L U X U R Y F O R T H E M A S S E S B U T W H A T H A P P e N S T o T H e B R A N D ?

StockholmSchoolofEconomics MasterThesis10pConsumermarketing Spring2010
LUXURY FOR THE MASSES
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w h a t
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b r a n d ?
Onceuponatimeluxurywasthemostbeautifulwaresimaginablethatmoneycouldbuy,created byextremelyskilledartisansinsmallfamilyownedbusinessesforsocietystrueelite.Luxurywas not simply a product, but contained a history of tradition, superior quality and an extraordinary buyingexperience.Buttheluxurymarkethaschanged.Luxurygoodsarecurrentlypurchasedbya mass group of consumers globally and luxury brands have increased their production capacities andextendedtheirrangestowelcomethismassconsumerbase.Theobjectiveofthisstudyisto explainwhathappenstothebrandimageofluxurybrandswhentheyintroducemasstigeproducts tothemarket.Bytheuseoftheoryfromluxurybrandmanagement,marketingtheoryintermsof brandextensions,andtheoriesoffashion,andthroughaquantitativestudy,wehaveshowedthat brandimageofaluxurybrandwillbedilutedasaresultofmasstige.
Keywords:masstige,luxuryconsumption,brandextensions,referencegroups.

Authors:SophieHedenmark&SophiaWesterling Advisor:Prof.MagnusSderlund Opponents:SusannaGransson&JennyWalln Presentation:
June11 2010 SSERoomC606
th
Examinator:SaraRosengren
Luxury For the Masses
HEDENMARK & WESTERLING
TABLEOFCONTENT
1.INTRODUCTION...................................................................................................................................................2 1.1Background..................................................................................................................................................3 1.2ProblemArea...............................................................................................................................................8 1.3Purpose........................................................................................................................................................9 1.4Delimitations................................................................................................................................................9 1.5DefinitionofTerm......................................................................................................................................10 1.6PreviousResearchandExpectedContribution..........................................................................................11 2.THEORETICALFRAMEWORK.............................................................................................................................13 2.1TheLuxuryConcept....................................................................................................................................13 2.2BrandExtensions........................................................................................................................................15 2.3TheLuxuryConsumer................................................................................................................................19 2.3.1PersonalandInterpersonalFactors...................................................................................................19 2.3.2ReferenceGroups.............................................................................................................................22 3.METHODOLOGY................................................................................................................................................24 3.1ChoiceofSubjectandStudyDesign...........................................................................................................24 3.2StudyApproach..........................................................................................................................................24 3.3ConstructofSurvey....................................................................................................................................25 3.4Prestudies.................................................................................................................................................26 3.4.1ClassificationofReferenceGroups ...................................................................................................27 . 3.4.2PretestSurvey..................................................................................................................................27 3.4SampleofRespondents.............................................................................................................................27 3.5AnalyticalTool............................................................................................................................................28 3.6ResearchQuality........................................................................................................................................28 4.ANALYSISANDRESULTS....................................................................................................................................30 4.1.TheLuxuryConcept...................................................................................................................................30 4.2BrandExtensions........................................................................................................................................31 4.3TheLuxuryConsumer................................................................................................................................36 4.3.1PersonalandInterpersonalFactors...................................................................................................36 4.3.2ReferenceGroups..............................................................................................................................41 5.CONCLUSION&DISCUSSION............................................................................................................................43 5.1Conclusion..................................................................................................................................................43 5.2Critique ......................................................................................................................................................44 . 5.3Implications................................................................................................................................................45 5.4FurtherResearch........................................................................................................................................46 5.5FinalDiscussion..........................................................................................................................................46 6.REFERENCES......................................................................................................................................................47 7.APPENDICES......................................................................................................................................................51 7.1Appendix1:Questionnaire........................................................................................................................51 7.2Appendix2:SampleofRespondents.........................................................................................................62
1.INTRODUCTION
Forthemajorityofpeople,theworldinhabitedbythesuperrichisextremelydistantfromtheirdaily lives,andyet,everyyearluxurybrandsspendmillionsonmarketingtryingtoconvinceotherwise.Since theturnofthelastcentury,whencouturierswhomadewidelyexpensivedressesforanarrowmarketof wealthy women, luxury brands began to diversify into other market segments in order to boost their incomes.ChanelNo5wascreatedin1921andotherluxurybrandsadoptedthesameperfumestrategy; theseprettyglassbottleswereprismsthroughwhicheverydayconsumerscouldglimpsealifeofluxury. Otheraccessoriesfollowed.Inthe1950s,Diorhadlicensesforarangeofaffordableproducts:handbags, gloves, scarves, hats, lingerie, and even eyeglasses, all giving the wearer a little piece of the luxury universe(Thomas2007). At the beginning of the 21st century, when established luxury brands fell into the hands of giant corporations with profithungry shareholders, this courtship of the mass market accelerated and intensified. Sunglasses, scarves, sneakers, belts and billfolds: lowerpriced items put luxury tantalizing withineverybodysreach.Almostanyonecouldenteraluxurystoreandpurchasearelativelyaffordable item(saya200euromonogrammedpassportcover)andenterthedreamworldofluxury.Thecrystal encrustedtentaclesofluxurydescendedtocaressthemasses,andtheygraspedthem(Danziger2005). Thisdevelopmentchangedtheluxuryindustry.Whilstofcourseluxuryhaschangedlittleinanabstract sense,theworldisnow(mis)appliedtoallmannerofproducts.Thetermmasstigehasbeencoinedto describe a place where mass and prestige meet, which is a development that has fundamentally changedtheindustry(Silverstein&Fiske2008).Almostallluxurybrandsnowhaveproductsthatstartat low price points,whetheritisapairofsocksfromPoloRalphLauren,aTiffany keyring,orevena1 series BMW. This is both to secure aspirations sales and to lead customers into highticket items (Okonkwo2007). Marketingluxurygoodsisaparadox.Managerswantacertainlevelofdiffusionfortheirbrandinorder to achieve success in themarketplace; yet, if theirbrand is over diffused, it loses its luxury character (Dubois & Paternault 1995). One of the biggest challenges facing a luxury brand today is therefore devisingastrategythatcancopewiththeextremesofthemodernluxurymarketplace,withaproduct rangethatmayextendfrom20eurosocksto20000eurocouturepiecesandwhichmaybesellingboth toaBrooklynsecretaryandtoaParkAvenuePrincess(Tungate2008).Thisfundamentalmarketchange isthetakeoffofourthesis.
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1.1Background
TheHistoryofLuxury Sincethedawnofhumanitytherehasbeenluxury.Therehavebeenorganizedsocieties,leadinggroups and objects, symbols and lifestyles specific to these leading groups. Ancient Egypt was a highly hierarchical society with extremely sophisticated codes and rules for living. This splendour was expressed by all means available and spurred the invention of exclusive products such as perfume (Kapferer & Bastien 2009). Imperial Rome is a further example of an ancient society known for its indulgence andluxury, intermsofanexcessofimportedgoodssuchasgold,ivoryandspicesforthe elites (Dalby2000). In fact, luxury has existed and exists in most cultures in which some people have superfluouswealth(Kapferer&Bastien2009). Originally,luxurywasthevisibleresultofasocialstratificationwhicheveryonehadtorespect,sincethe socialstructurewasthoughttobecreatedbyagod.Theluxuriesofsocietywere,hence,onlyreserved foraselectedfew.ItwasnotuntiltheIndustrialRevolutioninthe18thcenturythatluxuriesstartedto becomeaffordabletoabroaderpublic.Itgeneratedlowerproductioncostsandbroughtaconsiderable riseinlivingstandards.Byconsequence,anincreasingnumberofindividualssuddenlyhadthefinancial meanstoaffordsomeluxuries.Fromthe20thcentury,theworldofluxurygraduallyceasedtobeaworld apart.Agrowingsliceofthe populationbegantohave access toit.Thisispartly relatedtoeconomic progress,butalsotothegeneraldemocratization(Kapferer&Bastien2009). Inademocraticsocietywheredifferentclassesarenolongerobligedtodressinacertainmanner,luxury hastakenanewrole,thatofsocialstratification.Intodaysdemocraticsocietyallpeopleareconsidered equals and are free to use any of luxurys components to define themselves socially as they wish. However, humankind still needs some form of social stratification to avoid social chaos, which has becomethefunctionofluxurytoday.Accordingtotheirdreamsandwishesandwithintheirfinancial means,peoplecannowuseanysymbolsandhencerecreatetheirstrata(Kapferer&Bastien2009). NewLuxuryandItsActors ItwasduringthereignoftheBourbonsandtheBonapartesinFrancethatluxuryasweknowittoday wasborn.Manyoftodaysluxurybrands,suchasLouisVuitton,HermsandCartier,werefoundedin the eighteenth and nineteenth centuries by skilled artisans in small family businesses. Demographic changes during the 1980s and 1990s such as later marriages, female executives and rising disposable incomemadefinanciersrealise the potentialofthese smallfamilybusinesses.Theyboughttheluxury companies from elderly founders or their heirs, turned these houses into brands, and created giant conglomeratesthathousedanumberofluxurybrandsunderthesameroof(Thomas2007).
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Thischangeininvestmentandownershipstructurehasresultedinemphasisonreturnoninvestment andincreaseinshareholdervalue.Todeliverprofitsandachieveprofitabilityfinanciersandexecutives settheirsightsonanewtarget:thegrowingwealthymiddleclasswithahigherdisposableincomethan the middle class of the previous centuries. The result is that luxury goods are now available to an increased number of consumers, which is generally referred to as the democratization of luxury (Okonkwo2007). Torealizethisdemocratization,thebrandsweremercilesslyhyped.Thebrandshistoricallegacyandthe tradition of handcraftsmanship were communicated in expensive advertising campaigns to create a legitimateluxuryimage.Furthermore,designerswereencouragedtostageextravagantfashionshowsto make headlines andaddtotheluxury image.Another strategywas todress celebrities inthebrands products, not only for special occasions such as the Oscars, but also for everyday life, so that a photographer would catch the celebrity wearing the product, hence adding to the luxury aura of the brand. Then fashionable lowerpriced accessories that almost anyone could afford were introduced, makingtheproductsmoreaccessibleeconomically(Thomas2007). The democratization of luxury has generated a large global industry with sales of approximately 190 billioneuros.Themajorsectorsarereadytowear,accessories,perfume andcosmetics,jewelleryand watches,spiritsandchampagne(Chevalier&Mazzalovo2008).Fashionandleathergoodsaccountfor thelargestpartoftheindustry,followedbyperfumesandcosmetics(Tungate2008). In the luxury business, people generally speak of the Big Three corporations: LVMH, Richemont and PPRGucci.LVMHisthelargestoperatoronthemarketandhasnearlyonethirdofitsbusinessinthe fashion and accessories division. The group has many brands including Louis Vuitton, Donna Karan, Fendi and Marc Jacobs in the fashion and accessories division and Krg, Dom Prignon, Mot and ChandonandVeuve Cliquot inthewinesandspiritssector (Chevalier& Mazzalovo2008). In2009,its saleswere17.1billioneuros(Deeny100420). The Compagnie Financire Richemont is mainly active within the watches and jewellery sector with brandsincludingCartier,VanCleef&Arpels,MontblancandPiaget.Thejewelleryhousesrepresent30% oftotalsalesthatwere5.2billioneurosin2009(BusinessReport100528). PPRGucciwascreatedin1999bythepurchaseofaminorityinterestinGucciandthepurchaseofthe YSL beauty and fashion groups. Since then the group has purchased Bottega Veneta, Boucheron and Balenciagaamongothers.IthasalsodevelopedthebrandsStellaMcCartneyandAlexanderMcQueen from scratch (Chevalier & Mazzalovo 2008). In 2009, sales of the group were 3.4 billion euros (PPR GroupPressRelease100115).
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TheLuxuryPyramid The luxury brand needs to be exclusive to maintain brand image, but growth is only possible by becoming less exclusive. The typical business model that enables luxury brands to cope with this dilemmaisthepyramidmodel(Figure1).
Figure1:Thepyramidbusinessmodel(Kapferer&Bastien2009:251)
TheArtofFashionHauteCouture Theluxuryfashionindustrywasestablishedinthebeginningofthe20thcenturybytheFrenchhaute couturewithitsfocusonartandaesthetics.AslongasFrenchcouturewassellingbriskly,therewaslittle incentivetoindustrializetheFrenchclothingtradeforthemassmarket(Agins2000).Butin1966,Yves SaintLaurentintroducedalowerpricedreadytowearlinecalledRiveGauchethattargetedyoung people.Thepremadegarmentswereavailabletobuydirectlyintheshopsinoppositiontothetailor madecouture(Pagold1999). Whileprtporterhasbecomeincreasinglycommercial,thecreatorsstillwishtomaintainashredof credibilitybyhighlightingtheconnectionwithhautecoutureasanartform.Hautecoutureisfashions laboratory, encouraging experimentation and generating ideas that may, one day, change the way peopledress;thislinkispresentintheconsumersmindwhentheybuyprtporter(Tungate2008). This may explain Giorgio Armanis decision in 2005 to begin showing haute couture for the first time (Okonkwo2007). Hautecouturecanbeconsideredafantastictooltodemonstratetheprestigeofafashionhouseandits brand. Its impact on all the other lines, such as clothes, accessories, and cosmetics is enormous. The hautecouturewithitspreciousmaterialsandhandicraftisofcourseverycostly,buttheintentionisnot tocover thecost through haute couturesales.The main reason for the existence of haute couture is simplytoenhancetheluxuryimageofthebrand,whichshouldtransfertothebrandsotherproducts (Agins2000).
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SmallHandMadeSeriesandUpperRange Armani is a classic example of strictly following the pyramid model in its apparel business. Its many complete lines have been clearly organized in descending order from Georgio Armani and Armani Collezione (small handmade series) to Emporio Armani and Armani Jeans (upper range). These lines correspondtoacertainlevelofprice andtargetaswellasthedegreeofexclusivityoftheboutiques. However,unlikeotherhouses,whostartedoffwithhautecouture,ArmanissummitArmaniPriv did not appear until 2005, when Georgio Armani identified the void at the summit as a threat to his longtermbusiness(Kapferer&Bastien2009).
Licenses Licensing is not a new or even recent phenomenon. As the French couturiers created prtaporter collections for boutiques, they discovered that the easiest way to offset their mounting losses on couture was to sign up licenses, which provided reliable money and a lifeline for their business. The fatheroffashionlicensingwasChristianDior,whoin1948signedupwithPrestige,aNewYorkhosiery company,therebyallowingthemtoproduceandsellChristianDiornylonstockings.Diorsawlicensingas a way to extend the luxury brand business to a wider audience without taking on the cost or management responsibilities. Dior rejected an initial offer of a flat licensing fee and held out for a revenuestream,aslidingroyaltybasedonapercentageofsales,whichbecametheindustrystandard for such contracts. By 1951, Dior had licenses for handbags, gloves, scarves, hats, lingerie, and even eyeglasses(Thomas2007).
Soon licensing was the hottest business move in the luxury fashion business. Couturiers such as Yves SaintLaurentandPierreCardinlicensedtheirnamesinexchangeforroyaltyrevenuestreams.Gucciis another classic example of overlicensing; in the 1970s, the brands distinctive interlocking doubleG logocouldbeseeneverywhere,oneverythingfromkeyringsandTshirtstobottlesofwhiskey.Because of family disputes, the enterprise had split into a number of separate fiefdoms, each managed by a Guccifamilymember.Licensesweresignedwithoutlogicalstrategyandoverthenextdecadethebrand lostdirectionandprestige.Bythelate1980s,morethantwentytwothousandproducts,fromcigarette holderstoscotch,carriedtheGucciname(Thomas2007).
LicensingwasindeedanopiatethatgreatlyenrichedtheFrenchhouseswhilehandicappingthemforthe longrun.Byhandingovertheirtrademarksandnuancesofmassproduction,internationalretailing,and marketing,thehouseslostcontroloftheirvaluablebrand.Thelicensingboomsaturatedtheworldwith designer merchandise that hardly lived up to its prestigious labels polyester scarves and handbags stampedwithbrassylogos.Thelicensingbubblefinallyburstwiththegeneralexceptionoffragrances; since designer houses do not have the budget or expertise to create, manufacture, distribute and market perfumes it is still performed under license. With no more easy money from licensing, the
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couturehouseswerehardpressedtofindanewwaytoachievegrowthandfinancethesummitofthe brand(Agins2000).
Masstige Masstigeisbestdescribedasahybridofprestigiousnamesataccessiblepricesandistheresultofthe democratizationofluxurythatenables growthofluxury brands.Italsoensuresprofitability,since the margin by percentage and volume is made on these products (Kapferer & Bastien 2009). As a result, product portfolios of luxury brands have been modified; several products that were considered exclusive, rare and luxurious have been diffused to include lowerpriced versions. Furthermore, luxurybrandshaveextendedtheirproductrangestoincludelowerpriceditems,suchascosmeticsand accessories(Okonkwo2007). Handbagsareexamplesofaccessoriesthatareoftenusedasmasstigeproducts.Oncecostingasmuch as,ifnotmorethan,readytowear,luxuryhandbagsnowcomeinawiderangeofmaterials,fromnylon to crocodile, and an abundant number of styles at prices as low as 300 euros. Since everyone can affordaluxuryhandbag,theseproductsaretypicalmasstigeproductswhichthecompaniesareusingto makethebrandaccessibletothemassmarket(Thomas2007). Handbags are brilliant masstige products. They are visible on the body, which gives the wearer the chancetodisplaythebrandandpubliclydeclareherstatusorheraspiration.Furthermore,theyarethe easiest luxury fashion item to sell because they do not require sizing or trying on. Also, they are not difficulttocreateandproduceandtheprofitmarginisastounding.Formostluxurybrandstheprofitis between ten and twelve times the cost to make the item. At Louis Vuitton, it is as much as thirteen times and the bags are never marked down. As a result, luxury companies with support from fashion magazines, have created the phenomenon of the handbag of the season, the must have around the worldcommonlyreferredtoastheitbagoftheseason(Thomas2007:168). TheLuxuryGalaxy Anotherwayforluxurybrandstoachievegrowthisbymovingoutoftheiroriginalsphereandextending theirreputationtoothersectors(Kapferer&Bastien2009).Thisis,however,notanewphenomenon; thefirstexampleofafashionbrandextendingintoanentirelynewsectorwasasearlyas1921,when CocoChanelcreateditssignaturefragranceChanelNo.5(Okonkwo2007).Infact,theluxurymarketis made up of brands that have, for the most part, grown through moving out of their original sphere (Kapferer&Bastien2009).
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The most obvious examples of brands that have moved into new product categories are Armani and Ralph Lauren. They have diversified into a large number of product categories, creating a coherent branded environment, hence allowing the consumer to create a whole lifestyle based on the brand (Tungate2008).Thisisreferredtointheliteratureasthegalaxymodel(Figure2).
Figure2:Galaxymodel(Kapferer&Bastien2009:141)
