Although the marketing literature has recently seen a great deal of interest inthe study of luxury brands, little is yet known about how best to market and mon-itor them (Vigneron & Johnson, 1999, 2004). Against a background of dynamicgrowth in the global luxury market, it is critical for luxury researchers and mar-keters to understand the reasons why consumers buy luxury, what they believeluxury is, and how their perception of luxury value affects their buying behav-ior. In this context, a major objective of luxury marketing strategies is to iden-tify and profile consumer segments, such as the cosmopolitan luxury consumerswho travel frequently, speak more than one language, shop in internationaldepartment stores, and, as opinion leaders, often influence the purchasing behav-ior of other consumers (Anderson & He, 1998). Regarded as a common denom-inator that can be used to define consumption across cultures (Bourdieu, 1984;Dubois & Paternault, 1997), luxury is a key factor in differentiating a brand in
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a product category (Allérès, 1991; Kapferer, 1997), as well as a central driver ofconsumer preference and usage (Dubois & Duquesne, 1993).
Past research efforts in the luxury product market have analyzed the con-sumption behaviors of affluent consumers (e.g., Veblen, 1899; Stanley, 1988;Hirschman, 1988), luxury brand types (e.g., Dubois & Duquesne, 1993; Andrus,Silver, & Johnson, 1986), the determinants of the acquisition of luxury prod-ucts (e.g., Mason, 1992; Dubois & Laurent, 1993; Dubois & Duquesne, 1993),cross-cultural comparisons of attitudes toward the luxury concept (Dubois &Laurent, 1996; Dubois & Paternault, 1997), and comparisons of motivationsbetween Asian and Western societies (Wong & Ahuvia, 1998; Wang & Waller,2006). However, there is currently little agreement about the dimensions of lux-ury product value as perceived by customers. With regard to consumer buyingmotives, the notion of “to impress others” still more or less serves as a strategicprinciple for the marketing management of luxury brands (Berry, 1994; Dittmar,1994; Corneo & Jeanne, 1997; Vigneron & Johnson, 1999, 2004; O’Cass & Frost,2002). According to the theory of impression management, consumers are highlyaffected by the internal drive to create a favorable social image from their pur-chase behavior outcomes (Eagly & Chaiken, 1993; Mandrik, 1996; Sallot, 2002).However, from a broader perspective in exploring customer perceptions of andmotives for purchasing luxury, socially oriented motives are not sufficient toexplain the whole picture of luxury market consumption (e.g., Hansen, 1998;Wong & Ahuvia, 1998; Vigneron & Johnson, 1999, 2004; Wong, Chung, &Zaichkowsky, 1999; Gentry et al., 2001; Puntoni, 2001; Roth, 2001; Miquel,Caplliurer, & Aldas-Manzano, 2002; Coulter, Price, & Feick, 2003). A personallyoriented type of consumption as well as functional and financial aspects shouldalso be considered in the marketing management of luxury brands.
Incorporating relevant theoretical and empirical findings, this study focuseson understanding what is really meant by “luxury” from the consumer’s per-spective. By developing a multidimensional concept encompassing financial,functional, individual, and social components, it aims to identify different typesof luxury consumers according to the dimensions that influence their perceptionsof value and consumption. The empirical results are discussed with reference tomanagerial implications and further research steps.
CONSTRUCT DEFINITION AND LITERATURE REVIEW
Defining the Luxury Concept
Although routinely used in our everyday life to refer to products, services, or acertain lifestyle, the term “luxury” elicits no clear understanding. It takes dif-ferent forms for many different people and is dependent on the mood and expe-rience of the consumer. “Luxury is particularly slippery to define,” notes Cornell(2002, p. 47). “A strong element of human involvement, very limited supply andthe recognition of value by others are key components.” According to Kapferer(1997), the word luxury “defines beauty; it is art applied to functional items.Like light, luxury is enlightening. Luxury items provide extra pleasure and flat-ter all senses at once” (p. 253). Whereas necessities are utilitarian objects that relieve an unpleasant state of discomfort, luxuries are defined in Webster’s(2002) as “non-essential items or services that contribute to luxurious living;
an indulgence or convenience beyond the indispensable minimum.” Berry (1994)characterizes them as objects of desire that provide pleasure.
Seen as goods for which the simple use or display of a particular brandedproduct brings esteem for its owner, luxury goods enable consumers to satisfypsychological and functional needs. The psychological benefits are considered themain factor distinguishing luxury from non-luxury products (Nia & Zaichkowsky,2000). In the literature, a concept of exclusivity or rarity is well documented(Pantzalis, 1995). Luxury brands are those whose price and quality ratios arethe highest in the market (McKinsey, 1990), and even though the ratio of func-tionality to price might be low with regard to certain luxury goods, the ratio ofintangible and situational utility to price is comparatively high (Nueno & Quelch,1998). Therefore, luxury brands compete based on the ability to evoke exclu-sivity, brand identity, brand awareness, and perceived quality from the con-sumer’s perspective (Phau & Prendergast, 2000). Because luxury is a subjectiveand multidimensional construct, a definition of the concept should follow anintegrative understanding. This paper uses the luxury brand definition ofVigneron and Johnson (1999) as the highest level of prestigious brands encom-passing several physical and psychological values.
