What my peers think about luxury goods.

Warning: Long post ahead! This was a report I did in a luxury goods branding class. Thought I'd reshare it because the discussion by my classmates have been really interesting. Enjoy!

Introduction
A social class is usually defined as “the overall rank of people in society; people who are grouped within the same social class and are approximately equal in terms of their social standing, occupations, and lifestyles.” (p.80). The consumption of luxury goods therefore, could be seen as referencing to the social hierarchy and has two general levels of implications--personal and societal. In this essay, I would be reviewing six academic journal articles on the topic of “status symbols”.
 
Review
I will start off with an analysis of Han et al (2010) work “Signalling Status with Luxury goods: the role of brand prominence.” This paper posits that luxury goods are primarily bought with the intention of signalling social statuses. The signals, however, can be ostentatious or subtle; correspondingly, manufacturers can produce a product that has either conspicuous branding, or tone it down. Given that existing consumer behaviour presumes supply decisions, this implies that it is the consumers who in the first place, are different in their degree of loudness of signalling.

Using the term “brand prominence”, defined as the “the extent to which a product has visible markings that help ensure observers recognise the brand” (p.15), the authors categorize existing consumers into four large groups--the patricians, the parvenus, the poseurs and the proletarians. Is the categorization of consumers into four arbitrary groups sensible, and in this case, even implicating the existence of a hierarchy? In this case, I argue this classification to be generally meaningful, and concur with Mikko Ojala’s statement--

“To cite the quote "You don't buy them until you've made it. All the partners, the MDs - they wear [Salvatore Ferragamo]. But analysts and associates - No. You'd get cut down if you bought a pair too early". This emphasizes the fact, that sometimes a person, who otherwise clearly lacks status, can seem ridiculous sporting a status symbol. “

Alternatively, we can consider Farzeen’s view on how luxury products actually reinforces the social hierarchy system:

“Fast forward to present, every other twenty-something kid living with his parents is driving a BMW M3, leased and re-financed to oblivion, in order to afford it and other expensive products, to create the illusion they are indeed, wealthy. In today's society, wealth and the overall perception of style are very correlated; although you can't tell if a black t-shirt is Armani or GAP, a handbag from Roots (sorry Colin), automatically becomes less stylish than a LV bag. These products are advertised with certain promotional messages that try to identify with people's lifestyles and core values, but at the end of the day, everyone wants to believe they identify with these, and that's why consumerism is toxic and will forever be profitable.”

Both views imply that there are levels and ideas of exclusivity involved in the marketing and consumption of luxury goods. In the academic paper, patricians are a group of people who are extremely wealthy, and purchases luxury items only with hopes of signalling to fellow Patricians. They do not want to be associated with the second group, the parvenus, because they regard them as too ostentatious, uncouth, and trying too hard, even though both groups have the means to pay for the luxury items. In the discussion forum, this group of people is referred to by Saara Huikkola, who aptly captures the essence of subtly in communicating wealth, while not disassociating too much with the people who cannot afford luxury--

“...I think there are status symbols that can only be identified by people of the same reference group. The idea is to communicate equity and resemblance to people below one's status but to constantly make sure that the peers still see you as a part of the elite.

One good example of today's status symbols could be charity T-shirts than can cost up to 10 000 $; most of the people don't identify them as expensive objects but the people who need to know, will know.”

Yet, Clouter argues that this group of Patricians is becoming smaller and smaller, and it is increasingly more difficult to be distinguished as a Patrician, or even a Parvenus, the second group. This therefore gives the luxury company more reason to make less-conspicuous luxury goods even more expensive:

“I believe what Farzeen and many others have been pointing out is the fact that "exclusivity" has been pushed higher up the social ladder than what has been observed in previous generations. To elaborate, this change in perception of exclusivity is a result of changes to the available financing has allowed middle class consumers to attain what was previously thought of as unattainable. Furthermore, the availability of products or improved reach of consumers of all classes has grown greatly as a result of technological improvements in the last decade. This means that products that were considered exclusive as a result of their geographical rareness have also suffered in terms of their exclusiveness.”

