Is There a Long-Term Consuming Behavior as the Change of Chinese Perceived Value in Luxury Market - Literature review Example

Literature Review Is There a Long-Term Consuming Behavior as the Change of Chinese Perceived Value in Luxury Market? Student’s Name: WEN WEN Student’s Number: s3482297 Professor’s Name: CONTENT PAGE Executive Summary This paper examines whether there is a long-term consuming behavior among the Chinese population given the change in the country’s perceived value in the luxury market. In order for the study to achieve its intended objectives, it is essential to get a good and current picture of the Chinese luxury market. The consumer’s willingness to spend more income is typically influenced by their perception that there is a unique value attached to the luxury products. In simple terms, consumer behavior plays a significant role in their spending habit especially on luxury commodities. A study conducted to examine the willingness of the Chinese consumer to spend more of their income on luxury products such as luxury indicated that perceived value is a factor that plays a significant role in the Chinese consumer spending behavior. Li and Kambele (2012) reported that two different groups of users lacked genuine luxury fashion brand buying experience, however, their perceived product value indicated a significant impact on their willingness to pay for luxury items particularly fashion. The paper outlines a thematic, theoretical literature of a number of theories that examine and explain consumption and a spending habit of the Chinese consumers in the luxury market. Chapter 1 This chapter offers relevant and thorough literature review that will help in identifying a gap in the existing literature and suggest possible ways or provide adequate information to bridge this gap. This chapter of the paper examines whether there is long-term consumption habit in relation to a change of Chinese perceived brand value in the luxury market. Unlike other ordinary literature reviews that use annotated bibliography approach, this paper adopts a thematic approach to reviewing existing literature about consumer behavior in relation to various factors that influence the spending habits of consumers. The section is organized in three parts including the introduction, main literature, and conclusion. Other crucial elements in this paper will be analyzed and explained in the following chapters. Chapter 2 1. Perceived Brand Value in the Luxury Market Researchers usually measure perceived brand values using various dimensions. Brand equity gives value to product users by increasing their understanding of and ability to digest information, their contentment and confidence in purchasing decision. Li and Kambele (2012) assert that perceived brand value get a lot of attention from researchers as a vital research construct in the existing marketing literature. Here, brand value of a luxury commodity is defined as the disparity between consumer feedback to focal brands compared to unbranded goods when both products maintain the same response in marketing and equal product characteristics (e.g. Yoo and Donthu, 2001). Li and Kambele (2012; Vigneron and Johnson, 1999) suggest five perceived values that significantly influence consumer decision processes concerning luxurious brand selection. These include unique value, conspicuous value, emotional value, social value, and quality value. These are fundamental factors that influence the likelihood of having a long-term consumer behavior of the Chinese perceived value in the luxury market. 2. Conspicuous Value Jamshidinavid et al (2013, p. 290), the concept of perceived apparent value of luxury goods refers to the theory of consumption of luxurious products, which shows the social status. In relation to conventional standards, the price of these luxurious commodities is usually high and influenced greatly by individual value. Zhan and He (2012, p. 1453) notes that consumers naturally choose alternatives that have the lowest cost when the requirements for commodity benefits are achieved. However, when a comparison is drawn against consumers, high value-conscious product users are said to be more sensitive to the ratio between benefit and cost of the product hence, they tend to put more pressure on seeking products that give the best values (Zhan and He, 2012, p. 1453; Lichtenstein et al, 1990). In the current luxury market, China can be said to be a show off stage where people are tripping over one another in attempt to acquire the symbols of riches and showing them in a the most noticeable manner. Therefore, the measure of this concept value involves items such as “extremely expensive” or “for wealthy” that quickly connect to the ideologies of perceptions of price and social status that is associated with the purchased luxury brand. Zhang and Kim (2012, p. 70; Adams, 2011), the Chinese consumers buy luxuries conspicuously to show wealth and social status to contain societal expectations. The ideology behind spending more income on luxurious products could be said to be that people consume luxurious commodities just to communicate the individual’s social status and get across a symbolic value. Since things such as social status and riches occur in elongated periods, particularly generations, the consumers tend to spend a lifetime changing from one expensive product