In the Armani complex in Milan, visitors can stroll through the entire range of Armani, from suits to jeans,whilepausingatacaf,abookshop,anexhibitionspaceortherestaurantNobu.Thethreeflooor Armanispaceistheperfectillustrationofafamiliaringredientinluxuryfashion:thebrandextension.In thissinglestore,customerscansamplealmosteverydeclinationoftheArmanibrand:EmporioArmani (upper range young fashion); Armani Casa (furniture), Armani Profumi (fragrances), Armani Dolce (chocolates),andevenArmaniFiori(flowers)(ArmaniWebPage).AnotherexampleisRalphLaurenwho hasputhisnameonapparelformen,women,andchildren,sheets,towels,furniture,cosmetics,china, crystal,andevendesignerpaintandwallpaper(Agins2000).
1.2ProblemArea
Once upon atime luxurywas the most beautiful wares imaginable thatmoney could buy, createdby extremely skilled artisans in small familyowned businesses for societys true elite. Luxury was not simply a product, but contained a history of tradition, superior quality and an extraordinary buying experience (Thomas 2007). The luxury market has changed, however. Luxury goods are currently purchased by a mass group of consumers globally and luxury brands have increased their production capacitiesandextendedtheirrangestowelcomethismassconsumerbase(Okonkwo2007). Withsuchafundamentalmarketchangethereisneedforacademicresearchexplainingwhathappens to brand image when traditional luxury attributes such as rarity, exclusivity, quality and price are no longerapplicabletotheluxurymarket.Thepricepremiumthatconsumershavebeenwillingtopayfor luxury products are based on the image of luxury as a representative of attributes such as superior quality and innovative but timeless design. With such a dependence on brand image, it is of great academic and managerial interest to research what happens to brand image when these attributes
change.Canluxurybrandsmaintainitsimagebyhopingthattheauraoftherealluxuryproductsatthe summitofthepyramidwilltransfertothemasstigeproductsorwillluxurybrandimagebediluted? Fundamentaltounderstandingtheeffectsofthemasstigephenomenonistounderstandtheconceptof luxury.Iftraditionalattributesofluxuryarerepresentativeofconsumersluxurybrandimage,departing from these attributes should have a negative effect on brand image. If modern luxury consumers, however,attachothermeaningstotheluxuryconcept,theeffectsonbrandimagemightnotbesevere. Thisthesisthereforeattemptstocontributewithincreasedunderstandingoftheluxuryconceptaswell asresearchwhateffectsthemasstigephenomenonhasonbrandimage.
1.3Purpose
The purpose of our thesis is to explain what happens to brand image when luxury brands introduce masstige products that do not include the aspects that is traditionally referred to as constituents of luxury.Inordertoachievethispurpose,thepartialpurposeofourthesisistoidentifywhatfactorsluxury consumersattachtotheluxuryconcept.
1.4Delimitations
Because of the limited scope of the thesis we have made certain delimitations. We have chosen to concentrate solely on apparel (clothes and accessories) and not bring other product classes into our research. The major reason is that apparel has the highest visibility and hence makes it ideal in the research of the masstige phenomenon, since the most commonly acknowledged motive for luxury consumptionissymbolicasawaytosignalstatus(Wiedmannetal2007). Furthermore,wehaverestrictedourselvestoinvestigatethemasstigephenomenonandnotbringother examples of democratization of luxury into the thesis. Apart from masstige there have been several developments in the luxury market that have given rise to increased availability and access to luxury goodsforthemassmarket.Invintageshopsorinvirtualmarketplacessuchasebay,consumerscanbuy worn luxury goods to a fraction of the original price. Also, companies such as rentabag.com have profitedonmiddlemarketconsumersdesiretoownaluxuryhandbag.Luxurybrandsthemselveshave also taken advantage of this desire by opening outlet shops where last seasons clothes can be purchasedatpricesaffordableforthemasses(Okonkwo2007). Cultural aspects are another factor that we have chosen to leave out of the analysis. According to Hofstede(2001),culturaldifferencesoftencausedifferencesinconsumerbehaviourwithinandacross
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national borders. Kapferer and Bastien (2009) mention that Japanese luxury is a luxury of social integration and that rarity could destroy a brands value, which should not be the case in Western countries were the culture is different. Hence, we expect consumers from very different cultures to react differently to the masstige phenomenon, but since the scope of the thesis is limited, we have chosentoleaveculturalfactorsoutoftheanalysis.
1.5DefinitionofTerms
LuxuryBrands The origin of the word luxury is derived from the Latin word luxus, which means indulgence of the senses,regardlessofcost(Nueno&Quelch1998).Theconceptofluxuryis,however,complex,asitis subjective and multidimensional (Wiedman et al 2007) and primarily built on consumer perceptions (Stegemann2006).Hence,definingwhatconstitutesaluxurybrandbecomesdifficult. Economistsandmarketingconsultantsgenerallydefineluxurybrandsasthosewhosepriceandquality ratios are the highestof the market (Stegemann2006).This definition does, however, not take other factors than price into consideration, which is problematic, since certain premium mass consumption brandsaretodaymoreexpensivethantheequivalentluxuryproduct(Kapferer&Bastien2009). Luxurybrandssharecertainfunctionalcharacteristicssuchasdeliveringpremiumqualityandhavinga heritage of craftsmanship (Nueno & Quelch 1998), but the main factor for distinguishing luxury from nonluxuryproductsisthatluxurygoodsenableconsumerstosatisfypsychologicalneeds(Arghavan& Zaichkowsky2000).Thesimpleuseordisplayofaparticularproductmightbringesteemfortheowner (Wiedmannetal2007)asaresultoflimitedproductionthatensuresexclusivity(Nueno&Quelch1998). Another example of the psychological aspect is luxury as an access to pleasure (Kapferer & Bastien 2009). Totakeboththefunctionalandthepsychologicalbenefitsoftheconsumptionofluxuryintoaccountwe have chosen the definition of Vigneron & Johnson (1999) as the highest level of prestigious brands encompassing several physical and psychological values (1999:2). With this definition we exclude premium versions of mainstream brands, but include limited awareness brands that deliver a narrow productlineforanichemarket.
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Masstige Onehousemaysellluxuryproducts,upperrangeandmassproducts.Whenacompanythatsellsluxury products start selling products for a mass market we identify it as masstige. As previously stated, masstigeproductscanbedefinedasproductsofluxurybrandsataccessibleprices(Kapferer&Bastien 2009). Thedemocratizationofluxurycapitalizesonthedesireforthevisiblelogoasamajorelementofsocial valorisation.Thelogoofthebrandispresentonthemasstigeproductstoamuchhigherextentthanon the masterpieces to achieve instant recognisability. Furthermore, it is generally the accessories that exhibitthebrandasmasstigeproducts(Kapferer&Bastien2009).Wehave,however,chosentoleave thosetwoelementsoutofourdefinition,becauseofthemethodologicaldifficultyoffindingoutwhat qualitieswereinherentintheconsumersproduct,andfocussolelyonprice.
1.6PreviousResearchandExpectedcontribution
Previousresearchontheluxurymarketislimited.However,theresearchthathasbeenperformedhas mainly been based on predictors and motives for luxury consumption. Early research is centred on purchasing power of consumers as a predictor of luxury consumption. In 1993, however, Dubois and Duquesne found that not only income, but also a positive attitude towards cultural change explains luxuryconsumption. Morerecentresearchhasbeenconcernedwiththesymbolicaspect,suchasconspicuousconsumption, as a motive for luxury consumption (for example Eastman et al 1999, Amaldoss & Jain 2005 and Chaudhuri & Majumdar 2006). The basis of this research is all but recent, though, since the research generally is based on theories that previously have been used in studies of fashion, such as Veblen (1899),Barthes(1990[1967];2006)andSimmel(2008[1908]).Theinterpersonalmotiveshavelaterbeen completed by personal motives, such as hedonism, in research by Vigneron and Johnson (1999) and Wiedmannetal(2007). In the context of luxury, many authors such as Nueno and Quelch (1998), Chevalier and Mazzalovo (2008)andKapfererandBastien(2009),haveproposeddifferentframeworkstoexplaintheconcept.It is, however, necessary to test these factors to grasp the essence and importance of the different featuresofluxury.
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Brandextensionshavebeenwidelyresearched;focushas,however,beenonhorizontalextensions(for example Aaker & Keller 1990, Aaker 1990 and Tauber 1988). When it comes to vertical extensions, research is more limited, but examples are Aaker (1997), Lei et al (2008), Randall et al (1998) and Kirmani et al (1999). Primarily, researchers have been concerned with the success of the extension (Randalletal1998),whereaslessattentionhasbeendirectedtowardsthepotentialnegativefeedback effectsontheparentbrandthatanextensioncanbringtotheparentbrand(Martinez&deChernatony 2004). Despiteitswideoccurrence,theresearchondownwardsverticalextensionisverylimited.Stegemann (2006)hasaddressedtheimpactofbrandextensionsonthebrandequityofluxurybrands.Incontrast, ourthesiswillfocusononespecifictypeofbrandextension,thatofverticalextensiondowntomasstige. And unlike Stegemann, we will research the effect only on image, not on brand equity as a whole. Furthermore,whenluxurybrandsinviteanewclientele,itisnecessarytoconsiderwhatthetraditional buyersofluxurythinkabouttheirnouveaucoconsumers,sinceanegativeresponsefromthetraditional luxury consumers can result in dilution of brand image (Kapferer & Bastien 2009). By using not only marketing theory on brand extensions but also theory on fashion and symbolic consumption, we will achieveadeeperunderstandingofthephenomenon. The combination of luxury and mass market brands under the same corporate umbrella in the automobile market have been studied by Strach and Everett (2006), who found that consumer perceptions of luxury brands are influenced by the degree of commonality with the associated mass market brands, which poses a threat of brand corrosion for the luxury brand. We will add to this researchbystudyingasituationwhentheluxurybrandandthemassmarketbrandareproducedunder thesamebrand,aswellasresearchanotherindustrytoseeifthethreatofbrandcorrosionexistsona moregenerallevelthantheautomobileindustry. Since there is an obvious research hole in the literature, our thesis will contribute to research on an academiclevel.Furthermore,thereisageneralacceptanceintheluxuryindustryofgrowthaccordingto thepyramidmodel(Kapferer&Bastien2009),withoutresearchonhowthemasstigelevelmightaffect theparentbrandimage.Hence,itisofgreatmanagerialinteresttofindtheeffectsofmasstigeonthe parentbrand.
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2.THEORETICALFRAMEWORK
2.1TheLuxuryConcept
Today, the luxury word is everywhere; we do not only speak of luxury anymore, but of accessible luxury,newluxuryetc.Thewordhasbecomecommonplaceandprogressivelyemptiedofmeaning. There is,however,literaturethatdescribes thedifferentfacets ofluxury.Ahighpriceandqualityare commonassociations,butpriceandqualityontheirowndonotmakesomethingaluxury(Kapferer& Bastien 2009). The luxury construct is subjective and multidimensional and requires an integrative understanding(Nueno&Quelch1998).Theliteraturedescribesthefollowingaspectsasdifferentfacets ofluxury.
HighQuality Theluxuryliteraturemakesacleardistinctionbetweenluxuryandpremium.Premiumbrandsdesireto bechosenfortheirexcellenceandtheirpricemustbejustifiablebyitsutilitycurve.Luxurybrands,on theotherhand,gobeyondfunctionalityandcarrymythsandgivebirthtodreams(Kapferer&Bastien 2009).AccordingtoNuenoandQuelch(1998),alltheproductsinalinemustconsistentlydeliverhigh quality,fromthemosttotheleastexpensive.However,inadditiontoquality,whichyouhavearightto expectfromapremiumbrand,youwouldwantsomethingextrafromaluxurybrand(Kapferer&Bastien 2009).
Design There is an idea that the function of luxury is the aestheticization of society. Luxury does of course include a strong aesthetic aspect, hence its close connection with art. Today, any house that likes to think of itself as luxury has its own Modern Art foundation (Kapferer & Bastien 2009). Furthermore, beinguptodateandtrendsettingarecentraltobeconsideredluxury;theabilitytotimedesignshiftsis seenasparticularlyimportantwhendealingwithafashionintensivecategory.Designsmustalsoreflect thepersonalityofitscreator(Nueno&Quelch1998).
HighPrice Therelationshipbetweenluxuryandmoneyisobvious,butpriceonitsowndoesnotmakesomethinga luxury.Aproductthatismoreexpensivecanoftenturnintoaproductthatistooexpensive,onethat nobody wants, rather than a luxury product that people desire. Being expensive is not enough to be luxury, but it is a prerequisite. This is referred to as the threshold effect: below a certain price, the productisnolongerconsideredaluxuryproduct(Kapferer&Bastien2009).
Lineage According to Kapferer and Bastien (2009), there can be no luxury brand without roots. History gives depth,heritageandcontinuitytoabrand;themostdynamicbrandshave,amongotherthings,atrue, authentic, historical element. History provides the brand with a noncommercial aspect, enables
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mythologizationandisthesourceofabrandssocialidealization. History and tradition do not mean imprisonment in the past, but provides the brand with a dose of heritage and inherited values that can generate timelessness, which is a highly desirable element in luxury.Lineageandbeingplacedinthecontextoftraditionareimportant,buthistoryandtraditiononly havevaluethroughrelevancetoday.Oneofthemostsignificantparadoxesofluxuryisactuallythatit mustmaintainbothtimelessnessandtrendinessatthesametime(Kapferer&Bastien2009).
Handicraft Some part of a luxury object should be handmade, which is what makes it stand out from factory producedseries(Kapferer&Bastien2009).Thishandiworkshowsattentiontodetailandaddsastrong impression of uniqueness and preciousness (Nueno & Quelch 1998). Furthermore, it adds human content,whichgivessoultotheobject(Kapferer&Bastien2009).
Rarity Rarityisacentralcomponentofluxury.Realluxuryspeaksofraritywhenitcomestoingredients,know how,thebrandanditsvalues.Theextremeexampleisthesinglepiecefortheultrarich,suchashaute couturedressesandpaintingsofthegreatmasters(Kapferer&Bastien2009).
Exclusivity Thefacetofexclusivityistheconsequenceofrarity;itisnecessaryforaluxurybrandtocreatesomesort of inaccessibility to achieve desire. Being the only person to own an object means that others are excluded(Kapferer&Bastien2009).Limitedproductionanddistributionarewaysforabrandtoensure exclusivity,whichideallyleadstoacustomerwaitinglist(Nueno&Quelch1998).
Hypothesis1:Luxuryisamultidimensionalconstructthatwillbeinfluencedbythefollowingvariables a) perceivedlevelofquality b) perceivedlevelofdesign c) perceivedlevelofprice d) actualprice e) perceivedleveloflineage f) perceivedlevelofhandmadecontent
g) perceivedlevelofrarity h) perceivedlevelofexclusivity
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2.2BrandExtensions
TheBrandingConcept In the marketing literature, the brand is often described as a firms key asset (Aaker 1990). Farquhar (1989)describesabrandasaname,symbolordesignthatenhancesthevalueofaproductbeyondits functionalpurpose.Hence,thebrandprovidesbenefitstoconsumersbydifferentiatingproductssothat processing and retrieval of information is facilitated (Stegemann 2006). This information creates knowledge structures in the minds of consumers, which are the basis of the value of a brand (Keller 1993).Theknowledgeconsistsofassociationsonthepartofthebrandsconsumers,whichpermitsthe brand to earn greater volume or greater margins than it would without the brand name. Hence, the brandisapossiblesourcetoimportantcompetitiveadvantage(Stegemann2006). BrandEquity Brand equity is one important aspect of the branding concept that has been the subject of a large number of studies (Pitta & Katsanis 1995). Its definition is often debated (Biel 1992), but common definitions include the added value that a brand endows a product (Farquhar 1989), the differential effect of brand knowledge on consumer response to the marketing of a brand (Keller 1993) and the additionalcashflowachievedbyassociatingabrandwithaproduct(Biel1992). AccordingtoKeller(1993),brandequityoccurswhentheconsumerisfamiliarwiththebrandandholds some strong, favourable and unique brand associations. Hence, brand equity is driven by brand awareness and brand image; high levels of brand awareness and a positive brand image have implications for a brands pricing, distribution and promotion activities (Keller 1993) and result in a premiumthataconsumeriswillingtopayforabrandedproductcomparedtoanidenticalunbranded version(Biel1992). BrandImage Keller (1993) defines brand image as the perceptions about a brand as reflected by the brand associations held in consumermemory (1993:8). These associations consist ofattributes, benefits and overallattitudes(Keller&Aaker1992).Brandattitudesareimportantbecausetheyoftenformthebasis forconsumerbehavior(Keller1993). Brandimageisnot static,but isinfluencedbythedecisionsthatthecompanytakesabout thebrand. Previousresearchhasmainlyconcentratedonhowextensionsaffecttheequityofthebrand,measured intermsofthepricepremiumthatconsumersarewillingtopayforthebrandedproduct.Thereisagap in the literature regarding the effect of brand extensions on brand image, which is why this is particularlyrelevanttoresearch(Martinez&deChernatony2004).
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BrandExtensions Brandextensionshavebeenanincreasinglycommonwaytoleveragethebrandequityassociatedwith wellknownandwellrespectedbrands(RoedderJohnetal1998;Milbergetal1997).Bycapitalizingona companysmostvaluableassetsitsbrandsbrandextensionsareobviousgrowthstrategies(Keller& Aaker 1992; Boush & Loken 1991; Tauber 1988) that can be extremely profitable (Aaker 1990). By leveraging the brand equity of successful brands, companies can reap a second dividend from their investmentinadvertising,researchandproductdevelopmentforthesebrands(Pitta&Katsanis1995).
Primarily, researchers have been concerned with the success of the extension (Randall et al 1998), whereaslessattentionhasbeendirectedtowardsthepotentialnegativefeedbackeffectsontheparent brand that an extension can result in (Martinez & de Chernatony 2004). According to Keller (1993), extensionsmaypotentiallyharmthecorebrandimageiftheyweakenexistingassociationsinsomeway. Achangeofbrandimagewilloccurifconsumersperceivealackoffitbetweentheextensionandthe parentbrand(Pitta&Katsanis1995).Theextensionmightcreatenewassociationsinconsumersminds that dilute beliefs and feelings that consumers hold about the parent brand (Martinez & Chernatony 2004). This dilution effect may appear even if the extension is successful, since negative associations mightbecreatedthatadverselyaffectthebrandimage(Pitta&Katsanis1995).
Categorization theory has generally been used to predict how different levels of similarity and consistency affect potential negative feedback effects to the parent brand (Milberg et al 1997). Two modelsaresuggestedtoexplaintheeffectofbrandextensionsonfamilybrandbeliefs:thebookkeeping and the subtyping models (GrhanCanli & Maheswaran 1998; Loken & Roedder John 1993). The bookkeepingmodelsuggeststhateachpieceofnewinformationleadstoanincrementalmodificationof the consumers brand associations, regardless of the typicality of the extension (GrhanCanli & Maheswaran1998).Accordingtothismodel,inconsistentattributeinformationwillleadtodilutionof theparentbrand(Loken&RoedderJohn1993).Thesubtypingmodel,ontheotherhand,proposesthat atypical instances are considered exceptions and categorized assubtypes, andhence separate setsof associationswilltakeplaceforeachsubtype(GrhanCanli&Maheswaran1998).
Different circumstances affect if consumers use the bookkeeping or subtyping model when in the evaluationofthebrandextensionandtheparentbrand(Loken&RoedderJohn1993).GrhanCanliand Maheswaran (1998) found that differences in motivation are likely to determine whether the bookkeepingorsubtypingmodelwillbesupported.Withhighmotivation,consumersarelikelytotake the effort and process information piecemeal, predicted by the bookkeeping model. Luxury brand products can be assumed to be purchased with high motivation, which implies support for the bookkeepingmodel.Masstigeproductsgivetheconsumerinconsistentattributeinformation,sincethey do not represent the luxury brands typical price and quality points. According to the bookkeeping model,thisshouldgeneratedilutionoftheparentbrand.
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Verticalextensions Brand extensions can be horizontal, which means that an existing brand name is applied to a new productineitherarelatedproductorclassorinacategorythatisentirelynewtothefirm(Keller2002). Vertical extensions, on the other hand, involve introducing a brand extension in the same product categoryasthecorebrand,butatadifferentpricepointandqualitylevels.(Chen&Liu2004)Therehas beenquitealotofresearchonhorizontalextensions,whereasresearchonverticalextensionsismore limited(Keller2002). The rationalof vertical extensions is to leverage thebrand equity in new market segments, by either movingupwardsordownwardsfromtheparentbrand(Leietal2008).Companiesoftenwishtoexploit the equity of premium brands in lowerpriced parts of the market, where there is generally more productvolume(Randalletal1998). Directextensions A direct extension involves using the exact parent brand name for an extension (Kirmani et al 1999). Whenabranduses adirect extension,othercustomersare giventhe prestige ofthe parent brandat more affordable prices (Kirmani et al 1999), which potentially bothers the core audience (Pitta & Katsanis 1995). Hence, the use of a direct brand extension strategy for a luxury brand may lead to dilutionofthebrandimageamongtheexistingcustomerbase(Parketal2003). Hypothesis 2: True luxury consumers and luxury consumers will evaluate the parent brand more negativelythanwillmasstigeconsumersafteradirectdownwardextension. Subbranding Researchconsidersverticalbrandextensionsariskystrategy,sinceinherentbrandequityinlargepartis built on image. Consequently, stretching the brand to different markets may lead to brand image dilution.(Aaker1997)Toavoidnegativefeedbackeffectstheuseofasubbrandisrecommended(Aaker 1997;Kirmanietal1999;Michel&Salha2005).Incontrasttoadirectextension,asubbrandingstrategy combines the parent brand name with an individual brand name to form a new, composite name (Kirmanietal1999).Aaker(1997)considerstheroleofthesubbrandtohelpmanagersdifferentiatethe offeringsfromparentbrandswhileusingtheparentsbrandequitytoinfluenceconsumers.Byusinga subbrand,theparentbrandcankeepitsprestigeimage,despiteadownwardsverticalextension,since thisstrategycreates distance betweenthenewproduct offeringsandtheparent brand(Aaker1997). Kirmanietal(1999)researchedverticalbrandextensionsinaprestigebrandcontextandfoundthata subbrandextensionprotectstheparentbrandfromdilutiontoahigherextentthanadirectextension strategy.
