Is a $200 Nordstrom Gift Card Worth More or Less Than a $200 Gap Gift Card? The Asymmetric Valuations of Luxury Gift Cards

Gift cards account for a $200 billion market in the US, yet little is known about consumers’ preferences and valuations of different gift cards. We examine how average US consumers feel about exchanging luxury brand gift cards (LGCs) versus non-luxury brand gift cards (NLGCs). Using secondary data analyses, surveys, and experiments, we demonstrate two asymmetries: between valuations of LGCs versus NLGCs and between valuations of gift cards by givers versus recipients. We show that LGCs are valued less than NLGCs with identical price tags. LGCs are more likely to be swapped or sold. Resellers demand and buyers pay lower prices for LGCs. These effects are mediated by the perceived utility of the gift cards as gifts and moderated by a person’s role in the gifting process. Gift givers value and prefer to give LGCs more, whereas recipients prefer and value NLGCs more.     

The manifestation of luxury value dimensions in brand engagement in self-concept

This research investigates what consumers in democratized luxury markets value when purchasing luxury items. Nonetheless, these consumers have a limited budget and can not always buy luxury items, yet they are drawn back to these luxury brands. Thus, we use brand engagement in self-concept (BESC) to explain the relationship between these consumers and luxury brands within democratized luxury markets. A conceptualized model of three luxury value dimensions (experiential, symbolic, and functional) is proposed, and 488 cases were gathered through a phone survey. The data were analyzed using partial least squares structural equation modeling (PLS-SEM). The results show that the most critical drivers of consumers' luxury purchase intention (LPI) are hedonism, escapism, conspicuousness, quality, and usability in democratized luxury markets. Also, BESC can unify luxury value dimensions into an integrated whole and mediate the relationship between them and LPI.     

Celebrity endorsement in the world of luxury fashion – when controversy can be beneficial

ABSTRACT

Can a negatively publicised celebrity endorser ever lead to favourable brand attitudes toward a luxury fashion product (i.e. a perfume)? An online experiment was conducted with a sample of 260 target-relevant female consumers where two factors were manipulated: the brand’s positioning objective (image reinforcement versus revitalisation) and the type of celebrity endorser (naturally versus incidentally controversial). Consumer attitudes towards the luxury fashion brand were generally more positive when the type of celebrity endorser was consistent with the brand’s positioning strategy, that is, when a naturally controversial celebrity endorses a brand with a reinforcement strategy and when an incidentally controversial celebrity endorses a brand with a revitalisation strategy. Furthermore, this effect was mediated by consumers’ appreciation of the celebrity-positioning match-up (i.e. the consistency between the celebrity’s persona and the brand’s strategy) but not by their perceptions of appropriateness (i.e. the traditional match-up hypothesis). Several implications suggested by these findings are developed.     

Enhancing brand coolness through perceived luxury values: Insight from luxury fashion brands

Consumers of luxury brands have been described as seekers of products that can offer a signaling value to present to others but also a value for their self-concepts in an existentialist spirit potentially linked to being “cool or not.” Prior studies have conceptualized brand coolness and evaluated its impact on consumer responses to brands. However, few studies have contextualized the construct of brand coolness concerning luxury brand realism. We assessed the semiotic tension that luxury brand consumers feel between self-concept and self-presentation to others via a theoretical consideration of four antecedents of brand coolness: individual, social, financial, and functional luxury values; and one intentional outcome such as consumers' passionate desire to use luxury fashion brands. Our findings indicated that luxury values positively influence brand coolness, and brand coolness positively influences passionate desire. We further confirmed that brand coolness plays a complementary mediating role between luxury values and passionate desire. A final contribution is to invite brand managers to consider how luxury values and brand coolness might be used proactively to drive consumers' passionate desires in the relationships with luxury fashion brands.     

Embodied Product Perception: Effects of Verticality Cues in Advertising and Packaging Design on Consumer Impressions and Price Expectations

As consumers increasingly turn to luxury brands and associated benefits, brand managers face the question how to convey luxury perceptions via marketing communications such as packaging and advertising design. Inspired by theories addressing embodied cognition and symbolic meaning portrayal, this paper argues that visual cues inspiring verticality perceptions (i.e., camera angle and advertising background orientation) affect luxury perceptions and, consequently, consumer evaluations and price expectations. Across three experiments, verticality cues fostered perceptions of product luxury but differentially affected price expectations and purchase considerations depending on product type. Moreover, findings show that effects of vertical orientation are more pronounced for participants high on sociable dominance. Implications of these findings for visual brand management are discussed.     