The overall sentiment of wanting to identify with the members of the same social class, however, is not shared by the second group, the Parvenus. People in this group are not concerned about identifying with fellow wealthy people, but primarily concerned with distinguishing themselves from the less wealthy. This group has the ability to pay for luxury items, but they want to be loud. Therefore, they use loud brands that signal strongly to everyone around them that they indeed own the expensive luxury item, as they can afford it. This is exactly how Jerome puts it--

“Jacques Séguéla, a French publicist, has told in 2009 that ‘’ by the age of 50, if you do not have a Rolex, you did not succeed in your life really’’. Of course he has justified  himself several times that he did not mean that really, money is not the only thing that man should seek, and the context was at that time that the French President Nicolas Sarkozy had a Rolex and was keen to show off.”

The third group, the “poseurs”, do not have the wealth to support a lifestyle of consuming luxury goods. However, they are eager to associate themselves with the Parvenus and dissociate themselves with the fourth group, the Proletarians. The consequence therefore, purported in the essay, is that they therefore buy fake luxury products. In the discussion forums, many have referred to fake LV bags, and suggest yet another element that the article misses--the risk of being found out. The idea is as follow--if the person can pull off being seen as rich, then people will perceive him to be the second group. If the person cannot pull it off, then people will see him as a poseur. Here is what I posted in the discussion forum:

“I like to look at people in the Metro, and I LOVE looking at people taking the metro with LV bags, and then guessing what grade the bag is. My assumption is that people who have the excess money to buy LV bags won't be taking metros--well at least not in Singapore, because taking a cab is not that expensive.

So what happened a few days ago is that I was on the metro to Kamppi, and I saw two young ladies carrying LV bags. I'm personally involved in the fashion industry in Singapore, so I am quite familiar with LV bag designs and quality. The first thing that caught my eye was the hem; it wasn't high-quality hemming so I immediately knew that it was a fake. Unsurprisingly, my first reaction to the LV imitation is thinking that the two girls carrying them are "desperate".

Well the brand LV has this high-end, posh image, and if you are going to carry a LV bag it really doesn't make sense to take the metro. And I feel that it's ok to buy imitations, but at least use a AA grade that is oxidized, not a A grade or lower that looks obviously like an imitation? I mean, what's the point? LV bags have a standard, classy design, so it's not as though you are buying the fake FOR the classy design. (As compared to say Celine bags, or Kate Spate, or even MK bags). I somewhat think carrying obviously fake LV bags does more detrimental things to one's image if anything.”


The risk of being caught of carrying a fake is further verbalised by Matilde Pelkonen:

“I've been thinking the same question: Why people are using fake products even though it is obvious that the products are fake? As you mentioned, symbolic value, how the others are thinking about the owner of LV bag, is rather that he/she is desperate than cool and admirable people...However, these people who use fake products are probably treating them like status symbols. Most likely they can connect themself to the other consumers of LV, and so believe on something which is not true.”

Yet, Gabriel points out that this risk might be worth taking:

“Considering that 95% of people (except yourself) won't see a difference if you are carrying a 50$ handbag or a 2000$ one, it is much harder to really show off with more expensive brands (if showing off is what you are going for). People want to associate themselves with brands, and this is why they are willing to buy fake products. Being “the cool kid with expensive stuff” have never been so easy.”

The forth group--the Proletarians, are not affluent and do not crave status, and hence do not and will not be involved in this signalling game, because they do not see the point. There seems to be a lot of proletarians in our discussion forum making comments, probably because we are students and do not have high disposable income. Sometimes, students might even be in debt and are in no mood to think about luxury products. And when their friends do, these sentiments are met with slight surprise or disapproval. Tiia and Mark illustrate their opinions:

By Tiia:

“One example of a status-seeking person was a close friend of mine; a man who had a Porsche Cayenne Turbo (PCT) as his company car. Porsche as a car brand related to luxury, power, style and high-class lifestyle all of the characteristics being quite masculine. Thus some people, especially men, might want to show their masculinity and affluence. In my example case the man was quite wealthy and worked in a medium sized company as a sales director. Nevertheless he would not have been able to buy a car worth 200.000€ on his own. I asked him why would he choose such an expensive car as his company car as it still cost him a lot due to fuels and taxable value. He said that in business world a car symbolizes your working identity and relates to how successful you are. And as in the near future he wanted to be a wealthy and successful businessman he said that a car like PCT would help him to obtain the self he wanted to be. What surprised me quite a lot was how important a car might be in some circles and how determinedly and consciously he wanted present himself through that car.”