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Hypothesis3a:Theparentbrandwillbeevaluatedmorenegativelybytrueluxuryconsumersandluxury consumersafteradownwardextensionifitusesdirectextensionstrategythanifitusesasubbrand. Hypothesis 3b: True luxury consumers and luxury consumers will evaluate the parent brand more negativelythanwillmasstigeconsumersafterasubbranddownwardextension. Cobranding Cobranding is an alternative to leveraging brands through brand and line extensions. It is defined as combining two or more wellknown brands into a single product and has the potential to achieve synergythatcapitalizesontheuniquestrengthofeachcontributingbrand(Leuthesseretal2003). Parketal(2003)performedresearchonhowbrandcomplementarityaffectedthecobrandedproduct. They found thatGodiva cake mix by SlimFast andSlimFast cake mix by Godiva were evaluated as possessing the desirable attributes (low in calories and rich chocolate taste) of both brands. In accordancewiththeseresultsweassumethatwhenaluxurybrandcobrandswithamassbrand,the cobrandedproductcanbeperceivedaspossessingtheprestigeoftheluxurybrandatthepriceofthe mass brand. Since the concepts of luxury and value can be seen as complementary, brand image dilutioneffectsshoulddecrease.Furthermore,acobrandingstrategycreatesevenmoredistancetothe core brand compared to the subbranding strategy, which should reduce dilution effects to a higher extentcomparedtodirectandsubbrandingextensionstrategies(Aaker1990). Hypothesis4a:Theparentbrandwillbeevaluatedmorenegativelybytrueluxuryconsumersandluxury consumersafteradownwardextensionifitusesadirectextensionstrategythanifitusesacobranding strategywithamassbrand. Hypothesis4b:Theparentbrandwillbeevaluatedmorenegativelybytrueluxuryconsumersandluxury consumers after a downward extension if it uses a subbrand extension strategy than if it uses a co brandingstrategywithamassbrand. Hypothesis 4c: True luxury consumers and luxury consumers will evaluate the parent brand more negativelythanwillmasstigeconsumersafteracobrandeddownwardextension.
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2.3TheLuxuryConsumer
2.3.1PersonalandInterpersonalFactors Marketing theory often suggests different personal and interpersonal motives for different types of consumer behaviour. In the context of luxury consumption, interpersonal factors such as snob, Veblenianandbandwagonmotiveshavetendedtodominatepastresearchonluxuryconsumption.Itis, however, not sufficient to explain luxury consumption based on socially oriented consumers motives only(Wiedmannetal2007).Therefore,thisframeworkhasrecentlystartedtoincludepersonalaspects suchashedonistandperfectionistmotivestoexplainluxuryconsumerbehaviour(Vigneron&Johnson 1999). TheVeblenianConsumer The most commonly referred to motive for luxury consumption, both in literature and as strategic principle for luxury brand management, is the importance of buying to impress others. According to theory,consumerspurchasebehaviorishighlyaffectedbyaninternaldrivetocreateafavorablesocial image (Wiedmann et al 2007). Veblen emphasized the importance of this phenomenon of consumer behaviour over a century ago in The Theory of the Leisure Class (1899), in which the phrase conspicuousconsumptionwascoined,meaningspendinglavishlyonexpensivebutessentiallywasteful goodsandservicesasevidenceofwealth,whichmajorrolewastoconferprestigeonitsowner. Veblens early theory on symbolic consumption has been followed by Barthes, who used his work of linguisticsandsemiologytoformatheoryoffashioninthe1960s.InTheLanguageofFashion(2006), Barthes showed how signs easily can be translated into words. According to Barthes framework, apparel works as a symbol system to communicate ones image in an interpersonal network system (Kawamura 2006).Inorderforconsumptiontoserve symbolicallyitmust bevisibletoothers,though (Solomon & Englis 1995). Through public consumption and demonstration of ownership of different brands,informationabouttheownerssocialstatusistransferred(Nueno&Quelch1998). Theroleofconsumptionasawaytosignalsocialstatushasincreasedasaresultofmodernsocietiesin whichclassdistinctionsare unclearorflux(Kapferer& Bastien2009).Existingresearchdemonstrates, however,thatthisVeblenianbehaviorvariesbetweendifferentpeopledependingontheirsusceptibility tointerpersonalinfluence(Wiedmannetal2007).SinceVeblenianluxuryconsumersprimaryobjective istoimpressothers,andmasstigeleadstothespreadofluxury,wehypothesizethefollowing: Hypothesis 5: Veblenian consumers are more negative to vertical downward extensions compared to nonVeblenianconsumers.
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TheSnobConsumer Snobbery as a motive for luxury consumption is both a personal and interpersonal factor. There is obviously a personal and emotional desire when consuming prestige brands. However, snobbery is clearlyinfluencedbyotherindividualsbehavior(Vigneron&Johnson1999).
Therearetwoaspectsofsnobbery;thefirstisinvolvedwiththeimportanceofbeingthefirsttoadopt theproduct,whereasthesecondconcernstherejectionofaparticularproduct,whenitisseentobe consumed by the general mass of people (Vigneron & Johnson 1999). Whatever form the snobbery takes,however,itrelatestowhatWiedmannetal(2007)describeasuniquenessvalue;theperceived rarenessof a limited product enhances the consumers desire for the brand. As rarity decreaseswith masstigeproducts,thefollowinghypothesisisderived:
Hypothesis6a:Snobconsumersaremorenegativetoverticaldownwardextensionscomparedtonon snobconsumers.
The importance of uniqueness value is not the same for all consumer groups, though. According to Kapferer&Bastien(2009),theelitesvalueuniquenesstoamuchhigherextentthanthemasses.
Hypothesis6b:Trueluxuryconsumersandluxuryconsumersaresnobstoahigherextentthanmasstige consumers.
TheBandwagonConsumer The best known theory of fashion and clothing behavior is Simmels theory of fashion from the beginning of the 20th century, known as the trickledown theory. According to this theory, fashion changesasaprocessofimitationofsocialelitesbythemasses.Simmelsmodeloffashionwascentered ontheideathatfashionwasfirstadoptedbytheupperclassand,later,bythemiddleandlowerclasses. Lowerstatusgroupssoughttoacquirestatusbyadoptingtheclothingofhigherstatusgroupsandsetin motion a process of social contagion whereby styles were adopted by groups at successively inferior statuslevels.By the timeaparticularfashionreachedtheworkingclass,theupperclasshadadopted newerstyles,sincethepreviousstylehadlostitsappealintheprocessofpopularization.Thehighest status groups sought once again to differentiate themselves from their inferiors by adopting new fashions(Crane2000). Undertheseconditions,emulationorimitationisincreasinglysignificantandmeaningfulasastrategyby means of which people lower in a given social hierarchy attempt to realize their aspirations toward higher status,modifying their behavior, their dressand the kindof dress they purchase. Emulation in turnstimulatesthedesiretoretaindifferentials,whichoftenbecomesbaseduponaccesstoknowledge aboutgoodsandtheirprestigeconnotations(Crane2000).
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Liebenstein (1950) called what mostly has an impact on the lowerend brand extension, bandwagon consumption. Bandwagon consumption may be conceptualized as the antecedent of the snob effect. Eventhoughsnobsandbandwagonfollowersbuyluxuryproductsforapparentlyoppositereasons,their basicmotivationisactuallythesame;whetherthroughdifferentiationorgroupaffiliation,theywantto enhance their selfconcept (Dubois & Duquesne 1993). However, we can only project ourselves to others if they understand the symbols we use in similar ways. Therefore brand images allow visible productstocommunicatethesamesymbolismtosendersandreceivers(orwearersandobservers) (Evans1989).
FromLiebensteinsconceptofbandwagonconsumptionandSimmelstrickledowntheory,wepropose thefollowinghypotheses:
Hypothesis7a:Bandwagonconsumersarelessnegativetoverticaldownwardextensionscomparedto nonbandwagonconsumers.
Hypothesis 7b: True luxury consumers and luxury consumers are bandwagon consumers to a lower extentthanmasstigeconsumers.
TheHedonistConsumer Inadditiontotheinterpersonalfactorsdiscussedabove,luxuryshouldbeanaccesstopleasureandas suchhaveastrongpersonalandhedoniccomponent(Kapferer&Bastien2009).AccordingtoLipovetsky (2008), there are now signs that the era of postmodernity has been replaced by an era of hypermodernity, characterized by hyperconsumption and the hypermodern individual. Hyperconsumption can be described as consumption for own personal pleasure rather than enhancementofsocialstatus.Thehypermodernindividualisorientedtowardspleasureandhedonism andconsumesfirstandforemostforownpleasure.
Vigneron and Johnson (1999) describe the hedonist consumer as one that is not susceptible to interpersonal influence but consumes luxury with an emotional motive. Increasingly, emotional responsesconcerningsensorypleasure,aestheticsandexcitementaregivenbyconsumersas motives for luxury consumption (Dubois & Laurent 1994). The hedonist consumer consumes luxury brands to arouse feelings and affective states, received from personal rewards and fulfillment (Wiedmann et al 2007).Seeingthebrandproducingmasstigeproducts,whichbydefinitionhasalowlevelofhedonistic content,shouldreflectbadlyonthebrandintheeyesofthehedonicconsumer.
Hypothesis 8a: Hedonist consumers are more negative to vertical downward extensions compared to nonhedonistconsumers.
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The visible logo is important for the masstige consumer, since it adds social value and raises the individualfromaconditionofanonymityamongthecrowds.Fortheluxuryandtrueluxuryconsumers, however, a luxury object must be a true object of luxury, including a strong hedonistic component (Kapferer&Bastien2009).
Hypothesis 8b: True luxury consumers and luxury consumers are hedonists to a higher extent than masstigeconsumers. ThePerfectionistConsumer Onereasonwhyconsumersbuyluxurybrandsisbecauseofthesuperiorqualityreflectedbythebrand name (Wiedmann et al 2007). Luxury brands are expected to show evidence of greater quality than otherbrands(Kapferer&Bastien2009),sincetheyhistoricallyhavebeenhandmadetoalargerextent, whichisconsideredsuperiorincomparisontomassproducedproducts(Wiedmannetal2007).Hence, consumers associate luxury products with a higher brand quality, which makes them perceive value fromit.Sincemasstigeproductsaremassproduceditemsoflowqualitywepropose:
Hypothesis9a:Perfectionistconsumersaremorenegativetoverticaldownwardextensionscompared tononperfectionistconsumers.
Asstatedabove,luxuryandtrueluxuryconsumerswanttrueluxuryobjects,notonlywhenitcomesto hedonicpleasure,butwhenitcomestoqualityandaesthetics(Kapferer&Bastien2009).
Hypothesis9b:Trueluxuryconsumersandluxuryconsumersareperfectioniststoahigherextentthan masstigeconsumers. 2.3.2Referencegroups Luxurybrandconsumptionisnotonlypersonallyorientedorsociallyorientedinthesenseofimpressing others. Consumers product choices are often motivated by their desire to identify with or to avoid particular idealized lifestyles; brands may in those cases serve as symbolic markers of group membership.Therefore,theconsumptionofluxurygoodsinvolvespurchasingaproductthatrepresents valuetoboththeindividualandthereferencegroup(Wiedmannetal2007).
Simmelwasoneofthefirstandmostwellknownphilosophertoformatheoryofclassparticipationand class distinction through the act of imitation. Simmel pointed out that, in addition to imitation, demarcationconstitutesanimportantfactorinapparelconsumptionsincetheactofimitationarisesout ofthedesireforclassdistinction.Fashionunitesthoseofaonesocialclassandsegregatesthemfrom
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others.Theeliteinitiatesastyleand,whenthemassimitatesitinanefforttoobliteratetheexternal distinction of class, it abandons it for a newmode. Because once the style has trickled down to the lowerclasses,itcannolongerservetodifferentiatetheelitewhohavetomovetoadoptanotherstyle (Kawamura2006). BaseduponSimmelswork,SolomonandEnglis(1995)presentedintheirarticleToBeandNottoBe: LifestyleImagery,ReferenceGroupsandtheClusteringofAmerica,theirresearchaboutthedesireto emulate or to avoid reference groups. The different groups were labeled: aspiration group, occupied group,avoidancegroupandirrelevantgroup.Toconducttheresearchtheysifteddataclusterstocreate four groups, or more precisely, four lifestyles, representative of undergraduate society. They were: Young Suburbia, Money and Brains, Smalltown Downtown, and Middle America. Solomon and Englis gathered images of objects from four product categories (automobiles, magazines/newspapers, toiletries, and alcoholic beverages) that fit into each group. The respondents were asked to put the various images together into coherent groups; they were also to state their current proximity to, or desiretobepartof,eachgroupinthefuture.Next,theywereaskedtosortthecardsintofourpiles,or categories, defined as: These people are very similar to how I would like to be (aspirational group). ThesepeopleareverysimilartohawIcurrentlyseemyself(occupiedgroup).Thesepeoplearevery similartohowIwouldnotliketobe(avoidancegroup).Thesepeoplehavenomeaningforme;Idont feelstronglyaboutwantingtobelikeornotwantingtobelikethem(irrelevantgroup). What the authors found was not just that people consume to belong to certain groups, but more importantlywhattheydonotconsumeinorderstateavoidance.Forinstance,therespondentswerenot ashamed of smoking, but of smoking the wrong brand (Solomon & Englis 1995). When luxury brands starttosellmoreaccessibleproducts,theyinviteanewclientele;shouldthisclientelebeanavoidance groupofthemoretraditionalcustomers,thenewcustomergroupmightscarethetraditionalcustomers off. Hypothesis10:Trueluxuryconsumersandluxuryconsumerswillhaveamorenegativeattitudetowards carryingthesamebrandasnontraditionalluxuryconsumerscomparedtocarryingthesamebrandas traditionalluxuryconsumers.
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3.METHODOLOGY
3.1ChoiceofSubjectandStudydesign
Themasstigestrategytoinviteabroadermarketforincreasedprofitsandgrowthhasresultedinmore accessible luxury that not only serves as introductory products but as moneymaking items. To reach clarityifthisstrategy isprofitablenot only inthe short runbut alsointhelongrun withits potential damagetobrandimage,wehaveconductedourresearchbasedonvisibleclothingitemssuchasshoes, coats, jackets and accessories, that can be purchased in order to communicate to others to achieve status,orforinternalvaluessuchashedonism.
Toachievethepurposeofthethesis,theoriesfromdifferentfieldshavebeenused.Theoryfromareas such as luxury brand management, brand extensions and fashion have been used as complementary perspectives to research the phenomenon in depth. Our intention is to contribute with increased understandingoftheareainquestion.
3.2StudyApproach
Sincetheobjectiveofthethesisistoachieveageneralconclusionofthemasstigestrategyandexamine whetheritwilldiluteluxurybrandimage,aquantitativestudywasfoundtobethemostappropriate.A quantitative approach simplifies establishing the reliability of the thesis and clarifies the analysis. A quantitativestudyoftheconsumersofluxuryprovidesinsightsintotheirinnerlife,whatdrivesthem, motivates them, and moves them in the marketplace. Furthermore, as we have chosen to base the researchontheoryfromadjacentareasofstudyandtestingtheseusingalargesampleofrespondents, thestudycalledforaconclusiveresearchdesign(Malhotra&Birks2007). Therearetwostudyapproacheswhenconductingresearch,namelydeductiveandinductivemethods. Following the deductive method, the researcher starts by formulating hypotheses from the existing theoriesintheresearcharea.Thehypothesesarethentestedagainstempiricaldataandconclusionsare subsequently drawn. An inductive research approach starts with empirical data and theory is then derivedfromthecollecteddata.Theempiricaldataisthestartingpointandleadstotheformulationof theories. There is also a third research method that contains features of both the inductive and deductivemethods,theabductivemethod.Theabductivemethodistheprocessofalteringbetweena theoreticalandempiricalstandpoint,andtheresearchertakespartofexistingtheoriesintheempirical data collection process (Alvesson & Skldberg 2008). In cases where the theory has been given, for exampletheareaofbrandextensions,theresearchhasbeenconductedinadeductivemanner.Inother
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areas,whereaccesstotheoryhasbeenmoredifficulttofind,wehaveusedtheinductiveapproach.Our approachcanthusbestbedescribedasabductive.Webelievethatthisapproachhasgivenstructureto ourworkwhileatthesametimeallowingforcreativity,henceresultingindeeperunderstandingofthe effectsofthemasstigestrategy.
3.3ConstructofSurvey
The quantitative study was conducted with a questionnaire consisting of multiple questions covering differentareasoftheoryaswellasmoreexplorativequestions(seeappendix1).Intheinitialquestionof thesurveyrespondentswereaskedtochoosetheclothinggarmentoraccessorypurchasedinthelast two years that they perceived as most luxurious. The questions were asked in the form of question batteriestosecurereliability,ina1to7intervalscaleallowingforrespondentstotakeaneutralstand. We also chose to give the respondent the option of choosing a do not know response on several questions. The survey was constructed based on theory from the literature and our own reasoning with advice fromourtutorMagnusSderlund.Sincewewantedtodiscoverwhatmeaningconsumersattachtothe luxury concept we decided to let the respondent choose a product they perceived as luxurious and answer questions about that specific product. The first questions of the survey were therefore basic questionsabouttheproducttheyhadchosen. Subsequently,weaskedtherespondenttowhatextenttowhatextenthe/shethoughtthattheproduct had certain qualities such as quality, design, lineageetc. These questions were based on theory from KapfererandBastien(2009)andNuenoandQuelch(1998).Sincewewantedtoconnectthesequalities totherespondentsluxuryperception,thequestionswerefollowedbyathreequestionbatteryonhow luxurioustherespondentperceivedtheproduct.Thebatterywasbasedonthethreequestionsthatare normallyusedforaskingcustomersatisfactionrelatedquestions. Sinceourthesisisaboutverticalbrandextensionsintermsofmasstige,weaskedtherespondentabout how he/she would feel about the brand should it perform different types of vertical extensions. We chosethiskindofhypotheticalquestionsoveranexperimentdesignsincewedidnotwanttoinfluence therespondentsattitudebychoosingaspecificbrand,whichwewouldhavebeenforcedtodoinan experiment. Furthermore, by letting the respondent choose their own brand we were able to ask questionsfromrealclientsofabrand,whichweperceivedasvaluablesincetheycanbeassumedtobe moreemotionallyinvolvedwiththebrand.
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Furthermore,wechosetoasktherespondentabouthis/herattitudetowardscobrandingwithH&Min comparison to KappAhl despite the fact that H&M has performed this type of marketing activity whereasKappAhlhasnot.Eventhoughrespondentsmightbemorepositivetowardscobrandingwith H&Mbecauseofthatinsteadofsomebrandrelatedattitude,weperceivedthattheriskofwearoutof theconceptofcobrandingwithH&Mmighthaveaninfluenceintheoppositedirection. By askingquestionsaboutwhatclients hadbought previouslyfromthebrandwewantedtoresearch howclientsbecometrueluxuryconsumers,whicharetheconsumersthatoughttobemostinteresting forabranddotheystartoffasmasstigeconsumers?Unfortunately,respondentsfounditverydifficult torememberwhattheyhadboughtfromthechosenbrandpreviously,whichmadeitimpossibleforus tousethedata. The questions concerning reference groups we constructed ourselves in cooperation with our tutor, since the theory in this area is very limited. We could not use the same groups as Solomon & Englis (1995), since these are not adapted to the Swedish market. The groups and their attributes were constructedbasedonafocusgroupandapretestsurvey(seebelow).Toachievedeeperunderstanding oftheavoidancephenomenonwechoosetoaskquestionsrelatedtotherespondentsattitudetothe personondifferentlevelsofinteraction.Allresponsesbelowfourwereclassifiedasavoidance,whereas thefourresponsewasclassifiedasneutral. Concerning the personal and interpersonal factors related to luxury consumption, the majority ofthe questions are taken from Bearden and Netemeyer (1999). We also developed some questions with support from Vigneron and Johnson (1999) and Wiedmann et al (2007). In order to avoid the respondentfromunderstandingwhatquestionsconcernedeachpersonalfactor,wechosetomixthem up. Inaquestionnairepeoplehaveatendencytoexaggeratesomefeaturesinordertopresentthemselves in a desirable way (Sderlund 2005). To prevent the responses from being influenced by social desirabilitywechosetoasksomequestionsinanindirectmannerandalso,assuranceofanonymitywas crucial.
3.4Prestudies
In order to ensure a credible outcome of the study two prestudies have been conducted to (1) sift cluster tomake six socialgroups/lifestyles, representatives of the Swedish undergraduate society and (2)topretestthesurveyquestions.
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3.4.1ClassificationofReferenceGroups BasedonSimmels(2008[1908])and,SolomonandEnglis(1995)theoriesoffashionasalanguageand reference groups respectively, configurations of diverse lifestyles and modes representing different socialgroupscurrentintheSwedishsocietyweredefinedandtestedbyaprestudywithvalidresults. Westartedoffwithafocusgroupconsistingoffiveluxuryconsumersofbothsexesindifferentagesand askedthemaboutdifferentluxuryconsumertypesandwhatattributesbestdescribethem.Wechosea relativelysmallfocusgroup,sinceweperceivedthelikelihoodofhonestresponsesaslargerinamore intimate setting. Subsequently, 60 questionnaires with described clothing items were distributed and therespondentswereaskedtomatchtheclothingitemwithasocialgroup/lifestyle.Thisresultedinsix differentsocialgroups/lifestylesnamely,Classic,Russian,Brat,Suburbanite,TrendyandDowntown. TheClassictyperepresentsaproperandcasuallooksteamingfromaBritishheritagewithacolourscale ecrutonavyblue.Russianisamorevulgarstyleaccentuatedwithblingbling,withintentiontoshowoff in expensive garments and materials. The Brat represents a more casual and sporty style with visible logos.TheTrendyisabohemianchiclook,withcreativemixingofexpensiveluxurybrandsanditemsof unknownbrandsandmassbrandstoachieveanindividualstyle.Downtownistheepitomeofnostyle, just generic clothes. Lastly, the Suburbanite is a tacky style with screaming logos that are often counterfeit,sinceitdoesntshowanyway. 3.4.2PretestSurvey To ensure comprehension of the survey a presurvey was distributed allowing fifteen respondents to answerthequestionnaireandcommentonthequestionstheyhaddifficultiesunderstanding.Thefinal surveyistheresultofasurveyfullycomprehendedbytherespondents.