Dimensions of Luxury Value
With regard to motives for luxury consumption, existing research has demon-strated that behavior varies between different people depending on their sus-ceptibility to interpersonal influence (Bourne, 1957; Mason, 1981; Bearden &Etzel, 1982; Horiuchi, 1984; Bushman, 1993; Pantzalis, 1995). To explain con-sumer behavior in relation to luxury brands, apart from interpersonal aspectslike snobbery and conspicuousness (Leibenstein, 1950; Mason, 1992), personalaspects such as hedonism and perfectionism (Dubois & Laurent, 1994) and sit-uational conditions (e.g., economic, societal, and political factors) must be con-sidered (Vigneron & Johnson, 1999, 2004). While the consumption of prestige orstatus brands involves purchasing a higher-priced product to boost one’s ego(Eastman, Goldsmith, & Flynn, 1999), the consumption of luxury goods involvesbuying a product that represents value to both the individual and significant oth-ers. Therefore, in addition to the socially oriented luxury brand consumptionand the human desire “to impress others,” a personally oriented type of con-sumption should be considered in managing luxury brand marketing. In regardto personal and interpersonal perceptions of luxury, it is expected that differentsets of consumers will have different perceptions of the luxury value for thesame brands, and that the overall value would integrate these perceptions fromdifferent perspectives.
Generally, values can be regarded as beliefs that guide the selection or eval-uation of desirable behaviors or end states (Schultz & Zelezny, 1999). Withregard to consumption values that directly explain why consumers choose tobuy or avoid particular products (Sheth, Newman, & Gross, 1991), differenttypes influence consumers’ purchase choices. A customer’s luxury value per-ception and motives for luxury brand consumption are not simply tied to a setof social factors that include displaying status, success, distinction, and the human desire to impress other people; they also depend on the nature of thefinancial, functional, and individual utilities of the brand. Pointing to the factthat luxury value lies in social/individual as well as functional/financial aspects,
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it is important to synthesize all relevant cognitive and emotional value dimen-sions in a multidimensional model.
Inspired by the work of Dubois and Laurent (1994), Leibenstein (1950), Mason(1992), Kapferer (1998), Eastman, Goldsmith, and Flynn (1999), Phau and Prendergast (2000), and Dubois, Laurent, and Czellar (2001) on the evaluationof luxury brands, Vigneron and Johnson (2004) reviewed the latent structure ofthe luxury concept and developed a framework for a “brand luxury index.” Theyproposed that the luxury-seeking consumer’s decision-making process canbe explained by five main factors that form a semantic network, includingpersonal perceptions (perceived extended self, perceived hedonism) and themore usual non-personal perceptions (perceived conspicuousness, perceiveduniqueness, perceived quality). The model presented here draws on existingluxury research literature as well as Bourdieu’s capital theory (1984) andextends Vigneron and Johnson’s five-dimensional framework in order toenhance the understanding of consumer motives and value perceptions in lux-ury consumption. The question of what really adds luxury value in the con-sumer’s perception is defined in this paper through the existence of four latentdimensions: financial, functional, individual, and social (Wiedmann, Hennigs, &Siebels, 2007).
The financial dimension of luxury value addresses direct monetary aspectssuch as price, resale cost, discount, and investment, and refers to the value of theproduct as expressed, for example, in dollars, euros, or yen, as well as to what isgiven up or sacrificed to obtain it (e.g., Ahtola, 1984; Chapman, 1986; Mazum-dar, 1986; Monroe & Krishnan, 1985). The functional dimension of luxury valuerefers to such core product benefits and basic utilities as quality, uniqueness,usability, reliability, and durability (Sheth, Newman, & Gross, 1991). The indi-vidual dimension of luxury value focuses on a customer’s personal orientationtoward luxury consumption and addresses personal matters such as material-ism (e.g., Richins & Dawson, 1992), hedonism, and self-identity (e.g., Vigneron &Johnson, 2004; Hirschman & Holbrook, 1982). Finally, the social dimension of lux-ury value refers to the perceived utility individuals acquire with products orservices recognized within their own social group(s), such as conspicuousnessand prestige value, that may significantly affect the evaluation and propensityto purchase or consume luxury brands (Vigneron & Johnson, 1999; Bearden &Etzel, 1982; Brinberg & Plimpton, 1986; Kim, 1998). Although these value dimen-sions operate independently, they interact with each other and have variousinfluences on individual luxury value perceptions and behaviors that can beused to further identify and segment different types of luxury consumers.
Conceptual Model: Determinants of Consumers’ Luxury Value Perceptions
Starting from an integral luxury value concept, Figure 1 shows the proposed con-ceptual model for investigating the strongly correlated but not identical luxuryvalue dimensions. As sketched in the framework presented here, several influ-encing variables and value drivers may be related to the four key dimensionsof luxury value perception, such as price, quality, and conspicuousness. Thisstudy analyzes the selected variables for possible links to those dimensions aswell as associated influences on individuals’ overall perceptions. These selectedvariables (the antecedent constructs such as price value, quality value, prestige
value) have to be understood as individual value judgments. They do not rep-resent an objective valuation, but rather individual consumers’ perceptions ofa certain luxury brand or product, comprising their personal weighing of thedifferent antecedent constructs that can be aggregated to the four key luxuryvalue dimensions. For example, the objective and perceived price of a productconstitutes the financial value dimension, but may also act as a moderatingvariable with regard to the perceived prestige value of a certain luxury item.Therefore, the linkages shown in our model can only represent the key rela-tions between the antecedent constructs and the key luxury value dimensions.