By Mark:

“For example, my one friend bought an expensive Chanel handbag in high school just so that she could appear fashionable, mature, and popular to friends. This in my mind made her seem less mature as she spent over $2,000 (most of her savings) on a bag where a mature person in my mind would have saved it for her education/ future. While a product may bring some of the desired appearances I do not believe it is necessarily consistent with the promotional image. She bought the specific brand because of the celebrity endorsers who own the same bag and wants to experience their lifestyle. However, the bag ownership of a product cannot provide such a thing and thus cannot make the perception consistent with reality. Therefore, I believe that the images of those who own status symbols are not consistent with those portrayed in the product’s promotional messages.”

The authors of the paper then proceed to confirm these primarily hypothesis through a deductive approach. Interestingly, this study also convincingly explains why fake designer bags tend to be brand conspicuous. Yet, there are limitations to this method of categorization of course-- what about the group of people who can afford luxury brands, but choose not to buy because they do not subscribe to materialistic values? Under their model, they would be unclassified. The entire analysis Han et al (2010) is based on the assumption that people are materialistic. This according to Philemon Usman, is not true, because sometimes people might go through some life experiences that humble them and make them focus on the non-material standard of living--

“I once have a friend that is rich in coat and posses all the things that make life goes round but always try to make people know that he is rich, ...only when his family is not doing so well at all when he realize that he as to change his method and start to impact the lifes around him... and with that people notice him and start paying him respect . now this is what i call someone with status in life to keep and protect.”

The second limitation would be of the third group-- the poseurs. The consequences of not being able to afford luxury goods does not necessarily preclude them from the purchase-- as Karsimir Marttinen puts it, poseurs could still own luxury items by taking debt--

“Today, many of the Louis Vuitton bags and BMW:s are owned by people who cannot actually afford them. And possess only an access to an over limited credit.”

The second paper I will be examining is Geiger-Oneto et al (2012) paper. Essentially, the paper contends that the luxury goods market is not as affected as compared to the normal goods’ market, even in tough economic times. There are three groups of people here that they focus on--it posits that in prior research, the premise has always been that buying luxury and counterfeit items is a primary visual way to claim a form of social status. They introduce a third group of people, who reject the notion of luxury items--even those subtle ones as mentioned in the first article--because they know a better way to suit their styles, according to their status. They do not need a luxury brand to reinforce their own social statuses, because they are already so secure. I like how Tiia phrases it--

“I think people who are self-confident and don’t care about other people’s opinions do not have a need to “upgrade” themselves by buying material things. Status –seeking in my opinion is related to contradiction between the self and the desired self.”

The converse is true as well--that if people are not confident, they will need luxury products to appeal to a certain social status, to define themselves in a manner that progresses up the hierachy. Juhani phrases it this way--

“The influence of others is apparent in shaping one's self-concept. With reference to the course book, the symbolic self-completion theory predicts that people who have an incomplete self-definition tend to complete their identity in acquiring symbols associated with.”

The limitation of the research, however, lies in methodology, for participants are merely given pictures of luxury goods to choose from, and not exposed to a real shopping environment. As we did in the previous assignment, there are various differences between online and physical retail in terms of perceptions. Sometimes upon feeling and touching a luxury item in store, and influenced by the posh shopping atmosphere, a person might just buy the luxury good  on impulse if she likes the design and texture of a bag, even if it doesn’t mean anything to her. Also, the issue of alternatives can be considered to--certain bags like celine has unique designs that might appeal to certain people--and it is tough to get designs like that anywhere else, unless the consumer buys a counterfeit. Therefore, especially for patricians, they might just pay for a bag because they like the design, and not because of the status symbol. As Anna phrases it--

“Personally, I love a well-made and beautiful handbag. I value the craftsmanship, design and high-quality materials and I’m willing to pay for them. These are the values I want my handbag to present, not that I have just won a lottery.”