3.5Sampleofrespondents
218 respondents answered the survey, which was distributed in the area stermalm in Stockholm at coffeeshopsandrestaurantsweretherespondentswereabletositdownandhadthetimetoanswer thequestionnaire.Thevenueswerestrategicallychosensincewewantedluxuryconsumerstofillinthe surveytoachievethepurposeofourthesis.Inthisareawiththereputationofhighluxuryconsumption, we perceived the probability of running into these consumers as higher. Furthermore, Dubois and Paternault(1995)foundthatincomewasanimportantpredictorofluxuryconsumptionandbychoosing the area in Stockholm with highest disposable income per capita (jemar 100223) we increased the likelihoodofreceivingresponsesfromluxuryconsumers.However,iftherespondentchoseabrandthat
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didnotmatchthecriteriaforbeingaluxurybrand,therespondentwasremovedfromoursample.The numberofvalidrespondentsreached204. Thesampleofluxuryconsumersweresubsequentlydividedintothreegroupsequalinsizebasedonthe priceoftherespondentschosenitem.Weusedthismethodtodividetheconsumersintothegroups masstigeconsumers,luxuryconsumersandtrueluxuryconsumers(seeappendix2).Sincetheliterature lacksconcreteinformationaboutwhatpriceisconsideredaccessibleandatwhatpricepointaluxury productbecomesatrueluxuryproduct,wesimplyletthisbedeterminedbythesample. Inorderto taketheproductcategoryintoconsideration,wecreatedthreegroupsofsamesizebasedonpriceout ofeveryproductcategorybeforefinallyaddingtheleastexpensivethirds,themostexpensivethirdsetc into three different groups. This was done since prices tend to vary a lot between different product categories.