Price Value. Many authors have demonstrated that the price of a good mayhave a positive role in determining the perception of its quality (Erickson &Johansson, 1995; Lichtenstein, Bloch, & Black, 1988; Tellis & Gaeth, 1990).Status-conscious consumers also tend to use a price cue as a surrogate indica-tor of prestige (e.g., Berkowitz et al., 1992; Groth & McDaniel, 1993). Thus, pres-tige pricing—setting a rather high price to suggest high quality or status(McCarthy & Perreault, 1987)—may make certain products or services moredesirable (Groth & McDaniel, 1993). Nevertheless, it is important to realize thata product or service does not have to be expensive to be a luxury good, nor is itluxurious just because of its price. Luxury consumers demand more value alongwith their luxury. Some items may, for example, be regarded as luxury goods notin terms of a price tag or label, but in terms of their sentimental value (e.g., awedding ring as part of personal history or as ancestral heirloom) or invest-ment value (paintings, classic cars). Thus, consumers can and do distinguish
Price Value
Financial Value
Functional Value
Individual Value
Luxury Value
Social Value
First OrderLatent Variables
Second OrderLatent Variable
AntecedentConstructs
Usability Value
Self-Identity Value
Hedonic Value
Materialistic Value
ConspicuousnessValue
Prestige Value
Quality Value
Uniqueness Value
Figure 1. The conceptual model.
WIEDMANN, HENNIGS, AND SIEBELSPsychology & Marketing DOI: 10.1002/mar
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between objective price (the actual price of a product) and perceived price (thecost as judged by the consumer) (Jacoby & Olson, 1977). This leads to the fol-lowing proposition:
H1: Price as an indicator of outstanding quality or exclusivity of a luxury prod-uct or service is an appropriate criterion for value-based segmentation ofluxury consumption behavior.
Usability Value. In general, a product or service is designed to perform aparticular function; the core benefit can be seen in its usability for satisfying con-sumer needs. The concept of usability has been examined and understood interms of ease of use and can be defined by the physical/chemical/technical, con-crete, or abstract product/service dimensions (e.g., Park, Jaworski, & McInnis,1986). Usability is based on both the product’s properties and the consumer’sneeds. Hence, one must differentiate between an objective and a subjective judg-ment of usability, which depends on individual evaluation and the specific pur-pose of use. With regard to basic usage, consumers expect the item they buy towork right, look good, last a long time, and perform as expected and as prom-ised (e.g., Fennel, 1978). Such expectations increase even more in regard to lux-ury items. Thus:
H2: The consumer’s perceived level of excellent usability in terms of superiorfunctional value of a luxury product or service is an appropriate criterionfor value-based segmentation of luxury consumption behavior.
Quality Value. Gentry et al. (2001) found that one reason consumers buyluxury brands is because of the superior quality reflected in the brand name. Thisis congruent with the assumption in the field of perceived quality that luxurybrands offer greater product quality and performance than non-luxury brands(e.g., Garfein, 1989; Roux, 1995; Quelch, 1987; Nia & Zaichkowsky, 2000; O’Cass& Frost, 2002; Vigneron & Johnson, 2004). Consumers may associate luxuryproducts with a superior brand quality and reassurance so that they perceivemore value from them (Aaker, 1991). The literature on luxury consumption oftenemphasizes this importance of quality to ensure the perceptions, and thereforethe value, of luxury (Quelch, 1987; Rao & Monroe, 1989; Garfein, 1989; Groth &McDaniel, 1993; Roux, 1995). In addition, high quality is seen as a fundamen-tal character of a luxury product in terms of a sine qua non (Quelch, 1987;Garfein, 1989; Roux, 1995). Therefore, it is proposed here that:
H3: The consumer’s perceived level of first-class quality in terms of superiorperformance of a luxury product or service is an appropriate criterion forvalue-based segmentation of luxury consumption behavior.
Uniqueness Value. Uniqueness is based on the assumption, demonstratedin research, that the perceived exclusivity and rareness of the product enhancesa consumer’s desire or preference for it (Verhallen, 1982; Lynn, 1991; Pantzalis,1995). Furthermore, this desire even increases when the brand is also perceivedas expensive (Groth & McDaniel, 1993; Verhallen & Robben, 1994). Therefore,the more unique a brand is deemed, and the more expensive it is compared to normal standards, the more valuable it becomes (Verhallen & Robben, 1994).
In addition, the functional value of uniqueness also strengthens individuals’need for uniqueness (Snyder & Fromkin, 1977) and their wish for differentia-tion and exclusivity, which can only be fulfilled when the consumption and useof a certain brand is given only to an exclusive clientele (Leibenstein, 1950;Vigneron & Johnson, 1999, 2004). A luxury product or service is, by definition,not affordable by or owned by everybody; otherwise it would not be regarded asa luxury item. Consequently:
H4: The consumer’s perceived level of uniqueness as an indicator of the excep-tional exclusivity and scarcity of a luxury product or service is an appro-priate criterion for value-based segmentation of luxury consumptionbehavior.