This can also be read as that if money were no concern, she would have purchased a well-made designer bag from a designer shop because of the design and not the brand. The first and second journal articles, when seen together, therefore expands the discourse on luxury goods and status symbols, because now more consumer types are identified.

The third article by Vickers et al (2003) is an exploratory study of the marketing of luxury good. It begins with an ontological exploration of what is meant by the term “luxury good”--for “there is a lack of consensus particularly among academics regarding the definition of luxury goods products” (p.461). Criterias behind the determination of a luxury good is examined, on the basis of appearance, by price, by consumer’s attitude or by the intention of the manufacturer. This article covers three conceptual dimensions--functionalism, experientialism and symbolic interactionism. According to this paper, people buy luxury goods because they want access to another dimension of reality. Correspondingly, it was argued that the symbols and associated meanings exhibited by luxury goods have a major influence on the consumer’s choice of one luxury product over the other, or even to non-luxury good.

The idea of experientialism and symbolic interactionism is further expressed by Chloe Manokeian, often at the expense of functionality:

“We all know that symbol of a product is more important than the product itself. The luxury is a good example of the signification of symbol. Now a day a lot of people don’t really care about how the product is done. That’s true some people be careful about the quality or if it come from their country and not “made in China, Morocco…” but it is not representing the majority of our society! Instead of buying leather bag in a small specialty shop with good quality and made locally; they prefer buying a fake “Gucci” bag...people who prefer spend money on real luxury watches, bags or clothes than in their flat or food for example. When you go in places where the luxury take a important place (famous areas) you realise than 1/3 of people work in clubs and spend more than they have just to show that they “rich” but there are just victim of the picture of brands. Why? Because luxury represents the professional success and they prefer be part of this society more than favour symbol like made locally or other. ”

Of course, Chloe is making this statement against the backdrop of Gucci advertisments. In Gucci handbags advertisements, there are appeals to symbolic interactionism, defined as “desires for products that fulfil internally generated needs for self-enhancement, role position, group membership or ego-identification”. (p. 466). In this example cited, the idea is that people want to be part of the “professional success” and “be part of this society” more than being seen as a typical, average local on the street. So, luxury goods become a passport via the symbolic interactionism, since there is a component in the advertisement that plays up the association of the owner of the material luxury good with the sense of belonging to a group, role, or self-image in terms of emotions. Experimentalism in this paper is defined as a design that aims to “fulfil internally generated needs in respect to stimulation or/and variety”.  Indeed, usually on the advertisements on Gucci and Prada, the owner of the item is always portrayed to be posh, chic, cool, and most importantly, extremely versatile and free.

    The fourth paper I am reviewing is by Thomas and Wilson (2012), on “Youth Consumerism and Consumption of Status Products: A Study on the Prevalence of Social Pressure Among Students of Professional Courses”. This article primarily adopts a quantitative research approach, in measuring the correlation between social comparison and peer pressure--the independent factor X--versus consumption of status products among students from professional programmes, the dependent factor Y. More significantly, there was a reference to Nouriel Roubini, the economist who first suggested that Americans might even go to the extremes, by taking debt to fund their household expenditures on status items, things that they buy not for function but for status. (p.45)  The study concludes with the assertion that indeed, at least in the Indian context, purchase of products that signify status symbols are usually done out of social pressure, rather than functional purposes. In the Indian context, some students are even under high debt from tuition fees, and despite that they are spending on luxury items.

This again is reflected in Luiza Suciu’s comments, on consumption beyond one’s means:

“Most people care about the image they give a lot more than they would like to admit. And as many have previously stated on this thread, people sometimes would go to great lengths to look the part. Whether it's juggling with numerous credit cards to be able to pay for everything or trying to fake it by buying imitations of well-known brands, some will do anything to give a certain impression of them and uphold a certain social status.”

This is reinforced by Jordan’s perspective as well:

“Nowadays, a lot of people have more than one credit card. This means that some of them are buying goods and they don’t even have money for it. In our society, we attach a lot of importance to what other people think of us. That’s why some people will buy goods to show to others that they can afford expensive things. Sometimes, to be accepted into some kind of clubs or groups they will even go into debt. In this case, his/her image do not represent what images portrayed in the product's promotional messages.”

