Luxury Consumption Motives of Chinese Female Consumers - Research Proposal Example

Research Proposal Proposed research topic: A Research on Luxury Consumption Motives of Chinese Female Consumers Purpose: Traditionally it has been found that Chinese men are the consumers of luxury goods, chiefly because of the tradition in the country to gift in the corporate and government sectors (Joy 2001). However, due to the growing financial and social independence of the Chinese women, they are also forming a major share in the luxury brands market in China (Fish 2010). Various studies have been conducted to project the increase in the number of Chinese women consumers for luxury products, however, not much studies have been done to understand the luxury consumption motives of the women consumers in China. There are various motivating factors that may impact the luxury consumption among women consumers in China (Doctoroff 2005). These factors may include individual taste, social and personal motivations, quality motivations etc. Thus, through the proposed paper, the researcher would attempt to understand the motivations of the Chinese women consumers behind buying luxury goods. The main purpose of the paper is to understand the underlying motivations of the Chinese women consumers for purchasing luxury goods. The paper would seek to indentify the trends among the Chinese women consumers regarding buying of luxury goods. It would also focus on certain luxury brands and how these brands are being perceived by the women consumers in China. The researcher expects that the paper would provide a considerable outlook on the women luxury goods consumers in China, especially focusing on the motivations behind buying such goods. The results would help various luxury brands planning to set shop or already have established their retail stores in the country to understand the mindset of the women consumers and cater to them as per their preferences. Further, these companies can also mould their advertising and marketing campaigns as per the requirements of the women consumers. For instance, if the report finds that the women consumers are more inclined to buy luxury products due to social motivations, the brands may decide to promote their products as social aspiration products and attract more consumers. The women Chinese consumers buying luxury products are growing steadily in the country and therefore, it is essential to understand their mindset related to their buying preferences for luxury goods. Thus, the proposed paper would focus on finding out the motivations for Chinese women consumers to buy luxury products. Background: The proposed paper would seek to find out the underlying motivations of the Chinese women consumers for buying luxury products. As the segment of luxury product is growing steadily in China, it is imperative to understand how women are contributing towards this sector and what is driving them towards such luxury products. The idea behind this proposed subject matter came from the basic background research that is being explained below. The chief among them are the changes in the characteristics of the Chinese women consumers and luxury brands buying pattern in Chinese women. The study of various previous surveys and researches indicated that the Chinese women consumers are constantly becoming independent socially as well as financially. Further, they are the dominant member in the family to take decisions regarding household expenses. The greater number of women workers has also given rise to independent, single women. All these factors have given rise to an increase in the number of Chinese women consumers buying luxury products (Movius 2006; McKinsey Quarterly 2006). Understanding Chinese women consumers The ever changing business environment, the development in education and availability of commercial opportunities in China has influenced the economic status of the modern women in the country. The Chinese government has been putting greater emphasis on providing gender equality by developing various government regulations and policies. This has also led to the development of the Chinese society and especially Chinese women who are now being able to contribute equality in the society, economy as well as at home (Doctoroff 2005). Further, development in education has also resulted in the advancement of education among women with many Chinese women preferring to undertake higher education and professional courses to advance their career path. The contribution of education is evident in the development of the urban cities of China, where women are also securing high-paying jobs and upper management roles. Experts believe that this unprecedented growth in the number of female executives in China would drive the consumption activities in the country as these women have greater economic and social independence (Luxury’s new empire 2004). The country’s government also made several laws and regulations to create equal employment opportunities for the women employees and to ensure that these employees should receive equitable salaries. This has also helped greatly in improving the financial and social status of women in China. Surveys have found that around 88 per cent of the women in China in the urban areas would prefer to work and earn even when their families and husbands are able to support them financially. This projects the fact that women are becoming independent day-by-day and contributing equally towards the household (Doctoroff 2005). It has also been witnessed that with gaining higher education, better income levels and employment opportunities, women in China are becoming independent and many are