Self-Identity Value. In contrast to the external (social) facet of one’s self,the self-identity value refers to one’s internal (private) aspect in terms of self-perception (Mehta, 1999; Sirgy & Johar, 1999; Jamal & Goode, 2003). It is widelyaccepted within consumer behavior theory that the self-image congruity mod-erates the relationship between one’s self-image and one’s image of a product orservice (Belk, 1988; Mick, 1986), and that a consumer’s self-concept affects pur-chasing behavior in a self-image or product-image congruity model (Sirgy, 1982).Puntoni (2001) confirmed the significant impact of self-congruity on luxurybrand purchases. From this point of view, consumers may use luxury items tointegrate symbolic meaning into their own identity (Holt, 1995; Vigneron &Johnson, 2004), or they may use the brands to support and develop that iden-tity (Douglas & Isherwood, 1979; Hirschman, 1988; Dittmar, 1994). This leadsus to:
H5: Consumers’ perceived level of perfect congruity of a luxury product orservice with their self-image or intended self-image is an appropriate cri-terion for value-based segmentation of luxury consumption behavior.
Hedonic Value. Certain products and services carry an emotional value inaddition to their functional utility (Hirschman & Holbrook, 1982; Sheth,Newman, & Gross, 1991, Westbrook & Oliver, 1991). Studies in the field of lux-ury consumption have shown that luxury products are likely to provide suchsubjective intangible benefits (Dubois & Laurent, 1994). And research con-cerning the concept of luxury has repeatedly identified the emotional responsesassociated with luxury consumption, such as sensory pleasure, aesthetic beauty,and excitement (Benarrosh-Dahan, 1991; Fauchois & Krieg, 1991; Roux & Floch,1996; Vigneron & Johnson, 2004). Hence, hedonism describes the perceived sub-jective utility and intrinsically attractive properties acquired from the purchaseand consumption of a luxury brand as arousing feelings and affective statesreceived from personal rewards and fulfillment (Sheth, Newman, & Gross, 1991;Westbrook & Oliver, 1991). In sum, then:
H6: The consumer’s perceived level of hedonism toward a luxury product orservice and its property of satisfying as well as possible an emotionaldesire for sensory gratification is an appropriate criterion for value-basedsegmentation of luxury consumption behavior.
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Materialistic Value. In the area of consumer behavior, the topic of materi-alism has been widely researched since the late 1950s. But with researchersinterpreting materialism from different perspectives, theorists have not yetagreed on a single definition (Richins & Dawson, 1992). Nevertheless, posses-sion and acquisition play a central role in the definition of materialism (Daun,1983; Bredemeier & Toby, 1960; Wackman, Reale, & Ward, 1972; Heilbroner, 1956;Rassuli & Hollander, 1986; Du Bois, 1955). More specifically, materialism can bedescribed as the degree to which individuals principally find that possessionsplay a central role in their lives (Chang & Arkin, 2002). The more materialisticconsumers are, the more likely they are to have positive attitudes related toacquisition and to assign a high priority to material possessions. Highly mate-rialistic individuals may, in a general sense, find possessions to be desirable andtend to devote more time and energy to product-related activities (Belk, 1985).Research has also found that materialistic-oriented consumers rely heavily onexternal cues, favoring those possessions that are worn or consumed in publicplaces (Richins & Dawson, 1992; O’Cass & Muller, 1999). This can be associatedwith the understanding of materialists that possessions serve as a signal orsource of communicating and portraying impressions of who they are and whattheir status or position is (Douglas & Isherwood, 1979; Belk, 1985). Thus:
H7: The consumer’s level of materialism and extraordinary devotion to mate-rial needs and desires is an appropriate criterion for value-based seg-mentation of luxury consumption behavior.
Conspicuousness Value. In the early 1980s, a number of researchers car-ried out studies, based on the original work of Bourne (1957), focusing on theinfluence of reference groups on luxury brand consumption (Mason, 1981, 1992;Bearden & Etzel, 1982). Findings revealed that the conspicuousness of a prod-uct was positively related to its susceptibility to the reference group. For exam-ple, Bearden and Etzel (1982) concluded that luxury goods consumed in publicwere more likely to be conspicuous goods than privately consumed luxury goodsand that conspicuous consumption still plays a significant part in shaping pref-erences for many products that are purchased or consumed in public contexts(Braun & Wicklund, 1989; Hong & Zinkhan, 1995; Bagwell & Bernheim, 1996;Corneo & Jeanne, 1997; Vigneron & Johnson, 2004). Thus, luxury brands maybe important to individuals in search of social status and representation, whichmeans in particular that the societal ranking associated with a brand plays animportant factor in conspicuous consumption. Consequently:
H8: The consumer’s perceived supreme conspicuousness of a purchased lux-ury product or service as an indicator of elitism and wealth is an appropriatecriterion for value-based segmentation of luxury consumption behavior.
Prestige Value in Social Networks. Much of the existing research hasemphasized the role of status that takes place in communicating informationabout the possessors of goods and social relationships (Hyman, 1942; Barkow,1975; Douglas & Isherwood, 1979; Dittmar, 1994). This goes along with researchthat originally demonstrated how people tended to conform to the majority opin-ion of their membership groups when forming attitudes (Festinger, 1954). Hence,one may use a prestige brand during the week to conform with one’s professional
position, then use a modest brand during the weekend to match the social stan-dards of one’s neighborhood. Thus, as luxury brands and products often encloseprestigious values, social referencing and the construction of one’s self appear tobe determinants of luxury consumption. People’s desire to possess luxury brandswill serve as a symbolic sign of group membership. This bandwagon effect influ-ences individuals to conform to affluent lifestyles and/or to distinguish them-selves from nonaffluent lifestyles (French & Raven, 1959; Sirgy, 1982; Midgley,1983; Solomon, 1983; Mick, 1986; McCracken, 1986; Belk, 1988; Dittmar, 1994).In conclusion, the contribution of reference theory in the analysis of luxury con-sumer behavior appears to be important for the motivation underlying luxury consumption. This reasoning leads us to the final proposition:
H9: The level of perceived superior prestige of a luxury product or service asa symbolic sign of membership to a reference group is an appropriate cri-terion for value-based segmentation of luxury consumption behavior.