3.6Analyticaltool
Theanalysisofthegathereddatahasbeenconductedusingthe software PASW,includingcomparing means through independent sample ttests, paired independent ttests and oneway ANOVA. Throughoutourhypothesistesting,resultshavebeenacceptedata5%significancelevel,recommended by Malhotra and Birks (2007). Furthermore, when questions of the survey have been indexed, these questions have been tested for an adequate level of correlation using Cronbachs Alpha (>0,7). For CronbachsAlpha,wehaveusedaminimumofthreequestions,recommendedbySderlund(2005),and amaximumoffivequestions.
Furthermore, when testing hypotheses using linear regression, autocorrelation, multicollinearity and heteroscedasticity have been tested by using DurbinWatson (close to 2), Condition Index (<20) and Spearmans Correlation Coefficient (p>0,05; small and negative correlation). The standardized coefficient has been used when independent variables are different in scales, whereas the unstandardized coefficient has been used when the scale is the same for the different independent variables. Moreover, we have used adjusted R2 when more than one variable has been used and R2 whenonlyonevariablehasbeenused.

3.7ResearchQuality
To secure the research quality in order to establish credible results two criteria are essential, namely validityandreliability.Reliabilityisthediscrepancyfoundbetweentheobservedandtherealvaluedue torandomerrorsinmeasurement(Sderlund2005).Thepurposeofassessingreliabilityistoassurethat
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laterpotentialstudiesonthesamesubjectwiththesameprocedureswouldprovidethesamefindings andconclusions.Thestudyconductedforthisthesisusesrecognizedmeasurementsfromthemarketing researchsuchasmultiplequestionsmeasurementstoensurehighreliability. Validity is to whatextentthe results correspond toreality (Sderlund 2005). In order to reach a high validity,thestudyshouldbedesignedinsuchawaythattheattemptedphenomenonofstudyistheone aspectthatisactuallybeingstudied.Internalvalidityconcernshowwellthestudyisfreefrominfluence notincludedinthestudy,whichhasbeenaddressedbyensuringanonymity.Wealsoperformedapre testsurveyinordertoassurethattheinterpretationofquestionswaswhatweintended.Theexternal validityreferstothepossibilityofdrawinggeneralconclusionsfromthefindings.Wehaveachievedhigh externalvaliditybytheuseofalargesampleofrespondentsaswellaslettingrespondentschooseany brandtheywish,whichavoidsbrandspecificconclusions.
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4.ANALYSISANDRESULTS
4.1TheLuxuryConcept
In order to study the potential dimensions that influence the luxury concept, we performed a linear regression with dependent variable indexed as luxury (Cronbachs Alpha=0,804>0,7) and independent variables quality, design, high price, actual price, lineage, handicraft, rarity and exclusivity. In the questionnaire,respondentsansweredathreequestionbatteryrelatedtohowluxurioustheyperceived theirpurchaseditemtobe,usingthe17intervalscale.Thatsameintervalscalewasusedtodetermine to what extent the consumer perceived mentioned characteristics being inherent in their chosen product. We had included an open question about the actual price in the survey, which we chose to integrate in the regression, since we expected differences in importance between actual price and perceivedpricetobeaninterestingfindingitself.Itwasnotpossibletodosoforanyoftheotherfactors since there would have been no objective way to determine the actual quality etc of the products purchasedbytherespondents. Hypothesis 1 aims to explain the different facets of luxury to reach a higher understanding of the concept. According to the hypothesis, to be considered luxury the perceived level of quality, design, price,lineage,handmadecontent,rarityandexclusivitymustbehigh.
Tabel1Luxurydeterminants.RegressionforH1ah
HypothesisVariable a)perceivedlevelofquality b)perceivedlevelofdesign c)perceivedlevelofprice d)actualprice e)perceivedleveloflineage f)perceivedlevelofhandmadecontent g)perceivedlevelofrarity h)perceivedlevelofexclusivity
AdjustedR2=0,433 DurbinWatson=1,947 ConditionIndex=26,024 SpearmansCorrelationCoefficient=0,012;p=0,865
StandardizedBeta 0.220 0.240 0.186 0.366
Significance 0.000 0.000 0.001 0.000
Supportforthe hypothesis: YesorNo No No No Yes No Yes Yes Yes
The results indicate that perceived levelof handmade content, rarity and exclusivity as well as actual pricearefactorsthatcontributetotheluxuryconcept,hencewefindonlypartialsupportforhypothesis 1.AnadjustedR2of0,433isfairlyhigh,whichshowsthatthefactorsthatareusedtoexplainluxuryin theliteratureexplaintheconceptfairlywell,butshowsthattherearealsoothervariablesthatexplain consumersperceptionofluxurythatarenotyetresearched.
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Interestingly, we found support for actual high price as an explanatory factor for the luxury concept, whereas there was no support for the perception of high price. Moreover, there was no significant correlation between the factors. One possible reason for this according to the theory of introductory products is that consumers generally enter a product class by buying a lowerpriced introductory product.Hence,consumersthathaveboughtmoreexpensiveproductsarelikelytohaveboughtalarger numberofluxuryproductsintotal,bemorefamiliarwiththepricelevel,andhencedonotevaluateitas highastheyotherwisewouldhave. Thepurposeofourthesisisnotonlytoexplainwhatfactorsdescribetheluxuryconcept,buttoresearch whethermasstigeproductsresultindilutionofluxurybrands.Interestingly,perceivedlevelofexclusivity reachesthehighestbetavalue(=0,366),followedbyperceivedlevelofhandmadecontent(=0,240), actualprice(=0,220)andperceivedlevelofrarity(=0,186).Since highpriceandhandmade content are perceived as important explanatory factors for the luxury concept and masstige products by definitionaremassproducedproductsataccessibleprices,masstigeproductsshouldleadtodilutionof the brand. Furthermore, we found that exclusivity and rarity were important factors to explain the luxuryconcept.Sincemasstigeproductsareavailabletomanyandarequitetheoppositeofexclusivity andrarity,thesefactorssuggestthatmasstigeproductsshouldleadtodilutionofthebrand. Thebusinessmodelofluxurygroupstodayistosellmassproducedproductsthatarelabeledbyaluxury brand. Instead of actual rarity, rarity is simulated through extensive marketing communications and effective public relations. The challenge is to create the impression of rarity, without actual physical rarity (Kapferer & Bastien 2009). However, with globalization and increased spread of information through information technology we believe it will be increasingly difficult to simulate these factors. Making these variables physically present in their products should be necessary for luxury brands in ordertoavoidbranddilutionandcontinuebeingconsideredaluxurybrand.
4.2BrandExtensions
Directextensions Hypothesis2addresseswhetherdifferentkindsofluxuryconsumerswillresponddifferentlytoadirect downward extension strategy. This comparison between the three different groups was tested by performingaonewayANOVA.Theresultswefoundindicatedthattherearedifferencesinthesegroups inevaluationofadirectextensionstrategyatsignificancelevel5%.
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True luxury consumers were found to evaluate the parent brand more negatively after a downward extensionthanmasstigeconsumers(p=0,000).Moreover,luxuryconsumerswerefoundtoevaluatethe directextensionmorenegativelythanmasstigeconsumers(p=0,048). The results give support for hypothesis 2 and imply that different levels of luxury consumers have differentlevelsofacceptanceforthedirectextensionstrategy,whichsoclearlycapitalizesontheequity oftheparentbrand.Sinceadirectextensioncreatesnodistancebetweentheextensionandtheparent brand,thoseconsumersthathaveboughtthemoreexpensiveproductsfromthebrandfranchisewould opposetoabrandstrategythatconnectsthemwithconsumersthatbuythemasstigeproduct. Weshouldalsonoteinthiscontextthatthenegativefeedbackeffectsofadirectextensionshouldbe highest for brands that sell products for a higher level clientele, since these true luxury consumers expressmostoppositiontowardsdirectextensions.
Tabel2.DirectExtensions.OnewayANOVAforH2
ConsumerGroup Trueluxuryconsumers Luxuryconsumers Masstigeconsumers DirectExtension MeanValue 2.74 3.15 3.75 Significancewhencomparedto MasstigeGroup 0.000 0.048 Supportforthe hypothesis: YesorNo Yes Yes
Subbranding Theory suggests different ways, such as subbranding, to protect the brand from dilution effects. Accordingtohypothesis3a,dilutioneffectsoftheparentbrandshouldbeloweriftheparentusesthe subbranding strategy, instead of a directextensionstrategy, for its downward extensions. By usinga subbrand,thereisdistancebetweentheparentbrandandtheextension.Thesubbrandisconsidereda protectingshieldfortheparentbrandandhencedilutioneffectsarereduced(Aaker1990). We tested the hypothesis using a paired independent ttest and found significant support for the hypothesis. True luxury consumers were significantly more negative towards a direct extension comparedtoasubbrandextension(p=0,000).Thiswasalsotrueforluxuryconsumers(p=0,001).
Tabel3.1ExtensionStrategy.PairedSamplesTTestforH3a
ConsumerGroup Trueluxuryconsumers Luxuryconsumers ExtensionStrategy Directextension Subbrand Directextension Subbrand MeanValue 2.74 3.78 3.15 4.23 Significance 0.000 0.000 Supportforthe hypothesis: YesorNo Yes Yes
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Hypothesis3bsuggeststhattherearedifferencesbetweenconsumergroupsastohowtheparentbrand isperceivedafterasubbrandextension;trueluxuryconsumersandluxuryconsumerswouldevaluateit morenegativelyafterasubbrandextensionthanwouldmasstigeconsumers. The hypothesis was tested using a oneway ANOVA, according to which the hypothesis found partial support. As expected, true luxury consumers evaluated the brand after a subbrand extension more negativelythanmasstigeconsumers(p=0,029).However,luxuryconsumerswerenotfoundtoevaluate thesubbrandextensionmorenegativelythanmasstigeconsumers(p=0,777).
Tabel3.2Subbranding.OnewayANOVAforH3b
ConsumerGroup Trueluxuryconsumers Luxuryconsumers Masstigeconsumers Subbrand MeanValue 3.78 4.23 4.39 Significancecomparedto MasstigeGroup 0.029 0.777 Supportforthe hypothesis: YesorNo Yes No
Cobranding Toresearchhowluxuryconsumersevaluatecobrandedextensions,weaskedthemabouttheirattitude towardstheparentbrandafteranextensionwithtwodifferentmassbrands.Atfirst,weformulateda cobrandingquestionwithoutspecifyinganyspecificmassbrandforoursurveytestaudience.However, respondents associated directly with H&M or they were not familiar with the marketing term co branding,whichiswhywechosetonametwodifferentmassbrandsasbasisforcooperation. The fastfashion chain H&M has achieved great success by cooperating with famous luxury fashion designers(H&MWebPage);however,itisofgreatinteresttoresearchwhatattitudeluxuryconsumers holdtowardscobrandingwithH&Morifthesuccessiswithinthemasseswhohavebeenabletogeta pieceoftheluxurybrandatanaffordableprice.WealsochosethemassfashionchainKappAhl,whichis generallyperceivedasinferiorintermsoffashionanddesign,toinvestigatepotentialdifferences. According to hypothesis 4a, true luxury consumers and luxury consumers would evaluate the parent brand more negatively after a direct extension than after a cobrand extension, since cobranding increases the distance between the parent brand and the extension. We found no support for this hypothesis,sincetheevaluationoftheparentbrandaftertheextensionwasnotsignificantlyhigherfor H&M compared to the direct extension alternative. Furthermore, the evaluation of the parent brand waslowerifextendedviacobrandingwithKappAhlthanviadirectextension.
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Weconcludethatwhichmassbrandtheluxurybrandchoosestocobrandwithisofgreatimportance, since the KappAhlalternativeisperceivedasworse forthebrandthanperformingadirect extension. However,cobrandingwithH&Mshowsatendencyofactingasaprotectiveshield,sinceitisevaluated higher,howevernotsignificantlyhigher.NoteworthyinthiscontextisthatH&Mhascobrandedwitha large numberofluxury brands(H&MWebPage),which might have generatedsome sort ofwearout effect.Alessexposedbrandinthiscontext might reflectamorepositive attitude towardsthe parent brand, given that the wearout concerns H&M as a brand and not the mass brand and luxury brand collaborationasphenomenon.
Tabel4.1ExtensionStrategy.PairedIndependentTtestsforH4a
ConsumerGroup TrueLuxuryConsumers LuxuryConsumers
ExtensionStrategy Directextension CobrandH&M Directextension CobrandH&M ExtensionStrategy Directextension CobrandKappAhl Directextension CobrandKappAhl
MeanValue 2.74 3.03 3.15 3.63 MeanValue 2.74 1.48 3.15 1.87
Significance 0.148 0.070 Significance 0.000 0.000
Supportforthe hypothesis: YesorNo No No Support No No
ConsumerGroup Trueluxuryconsumers Luxuryconsumers
Hypothesis 4b addresses the evaluation of the parent brand after cobranding with a massbrand compared to extending via a subbrand. According to theory, a cobranding strategy should decrease dilutioneffectsonthe parent brandcomparedtoasubbrandingstrategy,because ofthecobranded extensions increased distance from the core brand. This hypothesis was not supported. Instead, the reversewassupported;dilutioneffectsaresmallerwithasubbrandingstrategythanwithacobranding strategywitheitherH&MorKappAhl.Onepossibleexplanationisthatcobrandingnotonlydistances theextensionfromthecorebrand,butitalsobringsanotherbrandsbrandimageintothepicture.With asubbrandingstrategy lessdistance iscreated betweentheparentbrandandtheextension,but the brandavoidstolettheimageofanotherbrandinfluencetheownbrand.
Tabel4.2ExtensionStrategy.PairedIndependentTtestsforH4b
ConsumerGroup TrueLuxuryConsumers LuxuryConsumers ExtensionStrategy Subbrand CobrandH&M Subbrand CobrandH&M MeanValue 3.78 3.03 4.23 3.63 Significance 0.002 0.002 Supportforthe hypothesis: YesorNo No No
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Luxury For the Masses ConsumerGroup Trueluxuryconsumers Luxuryconsumers ExtensionStrategy Subbrand CobrandKappAhl Subbrand CobrandKappAhl MeanValue 3.78 1.48 4.23 1.87
HEDENMARK & WESTERLING Significance 0.000 0.000 Support No No
According to hypothesis 4c, true luxury and luxury consumers should be more negative towards the parentbrandafteracobrandedextensioncomparedtomasstigeconsumers.Wefoundsupportforthis hypothesis, since true luxury and luxury consumers attitude after a potential extension was lower comparedtothatofmasstigeconsumersforbothbrands.Hence,trueluxuryandluxuryconsumersare generallymorenegativetowardsdownwardsextensionscomparedtomasstigeconsumers.
Tabel4.3.1CoBrandingH&M.OnewayANOVAforH4c
ConsumerGroup Trueluxuryconsumers Luxuryconsumers Masstigeconsumers CoBrandingH&M MeanValue 3.03 3.63 4.48 Significancecomparedto MasstigeGroup 0.000 0.013 Supportforthe hypothesis: YesorNo Yes Yes
Tabel4.3.2CoBrandingKappAhl.OnewayANOVAforH4c
ConsumerGroup Trueluxuryconsumers Luxuryconsumers Masstigeconsumers CoBrandingKappAhl MeanValue 1.48 1.87 2.42 Significancecomparedto MasstigeGroup 0.000 0.022 Supportforthe hypothesis: YesorNo Yes Yes
4.3TheLuxuryConsumer
4.3.1PersonalandInterpersonalFactors In order to study whether different personal and interpersonal factors influences the consumers attitude to masstige we formulated statements such as I prefer buying items from the most popular brand,IliketotryandbuynewproductsIalwaysbuythebestqualityandWhataproductmakesme feel is very important (Bearden & Netemeyer 1999) that reflected the different qualities and let consumeragreeordisagreeonascale17.Weaskedfivequestionsforeachfactor;theywereallmixed up and the statements were not labeled so that consumers could understand what personal or interpersonalqualitythatwasmeasured.AftercollectingthedatawecalculatedCronbachsAlphafor eachsetoffivequestions.Sinceitwas>0,7forallfactorsweindexedthemandachievedoneVeblenian, one snob, one bandwagon, one hedonist and one perfectionist index. Furthermore, we defined a
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Veblenianconsumerasaconsumerwithanindex>4asVeblenian,whereasaconsumerwithanindex<4 was classified as nonVeblenian. This made it possible for the same consumer to belong to several personalitygroups,whichwebelieveisappropriatetoachieveadeeperunderstanding,sinceconsumers canbeassumedtohaveseveralpersonalityfacets.
Inordertotestthehypotheseswecalculatedthemeansonthedifferenttypesofdownwardextensions forthegroupwithanindexlowerthan4foragivenpersonalitytraitandforthegroupwithanindex higherthan4forthesamepersonalitytrait.Wethenperformedindependenttteststofindoutwhether potential differences between the group were significant or not. We also performed paired ttests, wherewecomparedthemeansforthedifferentindicesbetweenthemasstige,luxuryandtrueluxury consumergroups.
TheVeblenianConsumer Hypothesis 5 predicts that a Veblenian consumer is more negative to masstige than a nonVeblenian consumer,sinceaVeblenianconsumerisinterestedinthesymbolicmeaningofaluxuryproduct,and increasingaccessforamasscustomerbasemeanschangingthemeaningofthesymbol.
Tabel5.DownwardExtension,Veblenist.OnewayANOVAforH5
DownwardExtension Directextension Subbrand CobrandH&M CobrandKappAhl ConsumerGroup Veblenist Nonveblenian Veblenist Nonveblenian Veblenist Nonveblenian Veblenist Nonveblenian Extension Mean 3.18 3.16 3.99 4.33 3.64 3.68 1.93 1.77 Significance 0.730 0.945 0.346 0.735 Supportforthe hypothesis: YesorNo No No No No
Findings show no significant differences between Veblenists and nonVeblenian consumers, hence Veblenian consumers are surprisingly not more negative to masstige. Since both groups are eqully negative to masstige, our interpretation is that conspicuousness is inherent in all type of luxury consumption,independentofthelevelofluxuryconsumption.
TheSnobConsumer According to hypothesis 6a, snob consumers should be more negative to masstige than nonsnob consumers. Masstige is concerned with increasing access to luxury products,which is the opposite of rarity,whichsnobsvalue.
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Tabel6.1DownwardExtension,Snob.OnewayANOVAforH6a
DownwardExtension Directextension Subbrand CobrandH&M CobrandKappAhl ConsumerGroup Snob Nonsnob Snob Nonsnob Snob Nonsnob Snob Nonsnob Extension Mean 3.18 3.14 4.12 4.14 3.47 4.34 1.79 2.17 Significance 0.896 0.936 0.006 0.089 Supportforthe hypothesis: YesorNo No No Yes No
Ourfindingsgiveslightsupporttothehypothesis,sincenonsnobsratecobrandingwithH&Matmean 4,34,whereas snobs attitude towards it isonly 3,47. Hence, snobs aremorenegative to cobranding withH&M(p=0,006).ThecomparisonbetweenthegroupsattitudestowardscobrandingwithKappAhl wasalsoclosetosignificant.Thismakesusconcludethatitislikelythatsnobsdonotmindextensionsas long asthey are totally controlled by the brand within the brand franchise. On theother hand, ifthe luxurybrandchoosestoassociatewiththemassbrandsthesnobsapparentlyreact.Hence,snobsseem tobeparticularlysensitivetowardsbecomingassociatedwithmassbrands. Furthermore, true luxury consumers and luxury consumers are hypothesized to be snobs to a higher extentthanmasstigeconsumers.Onthesnobindex,masstigeconsumersratedthemselvessignificantly lowerthantrueluxuryconsumersandluxuryconsumers,hencegivingsupporttohypothesis6b.
Tabel6.2ConsumerGroup,Snob.OnewayANOVAforH6b
ConsumerGroup Trueluxuryconsumers Masstigeconsumers Luxuryconsumers Masstigeconsumers Meansnob_ix 5.04 4.49 5.08 4.49 Significance 0.012 0.009 Supportforthehypothesis: YesorNo Yes Yes
TheBandwagonConsumer Since the bandwagon personality is considered the opposite of snobbism, we hypothesize that bandwagon consumers are less negative to masstige compared to nonbandwagon consumers. We foundpartialsupportforourhypothesis,sinceitwassupportedforthetwocobrandingsituations,but neither for the direct extension strategy or the subbrand; bandwagon consumers rated the parent brand after the cobranding significantly higher than nonbandwagon consumer. Since bandwagon consumersadheretogroupaffiliationanddonotwishtodeviatefromthenorm,itislogicalthatwefind thehypothesissupportforthecobrandingalternatives;theluxurybrandshouldbespreadtoamuch
