Why Do Consumers Like to Engage in Conspicuous Consumption? What Are the Marketing Implications? Assignment

Why Do Consumers Like to Engage in Conspicuous Consumption? What Are the Marketing Implications? Assignment Words: 2399

Why do consumers like to engage in conspicuous consumption? What are the marketing implications? In society, consumers do not only buy products to satisfy needs. Instead, they buy luxury products, which symbolise a lifestyle or image they would like to acquire. They aim to acquire this image by displaying that they can afford such luxury goods. This is called conspicuous consumption. This essay will determine why consumers engage in conspicuous consumption and what marketing implications this has in terms of the marketing mix.

In order to determine why consumers engage in conspicuous consumption, this term must first be defined. “Conspicuous consumption is the acquisition and visible display of luxury goods and services to demonstrate one’s ability to afford them” (Arnould et al. , 2004 p. 93). Research demonstrates that consumers buy branded products as solutions to practical problems. However, when engaging in conspicuous consumption, consumers buy branded products as symbols of their wealth (Piacentini & Mailer, 2004).

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They believe these products will give them a higher social standing and appearance; this is called status consumption (O’Cass & Frost, 2002). “The acquisition of material goods is one of the strongest measures of social success and achievement” (O’Cass & McEwen, 2004 p. 27). Conspicuous consumers tend to be highly influenced by the perception the rest of society has on the product they are buying. Extended problem solving involves purchasing high-risk, expensive items, which are not bought very often such as houses or cars (Brassington & Pettitt, 2006).

When purchasing such high-involvement products, conspicuous consumers are even more likely to consider the opinions of others and will purchase according to those opinions (Piacentini & Mailer, 2004). Another reason consumers engage in conspicuous consumption is to convey their personalities and identities through the products they buy (Piacentini & Mailer, 2004). Many consumers use products such as cars, houses, clothes, and electronics to portray a lifestyle they would like to have or be seen as having (Woodruffe-Burton, 1998). The use of clothing to symbolise a personality or lifestyle is commonly used by teenagers.

They tend to use clothing as a method of identification, allowing them to judge whether or not they would be friends with someone according to what they are wearing (Piacentini and Mailer, 2004). The final reason consumers engage in conspicuous consumption is to fulfil a need or desire that they cannot fulfil by other means; this is called compensatory consumption (Woodruffe-Burton, 1998). This is directly linked to conspicuous consumption (Woodruffe-Burton, 1998) since it is also undertaken in order to enlarge an individual’s ego (O’Cass & McEwen, 2004).

The need or lack that consumers are aiming to fulfil through consumption can be caused by an absence of confidence, happiness, or self-esteem (Woodruffe-Burton, 1998). Compensatory consumers aim to satisfy these needs or lacks through the purchase of items that will increase their confidence or make them happier. Maslow’s hierarchy of needs enables marketers to understand what needs consumers are trying to fulfil when purchasing a product or service (Arnould et al. , 2004). Once a consumer has satisfied all of the lower needs of the hierarchy, they seek to achieve esteem and self-actualization (Arnould et al. , 2004).

Individuals who have already reached those levels of the hierarchy tend to be seen as more intelligent, beautiful, and successful compared to the individuals who have not reached those levels of needs fulfilment. This is called the “halo effect” (Piacentini & Mailer, 2004, p. 256). This is when conspicuous consumption begins. Some consumers will be likely to buy products that are symbols of wealth and status in order to achieve the “halo effect”. Increasingly, in the western world, basic needs such as physiological needs, safety and security needs and belonging needs are already fulfilled at birth (Brassington & Pettitt, 2006).

When a baby is born in a developed country, it is likely that it will already have achieved the first three levels of the hierarchy. This is why “the fulfilment of the very basic needs can be taken for granted” (Brassington & Pettitt, 2006 p. 122). For example, in developed countries, food is not only bought just because it satisfies hunger (Brassington & Pettitt, 2006). The market is saturated with a growing number of food brands meaning that simply satisfying hunger is no longer the deciding factor. Instead, consumers will choose a food brand according to which higher needs it atisfies (Brassington & Pettitt, 2006). There are two needs that consumers want to fulfil in order to fit into society: “a need for uniqueness and a countervailing need for similarity” (Amaldoss & Jain, 2005 p. 1450). Sometimes, the extreme desire to fulfil these needs causes consumers to overlook Maslow’s basic needs in order to achieve the higher needs of esteem and self-actualisation through conspicuous consumption (Arnould et al. , 2004). “Consumers desire to live up to their full potential. They want to maximize the use of their skills and abilities” (Arnould et al. , 2004 p. 270).