deciding to delay marriages and some even are planning not to marry at all. Studies suggest that due to the growing number of young professionals seeking to work in the urban regions of the country, the number of households with single-person have grown by 25 per cent in the past five years (Fish 2010). If one can understand these development trends in China, it would help in eventually understanding the consumer pattern, the buying power, lifestyle and purchasing behavior of the future Chinese consumers. For instance, in China one of the most significant consumer groups is the Little Emperors or the people born in the 1980s, the era of the One-Child policy of the country. Due to the growth in the economy in the country and also being the only child in the family of six adults – two parents and four grandparents, these young adults are able to spend freely without any guilt factor as they are aware of the fact that all their needs would be fulfilled by their family. This consumer group also does not believe in saving like their parents and grandparents, and spend their salaries on purchasing expensive and luxurious items (Dou et al 2006). With regards to the Chinese women, due to the higher employment rate and quality of education imparted to them, the consumption pattern in these women have also changed drastically in the past few years, especially in the urban areas. It has been found that the Chinese women have gained greater economic and social independence in the recent times, which has translated into greater buying power. Therefore, many of the consumer and retail brands are wooing these working women with glossy advertisements and campaigns (Dou et al 2006). Further, the position of the women in the household has also increased significantly with the women gaining more financial independence. Although most of the Chinese women, around 74 per cent, earn less than their partners, they have considerable amount of dominance over how the money should be spent in the household. Studies have found that around 78 per cent of the married Chinese women take decisions regarding the purchasing of apparels and grocery at home. Further, with regards to bigger purchases such as car, house or other luxury products, 23 per cent of the married Chinese women stated that they are able to make such decisions independently, while the rest 77 per cent said that such decisions are taken after consulting with their spouse. However, the second group also stated that their preferences were strongly taken into consideration while undertaking such decisions (Fish 2010). Most modern women in China also take decision regarding how to spend their own salaries and only two per cent indicated that their spouses make the final decisions about their wages. Most women in China believe in keeping their money for themselves while using their husband’s money for the household expenses. Thus, the consumption power and the decision to spend largely rest with the women consumers in China (Bang 2008). Chinese women, especially the working women, are also living a consumer-driven lifestyle and believe in spending rather than saving their money. It has been found that around 65 per cent of the women consumers in the country spend around 60 per cent or over of their wages, saving only about 35-40 per cent of their salaries. Further, the amount of saving is not directly linked with the salary earned or the position held by the women employee. As per a survey by cjol.com, an HR website, women in the higher salary brackets and higher positions are less inclined towards saving and more towards spending their salaries. On the other hand, women who are earning less and are at lower ranks are likely to save more. Therefore, the power of spending is higher in women who are earning more (Fish 2010). It is estimated that the spending power of women in China would grow manifold in the next 10 years. As per a report by Mastercard, the buying power of single women and married women with no children would increase to US$ 260 billion in 2015 from US$ 180 billion in 2005. Further, elderly women who are living all alone with their children living in other parts of the country or world would also witness higher purchasing power and it would increase from US$ 100 billion in 2005 to US$ 150 billion in 2015 (China said to be biggest luxury consumption market by 2015 2006). Luxury brands and Chinese women The luxury market in China is considered to the second largest in the world. It is also becoming one of the fastest growing markets due to the growing demand for luxury goods by the urban Chinese women. The market is witnessing growing number of luxury brands opening their retail outlets in the country in the past few years, which has helped in creating a niche luxury brands market in the China (Morisset & Lee 2008). Further, these brands are not just found in major cities such as Beijing and Shanghai but also in tier II cities like Harbin, Shenyang, Qingdao and Tianjin. These tier II cities have population of around five million people and therefore the luxury brands are targeting these people by setting shops in these locations. Further finding a suitable location in the major cities have become a problem for these brands and therefore they have diversified into these smaller locations, tapping the upper strata and working women in these cities as well (Hedrick-Wong 2007). These luxury brands are not only giving an option for the consumers to spend but are also creating aspiration value for such products as well. As per a report, ‘The Cult of the Luxury Brand: Inside Asia's Love Affair with Luxury’, the consumers in China mostly buy luxury goods to show-off as