Private Label Vendor Selection in a Supply Chain: Quality and Clientele Effects

We model a supply chain consisting of a national brand manufacturer and an independent manufacturer, both of whom are potential suppliers of store brand to a single retailer. The retailer serves two customer segments—a quality sensitive segment (high type) and a price sensitive (low type) segment. The retailer serves these two segments by targeting the national and store brands to the quality and price sensitive segments, respectively. When the national brand manufacturer supplies the store brand he internalizes the effect of store brand quality on the national brand's retail prices. This leads the national brand manufacturer to choose a lower store brand quality than the independent manufacturer. This decrease in store brand quality has the benefit of increased revenues from the high type customers along with an associated cost of decreased revenues from the low type customers. Thus, when the benefit outweighs the cost the retailer chooses the national brand manufacturer to supply the store brand. We show that the retailer will choose the national brand manufacturer to supply the store brand when (a) the size of the high type customer segment is large relative to the low type customer segment, (b) the valuations of the high type customer segment is large relative to the low type customer segment, and (c) the retailer's margin requirement on the store brand is not very high. Overall, these results suggest that retailers who serve a bigger sized quality (price) sensitive clientele would have the national brand (independent) manufacturer supply the store brand.     

An investigation on the effectiveness of hedonic versus utilitarian message appeals in luxury product communication

This research studies the role of hedonic versus utilitarian message appeals in luxury goods communication, investigating how using one or the other type of message appeal affects product perceived luxuriousness and, in turn, product attitude, and consumers' willingness to buy. This research presents three experiments in which message appeal and brand prominence have been manipulated, while perception of luxuriousness, attitude toward luxury products, willingness to buy them and consumers' conspicuous consumption orientation have been measured. Hedonic, compared with utilitarian, message appeals increase perceived luxuriousness, thereby increasing product attitude and consumers' willingness to buy the product promoted. This effect is particularly likely to occur for consumers with lower levels of conspicuous consumption orientation and for products carrying lowly prominent logos. We extend the literature on luxury communication by studying the effect of hedonic versus utilitarian message appeals on consumers' responses, and the literature on hedonism versus utilitarianism by studying this dichotomy in the context of luxury goods communication. This research suggests that different message appeals used in luxury goods communication produce different effects on consumers' responses and that this differential effectiveness is particularly likely to manifest for certain types of consumers and certain types of luxury products.     

The effects of competitive context on consumer response to price changes

ABSTRACT

This paper aims to understand how a brand’s price level, relative to its competitors, will affect consumers’ responses to price changes of the brand. The study uses experiments to examine brand choice responses to price increases and decreases across contexts differing in competitor brands and their respective prices. These experiments are conducted with six consumer goods categories. The research identifies three key factors that affect the size of responses to brand price changes – (1) passing a competitor brand’s price, (2) narrowing versus widening the price gaps with competitors, and (3) whether competitors are predominantly higher or lower priced brands.     

Purchase Behavior and Psychophysiological Responses to Different Price Levels

The aim of the study was to examine emotional processes when product prices for different brands were changed. In a within‐subjects design, the participants were presented purchase decision trials with 14 different products (seven private label and seven national brand products) whose price levels were changed while their facial electromyography (EMG) and electrodermal activity were recorded. The results suggest that low prices and national brand products induce higher positive emotions indexed with zygomatic EMG compared to high prices and private label products. Also, positive emotions are related to greater purchase intent. Naturally, a low price has also a direct positive influence on purchase intent. However, the involvement of emotions and the influence that price and brand have on elicitation of emotions may be one explanation for consumers’ varying purchase behavior. The results highlight the importance of emotional factors in pricing research and support the usefulness of psychophysiological measures in the consumer research.     