For example, in Romania, families do not spend money on food in order to save up enough money for a refrigerator (Arnould et al. , 2004). They are engaging in conspicuous consumption. They bought the refrigerator as an indicator of their wealth (Amaldoss & Jain, 2005). Here the higher need for esteem is deemed more important than the basic need for food (Arnould et al. , 2004). One criticism of Maslow’s hierarchy of needs is its simplicity and that it does not apply to developing countries (Arnould et al. ,2004). Symbols of wealth and status will vary greatly from developed to developing countries.

In the past, many developing countries were aiming to satisfy basic physiological needs (Brassington & Pettitt, 2006). However, currently, due to increased marketing from western countries and the number of growing superpowers such as India and China, the desire to fulfil higher level needs is growing (Brassington & Pettitt, 2006). For example, although there are a large number of people starving in Africa, there are also a large number of people who own mobile phones. While some members of the population are fulfilling basic needs, others are fulfilling higher needs.

Conspicuous consumption has implications for the marketing mix. Marketers need to take into consideration that the purpose of conspicuous consumption is to indicate prosperity and improve the consumer’s social standing (O’Cass & McEwen, 2004). “Conspicuous consumption (has) become a way of life” (Lane, 2003). Marketers therefore need to promote a lifestyle rather than just a product (Woodruffe-Burton, 1998). Promoting a lifestyle means placing emphasis on different aspects of consumer’s lives such as their attitudes, expectations, morals, activities, and interests (Arnould et al. , 2004).

Understanding these aspects of a consumer’s lifestyle enables markets to encourage conspicuous consumption and behaviour (O’Cass & Frost, 2002). Conspicuous consumption is especially popular amongst young consumers, which is why marketers need to gear their products towards young individuals who are looking to portray a certain type of lifestyle (O’Cass & McEwen, 2004). These young consumers not only use clothes to portray a lifestyle but also use mobile phones and food and drink brands to communicate status (Piacentini and Mailer, 2004). Often the branded product may not be the main reason for the purchase.

It is the image that brand portrays that consumers are buying, not the product itself. It is likely that conspicuous consumption is more common amongst teenagers and young adults because they are at a life stage which involves the need to create an identity for one’s self (Piacentini and Mailer, 2004). They use products to establish themselves in the world and to encourage others to see them as serious adults, not children. When promoting a product to conspicuous consumers, marketers could use the “slice of life” approach (Brassington & Pettitt, 2006 p. 80). This involves showing customers how a product fits into the type of lifestyle they already have or would like to have (Brassington & Pettitt, 2006). For example, Sony promotes its products according to the stage in a consumer’s lifestyle. It uses demographics to determine which type of lifestyle its target market wants to achieve (Elkin, 2002). One way of promoting a lifestyle is to have a variety of people endorsing the product (Brassington & Pettitt, 2006). Some companies put testimonials from satisfied customers on their products.

Other firms use celebrities to endorse their products (Brassington & Pettitt, 2006). For example, consumers may buy Nespresso coffee because it is seen as an elegant and expensive product or because in the commercial, it is associated with George Clooney. Conspicuous consumption has implications for product pricing. Some brands tend to make their products less accessible in order to make them seem rare and more valuable (Amaldoss & Jain, 2005). “Exclusivity will enable the firm to charge a high price and potentially earn higher profits (Amaldoss and Jain, 2005 p. 1449).

For example, Ferrari will only produce 4300 of its cars even though it has a two year waiting list (Amaldoss and Jain, 2005). This is because when a product is scarce, yet demand is high, organizations can charge more for the product (Brassington & Pettitt, 2006). If everyone could own a Ferrari, they would seem less valuable Amaldoss and Jain, 2005). This is the case for many high-class, expensive, designer products. Research “shows that more snobs buy as price rises, even though the products have neither quality differences nor any signal value” (Amaldoss and Jain, 2005 p. 450). In order for products to be symbols of wealth and status, they must be sold through exclusive stores. They must be sold along side other products that generate the same wealthy image. This is could be why “Christian Dior sued supermarkets for carrying its products” (Amaldoss and Jain, 2005 p. 1449). By positioning a brand according to its exclusivity and uniqueness, the marketer is aiming to signal the social reputation and standing of the brand-user (O’Cass & Frost, 2002). Conspicuous consumption also has an effect on the process used to make a product or service.

For example, the Mercedes Maybach 62 is a luxury car that is completely customized to the customer’s lifestyle needs (Clarkson, 2005). It is the process of making customizable services and products that attracts conspicuous consumers. Marketers therefore adapt their processes to make them unique and exclusive. Another example is a food delivery company in London called Pure Package (Oberman, 2007). They provide healthy meals suited to dietary needs such as post-operation meals or post-pregnancy meals. These are suited to a customer’s dietary needs.