METHODOLOGY
To measure the underlying dimensions of consumers’ luxury value perceptionsagainst the background of the multidimensional model, this study used alreadyexisting and tested measures (i.e., Dubois & Laurent, 1994; Richins & Dawson,1992; Tsai, 2005) and generated further items resulting from exploratory inter-views. Specifically, the qualitative part of the study encompassed the tasks of awritten definition of the concept of luxury and components of luxury value aswell as a collection and ranking of adjectives that illustrated the value conceptof luxury with reference to different product categories and luxury brands.
Eight marketing researchers and 50 marketing students were asked what ben-efits they associated with certain luxury goods. The questionnaire items wererated on a 5-point Likert scale (1 � strongly disagree, 5 � strongly agree). Thefirst version of the questionnaire, consisting of 150 items, was face-validatedtwice, using exploratory and expert interviews, and pretested with 80 respon-dents to identify the most important items and to reduce the total number. Thestudy sample was defined as male or female respondents, aged 18 years andolder. A total of 750 interviews were conducted in winter 2006–07. (A descrip-tion of the sample can be found in Table 4 later in the paper.)
RESULTS AND DISCUSSION
Data were analyzed in three stages. First, the various dimensions underlyingthe luxury value perception were uncovered by a factor analysis using the prin-cipal component method with varimax rotation. The analysis produced a ten-factor structure, as shown in Table 1, with a Kaiser-Meyer-Olkin measure of0.906 that summarized 48 items with medium ( � 0.5) to high ( � 0.8) factor load-ings. Given that a Cronbach’s alpha of 0.600 or better is desired for any meas-urement scale (Robinson, Shaver, & Wrightsman, 1991), all factors were stable,with alphas of 0.604 to 0.923.
The research was motivated by the need for a clearer conceptualization andmeasurement of consumers’ luxury value perceptions. As a multifactor solution
that could largely confirm the proposed luxury value structure, our resultsrevealed an interesting view on the underlying set of luxury value dimensions.Consumers’ perceptions of luxury value appear to be determined mainly byfunctional, individual, and social aspects, with the financial dimension in termsof the price acting as a moderating variable. A brief description of the identifiedfactors is given below.
Factor 1: Usability Value. This factor measures an orientation toward thebasic use and core benefits of luxury and luxury products. The item that bestdescribes it is “In my opinion, luxury is really useless”; it has a negative load-ing (�0.725). Linked to this aspect is a positive attitude toward luxury in gen-eral. Thus, luxury is not regarded as a snobbish accessory without any basicutility, but as a valuable and pleasant part of life.
Factor 2: Uniqueness Value. Referring to the perceived exclusivity andrareness of luxury products, this factor is best described by two items: “A lux-ury product cannot be sold in supermarkets” (0.737) and “True luxury productscannot be mass-produced” (0.732). Linked to the aspect that luxury has a cer-tain differentiation quality and that such items are only accessible to a few peo-ple, this factor emphasizes the uniqueness and exclusivity of products assupportive of the consumer’s luxury value perception.
Factor 3: Quality Value. This factor represents the assumption of the supe-rior quality and performance of luxury products. The highest-loading item was“I’m inclined to evaluate the substantive attributes and performance of a lux-ury brand myself rather than listen to others’ opinions” (0.781). Linked to thisaspect is the fact that individual quality standards are evaluated as more impor-tant than the drive for prestige.
Factor 4: Self-Identity Value. Measuring the congruity of a consumer’s self-concept with the image of a product or service, this factor assesses the symbolicmeaning of luxury products for the consumer’s identity. The factor is bestdescribed by the items “I never buy a luxury brand inconsistent with the char-acteristics with which I describe myself” (0.843) and “The luxury brands I buymust match what and who I really am” (0.840).
Factor 5: Materialistic Value. This factor represents a consumer’s generalmaterialistic orientation and the desire to use possessions as a status signal. Itis best described by the item “My life would be better if I owned certain thingsI don’t have” (0.769), combined with the wish to be able to afford to buy morethings to enjoy life.
Factors 6–9: Hedonic Value. Referring to sensory pleasure, aesthetic beauty,or the excitement that luxury goods and experiences provide to a consumer,these factors measure in a very differentiated way the emotional value of lux-ury. While Factor 6 emphasizes the aspect of self–gift giving with the highest-loaded item, “Purchasing luxury brands can be seen as giving myself gifts tocelebrate an occasion that I believe significant to me” (0.777), Factor 7 stressesthe fact that luxury is always a little expansive to normal standards, bestdescribed by “I enjoy spending money on things that aren’t practical” (0.721). Inview of the enjoyment and pleasure of luxury, Factor 8 refers to self-directed
WIEDMANN, HENNIGS, AND SIEBELSPsychology & Marketing DOI: 10.1002/mar
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pleasure, with the highest loading on “Luxury brands are one of the sources formy own pleasure without regard to the feelings of others” (0.858). Finally, Fac-tor 9 embodies the wish for life enrichment, measuring the value of luxurybrands and products for the consumer’s meaning and quality of life: “Purchas-ing luxury brands provides deeper meaning in my life” (0.708).