possession of such items also define their wealth (Li et al 2007). As compared to the western consumers who are more inclined towards subtle branded products, the Chinese consumers are buying shiny goods and products (Xiao Lu 2008; Sun et al 2004). Women consumers, especially those born in the 80s are flexible enough to spend considerable amount of their salaries on buying luxury goods. As these people have great confidence in the economic growth of their country, they are willing to spend more money on buying luxury goods. This section of the society are perceived to be much more sophisticated than the older generations as they are willing to purchase to maintain their concept of social status, rather than saving for their future. This segment would remain regular luxury consumers even after crossing 30s (Dou et al 2006). As per a report by Goldman Sachs released in 2006, China is expected to witness an annual growth of around 25 per cent in its luxury consumption in 2015. Further, its luxury consumption would account for around 29 per cent of the market share of the world in 2015. Most Chinese consumers buy luxury brands due to the similar reasons for which other consumers throughout the world buy these products, the aspiration value for such products. Nonetheless, as per a TNS survey, the chief reasons for purchasing such products by Chinese consumers are self-reward and status. The survey also found that most people had positive attitude towards such luxury brands, with over 70 per cent stating that the luxury products helped them in augmenting their status. Further, more than 60 per cent people said that they purchased such products for rewarding themselves. Further, the luxury goods consumption in the country is driven by individual items, which means that consumers buy the latest products and collection (Batra & Homer 2004). For instance, the Chinese luxury market is currently dominated by the perfume, cosmetics and watches segments, which are mostly bought as reward. Such a consumer behavior is very different from the consumers in the developed markets where the consumers prefer to buy products that cater to their personal needs and tastes (Wong & Ahuvia 1998). It has also been found that till the recent times, 90 per cent of the luxury shopping used to be done by men. However, with the women gaining financial and social independence, they are also spending more on luxury items. Young Chinese women are in fact overtaking the businessmen in the age group of over 35 years in their buying pattern of luxury goods (Movius 2006). The modern Chinese women who are mostly doing shopping for luxury brands include celebrities, business women as well as rich wives (Gountas & Gountas 2007). Such empowered buying power to the Chinese women regarding luxury goods could be seen in constant with the world wide trends as well, wherein the buying power of women, especially wealthy women, has increased significantly due to the their economic independence and power (Gountas & Gountas 2007). Further, the buying power of women is expected to increase further with women outperforming men in their careers, businesses and academics. A study by Pao Principle, a US-based consultancy, found that Chinese female luxury consumers use around 11 per cent of her salary to buy luxury handbags itself. Further, it has been found that Chinese women in 2009 saved only around 24 per cent of their income, as compared to around 55 per cent in 2006, in a survey conducted by a magazine, Women of China. Although, Chinese men had been the primary consumers buying luxury goods, mostly due to the custom of gifting in the corporate and government sectors, women are also steadily becoming a part of this growing sector (Joy 2001). In fact, till a decade ago, only around 20 per cent of women consumers were luxury customers, but the figure has increased to 50 per cent in 2009. It is estimated that the figure may increase to 55 per cent in the next five years (Fish 2010). Scope: I will conduct a survey over a period of six weeks from October 1, 2010 to November 12, 2010. I will conduct the survey in various luxury stores in China by interviewing the consumers there. I am expecting to interview at least 250 women consumers visiting such stores. I would use a structured interview format and interview these consumers in an informal set-up. Methodology: In order to conduct the proposed research, the following methodology would be used: Conducting literature review: A through literature review would be conducted to find out about the previous studies and researches on the subject of Chinese women consumers buying luxury goods. Creating a questioner: Based on the literature review and other observations, a detailed questioner would be prepared which would be used to understand the underlying motivation behind buying luxury goods by Chinese women consumers. The questioner would be structured and would have multiple questions, with a few open-ended questions. Conducting interviews: A few luxury retails would be selected which has high foot fall. Prior permission from the management would be sought to conduct the interviews. The interviews would take place in a very informal manner and first and foremost the permission from the participants would be taken. They would be assured of their anonymity and that the data would only be used for the purpose of the proposed research only. While conducting the interview, it would be taken care of that the participants are not uncomfortable with certain questions. Further, in case they want to leave the interview in between, they would not be pestered for completing the same. Undertaking situational analysis: Together with