The next journal article by Hudders and Pandelaere (2012) is interesting. Materialism in this paper is defined as “a way of life characterised by the pursuit of wealth and possessions” (p.411) While Thomas and Wilson (2012) posits materialism funded by debt to be slightly worrying, this paper highlights the “silver lining” in the consumption of status-enhancing goods, since it contributes towards the consumer’s subjective well-being. To support the upsides of being materialistic even at the expense of debt, five components were examined on a normative basis--”negative affect”, “materialism”, “life satisfaction”, “luxury consumption” and “positive affect”. (p.423). They conclude that there is an enhancement of “subjective well-being” in that the consumption of luxury goods indeed make people feel truly better about themselves.

    This is supported by Methilde Pelkonen’s reflective comments:

“However, these people who use fake products are probably treating them like status symbols. Most likely they can connect themselves to the other consumers of LV, and so believe on something which is not true. “

The idea here is that if such a connection makes the consumers of counterfeits feel better about themselves, and create another set of realities for themselves and feel significantly better about it, then perhaps the decision to splurge on luxury products or counterfeits is justified.  One limitation proposed in the paper, however, is that “however, it remains unclear why luxury consumption makes materialists feel happier”. (p.425), so that is definitely a topic for future research.

Yet, meanwhile, at least in the Asian context, we could speculate that the possession of status symbols can be seen as a form of respect for the statuses of others. The idea here is that there could have been a higher happiness utility generated because the consumer of a luxury item could gain the respect of people of higher statuses, and inspires people of lower status. The person with that luxury item knows this well. As Sang Vo puts it--

Most of my principles of life as well as dress code are strongly affected by her... I can clearly see that she always chooses LV and Gucci clothes and products of the same kind for meetings. LV and Gucci apparel is worldwide famous for its luxury and elegance. of course, only the rich and people from high social class can afford this brand. The reason behind her choosing these two brands is  that she would like to show respect to her clients through the way she dresses... If meeting 'big' customers in ordinary outfit, this will be implied a degradation to them. This is true in Asia…Dressing neatly and professionally when meeting clients is therefore is one of the cues to reflect her respect. However, when she is at home with family, she always prefers 20- dollar-something- outfit as it is comfortable and suitable for her as a housewife in her husband's and son's' eyes. Again, dressing style does have something to do with status symbol. In my friend's mother case, her image as a successful business woman always goes with dressing  style of elegance, professionalism and luxury. When a wife and mother at home, her image is always consistent with simplicity and dedication.”

The last paper I will be reviewing is Nelissen and Meijers’ (2011) article on the social benefits of luxury brands, even as they are extremely expensive to the average person. This article is interesting in the sense that it proposes a rational case behind the consumption of luxury products--as the consumption of conspicuous luxury products symbolic of a certain social status can be interpreted by others as a costly signaling trait that would induce preferential treatment to the consumer. So, different from other paper, this paper argues for a rational, careful cost-benefit consideration behind each purchase. This is the sentiment expressed by Jerome:

“[The consumption of luxury products] means that you show that you belong to a certain social class. Rolex advertises its watches usually with worldwide sport stars and therefore give an image of professional excellence and professional success. Professional success means generally a career achievement. I have indeed a good friend of mine who has actually a Rolex. I think his image corresponds to the message given by the basically advertisement (you wear a Rolex because you are successful, not because you belong to the class of ‘nouveaux riches’). He is passionate, and it is clear milestone in his life. But for certain people who are unsure about their status, they just want to show off.”

The view above strengthens the idea that when a person wears the luxury product, he reinforces the image that the promotional posters portrays, and sometimes, he deserves people looking at him and judging him on the basis of that particular image. Onlookers might therefore interpret the ownership of luxury products as the owner deserving respect, and therefore it might be worth every cent to buy that luxury product as a constant subtle reminder to onlookers of his success.

Limitations of Discussion
Of course, the views expressed in the discussion forum may be biased towards the evils of owning luxury products, because we are all students. The assumption here is that students do not earn significantly large amounts yet, and neither do they surround themselves with people who are of a certain accomplishment or financial level.
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What do you think about the above discussion? Do they make sense to you? :-)

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