Citation
(2014), "Executive summary of “The impact of economic perceptions on status consumption: an exploratory study of the moderating role of education", Journal of Consumer Marketing, Vol. 31 No. 2. https://doi.org/10.1108/JCM-03-2014-0891
Publisher
:Emerald Group Publishing Limited
Executive summary of “The impact of economic perceptions on status consumption: an exploratory study of the moderating role of education
Article Type: Executive summary and implications for managers and executives From: Journal of Consumer Marketing, Volume 31, Issue 2
This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.Research pertaining to the consumption of luxury goods has identified similar behavior across the globe. It appears that consumers in different markets have the same needs and use the same brands with which to satisfy them. Another common factor is that the purchase of luxury goods is driven by motives that can be categorized as financial, functional, personal and social.
Luxury product consumption brings pleasure and helps raise confidence and is evident within a variety of social classes and income brackets. New luxury brands and extensions of existing luxury brands are less expensive and therefore more accessible to low earners. Belvedere vodka is cited as an example of the first type and BMW 325 sedans of the latter. Such moves have helped grow the luxury brand market.
Scholars use the term “status consumption to describe how individuals purchase goods including luxury products to convey their status to others, especially those within their key “reference groups. Such products have a symbolic function whose value lies in the “social prestige bestowed on the consumer involved. This desire to indicate status through consumption is not dependent on income or social class level. Many studies confirm the hedonic aspect of this “conspicuous consumption that implies wealth and seeks to obtain admiration and envy from others. With luxury consumption, such responses are a greater source of fulfillment to the consumer than the actual value of the product in question.
A direct link between increased purchasing of luxury items and economic growth has been noted. This trend is attributed to the probability of more disposable income becoming available. However, the length of the recent economic downturn illustrates the opposing effect whereby consumers feel uncertain, insecure and therefore inclined to limit or even postpone their spending on luxury goods. Surveys strongly indicate that many consumers would specifically target this area if spending cuts need to be made. It has been mooted that during a period of recession consumers may be ashamed to buy products that could be deemed extravagant and unnecessary. Those who are less obsessed with status are likelier to harbor these feelings.
This connection between economic health and luxury consumption has prompted researchers to consider the impact of various factors. Consumer attitude is one example as this is widely used as a means to predict future purchase activity. It is proposed that such attitudes and subsequent behaviors are determined to some extent by consumer confidence. Different indices are used for the construct that is subject to different interpretations but is generally taken as a measure of such as employment opportunities and security, income levels and how future business conditions are perceived.
Similar significance is attached to “perceived economic welfare, which the present study defines as how consumers perceive the current well-being of their own and their countrys finances.
Earlier studies suggest that education might determine how consumer confidence and perceived economic welfare affect status consumption. One indication is that highly-educated individuals place greater magnitude to such as the quality and reputation of products and services. It is additionally proposed that education is more accurate than other measures when ascertaining consumer opinions about their present and future earning potential.
Bock et al. explore relevant issues further in a telephone study involving 295 consumers in the US state of Georgia. The intention to secure greater accuracy in the connection between attitudes and behaviors prompted the use of a non-student sample. A significant demographic of the sample was its close comparability to educational attainment levels in the state. This is important given that education was deemed the most critical demographic. Subjects were therefore divided into two groups with those achieving at least a four-year college degree classified as the more educated segment. The remainder was categorized as less educated consumers.
Initial examination of the data revealed that respondents:
were generally not motivated by status consumption;
believed that their economic welfare had worsened slightly from the previous year; and
felt that economic conditions would marginally improve during the forthcoming year.
Further analysis indicated:
a strong positive relationship between perceived economic welfare and consumer confidence;
the relationship between economic welfare and status consumption was positive and significant;
no significant connection between consumer confidence and consuming for status; and
economic welfares relationship with status consumption was more prominent among highly educated participants.
That people who feel better off financially than before are likelier to purchase luxury products is deemed logical by the authors. They also propose that status consumption could be more prevalent in the highly educated group because such individuals may feel that the effort expended in order to obtain higher educational qualifications increases their entitlement to make such purchases.
The lack of relationship between consumer confidence and status consumption mirrors previous findings. This is attributed to the enduring economic sluggishness denting future expectations and thus making people less inclined to purchase luxury items associated with status.
Based on this work and the current economic climate, Bock et al. recommend that marketers of status products target consumers who believe that their financial well-being is improving. They propose that such a strategy will probably succeed better than discounting products in the quest to attract a larger market. Marketing messages might emphasize that people who work hard to achieve higher education qualifications deserve to consumer luxury goods. A focus on such products being a reward for effort and sacrifice is advised. Using this appeal might also pacify individuals in this consumer segment who might feel uneasy or awkward about consuming for status when times are tough in general.
Future research could work to identify key antecedents to status consumption and how they motivate such behavior with regard to internal and external purposes such as self-reward or signaling of wealth respectively. Greater understanding here would enable marketers to better reach status consumers. The significance of income might also be investigated and the authors suggest using a self-administered survey in order to avoid intrusiveness. The present work only surveyed landline users and additional studies should include cell phone users as individuals owning such devices may be particularly inclined towards luxury goods. Extending the work to consider more diverse samples geographically and demographically is also advised.
To read the full article, enter 10.1108/JCM-10-2013-0725 into your search engine.(A précis of the article “The impact of economic perceptions on status consumption: an exploratory study of the moderating role of education. Supplied by Marketing Consultants for Emerald.)