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higherextentifitsellsdownwardsextensionswithamassbrandthanifitsellsthemonitsown,both becauseofpriceanddistributionfactors.
Tabel7.1DownwardExtension,Bandwagon.OnewayANOVAforH7a
DownwardExtension Directextension Subbrand CobrandH&M CobrandKappAhl ConsumerGroup Bandwagon Nonbandwagon Bandwagon Nonbandwagon Bandwagon Nonbandwagon Bandwagon Nonbandwagon Extension Mean 3.50 3.09 4.32 4.06 4.27 3.48 2.27 1.76 Significance 0.089 0.247 0.006 0.010 Supportforthe hypothesis: YesorNo No No Yes Yes
Moreover,accordingtothetrickledowntheory,thebandwagonpersonalitytraitshouldexisttoalower extent among true luxury and luxury consumers, which was formulated in hypothesis7b. True luxury consumers ranked themselves significantly lower on the bandwagon index, whereas no significant difference was found between luxury consumers and masstige consumers. This gives only partial supporttothehypothesis.
Tabel7.2ConsumerGroup,Bandwagon.OnewayANOVAforH7b
ConsumerGroup Trueluxuryconsumers Masstigeconsumers Luxuryconsumers Masstigeconsumers Meanbandwagon_ix 2.73 3.46 3.08 3.46 Significance 0.001 0.151 Supportforthehypothesis: YesorNo Yes No
TheHedonicandthePerfectionistConsumer
Hypotheses8aand9aaimstofindwhetherthepersonalfactorsofhedonismandperfectionismaffects theattitudetowardsmasstige.Accordingtotheory,hedonistandperfectionistconsumersareinterested inthesensorypleasureofluxury,ratherthanthesymbolicinterpersonalaspect.Hence,wehypothesize that they should be less negative towards masstige as compared to consumers that consumers that havelowmeansontheindexesthatmeasurethepersonalaspectofluxury. Results show that hedonic consumers rate the parent brand after an extension via cobranding with KappAhl lower compared to nonhedonic consumers, which gives slight support to hypothesis 8a. Moreover, the difference between the hedonic and nonhedonic consumer is close to significant regardingthepotentialcobrandingsituation.Weinterpretthisasthedifferencescanbefoundinthose circumstances where it is more difficult for the luxury brand to control the hedonic content of the productaswellasthebuyingexperience.
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Furthermore, we found partial support for H9a, according to which perfectionist consumers should evaluatetheparentbrandmorenegativelyafteradownwardsextensioncomparedtononperfectionist. Perfectionist are very sensitive concerning quality issues. The low quality reputation of mass brands might explain the significance of the H&M alternative. Surprisingly, however, we did not find any supportfordifferencesbetweenthegroupsconcerningtheKappAhlquestion.Whythedirectresponses supportedthehypothesismightbeexplainedbytheriskofpurchasinganitemofinferiorqualityifthe masstigeproductandtheluxuryproductarebrandedsimilarly.
Tabel8.1.DownwardExtension,Hedonic.OnewayANOVAforH8a
DownwardExtension Directextension Subbrand CobrandH&M CobrandKappAhl ConsumerGroup Hedonic Nonhedonic Hedonic Nonhedonic Hedonic Nonhedonic Hedonic Nonhedonic Extension Mean 3.08 3.47 4.17 3.80 3.55 4.07 1,77 2.32 Significance 0.108 0.106 0.070 0.006 Supportforthe hypothesis: YesorNo No No No Yes
Tabel8.2.DownwardExtension,Perfectionist.OnewayANOVAforH9a
DownwardExtension Directextension Subbrand CobrandH&M CobrandKappAhl ConsumerGroup Perfectionist Nonperfectionist Perfectionist Nonperfectionist Perfectionist Nonperfectionist Perfectionist Nonperfectionist Extension Mean 3.07 3.63 4.08 4.25 3.45 4.52 1.86 1.93 Significance 0.026 0.475 0.000 0.718 Supportforthe hypothesis: YesorNo Yes No Yes No
Regarding the personal motives for luxury consumption, theory suggests that true luxury and luxury consumers want to consume true luxury objects that make appeal to hedonism and perfectionism. Therefore,hypothesis8band9bpredictthattheseconsumersshouldbehedonistsandperfectioniststo ahigherextentthanmasstigeconsumers,whichissupported.
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Tabel9.1.ConsumerGroup,Hedonic.OnewayANOVAforH8b
ConsumerGroup Trueluxuryconsumers Masstigeconsumers Luxuryconsumers Masstigeconsumers Hedonism_ix Mean 5.37 3.91 4.73 3.91 Significance 0.000 0.000 Supportforthehypothesis: YesorNo Yes Yes
Tabel9.2ConsumerGroup,Perfectionist.OnewayANOVAforH9b
ConsumerGroup Trueluxuryconsumers Masstigeconsumers Luxuryconsumers Masstigeconsumers Perfectionism_ix Mean 4.91 4.36 5.02 4.36 Significance 0.020 0.004 Supportforthehypothesis: YesorNo Yes Yes
Our most interesting finding regarding personal and interpersonal factors is that our hypotheses are almostunanimouslysupportedwhenitcomestothepersonalityoftrueluxuryandluxuryconsumers. Theory predicts that compared to masstige consumers, true luxury and luxury consumers should be snobs,hedonistsandperfectioniststoahigherextent,whichwefoundtotalsupportfor.Furthermore, theorypredictsthatthebandwagoneffectshouldbelowerfortrueluxuryandluxuryconsumers,which, however,onlywaspartiallysupported.
Another interesting finding is that personality types seem to be proper explanatory factors for differences in attitudes towards cobranding with a massbrand. This might be explained by, while making downwards extensions in their own name, the luxury company still controls production and distribution, which should be important for hedonists and perfectionists who value the personal pleasureofluxuryconsumption.Whencobrandingwithamassbrand,thehedonistandperfectionist consumer might believe that the two brands are involved with what Strach & Everett refer to as platformsharing(2006:115)inthecarindustry;ifthesamecomponentsareusedfortheluxuryand themassbrand,thepersonalpleasurewouldmostlikelybereduced.Forconsumersinterestedinthe interpersonal aspect of luxury consumption, such as snobs, we suspect that their loyalty towards the luxury segment is larger than the loyalty to a specific brand. Since it is more obvious that the brand entersthemassproductsegmentwhencobrandingwithamassbrand,thanwhenmakingadirectora subbrandextension,itislogicalthatthebrandisdilutedintheeyesofsnobs. 4.3.2ReferenceGroups Based on Simmels (2008[1908]) and, Solomon and Englis (1995) theories on reference groups, configurations of different lifestyles and modes representing different social groups current in the Swedish luxury market were defined. We performed small focus group of luxury consumers of both
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sexesindifferentages,whocameupwithsixdifferentconsumergroupspresentontheSwedishluxury scene,consistingofthreemoretraditionalluxuryconsumergroups(Classic,TrendyandBrat)andthree nontraditional consumer groups that have more recently appeared in the luxury landscape (Russian, DowntownandSuburbanite).
Thedifferentgroupswerethefollowing:
The Classic, representing a proper and casual look steaming from a British heritage, often in colourscaleecrutonavyblue The Russian, a more vulgar style accentuated with bling bling, dresses to show off and preferablyinexpensivematerials TheBrat,representingamore casualandsportystyleinfavouroflogosindicatingstatus,it is importantthatyoulooklikeyouhavethemoney TheTrendy,abohemianlook,withrelaxedandloosefitthatgivestheimpressionthatyouwork withsomethingcreative TheDowntownistheepitomeofnostyle,justgenericclothes The Suburbanite, a tacky style with screaming logos, does not hesitate to wear counterfeit garments
Inthesurvey,wechosenottomentionwhetheraconsumerwasTrendy,Brat,Suburbaniteetc,sincewe perceivedtheselabelstoinfluencetherespondentnegativelyforourpurpose.Weonlymentionedthe different attributes of the intended consumer group. These attributes were, after our focus group, testedquantitativelyinapresurveyperformedinthecomputerlab,consistingof30respondentswho hadtomatchaconsumertypewiththedifferentattributesproposed.
In the survey, we formulated five questions, asking the respondent about his/her general attitude towardsapersonwithcertainattributes, his/herattitude towardsdifferentlevelsofinteractionswith thepersonandhowtherespondentwouldfeelifthepersonshowedupinthesamebrandashim/her. For the different personality types we then performed a Cronbachs Alpha and since all resulted in a CronbachsAlpha>0,7wecreatedoneindexforeachluxuryconsumertype.
To test our hypothesis, we performed paired independent ttests for each combination of consumer groups. Since potential avoidance groups of luxury and true luxury consumers, we excluded the masstigeconsumersfromthetest.Wefoundunanimoussupportforourhypothesis(seetablebelow), since all traditional luxury consumer groups were rated significantly higher compared to the non traditionalconsumergroups.Furthermore,allnontraditionalconsumergroupswereratedlowerthan theneutral4,whereasalltraditionalconsumergroupswereratedhigherthantheneutral4.Therefore,
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weclassthenontraditionalconsumergroupsasavoidancegroupsforluxuryconsumers,andhence,by invitingthenontraditionalconsumergroupsintothebrandfranchise,thebrandriskslosingitscurrent customerbaseandexposesthebrandtotheriskofdilution.
Tabel8.ReferenceGroup.PairedSamplesTtestforH10
ReferenceGroup Classic Russian Classic Downtown Classic Suburbanite Trendy Russian Trendy Downtown Trendy Suburbanite Brat Russian Brat Downtown Brat Suburbanite Mean 4.93 3.74 4.93 3.14 4.93 3.21 5.53 3.74 5.53 3.14 5.53 3.21 4.82 3.74 4.82 3.14 4.82 3.21 Significance 0.000 0.000 0.000 Supportforthehypothesis: YesorNo Yes Yes Yes
0.000 0.000 0.000
Yes Yes Yes
0.001 0.000 0.000
Yes Yes Yes
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5.CONCLUSION&DISCUSSION
5.1Conclusion
Theresultsintheanalysisdemonstratethatthereisahighriskforbranddilutionwhenaluxurybrand choosestostartsellingproductsatmoreaccessiblepricesforalargermarket.Westartedoff withthe intentiontoexplainwhatfactorsareperceivedasdifferentfacetsoftheluxuryconceptandfoundthat actual price, perceived handmade content, perceived level of rarity and perceived level of exclusivity wereimportanttoexplaintheluxuryconcept.Masstigeproductshave,bydefinition,lowlevelsofthese qualities,which,moreover,becomeincreasinglydifficulttosimulate.Hence,theoryfromluxurybrand managementindicatesthatbringingmasstigeproductstothemarketinvolveshighrisksofdilutionfora luxurybrand. Wheninvestigatingtheattitudesoftrueluxuryandluxuryconsumerscomparedtomasstigeconsumers wefoundthattrue luxuryconsumersweremorenegativetowardsdownwardsextensionsinallthree suggestedmasstigecases.Regardingluxuryconsumers,theyweremorenegativeintwocasesofthree. Thus,thereisobviouslyanegativeattitudetowardsbringingmasstigeproductstothemarketfromthe regularcustomerbase. We made interesting findings regarding both the subbranding and cobranding marketing strategies. True luxury and luxury consumers evaluated the subbrand alternative higher than both the direct extension strategy and cobranding. Furthermore, true luxury and luxury consumers were snobs, hedonists and perfectionists to a higher extent than masstige consumers, but these personalitytypes were not more negative towards the subbrand strategy compared to consumers who scored low on these factors. Hence, the subbrand seems to act as a protective shield for the brand, and is the alternativethatwewouldrecommend,shouldabranddecidetodoadownwardsverticalextension. Regardingcobranding,theincreaseddistancethatthisstrategycreatestothemotherbranddoesnot seem to protect the brand; the attitude towards the subbranding strategy is higher than both co brandingwithH&MandcobrandingwithKappAhlforbothluxuryandtrueluxuryconsumers.Thesame is true for direct extensions in the KappAhl case. Hence, increased distance to the core brand means reduceddilutioneffectonlyuptoacertainpoint;afterthepointwherethedistancetothecorebrand makestheparentbrandlosecontrolovertheextension,itseemsasifdilutioneffectsincrease.Inour specificresearchthereisalsotheimageofanotherbrandtotakeintoconsideration. Furthermore, the theory regarding reference groups was useful for our purpose. We found that true luxuryandluxuryconsumershavecertainavoidancetowardsnontraditionalluxuryconsumersthatare
43
letintothebrandfranchisewhenbringingmasstigeproductstothemarket.Theunwillingnessforthe traditionalcustomerbasetobe associatedwiththese consumersisafactorthat aluxurybrandmust take into account in its branding strategy. Luxury brand management stresses the importance of protectingclientsfromnonclientsandthebigfromthesmall(Kapferer&Bastien2009).However,itis not only in the environment controlled by the brand that the luxury client risks running into the masstigeclient;duetothevisiblenatureofappareltheluxuryconsumerisexposedtoandwillrecognize themasstigeclientatanytime. Thepurposeofourthesiswastoexplainwhathappenstothebrandimageofluxurybrandswhenthey introduce masstige products to the market. By the use of theory from luxury brand management, marketing theory in terms of brand extensions, and theories of fashion we have showed that brand imageofaluxurybrandwillbedilutedasaresultofmasstige.
5.2Critique
Sincerespondentswereaskedthequestionsofthesurveyanonymously,webelievethatrespondents responses were honest. However, a general problem with surveys is that it is impossible to ask behaviourrelated questions regarding the future (Sderlund 2005); instead we have asked questions aboutattitudesandintentionsassumingthatthesefactorswillinfluencebehaviour. Analternativemethodtostudyingthephenomenonwouldhavebeentomaketwosurveysforthesame sample,onedistributedbeforeacertainbrandsmasstigeactivityandoneaftertoseehowattitudeand behaviourhaschanged.Theproblemswithsuchanapproach,however,wouldhavebeenthedifficulty toisolatethesalesofmasstigeproductsfromotheractivitiesperformedbythebrand;hence,internal validity would have been reduced. Furthermore, the feasibility of such a research design would have beendifficultsinceitwouldhaverequiredmarketinformationnotaccessibletothegeneralpublic. Anotherpointthathastobemadeinthiscontextisthatthequestionsinthesurveywereaskedona hypotheticallevel;evenifrespondentscanbefamiliarwithwhattheythinktheirreactionwouldbetoa specifichappeningonthemarketplace,itisnotcertainthattheywouldactuallyreactaspredicted.Had wechosentoperformanexperimentinstead,thiscritiquecouldhavebeenavoided.However,sincean experimentdesignwouldhaveobligedustoconcentrateonspecificluxurybrands,itwouldhavebeen impossibletoseparatethebrandspecificattitudeoftherespondentfromourresearch. Afurthershortcomingofthe thesisisthatevenifrespondentsansweredquestionshonestly,itmight havebeendifficultforthemtoactuallyrememberfactorsfromapurchasemadesometimeduringthe lasttwoyears,which iswhat weaskedthemtodo.However,since we askedabout therespondents
44
mostluxuriouspurchaseduringthelasttwoyears,wesuggestthatsuchapurchasemusthavemadean impressionandisconsequentlyeasiertorememberindetail.
5.3Implications
Accordingtotheory,luxurybrandconsumersandnonluxurybrandconsumersaredifferent(Strach& Everett2006).Withourfindingsinthisthesiswecanalsoaddthatdifferentlevelsofluxuryconsumers are different. True luxury and luxury consumers are more negative to different types of masstige. Furthermore,theirpersonalityisdifferent;trueluxuryandluxuryconsumersaresnobs,hedonistsand perfectioniststoahigherextent,whereasmasstigeconsumers are bandwagonconsumers toahigher extent than true luxury consumers. This finding indicates has important marketing implications, since thesedifferencesinvaluesandmotivationdefinitelyaffectconsumerbehaviour. Ourresearchalsoputsemphasisontheimportanceformanagerstoknowtheirbrandandconsidertheir positioning. What consumer group are they targeting and what motivates it? Whether a brands customerbaseconsistsofmainlyhedonistsorVeblenistswillhaveimportantimplicationsformarketing strategy. Furthermore, what level of consumers are they targeting? Is the brand a luxury brand or a masspremiumbrand? Anotherfindingrevealstheimportanceofthecocustomerasapartoftheproduct.Sderlund(2001) discusses that for example night clubs is an example of such a product. Afterour findings concerning referencegroupswestressthatinthepurchaseandconsumptionofaluxuryproduct,thecoconsumer constitutes a part of the experience. We have showed that traditional consumers of luxury do not botherluxuryconsumers,whereasthenontraditionaltypescertainlydo;invitingnewconsumergroups isatemptingstrategy,butappealingtoonecertaincustomergroupcanmakeothersrejectthebrand. What becomes problematic for a brand, however, is that this does not only relate to the purchase experience but also the consumption of a specific product or seeing somebody else consuming the product,whicharefactorsthatthebrandcannotcontrolinanyothersensethanavoidingtoproduce andsellproductsthataretooaccessible. Afurtherimplicationofourresearchisthatmanagersmustcreateadistancebetweentheluxuryand themasstigeproduct,whichissupportedbyanappropriatebrandingstrategy.Theuseofsubbrandsis clearly the optimal distance, since the attitude towards this extension strategy is more positive comparedtothedirectextension,whereastheattitudetowardsthecobrandingwithamassbrandis seenasmorenegativeincomparison.Thisclearlyhighlightstheimportanceofstayingincontrolofthe luxury brand, which improves possibilities to manage the clients every meeting with the brand. We suspectthatthispointalsoisrelevantconcerningdistributionissues.
45
5.4FurtherResearch
Littleresearchhasbeendoneintheareaofluxurybrandimagemanagement,especiallywhenitcomes to vertical brand extensions. The pyramid model has long been accepted as the only way to achieve somesortofvolumeinanotherwiseexclusivebusiness,andhenceitissurprisingthatthetopichasnot beencoveredtoalargerextentonanacademiclevel.Furthermore,withtheluxuryindustrybeingsuch an image intense business spending enormous amounts of money every year on marketing communications,moreresearchonthemanagementofitsimageisdefinitelycalledfor.
Tounderstandwhatdrivesconsumerbehaviourintheluxuryindustry,wemustfirstofallunderstand what factors contribute to the concept in consumers heads.Thetraditional facets of luxury are well known; by testing these factors we have come closer to understanding the importance of certain factors,butwithanadjustedR2of0,433itisclearthattherearestillotherfactorslefttoresearch.
Furthermore, the democratization of luxury is a fundamental market change that needs further research. In our thesis, we have limited ourselves to masstige, but there are other aspects of this conceptthathave not beenresearched.Forexample,designeroutlets, vintageshopsandendseason salesarecommonplacemarketingstrategiesthatmakeluxurygoodsmoreaccessiblebuttheireffecton brandimageisnotyetresearched.Moreover,thereisaconvergenceofgenresinasmuchasnonluxury brandsarestronglyinspiredbyandadaptluxurymarketingstrategies.
Due to the limited scope of our thesis, we have not touched upon the cultural aspect of luxury consumption. Strach and Everetts (2006) research on the U.S automobile market supports our conclusionsregardingluxurybranddilutionwhengoingintoareasthatarenolongerluxury.Hence,we arguethatourresultscanbegeneralizedforluxuryconsumptionontheEuropeanandNorthAmerican markets.However,researchfromemergingmarketssuchasAsiawithamoreintegrativeinterpretation ofluxury(Kapferer&Bastien2009)mightgivedifferentresults.
5.5FinalDiscussion
Themostcommonlyusedbusinessmodelintheluxuryindustryisthepyramidmodelwithitsexclusive summitanditsmassconsumerbaseatthebottom.Furthermore,alargenumberoftextbooksinluxury brand management discuss the tradeoff between exclusive brand image and fast growth and profits. However,thishasnotbeentestedbefore.
In our thesis, we have tested what factors luxury consumers associate with the luxury concept. Furthermore, we have tested whether attitudes and intentions change as a result of the masstige strategyandfoundthatmasstigedoesdilutebrandimage.SinceStrachandEverett(2006)madesimilar findings in their research on another category of public consumption goods, we believe there are general conclusions to be drawn from our study; other studies on luxury products that are publically consumedshouldsupportourconclusions.However,asalready stated,there areculturallimits, since these findings have been made in Western societies with a more individualistic interpretation of the luxuryconcept.
46
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Appendix1:TheQuestionnaire