conducting the interview, I would also undertake a situational analysis and attempt to understand the behavior pattern of the consumers, the attraction value for certain products and brands, the sensitivity towards pricing of a product and the emphasis on quality, which can be understood through their conversations with the store helpers. Conducting analysis: I would analyse the data collected and formulate charts and graphs to represent the results. Further, these results would be discussed in detail to find out the trends in the luxury brands markets and the perceptions about these products by women Chinese consumers. Writing the report: The final report would be a combination of the relevant theories on the subject matter, previous research and assumptions as well as the findings from the current survey. The proposed paper would also provide various recommendations for the luxury brands to capture greater market share among the Chinese women consumers. Research limitations The proposed paper may have the limitation regarding the survey procedure. It might be difficult to convince the retail stores and get permission for conducting the interviews. Further, it would require added skills to interview the participants and convince them for the interviews. The figure of 250 participants might be an ambitious one and would solely depend on the number of respondents agreeing for the interviews. As the interview has to be conducted using a targeted consumer section, a generic mail to every consumer cannot solve the issue. Further, online surveys are also not the best method for such researches. Therefore, it is imperative to conduct the surveys physically, which can be quite time consuming. Therefore, I believe that in case of difficulty in finding respondents for this particular research, it may be proposed that the time frame should be increased or the number of participants should be reduced. References: “China said to be biggest luxury consumption market by 2015”, Sino Cast China Business Daily News, 12 February 2006. “Luxury’s new empire” 2004, The Economist, 371 (8380). Bang, Y.T. 2008, “How Female Consumers Think of Themselves, Make Consumption and Show Loyalty to a Brand”, International Review of Business Research Papers, 4(3), 56-63. Batra, R., & Homer, P. M. 2004, “The Situational Impact of Brand Imagery Beliefs,” Journal of Consumer Psychology, 14(3), 318-330. Churchill, G. A. Jr. 1979, “A Paradigm for Developing Better Measures of Marketing Constructs,” Journal of Marketing Research, 16(1), 64-73. Doctoroff, T 2005, “Billions: Selling to the New Chinese Consumer,” Martin Sorrell, Palgrave MacMillan. Dou, W., Wang, G. and Zhou, N. 2006, “Generational and regional differences in media consumption patterns of Chinese generation X consumers,” Journal of Advertising, 35 (2), 101-110. Fish, I.S. 2010, “Chinese Women Go Shopping”, Newsweek, viewed September 15, 2010, http://www.newsweek.com/2010/08/27/chinese-women-go-shopping.html#. Goldman Sachs Annual Report (2006), http://www2.goldmansachs.com/our_firm/investor_relations/ financial_reports/annual_reports/2006/pdf/Goldman_Sachs_2006AR.pdf Gountas, J., & Gountas, S. 2007, “Personality Orientations, Emotional States, Customer Satisfaction, and Intention to Repurchase”, Journal of Business Research, 60(1), 72-75. Hedrick-Wong, Y 2007, “Succeeding like success: The affluent consumer of Asia,” John Wiley & Sons (Asia), Singapore. Joy, A. 2001, “Gift Giving in Hong Kong and the Continuum of Social Ties”, Journal of Consumer Research, 28(2), 239-256. Li, J. J., & Su, C. 2007, “How Face Influences Consumption: A Comparative Study of American and Chinese Consumers”, International Journal of Market Research, 49(2), 237-256. McKinsey Quarterly 2006, The Value of China’s Emerging Middle Class. Morisset, D and Lee, L 2008, “Welcome to the China luxury summit 2008, viewed September 15, 2010, http://www.chinaluxurysummit.com. Movius, L. 2006, “Decoding China’s luxury market“, Women’s Wear Daily. Sun, T., Horn, M. and Merritt, D. 2004, “Values and lifestyles of individualists and collectivists: a study on Chinese, Japanese, British and US consumers”, Journal of Consumer Marketing, 21(5), 318-331. Wong, N.Y. and Ahuvia, A.C. 1998, “Personal Taste and Family Face: Luxury Consumption in Confucian and Western Societies,” Psychology & Marketing, 15(5), 423–41. Xiao Lu, P 2008, “Elite China: Luxury consumer behavior in China,” John Wiley & Sons (Asia), Singapore. Appendix I: Questioner Please rate the following statements on the scale of 1 to 5: Statement Strongly disagree (1) Disagree (2) Neutral (3) Agree (4) Strongly agree (5) I often buy a luxury product that defines my uniqueness I buy luxury products solely for gifting purposes I am strongly influenced by my peers and friends to buy a luxury brand or product I often buy a luxury product to reward myself for my success The luxury brands define my personal tastes and choices I do not believe in buying products that are being purchased by almost everyone I like buying flashy luxury brands I buy luxury brands due to their superior quality I like to buy similar luxury products as my friends and family I spend at least 25% of my income on buying luxury brands Do you believe most women buy luxury products to show-off Are you emotionally attached with your preferred luxury brand Would you continue to buy your preferred brand even if they hike the prices by 20% Is pricing of a product a major consideration for your buying decision Do you believe in creating an individual style through your luxury brand Open ended question: What motivates you to buy a luxury brand and why? 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