Buyer Behavior of Luxury Products
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Buyer Behavior of Luxury ProductsTable of ContentsIntroduction Literature Review Abraham Maslow’s Hierarchy of Needs Research Questions Research Design and Methodology Qualitative analysis Different Buyer Behavior between Asian and European Market Data Collection Conclusion Miscellaneous References Introduction The companies around the globe are trying to capitalize on the advantages of globalization. Over the past few years demand of luxury goods gradually increased due to countries’ economic development and increasing per capita income of people. As a result the luxury goods sector has grown drastically. Consumption rate of luxury goods has increased rapidly in Asian and European market since 2001. In the year 2005 this sector has earned revenue of 6.17 billion Euros globally. It is reported that after 2005 every year the luxury goods industry is growing by 10 percent. Countries like Russia, China. India, UK, France etc. have a great potential market for the luxury goods. The concept of shopping has changed in the modern era of globalization. Before the Second World War people generally used to buy products according to their needs. Now people used to buy luxury goods to satisfy their own esteem needs. Moreover people buy things to improve their personality in order to satisfy their own self esteem. According to Maslow’s hierarchy theory it can be said that when people are able to satisfy their physiological and security needs then only they can look for social belongingness. People are motivated by their interpersonal and external factors to buy the luxury goods. The objective of the study is to reveal the consumer buying behavior of luxury products. Moreover the study will help to find out the effects of high price of luxury branded goods, perceived quality of the product, impact of cross culture and social status of people on consumers’ buying behavior. The research work is consisting of literature review, Research design and methodology. Finally the study ends with a conclusion and Miscellaneous.Literature Review Initially few economic concepts are being applied in order to distinguish between luxury and need for a product or service. Now the economic theories are applied to do the pricing strategies of luxury products. In order to achieve the brand exclusivity the economic theories are applied. Proper pricing and promotional strategy increases the value and exclusivity of a luxury product. According to various authors the market price for a luxury product depends on effective value of that particular product and elite value premium.
For a luxury product, sources of value include quality of a product, aesthetic getup of the particular product and last but not the least the quality service of that particular product. Some external factors like advertising and promotional strategies motivate the buyers to consume more number of luxury goods. People used to motivate for buying the luxury goods based on the interpersonal and external factors like taking opinions, getting influenced by the promotional strategies, interaction with relatives and friends (Underhill, 2008, p.77). There are some internal and personal factors too such as emotions, feelings that motivate people to consume luxury goods (Wiedmann and Hennigs, 2013, p.40). People consume luxury goods in order to satisfy their social belongingness. This increases the personality level of an individual and by this people can satisfy their self esteem.Abraham Maslow’s Hierarchy of Needs In order to analyze the buying behavior of consumers Maslow’s hierarchy theory of needs can be applied in this study. Need and want are the two important economic factors. The goods and services which are required for daily life can be defined as need. On the other hand wish and desire to having a luxury good like sports car can be defined as wants (Raaji, 2013). For an example, people need to consume clothes and want to consume designer branded jeans (Lee, 2007, p. 38). The hierarchy of needs by Abraham Maslow will help to uncover the consumer buying behavior of luxury goods. The theory reveals five needs that motivate an individual.[pic 1](WordPress, 2009). According to Maslow’s hierarchy needs, in order to sustain a healthy life people basically need water, food, cloths which are the physiological needs (Kelly and McGowen, 2010, p.225). The second need in the hierarchy is safety and security needs. This need includes physical safety and economic security of people. These first two needs are very essential for human life as these needs help people to maintain a sustainable life (Maslow and Frager, 1987, p.91). Once the physiological and safety needs are satisfied then people look to achieve their social needs (French, 2011, p. 163). Making friends, desire of belongingness in society and workgroups comes under social belongingness of Maslow’s hierarchy pyramid. People want to receive love and belongingness to achieve the social belonging needs of Maslow’s hierarchy theory (Jex and Britt, 2008, p.147). Consumption of luxury products satisfies the next need factor of Maslow’s hierarchy which is self esteem (Baker and Saren, 2010, p. 125). Interpersonal and external factors drive the people to satisfy their self esteem. After achieving the lower level of needs, people wish to show off their personality, ego. People consume attractive sports car due to the self esteem needs which includes achievement, self-respect, recognition etc (McKay, 2009, p.235). The self-esteem needs depend upon few external economical factors such as consumer’s disposable income, per capita income of people, purchasing power of consumers, and economic stability of the country etc (George and Jones, 2011, p.133).According to Maslow’s hierarchy of needs consumption of luxurious products also satisfies the self-actualization level of people (Pillai, 2008, p.282). Consumers want to consume luxurious goods due to high disposable income and high purchasing power. When people are able to satisfy all the level of needs, then only they can reach the self-actualization level (Wilson, Hope and Hart, 2005, p. 16). For an example, people of upper income level used to fulfill their dreams after getting retired from job, such as buying an expensive residential complex, expensive firm house. Only those people are able to do so who have achieved the actualization level of life (Gillespie, Jeannet and Hennessey, 2010, p.17).