Hej!
Tack fr att du vill vara med i den hr underskningen! Underskningen r en bidragande del till vr magisteruppsats p Handelshgskolan i Stockholm. Dina svar kommer att behandlas anonymt och kommer inte att anvndas i annat syfte n till att driva forskningen framt. Det r viktigt att du svarar p alla frgor! Om du knner dig osker p ngot, frga oss grna! Enkten tar c:a 8 minuter att besvara. Tack p frhand!
Fljande frgor berr endast klder, skor, vskor och accessoarer (ej kta smycken eller klockor)
Tnk p ett av de dyraste kldsplaggen/vska/skor/accessoar du har kpt de senaste tv ren som du tycker r vldigt lyxigt. Vilken produktkategori tillhr det? (Kryssa i enbart en)
Skor Vska Bijouteri Solglasgon Rock/kappa Jacka Kostym Kavaj Kjol/byxor Skjorta/blus Klnning Trja/topp
Annatnmligen..
Nu kommer ngra frgor om det plagget/vskan/skorna/accessoaren du angivit ovan

Fr hur mnga mnader sedan kpte du det? (max 24 mnader)mnader Frn vilket mrke r det? Ungefr vad kostade det?................................................................... Hur kpte du det? (vlj bara en)
Ordinarie pris Realisation Secondhand-pris Outlet-pris Annat nmligen
51
I vilken utstrckning anser du att plagget kan beskrivas med fljande egenskaper? (Ringa in hur vl du
tycker att det verensstmmer)
Ingen betydelse Kvalit Design Exklusivitet Hantverk Hgt pris Sllsynthet Anrik historia 1 1 1 1 1 1 1 2 2 2 2 2 2 2 3 3 3 3 3 3 3 4 4 4 4 4 4 4 5 5 5 5 5 5 5 6 6 6 6 6 6 6
Mycket stor betydelse 7 7 7 7 7 7 7
Totalt sett hur lyxigt tycker du att plagget/vskan/skorna/accessoaren r? (Ringa in hur vl du tycker
att det verensstmmer)
Inte alls lyxig
Vldigt lyxig
Till vilken grad mter plagget/vskan/skorna/accessoaren dina frvntningar gllande grad av lyx? (Ringa in hur vl du tycker att det verensstmmer)
Inte alls 1 2 3 4 5 6 7 Helt och hllet
Frestll dig ett plagg/vska//skor/accessoar som r vldig lyxigt i alla avseenden, hur nra eller lngt ifrn frn finner du ditt plagg/vska//skor/accessoar? (Ringa in hur vl du tycker att det
verensstmmer
Vldigt lngt ifrn
Kan inte bli nrmare
Vad r ditt helhetsintryck om plagget/vskan/skorna/accessoaren?

