A Closer Look At Luxury Consumption In Asia
From Luxury society
Asia may be an emerging sweet spot for luxury, but consumers in each region have varying value perceptions and buying behaviours, so brands should steer clear of the cookie-cutter approach if they want to truly succeed, explains Paurav Shukla, Professor of Luxury Brand Marketing at Glasgow Caledonian University.
While luxury in Asia is booming with the rise of new money and an affluent consumption class, the picture is not all rosy for the luxury brands within or outside of Asia.
Some remarkable examples of this struggle involve Prada and Mulberry in China, Aigner and De Grisogono in India and Ermenegildo Zegna – entering, leaving, and re-entering the markets. Moreover, with Chinese gift-giving on sudden decline with the subtle messages from its political leadership, many luxury brands have their work cut out for the present and future in figuring out how to succeed in these rapidly growing, but ever so competitive and fickle markets.
In a recent research paper, published in the journal ‘Marketing Letters’, my co-authors – Jaywant Singh (Kingston University, UK) and Madhumita Banerjee (American University of Sharjah, UAE) – and I attempted to decipher the underlying value perceptions that drive luxury consumption among three of the largest emerging Asian economies, namely, China, India and Indonesia.
The following is a presentation of some of our findings, which will discuss how these consumers differ significantly from each other, the underlying problems at hand, and possible ways of engaging luxury customers in each of these markets.
“ Asia can no longer be approached as a laggard market, where consumers will buy anything foreign ”
Why Are Some Companies Struggling In Asia?
I’ll start with the challenges facing luxury brands first. Analysts ascribe the underperformance of some luxury brands in Asia to over-expectations from the market and, particularly, to the treatment of many Asian markets as homogenous.
Asia cannot be approached as a laggard market anymore, where consumers will buy anything just because it’s foreign, or has European heritage.
While business analysts and research scholars emphasise the diversity and uniqueness of individual country markets in terms of geography, demography, culture, and consumption patterns, market realities suggest that many Western luxury businesses might have erred in considering Asia as a homogenous market.
Indeed, many times in our own travels, we have seen the same adverts, the same message and the same communication means employed by luxury brands across Asia to serve these vastly different markets.
This homogenous treatment of Asian consumers baffled us and hence we decided to investigate further and ask some key questions as to:
• What underlying values consumers in Asia associate with luxury brands? And;
• How can a luxury brand profit from these rapidly growing, competitive and diverse markets?
Prada Eyewear, 2014 Campaign
We all buy and consume what we believe offers value. Hence, value is one of the fundamental drivers of consumption decisions.
For regularly consumed products, value can be largely derived as a trade-off between costs (mostly price) and benefits (utility). However, in case of luxury goods, this equation becomes significantly more complex as costs are considerably high and, in addition, the benefits are not just utility-oriented but significantly more hedonic in nature at a personal as well as social level.
Using the philosophical framework developed by Berthon et al. (2009) who employed Karl Popper’s “Three Worlds” hypothesis – we examined the constituent value perceptions among Chinese, Indian and Indonesian consumers.
Based on earlier debate, we conceptualised luxury brands with three distinct value-based dimensions:
• Experiential, and
The symbolic dimension is reflected in social signals which are constructed through the narrative associated with the brand’s meaning, myth, stories, and consumers’ own wealth, prestige, and social status.
The functional dimension relates to the material embodiment which reflects in physical manifestations, such as quality of material and craftsmanship.
Finally, the experiential dimension is associated with subjectivity and is idiosyncratic, as it differs from person to person. It is reflected through sensations, feelings, cognitions, and behavioural intentions aroused by brand-related stimuli such as logo, packaging, advertisements, and store environment.
Incorporating the instrumental and expressive aspects of the theory of impression management, we extended Berthon et al.’s (2009) three-component model by including two specific sub-dimensions for symbolic value: other-directed symbolism and self-directed symbolism.
We argue that symbolic value is reflected not only through social signals (i.e., instrumental aspect — other-directed symbolism) but also through possessions that help build a unique image for the desired personality (i.e., expressive aspect — self-directed symbolism).