to another. Zhang and Kim (2012; Chen and Sethi, 2007), notes that middle-class consumers in the Chinese luxury market perceive luxury goods as an indication to become associates of the elite social circles. Unlike the Chinese consumers who aspire for social recognition and desire for a symbolic value exhibit these habits by engaging in the purchase of luxurious products, Malaysian prefer quiet brands. Individualist values are more valued than group values; hence, marketers of luxury brands face the challenge of promoting a perpetual spending habit for a particular group of consumers in the Malaysian luxury market. Bagheri (2014) notes that while purchasing the quiet brands, these customers promote personal gratification instead. From the study conducted about the Malaysian consumer behavior in the luxury market, it revealed that the consumers who wish for social recognition and a sense of accomplishment do not associate themselves with loud brands (Bagheri, 2014). Perhaps, they have been found to possess negative attitudes towards buying flashy products with the intentions of showing off their wealth and social status. 3. Unique Values Uniqueness is another psychological characteristic that is prevalent among the Chinese consumers and plays a significant role influencing what the consumers spend their income on. Zhan and He (2012) identify the need for uniqueness as a third psychological trait among the habits of the Chinese consumer with respect luxury brands. The need for uniqueness of customers has been established to be a vital determinant for customer ownership acquisitions and a symbolic value. Li and Kambele (2012), defines uniqueness as the extent to which consumers believe that a certain brand is different from the standard competing brands. Given the individual-level perception of luxury products, the conspicuous value of a brand encompasses the brand’s perceived use in showing the wealth and social status of customers. Conventionally, a familiar brand name carries certain symbolic distinctiveness within a particular society (Li and Kambele, 2012, p. 1518; Keller, 1993). Based on the idea of uniqueness for luxury products, consumers often use these luxury brands to classify themselves or discriminate themselves from other groups of users. Wang and Foosiri (2013, p. 5) define the concept of uniqueness as rare commodities that have more influence on consumer demand and promote the perception that the brand possess distinctive, popular and pricey characteristics. The uniqueness is required for luxury brands to increase the customer’s self-image and social status by conforming to one’s personal taste, proving to be different from the distinct products or providing a different consumption. Zhang and Kim (2013, p. 71) acknowledge that luxury products such as fashion and new fashion items that are excessively sensitive to brand names influence the consumers decision to purchase these products. These products also have a greater need for distinctiveness since they use clothing to indicate individuality and rareness and regard visual aesthetics as crucial factors during product evaluation. Here, the need for uniqueness for luxury brands and the major concept of uniqueness play a significant role in enhancing social comparison and the extent of consumer behavior given their awareness of acquiring self-knowledge and taking part in self-reflective ideologies. 4. Social Values Li and Kambele (2012) define social value to mean the people’s desire to own luxury fashion brands that might be used as symbols for identifying the group membership. In an ordinary life scenario, consumers could use expensive fashion products to adhere to their professional standards or to indicate their social status (Li and Kambele 2012; Arghavan & Zaichkowsky, 2000). The perceived social value of luxury brands implies that consumers would use expensive products according to preferences and tastes of famous and significant reference groups, or individuals are not such prominent people. Researchers recognize the significance of social value in the purchasing intention of buyers especially in the consumers’ behavioral model. Theorists such as Hume assert that consumers are likely to be influenced by internal motives intensively in order to make an optimal social picture of the implications of consumers’ behavior. Hence, luxury can reconstruct social stratification in a given population of users that can influence their consumption habits for an extended period. Zhang and He (2012, p. 1453) states that social values apply considerable pressure in China due to its group culture. 5. Cultural Factors Research indicates that the intentions of consumers for the consumption of luxury brands differ to cultures such that consumers in individualistic cultures buy luxury products primarily for self-expression, whereas customers from group cultures buy luxury brands mainly driven by their social needs (Zhang and He, 2012, p. 1453; Wong & Ahuvia, 1998). Conventionally, collective cultures encourage group synchronization and individual accountability to the group therefore, adhering to social values in a central goal that steers each person’s behavior (Zhang and He, 2012, p. 1453; Kim & Markus, 1999). In this case, consumers that belong to a collective culture are likely to choose brands that conform to their group values. Therefore, the most fundamental issue for understanding luxury consumption in the Chinese market is to recognize the social standards that steer Chinese middle-class consumers, customs that get their shape from two opposing forces. The effects include Chinese traditional customs and the modern Western traditions. Studies and theorists attempt to give insight into Chinese consumers’ shifting state of mind about the consumption of luxury brands. 