It is the process of making these meals to suit a busy and healthy lifestyle that makes them exclusive and unique. Using Pure Package, enables consumers to portray themselves as having a busy and important life. The use of services depends on the customer, the service’s staff and the other customers that use that service (Brassington & Pettitt, 2006). For example, teenagers watch MTV because their friends watch it and they want to fit in with them (Amaldoss and Jain, 2005). As previously stated, some consumers look for individuality, while others seek similarity to their peers (Amaldoss and Jain, 2005).

This implies that conspicuous consumption affects who will use a service according to those who already use it. Physical evidence is the basis for conspicuous consumption since it is the image or ambience associated with the brand (Brassington & Pettitt, 2006). Physical evidence is the x factor or wow factor that encourages conspicuous consumers to be induced by that brand. For example, a consumer may choose to fly first class with Singapore Airlines, rather than flying with a charter airline. This is because the physical evidence such as the atmosphere and quality of Singapore Airlines is a symbol of status and wealth.

This has implications for marketing managers. Marketers should position a conspicuous brand according to the unique features it offers. In conclusion, there are three reasons for engaging in conspicuous consumption. The first is to demonstrate wealth and status through the purchase of goods. These goods are then overly displayed to improve social standing. The second is to use products to convey a consumer’s personality or identity. Consumers find themselves grouped according to what they wear, eat or use. The final reason to engage in conspicuous consumption is to compensate for something that is missing.

A consumer may buy clothes to make them feel beautiful, because they feel a lack of confidence in terms of their looks. Marketers are able to understand these consumer needs through the use of Maslow’s hierarchy of needs. In developed countries, primary needs are usually easily fulfilled or already fulfilled at birth. Therefore, consumers engage in conspicuous to fulfill their higher needs. However, in developing countries, levels of needs are very different. While some consumers are still reaching the basic levels, others are skipping to achieve higher needs on which place more importance.

This is often due to marketing from western countries. Such consumption has implications in terms of the 7 P’s. Product marketing is being replaced by lifestyle marketing because consumers are aiming to create a lifestyle, not just own products or goods. In order to create a lifestyle, products must be priced and sold through distribution channels that portray exclusivity. This makes products more valuable in terms of their financial value and their brand reputation. The process, physical evidence, and the people that use a service all contribute to how is it seen by potential brand users.

By gearing this image towards conspicuous consumers, brands can attract and encourage conspicuous behaviour. Reference List Amaldoss, W. and Jain, S. (2005) ‘Conspicuous Consumption and Sophisticated Thinking’. Management Science, Vol. 51 (10) pp. 1449-1466 Arnould, E. , Price, I. and Zinkhan, G. (2004) Consumers (2nd ed. ). New York: McGraw Hill Brassington, F. and Pettitt, S. (2006) Principles of Marketing (4th ed. ) Essex: Pearson Education Limited Clarkson, J. (2005) Maybach v Rolls-Royce Phantom: May the bet palace on wheels win. Sunday Times [Online] Accessed on 16 November 2007 from http://driving. timesonline. o. uk/tol/life_and_style/driving/jeremy_clarkson/article546878. ece Elkin, T. (2002) Sony marketing aims at lifestyle segments. Advertising Age, Vol. 73 (11) pp. 72-73 Lane, M. (2003) Can the world go on as it is? BBC News [Online] Accessed on 16 November 2007 from http://news. bbc. co. uk/1/hi/magazine/3153661. stm Oberman, T. -A. (2007) Pure Package. The Guardian [Online] Accessed on 16 November 2007 from http://www. guardian. co. uk/g2/story/0,,2022068,00. html O’Cass, A. and Frost, H. (2002) ‘Status brands: examining the effects of non-product-related brand associations on status and conspicuous consumption’.

Journal of Product and Brand Management, Vol. 11 (2) pp. 67-88 O’Cass, A. and McEwen, H. (2004)’Exploring consumer status and conspicuous consumption’. Journal of Consumer Behaviour, Vol. 4 (1) pp. 25-39 Piacentini, M. and Mailer, G. (2004) ‘Symbolic consumption in teenagers’ clothing choices’. Journal of Consumer Behaviour, Vol. 3 (3) pp. 251-262 Woodruffe-Burton, H. (1998) ‘Private desires, public display: consumption, postmodernism and fashion’s new man’. International Journal of Retail and Distribution Management, Vol. 26 (8) pp. 301-310

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