We then asked luxury consumers in India, China and Indonesia about their luxury value perceptions with a sample size of more than 600 luxury consumers and employed structural equation modelling to analyse the results.
“ We asked luxury consumers in India, China and Indonesia about their luxury value perceptions ”
In India, the construct of other-directed symbolism is found to be significantly related to luxury value perceptions, conforming to the crucial role of the instrumental aspect of impression management.
Thus, Indian luxury brand consumers seem to be significantly influenced by what others think of them and, therefore, consume in a way to influence others in order to achieve societal acceptance, reflecting the hierarchical nature of the society (vertical collectivist).
Basically, they use luxury brands most to indicate social status and, more importantly, as a means to symbolise achievement, wealth and prestige.
Whilst Indian consumers were predominantly influenced by other-directed symbolic value, luxury value perception of Indonesian consumers, on the other hand, is influenced by the self-directed symbolism of luxury brands. Self-directed symbolism resonates with expressive self-presentation, wherein the individual seeks to enhance the self through consumption.
This result, while counterintuitive to the general perception of Indonesia as a collectivistic society, can be explained from the lens of equality perspective (horizontal collectivist). While Indonesian consumers in general would see themselves as similar to others, they will not submit to in-group authority if the consumption choice is distasteful to them.
In comparison, for Indians, luxury goods shopping is not an individual experience. It is rooted in the societal process wherein family and friends go together and the decision is group-related rather than an individual decision – hence, stronger other-directed rather than self-directed symbolism is observed.
“ Indonesian consumers show significant impact of experiential value on their luxury value perceptions ”
Indonesian consumers also show significant impact of experiential value on their luxury value perceptions, which is consistent with the earlier result relating to self-directed symbolism.
Experiential value perceptions represent store-level and personal pleasure derived from the consumption of luxury brands.
In this regard, Indonesian consumers use luxury shopping as a way to forget their problems. The differences in the symbolic value perceptions between Indian and Indonesian customers are also consistent with what is observed in prior literature which shows that social and self-directed behaviour vary as per cultural differences.
Functional value perception, in particular, has a significant impact on luxury value perceptions among Chinese consumers.
However, as a value perception this was significant across all three countries in the study. This result shows that consumers evaluate the functional value of a luxury brand in terms of the status it brings and therefore are willing to pay a premium price.
The three countries have witnessed rapid economic growth over the last two decades and a consequential increase in aspirational consumers. These consumers associate prestige through the price and product quality perceptions and therefore buy luxury brands, which are perceived to accord higher status in the eyes of their societies.
How To Customise Your Luxury Strategy In Asia
Marketers can benefit from knowledge about the differences (and similarities) in constituent luxury value perceptions and customise or standardise their marketing strategy accordingly.
For instance, a luxury brand positioning strategy in Indonesia should emphasise how the brand could enhance a consumer’s self-image and could make them feel good about themselves, as well as focus on the experiential aspects of buying and using the brand. Moreover, a brand will have to offer a unique store-level experience to Indonesians.
On the other hand, a luxury brand in India should focus more on how the brand could add to the buyers’ social status.
Marketing a luxury brand to Indian consumers by stating its European heritage and highlighting foreign origin may not work as these consumers are well-travelled and aware of global trends.
Moreover, they have a strong Indian luxury heritage connection, so a luxury brand which wants to establish itself in the Indian market will have to work on social acceptability and symbolism of achievement, prestige and wealth.
This wealth connection is also integrated with functional value, as Indian consumers associate higher price with higher quality and desire products that are harder to get.
The higher price and social symbolism also adds significant meaning to a luxury brand for Chinese consumers also.
Thus, overall, the results gathered to date suggest that luxury brand marketers should customise their positioning and communication strategies for symbolic and experiential value perceptions across the three countries.
Given that functional value has a significant impact on luxury value perceptions in all three countries, marketers could achieve scale economies by standardising their strategy for this dimension of luxury value perception.
Reference: Shukla, Paurav, Jaywant Singh, Madhumita Banerjee (2015), “They are Not All Same: Variations in Asian Consumers’ Value Perceptions of Luxury Brands,” Marketing Letters, Forthcoming.
Additional editing by Daniela Aroche, Editorial Director of Luxury Society
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