity in terms of the presence or absence of a flagship product and use two luxury brands (Chanel and Chloe) that fit this criterion (based on a pretest). The design was a 2 (Desire specificity: Brand with Signa-ture/Brand with No-signature) X 2 (Own: Yes/No) experiment, in which desire specificity was manipulated and ownership was mea-sured. In the flagship condition (no-flagship condition), participants were told that they dreamed of owning the signature Chanel 2.55 bag (anything from Chloe). A Chanel/Chloe new leather bracelet at a price of €199 was introduced. All measures were similar to study