The role of intangible attributes of luxury brands for signalling status: A systematic literature review

Previously, signalling status had been primarily studied from the conspicuousness of luxury brands, including high prices and prominent designs. However, less attention has been directed toward other elements of brands that could be strategically managed in order to enable consumers signalling status. This study synthesizes the literature using a framework based on four intangible attributes of luxury brands: user profile, purchase usage, personality and values and heritage. The topics studied under each of the four intangible attributes were analysed using a systematic approach. Based on the interconnectedness of the topics studied, this review proposes that the intangible attributes used as a framework may have a synergistic interaction, in contrast with the current perspective that considers them as independently and equally relevant for consumers signalling status. It also reports the psychological function of these intangible attributes and supports the notion that consumers use luxury brands either to routinely affirm their status within a group or to enhance that status. This review contributes to the literature on luxury and signalling by considering luxury consumption as a social process. A functional perspective on the intangible attributes of luxury brands provides the basis for some insightful directions to advance this field of research.     

What women want: Creation of a luxury brand

South Korea was first introduced to luxury brands in the 1990s. Since then, a great interest in luxury products, or myungpoom, and foreign products, called waejae, has developed. Despite the strong preference for fashion products from the United States and Europe, Sang A, a brand founded by a woman born and raised in Korea, is recognized as a myungpoom in Korea. This new luxury brand is also known for its designer handbags in the United States and is quite successful in both countries. In a comparative study of Sang A and the internationally well-known luxury brand Jimmy Choo using literary research, Internet research, field research, and interviews with Sang A bag consumers, I identified several key elements of success for the two brands: niche market targeting, storytelling, a ‘hungry attitude,’ high prices but accessible discounts, thorough management of distribution channels, and image-making through star power. This article implicates that Korean consumers have complex desires that go beyond simply wanting foreign goods.     

The artification of luxury: From artisans to artists

Growth is the biggest challenge for a luxury brand in that volume dilutes the brand cachet. In addition, it violates the credo of rarity on which the luxury sector is originally based. This article reveals how the current leading luxury brands use ‘artification,’ a process of transformation of nonart into art, to circumvent the volume problem. Artification takes time and substantial investment. It cannot be undertaken by the brands alone: It requires the active collaboration of art authorities and renowned artists. The goal is to change the status of the brand, of its founder and products, and in so doing, to reinforce the idea of a better-than-ordinary brand whose price and symbolic power are undisputed. It is also strategic for the globalization of luxury: Art is universal.     

Loyalty differences in the use of internal and external reference prices

Recent findings in reference price research suggest that consumer characteristics may affect whether they use an internal reference price (IPR) or an external reference price (ERP) in price judgments. In this paper, we investigate the role of one such characteristic, brand loyalty, in the use of either type of reference price. Specifically, we employ a latent class-type approach to divide consumers on the basis of their brand loyalty into an ERP and an IRP segment. Analysis of the margarine and liquid detergents categories shows that consumers who are highly loyal to a brand are likely to use external reference prices whereas less brand-loyal consumers rely on internal reference prices. We discuss the implications of this finding and suggest directions for future research.     

The impact of retailers’ sustainability and price on consumers’ responses in different cultural contexts

Consumers want sustainability, but at what price? With growing demands for environmental and social sustainability, retailers aim to understand how consumers might react to adaptations in retail practices. This research examines consumers’ perceptions towards retailers’ environmental and social sustainability practices and the moderating effect of price in different cultural contexts. Quantitative research methodology using scenario-based experiments was employed. Two experiments were conducted using research participants from the US (a more individualist country) and Turkey (a more collectivist country) and measured one dimension of culture, individualism versus collectivism. The results reveal that high prices negatively moderate consumers’ response to retailers’ sustainability efforts. Even though there is no significant interaction between either type of sustainability and price on purchase intention, high sustainability along with a low-price strategy leads to an increase in consumers’ commitment, satisfaction, and loyalty. Furthermore, the results demonstrate that high prices have a more negative effect on consumers’ responses in a collectivist country. This study highlights the importance of price in both individualist and collectivist cultures and provides a better understanding of a neglected dimension of sustainability, social sustainability. Managers need to be aware of the increasing demand from consumers for environmentally and socially sustainable practices but need to recognize that consumers may not be willing to pay more for these products. Companies need to formulate business strategies based on low priced-sustainable products and the cultural context of the country in which they operate.     