verensstmmer)
(Ringa in hur vl du tycker att det
Dligt Negativt Tycker inte om
1 1 1
2 2 2
3 3 3
4 4 4
5 5 5
6 6 6
7 7 7
Bra Positivt Tycker mycket om
52
Nu vill vi att du tnker p varumrket p produkten du valde

Om ditt valda varumrke sljer/skulle slja liknande produkter med ngot smre kvalitet till ett ngot lgre pris fr att ka frsljningen med exakt samma varumrke, vad tycker du d om varumrket? (Ringa in hur vl du tycker att det verensstmmer)
Dligt Lg kvalit Inte exklusivt Inte prisvrt Trkigt Negativt 1 1 1 1 1 1 2 2 2 2 2 2 3 3 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5 6 6 6 6 6 6 7 7 7 7 7 7 Bra Hg kvalit Exklusivt Prisvrt Spnnande Positivt
Om ditt valda varumrke sljer/skulle slja liknande produkter med lite smre kvalitet till ett ngot lgre pris fr att ka frsljningen med ett annat varumrke som nd visar tillhrighet med det ursprungliga varumrket, vad tycker du d om varumrket? (Ringa in hur vl du tycker att det
verensstmmer)
Dligt Lg kvalit Inte exklusivt Inte prisvrt Trkigt Negativt
1 1 1 1 1 1
2 2 2 2 2 2
3 3 3 3 3 3
4 4 4 4 4 4
5 5 5 5 5 5
6 6 6 6 6 6
7 7 7 7 7 7
Bra Hg kvalit Exklusivt Prisvrt Spnnande Positivt
Om ditt valda varumrke har slt/skulle slja produkter i samarbete med H&M, vad tycker du d om varumrket? (Ringa in hur vl du tycker att det verensstmmer)
Om ditt valda varumrke skulle slja produkter i samarbete med KappAhl, vad tycker du d om varumrket? (Ringa in hur vl du tycker att det verensstmmer)
53
Nu vill vi att du ven tnker p andra produkter som du kpt frn samma varumrke
Har du kpt fler produkter frn samma varumrke? Om nej, hoppa ver den hr sidan. Om ja, hur mnga produkter har du totalt kpt? st
Lista i kronologisk ordning de produkter du har kpt frn varumrket. Frsta saken .. Ungefr vad kostade det? Hur kpte du det? (vlj bara en)
Ordinarie pris
Andra saken .. ..
Tredje saken .. ..
..
..
Fjrde saken ..
..
Femte saken .. ..
..
Sjtte saken .. ..
Realisation
hand-pris Second Outlet-pris
Annat nmligen
Ungefr vad kostade det? Hur kpte du det? (vlj bara en)
Ordinarie pris
..
Realisation
hand-pris Second Outlet-pris
Annat nmligen
..
..
..
54
Nu vill vi att du tnker p andra personer som ocks konsumerar klder

Utg frn att du r singel nr du svarar p fljande frgor och ta stllning till mannens klder om du attraheras av mn och kvinnans klder om du attraheras av kvinnor.
Frestll dig att du ppnar en mans/kvinnas garderob, i den hnger fljande: Man
Loafers frn Tods Jacka frn Barbour Cashmere halsduk
Kvinna
Loafers frn Tods Kavaj frn Busnel Vska frn Mulberry
Vad tycker du om den hr personen baserat p klderna i garderoben?

Dligt Negativt Tycker inte om Inte attraktiv 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 Bra Positivt Tycker mycket om Attraktiv
Skulle du vilja prata med denna person i tio minuter? (Ringa in hur vl du tycker att det verensstmmer)
Aldrig i livet 1 2 3 4 5 6 7 Vldigt grna
Skulle du vilja g p date med denna person? (Ringa in hur vl du tycker att det verensstmmer)
Skulle du vilja ha ett frhllande med denna person? (Ringa in hur vl du tycker att det verensstmmer)
Ta nu stllning till mannens klder om du r man och kvinnans klder om du r kvinna.
Skulle du vilja ha p dig dessa klder? (Ringa in hur vl du tycker att det verensstmmer)
Hur skulle det knnas om ngon med dessa klder hade p sig ngot frn ditt ovan valda varumrke (som du angav p frsta sidan)? (Ringa in hur vl du tycker att det verensstmmer)
Dligt Trkigt Negativt 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 6 6 6 7 7 7 Bra Spnnande Positivt
Utg frn att du r singel nr du svarar p fljande frgor och ta stllning till mannens klder om du attraheras av mn och kvinnans klder om du attraheras av kvinnor. Frestll dig att du ppnar en mans/kvinnas garderob, i den hnger fljande:
Man
Sneakers frn Puma Jacka frn Brothers Halsduk frn Dressmann
Kvinna
Stvletter frn Din Sko Jacka frn Sisters Vska frn Wedins
Vad tycker du om den hr personen baserat p klderna i garderoben?

Dligt Negativt Tycker inte om Inte attraktiv 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 Bra Positivt Tycker mycket om Attraktiv
55
Frestll dig att du ppnar en mans/kvinnas garderob, i den hnger fljande:

Man
Sneakers frn Adidas Jacka frn Canada Goose Halsduk frn Kangol
Kvinna
UGGsfrnDinSko Jacka frn Canada Goose Monogramvska kopia av Louis Vuitton
Vad tycker du om den hr personen baserat p klderna i garderoben? (Ringa in hur vl du tycker att det
verensstmmer) Dligt Negativt Tycker inte om Inte attraktiv 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 Bra Positivt Tycker mycket om Attraktiv
56
Frestll dig att du ppnar en mans/kvinnas garderob, i den hnger fljande: Man Kvinna
Sneakers frn Paul Smith Jacka frn Whyred Halsduk frn Acne Stvlar frn Acne Jacka frn Anna Holtblad Vska frn Marc Jacobs
57
Loafers frn Gucci med monogram Kavaj frn Gucci Halsduk frn Dolce & Gabbana med monogram
Kvinna
Pumps frn Dolce & Gabbana med logo Yvig rvpls Vska frn Versace i guld med monogram
Pik frn Ralph Lauren Sneakers frn Gucci Halsduk frn Louis Vuitton med monogram
Kvinna
Jacka frn Moncler UGGs Vska frn Balenciaga
verensstmmer)
58
Dligt Negativt Tycker inte om Inte attraktiv
1 1 1 1
2 2 2 2
3 3 3 3
4 4 4 4
5 5 5 5
6 6 6 6
7 7 7 7
Bra Positivt Tycker mycket om Attraktiv
59
Nu vill vi att du svarar p ngra frgor om dig sjlv

Ungefrhurstordelavdininkomstlggerdupklder/skor/accessoarer? %
Markera hur vl fljande pstenden stmmer in p dig

Instmmer inte alls 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Instmmer helt vet ej 6 7 () 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () ()
Jag dras till unika objekt Det r mer sannolikt att jag kper en produkt om den finns i liten upplaga Vad en produkt fr mig att knna r viktigare n ngot annat Det r viktigt att andra gillar de varumrken jag kper Jag konsumerar bara lyxprodukter av emotionella skl Hg kvalit r viktigt fr mig Att anvnda vissa varumrken fr mig att knna vlbehag Jag kper sllan det senaste modet innan jag r sker p mina vnner gillar det Det r viktigt fr mig hur andra uppfattar mig Jag brukar vara frst nr det gller nya trender Jag gillar att ha saker som andra inte har En dyrare produkt r en bttre produkt Om jag kper ngot dyrt r det viktigt att det syns Pris r en indikator p status Jag dmer andra baserat p vad de har p sig Om en produkt blir fr vanlig slutar jag anvnda den Jag fredrar lyxmrken som bara ett ftal knner till Varumrken speglar vem man r Jag frsker alltid att kpa det bsta Om jag ser upp till ngon frsker jag kpa samma varumrken som honom/henne Jag skulle aldrig kpa ngot av dlig kvalitet Det r viktigt fr mig att smlta in i sociala sammanhang Genom anvndning av mrkesvaror imponerar jag p andra Jag lgger ner mycket tid och energi fr att hitta de bsta produkterna Jag dricker grna ett dyrt vin ensam hemma Jag hller mig uppdaterad p mode genom att titta p vad andra har p sig Det r viktigt fr mig att passa in i gruppen Jag tror att andra dmer mig som person utifrn de varumrken jag br Jag brukar konsultera ngon annan innan jag kper ngot Njutning r det frmsta sklet till att jag konsumerar dyra produkter Jag kper oftast det mest sljande varumrket Det r viktigt fr mig att ha de finaste sakerna
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3
4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4
5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5
60
Hur gammal r du? ............................................r

Jag r:
Man Kvinna
Vad har du fr mnadsinkomst?............................................
Uppskattningsvis hur mycket kper du klder/skor/vskor/ accessoarer fr varje mnad? ............................................
Stort tack fr din medverkan!
61
Appendix2:SampleofRespondents

Masstige Consumers n=68 4.79 4693SEK
Luxury Consumers n=68 5.18 6490SEK
TrueLuxury Consumers n=68 6.23 11724SEK
TotalSample LuxuryConsumers n=204 5.48 8006SEK
PerceivedLevelof LuxuryMean PriceonLuxuryItem Bought,Mean

Scale17(neg.pos.)
62

L U X U R Y F O R T H E M A S S E S B U T W H A T H A P P e N S T o T H e B R A N D ?

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StockholmSchoolofEconomics MasterThesis10pConsumermarketing Spring2010

LUXURY FOR THE MASSES

June11 2010 SSERoomC606

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Rarity Rarityisacentralcomponentofluxury.Realluxuryspeaksofraritywhenitcomestoingredients,know how,thebrandanditsvalues.Theextremeexampleisthesinglepiecefortheultrarich,suchashaute couturedressesandpaintingsofthegreatmasters(Kapferer&Bastien2009).

Hypothesis1:Luxuryisamultidimensionalconstructthatwillbeinfluencedbythefollowingvariables a) perceivedlevelofquality b) perceivedlevelofdesign c) perceivedlevelofprice d) actualprice e) perceivedleveloflineage f) perceivedlevelofhandmadecontent

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

areas,whereaccesstotheoryhasbeenmoredifficulttofind,wehaveusedtheinductiveapproach.Our approachcanthusbestbedescribedasabductive.Webelievethatthisapproachhasgivenstructureto ourworkwhileatthesametimeallowingforcreativity,henceresultingindeeperunderstandingofthe effectsofthemasstigestrategy.

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses

HEDENMARK & WESTERLING

Luxury For the Masses