In this chapter, the author presents an overview on global consumer behaviour in luxury goods markets. The discussion is based on the classic theories of consumer decision-making process and the important factors affecting the decision-making process. As global consumer behaviour in luxury goods markets is greatly affected by cultural differences, Hofstede's cultural dimensions theory is used to explain the various consumption behaviours displayed by consumers from different parts of the world. Past research findings are summarised, examples of consumer behaviours and appropriate marketing strategies implemented by luxury brands are also presented to assist readers for a better understanding of the topic.
TopBackground
Consumer behaviour is defined as ‘the behaviours that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs” (Shiffman et. al, 2014).So luxury consumer behaviour means consumption behaviours related to luxury goods.
However “luxury goods” mean different things to different consumers in different countries. The understanding of luxury may also differ between individuals; it is situational, contingent and depends on the experience and individual needs of the consumer (Wiedmann, Hennigs & Siebels (2007).
Luxury brands constitute the highest level of prestigious brands and demonstrate several physical and psychological values; for instance, the act of use or display of a luxury product brings esteem for its owners (Vigneron & Johnson, 1999). Out of those two values psychological benefits are considered to be the main factor which distinguishes luxury products from non-luxury products (Nia & Zaichkowsky, 2000).
Over the last five years the luxury goods market has grown despite persistent economic turbulence and austerity approaches in many economies. The growth has been supported by the expansion of middle class in emerging economies. Based on Euromonitor’s data (2013), Asia Pacific, Latin America, the Middle East and Africa contributed 19% to the global luxury goods market in 2013, and this is projected to grow to 25% by 2015. The growth is driven by the combined forces of urbanisation, economic expansion and the love of luxury (Deloitte, 2014). USA is by far the largest luxury goods market, followed by Japan, Italy, France and China (Euromonitor, 2013), but with the BRICs (Brazil, Russia, India and China) and other emerging economies being the key drivers of global luxury goods growth (Passport, 2013).
Research in the global luxury goods market has identified that the tastes of luxury consumers are constantly changing. Luxury brands need to respond to these changes in order to maintain their growth and market share. Bonding with the consumer is the key to the survival of luxury brands in an era where markets, products, services, marketing and distribution are always in a state of change (Khan, 2010).
Overall, the global market for luxury goods is maturing, stabilizing and consolidating, it is becoming more resilient to economic crises; more responsive to a global consumer base which has become more demanding and highly mobile; and it is less dependent on market booms for growth (D’Arpizio, 2014). Luxury goods have become available to a much wider range of consumers globally, and over the last decade the traditional conspicuous consumption model has been transformed into a new experiential way in which consumers define luxury (Wiedmann, Hennigs & Siebels, 2007). In mature luxury markets, such as Europe and the US, as well as in emerging markets such as China and India, middle class families with burgeoning incomes have begun to shop for brands that were previously regarded as out of reach (Catry, 2003), even the low-income individuals are purchasing luxury goods on occasions as for them the ownership of a luxury branded product represent an experience in status improvement.