Factor 10: Prestige Value in Social Networks. Measuring the qualityof luxury brands and products as a symbol of membership to relevant others,this factor is best described by the item “I like to know what brands and prod-ucts make good impressions on others” (0.789); it is linked to the wish to impressand meet the expectations and style of the consumer’s reference group.
To identify different groups of luxury consumers, the factor scores for eachrespondent were saved and subsequently used in stage 2 for clustering them intomarket segments. The focus of cluster analysis in this study was on the com-parison of cases according to the natural relationships between the hypothe-sized luxury value dimensions and the factors. An initial hierarchical clusteringprocedure was employed to obtain a possible number of clusters and seed pointsfor a k-means cluster analysis. To identify the right number of clusters, therespondents were partitioned by a hierarchical procedure. Ward’s method ofminimum variance was chosen to check the cluster differences in each stage of combination and to maximize homogeneity and heterogeneity within andbetween clusters. The results strongly suggested the presence of four clusters,which was validated using nonhierarchical k-means clustering. The k-meanscluster membership was identical to Ward’s membership for 86.3 percent of thecases. Overall, following the typical criteria for effective segments of consumerswith homogeneous needs, attitudes, and responses to marketing variables, thefour clusters were distinct from one another, were large enough to be manage-rially useful, and provided operational data that were practical, usable, andreadily translatable into strategy (McCarthy, 1982; Weinstein, 1987). Thus, thisfour-cluster solution, shown in Table 2, most favorably produced the most inter-pretable and stable results.
The results point out that the perceived luxury value variables appeared tomake considerable contributions in characterizing clusters. In particular, PrestigeValue (F � 110.844), Quality Value (F � 69.379), Hedonic Value c—Self-DirectedPleasure (F � 54.019), and Usability Value (F � 50.494) had sizeable differ-ences, whereas Hedonic Value a—Self–Gift Giving did not contribute greatly todifferences between the clusters (F � 1.825).
Once the clusters were identified, a discriminant analysis was used to checkthe cluster groupings (Churchill, 1999; Hair et al., 1998), which revealed sig-nificant differences between the group characteristics, as shown in Table 3.These results were used to determine how successfully the discriminant func-tion could work. Overall, 99.7 percent of the cases were assigned to their correctgroups, validating the results of cluster analysis for useful classification of lux-ury consumer subgroups based on their luxury value perceptions.
For market segmentation purposes, profiling the cluster solutions should leadtoward a classification scheme through a description of the characteristics ofeach cluster to explain how they might differ on relevant dimensions. To developa profile of each market segment, more detailed information comes from look-ing at the questionnaire variables cross-tabulated by cluster segment. Com-parisons among the four clusters were conducted on a variety of descriptive
Tab
le 2
.Lu
xury
Val
ue
Seg
men
ts:k
-Mea
ns
Clu
ster
Res
ult
s.
Clu
ster
1
Clu
ster
2C
lust
er 3
Clu
ster
4L
uxu
ry V
alu
e D
imen
sion
(n�
145)
(n�
178)
(n�
195)
(n�
129)
Fa
Fu
nct
ion
al V
alu
e D
imen
sion
Usa
bili
ty V
alu
e0.
3794
4�
0.01
323
0.27
487
�0.
8237
350
.494
Un
iqu
enes
s V
alu
e0.
0732
60.
3527
6�
0.56
776
0.28
913
37.6
72Q
ual
ity
Val
ue
�0.
6041
50.
5607
9�
0.35
276
0.43
851
69.3
79
Ind
ivid
ual
Val
ue
Dim
ensi
onS
elf-
Iden
tity
Val
ue
0.01
803
0.35
499
�0.
0592
3�
0.42
056
16.4
24M
ater
iali
stic
Val
ue
0.69
732
�0.
2895
6�
0.27
500
0.03
144
39.3
97H
edon
ic V
alu
e a—
Sel
f–G
ift
Giv
ing
0.02
820
�0.
0606
80.
1170
5�
0.12
491
1.82
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WIEDMANN, HENNIGS, AND SIEBELSPsychology & Marketing DOI: 10.1002/mar
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variables, including demographic and socioeconomic characteristics. Table 4 pro-vides a thumbnail sketch of the characteristics that differentiated each clusterfrom the others. Based on the variables from which they derived, the four clus-ters can be described as follows:
Cluster 1: The Materialists
This cluster comprised 22.4% of the sample and consisted of 54.5% female respon-dents with a mean age of 34.4 years. Compared to all the clusters, members ofthis group showed the highest ratings for the materialistic and usability valueof luxury goods, whereas the quality and self-identity value aspects were ratherunimportant; its ratings for quality and prestige value were the lowest amongall the groups. Slightly more than members of clusters 2 and 3, materialistsstated that for them the hedonic value of luxury goods is important. Signifi-cantly more than the other clusters, they wish to have a lot of luxury in theirlives and think that their lives would be better if they owned certain thingsthey don’t have. And they had the most positive attitude toward luxury objects,as evidenced by the highest ratings for the items “In my opinion, luxury is good”and “Luxury products make life more beautiful.” In contrast, they did not stronglyperceive the social dimension of luxury consumption as being important fortheir perception of luxury value, which can be seen in the lowest ratings for “Ilike to know what brands and products make good impressions on others” and
Table 3. Discriminant Analysis of Luxury Value Factors.