Power moderates the impact of desire for exclusivity on luxury experiential consumption

This research examines the effect of desire for exclusivity on evaluations of luxury experiences and proposes a boundary condition for the effect. The scarcity effect literature suggests that consumers prefer scarce products due to limited supply because they appeal to consumers’ desire for exclusive consumption. Building on this thesis, the current research argues that luxury experiences are intrinsically scarce enough to appeal to consumers’ desire for exclusivity: Consumers with a strong desire for exclusivity will evaluate luxury experiences more favorably than those with a weak desire for exclusivity. A pilot study confirms a positive correlation between consumers’ desire for exclusivity and attitudes toward luxury experiences. Study 1 demonstrates that consumers with a strong desire for exclusivity show more favorable attitudes toward luxury experiences than those with a weak desire for exclusivity. Further, Study 2 finds that consumers’ power state (powerful vs. powerless) moderates the effect of desire for exclusivity on their affinity for luxury experiences: Only when feeling powerful do consumers with a strong desire for exclusivity evaluate luxury experience more favorably than those with a weak desire for exclusivity. However, this is not the case when consumers feel powerless.     

How Do Price Perceptions of Different Brand Types Affect Shopping Value and Store Loyalty?

This research investigates the relationships among price perceptions for different brand types (national brands, standard store brands, regional store brands, organic store brands), shopping value dimensions (quality, price, social, and emotion value), and store loyalty (retention and word of mouth (WOM)). A comprehensive model depicts determinants of customer store loyalty. Using structural equation modeling, the model test includes 671 consumers intercepted during shopping trips. The data analysis yields several surprising results. In particular, low product price perceptions do not necessarily signal negative store quality evaluations. Shopping value dimensions influence store retention loyalty and WOM behavior differently. Furthermore, different brand types exert distinct effects on the value creation process. Favorable prices for national and standard store brands have comparable positive effects on store price value and emotional value creation; appealing prices of regional store brands instead reduce the emotional value of the store, and low prices for organic store brand products significantly increase social value creation.     

The picture of luxury: A comprehensive examination of college student consumers' relationship with luxury brands

This study examines college student consumers' relationship with luxury brands through two studies. Study 1 analyzes collages to determine what represents luxury to them, how consumers perceive their relationships with luxury, and who they are as luxury consumers. Study 2 analyzes qualitative interviews to validate the findings of Study 1 and to add further insights. Results of Study 1 suggest that college student consumers represent a vibrant segment in the luxury market. These consumers perceive a wide variety of products and brands as meeting their luxury needs. They are currently interested in luxury and their potential will only increase as their incomes do. Results of Study 2 confirms their views of luxury and emphasizes the critical roles social media, peers, and family play in influencing college student consumers' luxury consumption and provide insights for how to build an emotional bond with them. Luxury marketers can build brand relationships with college student consumers by offering them entry-level products as they are current luxury consumers and see their consumption expanding in the future. Given that college student consumers are both vulnerable and savvy in recognizing when they are being manipulated, caution needs to be taken in approaching this segment in relationship-building efforts.     

Consumption situations and the effects of brand image on consumers' brand evaluations

This research examines the role consumption situations play in determining the effects of brand image on consumers' brand evaluations. Results from the first experiment suggest that when consumption situations are experimentally manipulated for the same brand, conspicuousness does not significantly moderate the relative effects of actual and ideal congruence on brand evaluations. Further, marketers can manage the effects of image congruence (between brand image and self-image) by promoting varying consumption situations. Results from the second experiment demonstrate how a dynamic concept of situational ideal self-image (the image consumers perceive as being ideal to project in a particular situation) is a better predictor of brand attitudes than are static concepts of self-image such as actual and ideal self-image. Developing effective brand images must be coupled with a consideration of the potential situations in which the product is to be consumed. © 1997 John Wiley & Sons, Inc.     

When pride meets envy: Is social superiority portrayal in luxury advertising perceived as prestige or arrogance?

This paper draws on the theoretical underpinnings of envy and pride in examining the effectiveness of social superiority portrayal in luxury advertising. Across two studies, benign (malicious) envy led consumers to perceive social superiority portrayal as an expression of authentic (hubristic) pride and, in turn, increased (reduced) luxury perception and positive brand attitude. These findings were replicated for both dispositional (Study 1 and 2) and state feeling of envy (Study 2), regardless of whether envy was self‐reported or manipulated. These findings were found to be consistent in a comparison between luxury and premium brands. Taken together, this paper is the first to examine: (a) consumer responses toward social superiority portrayal in luxury advertising, (b) the interactive effect of envy and pride perceptions on luxury perception and brand attitude, and (c) the effectiveness of using social superiority portrayal as an advertising strategy for luxury and premium brands.