Abstract
In this chapter, the authors present a cultural comparative study of how millennials in Switzerland and South Korea define and perceive luxury and prestige and how this might influence their luxury consumer behavior. Labels, such as GenX, millennials, GenY, or GenZ, are often used to distinguish cohorts of individuals based on their shared generational experiences and characteristics. However, as previous research shows, mere membership in a generational cohort is not a sufficient explanation for consumption patterns across geographies and cultures. Given the size and importance of the global luxury market and the degree of internationalization of luxury companies, a better understanding of the luxury consumer and the impact of their macro-context is vital. The results of the present study indicate that economic as well as cultural factors have an impact on the definition and perception of luxury among millennials and might also explain differences in consumer behavior.
TopBackground
Luxury: A Global Business
Luxury is one of the most profitable and fastest-growing global markets and spans multiple industries. Central to this phenomenon is a consumer culture that is characterized by an increasing desire for luxury worldwide (Kapferer & Bastien, 2009; D’Arpizio, Levato, Prete & Gault, 2020). While historically luxury has primarily been defined as a means of gaining and maintaining social prestige, nowadays luxury refers to comfort, elegance, and high quality, as well as high expense (Pedrazzi, 2020). Luxury goods have become more affordable and accessible to new customers (Truong, McColl & Kitchen, 2009, p. 2), and more consumers are willing and able to pay a price premium for higher-quality and higher-status products (Gardyn, 2002). Consumers of luxury products come from all different social and income classes and use prestige products because it makes them feel confident and they enjoy wearing well‐known brands (Husic & Cicic, 2009), because they express status and membership in or differentiation from social groups (Vigneron & Johnson, 1999). In 2019 the luxury market grew by 4% and reached a global market size of €1.3 trillion. The growing middle class, especially in Asia, will further stimulate the luxury market, especially the entry-level segments. By 2025 market growth is expected to recover from the Covid-19 crisis, resuming gradually and reaching an estimated €320-330 billion (D’Arpizio et al., 2020). As millennials represent the largest global consumer group (DeVaney, 2015, p. 11), it is the generation this study focuses on. But what is the meaning of luxury and prestige among millennials around the world? How do members of one of the world’s largest generations define and perceive luxury and prestige in different countries, and what are the determining influences? Consumers demand offerings that correspond with their values and lifestyles (Meredith & Schewe, 2002). Knowing these preferences and satisfying the needs and wants of individual segments still prove to be pivotal to an effective marketing strategy and subsequent business success (Ting, Lim, de Run, Koh & Sahdan, 2016).
Definition Of Luxury And Prestige
What exactly luxury and prestige mean, is still a matter of debate in the literature (Kapferer & Valette-Florence, 2016, p.124). Not only are there multiple definitions of both terms, but they also change over time (Yeoman, 2011; Cristini, Kauppinen-Räisänen, BarthodProthade & Woodside, 2017, p. 102).
Key Terms in this Chapter
Luxury: Term with Latin origins, that stems from the word “lux” for light or brightness, but also “luxuria” meaning intemperance or debauchery, and “luxus” for opulence, lusciousness and pomp. Historically, luxury has primarily been defined as a means of gaining and maintaining social prestige, nowadays luxury refers to comfort, elegance, and high quality, as well as high expense.
Prestige: Subjective categorization of people or objects such as brands in a high social status.
Luxury Goods: Products typically offered at a price that exceeds their functional value, wrapped in a holistic hedonistic experience, and often tied to a heritage, unique know-how, and culture. Luxury goods are often social markers and bought to display status and a certain position in society or a specific social group.
Macro-Contextual Factor: Defined as cultural (context and independence), economic (opportunities based on wealth), and ecological (threats due to society, disease, and stress) factors that impact the overall value system of consumers. Macro-contextual factors shape personal values.
Social Value: Characterized by a desire of differentiation within a non-prestigious or non-reference group in order to relate to a prestigious group. Social value arouses consumption based on the purpose of display of wealth and increase to the ego in an ostentatious way.
Personal Value System: Determines what a person regards as desirable or not, it has an impact on the preferences and consumer behavior. The personal value system is defined by individual values, social related values, and human basic values.
Generational Cohort: A group of individuals, e.g. Baby Boomers, GenX, GenY or GenZ, born in a certain period, who have shared similar experiences and have unique common characteristics around these experiences.