Discriminant Canonical Wilk’s Function Eigenvalue Correlation Lambda �2 Sig.
Significant variable (structure matrix)Usability Value 0.402 �0.0091 0.142Uniqueness Value �0.299 �0.147 0.190Quality Value �0.396 �0.285 �0.174Self-Identity Value 0.078 �0.238 0.065Materialistic Value 0.008 0.192 0.365Hedonic Value a—Self–Gift Giving 0.080 0.016 �0.014Hedonic Value b—Extravagance 0.289 �0.077 0.014Hedonic Value c—Self-Directed Pleasure �0.133 0.448 0.025Hedonic Value d—Life Enrichment �0.064 0.377 �0.014Prestige Value in Social Networks 0.131 0.117 �0.672
Note: Classification matrix revealed that 99.7% of the cases were classified correctly.
“If I were to buy something expensive, I would worry about what others wouldthink of me.” In sum, materialists satisfy their personal needs and superiorquality standards with luxury goods but do not try to impress others with theirpossessions or belong to a special group of individuals.
Cluster 2: The Rational Functionalists
The second cluster made up 23.7% of the sample, was 56.5% female, and had amean age of 33 years. Its members showed the highest mean ratings of all groupsfor quality value, followed by uniqueness and self-identity value. Their meanscores for hedonic luxury value factors, taken as a whole, were lower than thoserecorded by other groups. Luxury consumers in this cluster are closely attachedto functional value items and show high ratings for statements such as “I’minclined to evaluate the substantive attributes and performance of a luxury brandmyself rather than listen to others’ opinions” and “Product quality superiority ismy major reason for buying a luxury brand.” Overall, the rational functionalistsdo not seem to be greatly excited about the emotional dimensions of luxury con-sumption. Unlike other clusters, they consider the hedonic value aspects as beingunimportant, which can be seen in the lowest mean ratings for “Buying thingsgives me a lot of pleasure.” In general, consumers in this cluster have superiorquality standards and differentiate themselves from others with the purchase ofexclusive luxury products. Like cluster 1, they perceive their individual needs tobe more important than the desire to make a good impression on others.
Cluster 3: The Extravagant Prestige-Seekers
Comprising 26% of the sample, this was the largest of all the clusters. It consistedof 56.4% female respondents with a mean age of 30.8 years. Its members are morelikely than those of other groups to take social value aspects of luxury con-sumption into account, as evidenced by the highest ratings for prestige value fol-lowed by extravagance (Hedonic Value b) and usability value. The other functionalaspects show lower mean scores compared to those recorded by other groups; rat-ings for the uniqueness value represent the smallest percentage of all groups.Extravagant prestige-seekers do strongly perceive social aspects as being mostimportant for their perception of luxury value. They had the most positive per-ception of all prestige items, for example, “Before purchasing a product it isimportant to know what brands or products to buy to make good impressionson others” and “I tend to pay attention to what others are buying.” When con-sidering the purchase of a luxury brand, they place much emphasis on prestigeover quality assurance and state that they buy a certain luxury brand mainlyfor impressing others rather than just for themselves. To sum up, extravagantprestige-seekers perceive the quality of life and pleasure aspects of luxury con-sumption to be uppermost in importance; however, in this group, more individ-uals are concerned about other people’s opinions than in the other three clusters.
Cluster 4: The Introvert Hedonists
The smallest cluster represented 17.2% of the sample and consisted of 51.9% malerespondents with a mean age of 35 years. Members of this group perceived the
WIEDMANN, HENNIGS, AND SIEBELSPsychology & Marketing DOI: 10.1002/mar
644
hedonic value aspects of self-directed pleasure and life enrichment to be mostimportant for their perception of luxury value. In their opinion, luxury brandsare sources of pleasure; such consumption enhances their quality of life. Theirdefinition of luxury refers to exclusivity and products that are not for mass con-sumption. More than others, they stated that “I can enjoy luxury brands entirelyon my own terms no matter what others may feel about them” and “Luxury brandsare a source for my own pleasure without regard to the feelings of others.” In con-trast to this, the mean ratings for usability, extravagance, self-identity, and self–giftgiving were lowest for this group. In sum, the introvert hedonists are less likelythan consumers in other groups to be enthusiastic about luxuries, as can be seenin the lowest scores for “Luxury products make life more beautiful.”
NEXT RESEARCH STEPS AND MANAGERIAL IMPLICATIONS
The study presented here has made a first step toward conceptualizing luxuryvalue in the context of identifying market segments along the dimensions ofconsumers’ perception of luxury brands. However, the integrative frameworkand exploratory results make it worth focusing on further research as well ason implications for managerial practice.
Next Research Steps
The primary goal of this paper was to establish and explore a multidimensionalluxury value framework as a basis for identifying and segmenting differenttypes of luxury consumers. Of course, the exploratory results are only the firstempirical hints and should be further developed in different ways. In particu-lar, the interplay between the proposed structural solution and the overall modelfit must be examined using confirmatory factor analysis (CFA) to determinewhether the factors identified by the exploratory analysis are substantiallyrelated to the value dimensions indicated by the structural model. This willlead to a proper causal modeling of effects between the luxury value dimen-sions and their impact on luxury perception as well as the consumption of lux-ury goods.
