Class Act: You Are What You Buy

You buy based on the brand, whether you want to admit it to yourself or not. Brand identity, is part of your identity. A research study illustrates that the brands and styles we choose reveal more about us than most people realize. If you are are willing to drop $1200 on a purse there’s a reason. You know that most people may assume that it is a simple purse, but those “in the know” will recognize that your bag with its signature stitching costs a very pretty penny. Consumers often make buying decisions based on the prominence of a brand’s design or logo. This is called conspicuous consumption, and applies to high-visibility products like cars, jewelry and fashion.

As part of the study researchers “divided consumers to one of four groups on the basis of two distinct and measurable characteristics: wealth and need for status.” Group 1 were wealthy people who wish to impress only others in their own social class. Group 2 were also affluent, but primarily interested in disassociating themselves from the have-nots. Group 3 was of a lower income, but highly concerned with social status and the appearance of wealth. Group 4 was also lower income, but less status-conscious than the other groups.

The researchers then conducted four studies. Study 1 examined the correlation between price and brand prominence for designer handbags, luxury cars, and men’s shoes. Each item was given a “loudness rating” from 1-7, based on the prominence of the brand’s design and logo. The loudness rating of each item was then compared to its price. This study determined that the more prominent a brand’s logo, the lower the price of the item, on average.  In turn this is why Gucci has two types of bags one worth $1200 with subtle features and another that costs $120 with the Gucci logo prominently displayed. They want both sets of consumers as the researchers explained, “the policy of lowering price while making the brand name more prominent seems to apply regardless of gender (men’s shoes, women’s handbags) and whether the category is considered more faddish (fashion goods) or durable (vehicles).”

In the second study, data was collected from from law enforcement officials who confiscated counterfeit goods in Thailand, a country known for its production of counterfeit luxury items. This data was combined with data from a web site that sells counterfeit handbags. Analysis revealed that consumers in Group 3 (lower income but concerned with status) are more likely than consumers in the other groups to buy counterfeit luxury items.

The third study examined personal tastes, by showing pictures of handbags with the brand names removed to 120 women, and asking which item they preferred. Half of these women lived in a wealthy neighborhood (Group 1). The other half lived NEAR a wealthy neighborhood (Group 2). The results demonstrated that Group Ones generally don’t need prominent markings to judge the value of a bag, and that women in this group will pay top dollar for inconspicuously branded luxury goods that only those in their group will recognize. Group twos, on the other hand, need to see the brand prominently displayed to recognize a bag as an expensive luxury brand. So they are more likely to buy luxury goods with more prominent design features.

The fourth study tested 120 consumers from Groups 2 and 3 on how likely they were to have a friend traveling abroad buy them a counterfeit luxury item. They responded with a number from 1 (not at all) to 7 (extremely). 88% of participants in Group 3 – but only 18% in Group 2 – expressed a keen desire to purchase a counterfeit bag.

Companies use this type of data to make crucial ordering and pricing decisions. Moreover, they research who you are to decide how to market their bags, cars, shoes and other items. That’s why luxury items with subtle design features and hidden logos generally cost more than items of the same brand, whose logo and design features are more obvious.

If both cars had the same features, would you feel better driving the Mercedes versus the Honda? Probably, yes. Ah, the life of luxury.

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