6. Gaps in Literature and Suggested Research There exists a gap in the existing literature concerning the period that the consumer exhibits a particular consumption or spending habit. Many elements associated with consumer behavior such as the implications of fashion brands, lifestyles, and perceived value of the luxury brands. Even though, these vital aspects of consumer behavior have been examined in different groups of consumers, the period to which these behaviors last has not been established. For instance, the study conducted by Li and Kambele (2012) only examined various implications of fashion styles and perceived value concerning the willingness of consumers to spend the particular amount of income based on their purchasing experiences. Moreover, this study also recognizes that there is no sufficient research in Chinese fashion lifestyles despite many studies about various cultures and luxury markets such as the United States (Li and Kambele, 2012). Chapter 3 Rationale This study aims at examining whether there is a long-term consuming behavior of Chinese consumers concerning the consumption of luxury brands. Given the change of Chinese perceived brand value in the luxury market, consumers exhibit a trend in their spending; hence, the paper aims at establishing whether this behavior is short-term or long-term. Research Questions 1. How does the perceived brand value of luxury products influence the behavior of the Chinese consumers? 2. How do other factors such as uniqueness, social value, conspicuous value and cultural factors influence consumer behavior with respect to perceived value? 3. Is there a long-term consumer behavior regarding the perceived value in the Chinese luxury market? Research Methodology Introduction This section of the study outlines the research methodology that has been suggested and chosen for the actual research. It also describes the geographical location where the population sample will be chosen in preparation for the actual study and collection of primary data. The chapter also reveals the equipment for data collection and the methods that will be implemented by the researcher to ensure validity and reliability of the study tools and data are maintained and well-described. Research Design This paper adopts a mixed method approach rather than the ordinary single method research. For mixed method approach, both qualitative and quantitative research will be conducted to obtain statistical and qualitative data. According to Ary, Jacobs, Razavieh and Sorensen (2009, p. 559), mixed methods approach combines qualitative and quantitative study techniques in various ways, with each method adding value to the understanding of the subject under research. In the past 30 years, the recognition of the mixed method research has augmented exponentially as shown by the mounting number of published specialized books in the most recent decades (Ary, Jacobs, Razavieh and Sorensen, 2009, p. 559). Conclusion Although research has noted a change in Chinese consumers’ perceived value in the luxury market, there remains the question of whether there exist a long-term consumer behavior in relation to change in perceived value. Many studies have examined and established the implications of changing the perceived value of luxury products, however, the extent to which this behavior last is still critical. In analyzing the consumer behavior, various elements such as conspicuous value, uniqueness, social value and cultural values help in understanding the behavior of the Chinese consumers with respect to luxury brands. In order to obtain more relevant data, the research adopts a mixed methods approach over the single method. Both the qualitative and quantitative data will be analyzed, and recommendations made based on the findings of this study. Bibliography 1. Ary, D. Jacobs, L. Razavieh, A. and Sorensen, A. (2009). Introduction to research in education. New York: Holt, Rinehart and Winston. P.559. 2. Bagheri, M. (2014). Luxury Consumer Behavior in Malaysia: Loud Brands vs.Quiet Brands.Procedia - Social and Behavioral Sciences, 130, pp.316-324. 3. Li, G. and Kambele, Z. (2012). Luxury fashion brand consumers in China: Perceived value, fashion lifestyle, and willingness to pay. Journal of Business Research, 65(10), pp.1516-1522. 4. Zhan, L. and He, Y. (2012). Understanding luxury consumption in China: Consumer perceptions of best-known brands. Journal of Business Research, 65(10), pp.1452-1460. 5. Zhang, B. and Kim, J. (2013). Luxury fashion consumption in China: Factors affectingattitude and purchase intent. Journal of Retailing and Consumer Services, 20(1), pp.68-79. 6. Jamshidinavid, B. Azizmanesh, Z. Nesari, T. and Seyedi, F. (2013). Considering FactorsEffective on the Consumption ofLuxury Goods. 7. Wang, J. and Foosiri, P. (2013). Factors Related to Consumer Behavior on Luxury Goods Purchasing in China. 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