Further empirical steps must, of course, meet the state of the art in usingsophisticated multivariate methods. For example, it might be useful to comparedifferent approaches of formative and reflexive construct development and test-ing (Diamantopoulos & Winklhoffer, 2001; Jarvis, MacKenzie, & Podsakoff,2003). Moreover, due to the fact that one cannot assume linear relationshipsamong the different variables, research should also draw on nonlinear causalmodeling and neural networks.
To identify luxury consumer segments on a global level, the next research stepis a cross-cultural study to identify discriminating drivers of different consumersegments in collaboration with American, European, and Asian researchers. Evenif the overall luxury value level of a certain product or brand may be perceivedequally across national borders, a differentiated measurement may reveal thatthe overall luxury value perception is a combination of different evaluations withregard to the subdimensions. More specifically, consumers in different parts ofthe world buy, or wish to buy, luxury products for apparently varied reasons;
however, they possess similar values and, regardless of their country of origin,their basic motivational drivers are expected to be the same—among the finan-cial, functional, personal, and social dimensions of luxury value perception, only therelative importance of the different dimensions may vary (Wiedmann, Hennigs, &Siebels, 2007). In consideration of the variety of cultures across the world, the lux-ury value model will, of course, not be able to capture all effects of culture andethnicity. Thus, it has to be stated that these suggestions mainly refer to theglobal segment of cosmopolitan luxury consumers.
Despite these limitations and necessary steps in future research, the pri-mary contribution of this framework lies in developing a comprehensive modelof consumers’ perception of luxury by integrating the dimensions of financial,functional, individual, and social value to identify relevant behavioral patternsacross different value-based segments.
Managerial Implications
Knowledge of all relevant aspects of consumer perceptions of luxury and morerobust measures of luxury value in different market segments are, of course, keyto managerial practice. Based on a deeper understanding of why different con-sumer segments buy luxury brands, marketing managers may elicit more salesfrom their target consumers by adequately addressing their perceptions of andattitudes toward those products.
In the strategic planning of the utilitarian, affective, and symbolic product cat-egories, luxury brand marketers should avoid narrowly confining their per-spective to the consumer’s desire to impress others. A comprehensive marketingstrategy for luxury brands rests not only on social aspects but also on the ben-efits of the dimensions proposed in the model presented here. Moreover, it ishighly advisable to conduct luxury brand marketing management with multi-ple brand-positioning strategies, such as enhancing consumers’ social status byproviding them with an impression management function, or enhancing theirindividual status for meeting personally oriented consumption goals.
With regard to financial, functional, individual, and social value dimensions,marketers might be able to base strategies on this model to improve purchasevalue for different segments of luxury consumers, who may differ in their valueorientations and prefer that a certain brand satisfy either their cognitive ortheir emotional needs. This is useful from both a market segmentation point ofview and a market positioning point of view, and will, of course, enhance theefficiency of marketing efforts for luxuries.
From a market segmentation point of view, clustering groups according totheir primary perceived luxury brand values may indicate distinct market seg-ments to which different sets of luxury products appeal or for which advertisingstrategies could be implemented. As the study results show, to some the socialvalue dimensions such as brand conspicuousness, popularity, or exclusivity areparticularly important in that they are signals of wealth, power, and status,and strengthen the membership of peer groups. To others, luxury goods serveas a financial investment, or must meet their individual standards of superiorquality. Another segment’s luxury brand consumption stems from hedonistic ormaterialistic motives for expressing the individual self. Overall, this researchsynthesizes cognitive and emotional value dimensions and could already leadto a better understanding of the conditions and drivers of luxury product
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perception, as well as a broadened view of luxury value as it lies in social, indi-vidualistic, functional, and, as a moderator, financial aspects.
From the point of view of market positioning, if monitoring a luxury brandindicates a declining level of luxury, researchers could identify and concentrateon the specific value dimension that is weakening. Accordingly, the advertisingmessage may be changed, stressing the perceived values and emphasizing thebenefits of the luxury brand over competing brands. In contrast to existing stud-ies exploring customer perceptions of and motives for purchasing luxury prod-ucts, at least theoretically, this research enables the identification of a broadervariety of potential luxury value drivers. Thus, marketers should first explorethe values expressed by their brands, products, and market communications, thencompare them to their customers’ luxury value systems. If necessary, they shouldrevise their marketing strategy and product positioning accordingly.
In sum, luxury brands have to encompass consumer values if their purchaseis to be justified. Because the luxury market is not homogeneous, product cat-egory and situational characteristics play an important role. From a consumerperspective, each product can provide a certain set of values and may be moreappropriate in certain situations than in others. Thus, marketers have to con-sider individual differences in associating luxury values with certain situations.Knowing these differences can be an important starting point in designingappropriate marketing campaigns.
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The authors would like to express their gratitude for the thorough, helpful, and encouragingcomments of the special issue editor, Prof. Eunju Ko, and the anonymous reviewers.
Correspondence regarding this article should be sent to: Prof. Dr. Klaus-Peter Wiedmann,Institute of Marketing and Management, Leibniz University of Hanover, KoenigswortherPlatz 1, 30167 Hanover, Germany, ([email protected]).
