Journal of Business Research 67 (2014) 1912–1920
Contents lists available at ScienceDirect
Journal of Business Research
When higher prices increase sales: How chronic and manipulated desires
for conspicuousness and rarity moderate price's impact on choice of
luxury brands☆
Yookyung Hwang a,1, Eunju Ko a,2, Carol M. Megehee b,⁎
a
b
Yonsei University, Clothing and Textiles, Seoul 120-749, Republic of Korea
Coastal Carolina University, E. Craig Wall, Sr. College of Business Administration, P.O. Box 261954, Conway, SC 29528-6054, United States
a r t i c l e
i n f o
Article history:
Received 1 October 2013
Received in revised form 1 November 2013
Accepted 11 November 2013
Available online 13 December 2013
Keywords:
Choice
Conspicuous
Experiment
Price
Rarity
a b s t r a c t
This study examines the impact of low, medium, and high prices on luxury brand choices by consumers very high
versus very low in chronic desire for conspicuousness (CC) on selection of a luxury brand, namely, as well as the
combination of very high versus very low chronic desire for rarity (CR). The research design tests and confirms
the nomological validity of a system of relationships among chronic and manipulated conditions. High versus
low manipulated desire for conspicuousness (MC) and manipulated desire for rarity (MR) conjoined with high
versus low chronic desire for conspicuousness (CC) and chronic desire for rarity (CR) moderates the typically
hypothesized negative main effect of price on demand and may cause a positive main effect of price on luxury
brand choice across a relevant range of price-points. These findings confirm the applied theory that for some consumers, chronic psychological states in combination with manipulated related states allow for—perhaps demand
that—merchants to charge higher prices to increase sales of luxury brands.
© 2013 Published by Elsevier Inc.
1. Introduction
For some consumers, price matters little or not at all when given the
opportunity to buy a conspicuous, rare luxury product. The findings of
the study here support this view as well as an inverted “U” shaped relationship between demand and price for a combination of conditions
coupling a very high chronic level of desire for conspicuousness (CC)
or rarity (CR) with very high manipulated conspicuousness (MC) or
rarity (MR).
In 2010, the worldwide luxury market rebounded from the economic crisis to reach an all-time high of $256.6 billion (€172 billion) (Bain
and Company, 2011). Between 2007 and 2010, Korea was one of the
most resilient markets for luxury goods (Kim and Shin, 2011). In this
four-year period, the top five department stores in Korea reported
that luxury sales doubled (Kim and Shin, 2011). When consumers
from seven different countries were asked, “How has your spending
on luxury changed over the past 12 months?,” 46% of Koreans
responded, “More than in the past,” compared to 44% of Chinese respondents, 6% of Japanese respondents, 3% of European Union respondents,
and 6% of U.S. respondents (Kim and Shin, 2011). In particular, Koreans
☆ The authors acknowledge the thoughtful and useful suggestions of Arch G. Woodside,
Boston College, and Rajan Nataraajan, Auburn University, to earlier versions of this
manuscript.
⁎ Corresponding author. Tel.: +1 843 349 2706; fax: +1 843 349 2455.
E-mail addresses: [email protected] (Y. Hwang), [email protected] (E. Ko),
[email protected] (C.M. Megehee).
1
Tel.: +82 2 2132 4651; fax: +82 2 312 8554.
2
Tel.: +82 2 2132 3109; fax: +82 2 312 8554.
0148-2963/$ – see front matter © 2013 Published by Elsevier Inc.
http://dx.doi.org/10.1016/j.jbusres.2013.11.021
20–30 years old have moved from luxury consumption to show off
economic status and acquired symbols of wealth to “masstige,” or
large-scale adoption of luxury fuelled by the need to conform or fit in
(Ipsos, 2010). Purchase frequency, conformity, age, consumer ethnocentricity, social recognition, and the availability of pocket money are
all factors related to young South Koreans' purchasing foreign luxury
fashion brands (Park, Rabolt, and Jeon, 2008).
Although a variety of current research focuses on luxury consumption psychology, Wiedmann, Hennigs, and Siebels (2009) consider
conspicuousness, a scarcity value, and an economical value as representative and important variables of luxury consumption. Wiedmann et al.
(2009) divide luxury values into an economical value, an intelligent
value, an individual value, and a social value to explain why customers
purchase luxury products. Customers choose luxury products because
they associate high price with high quality, and luxury products have
their own unique properties and scarcity values that are exclusively
distributed (e.g., they cannot be found in the supermarket) that lead
to social values—like conspicuousness and a sense of entitlement—
when consumers buy them.
Conspicuous consumption, spending on goods and services for the
purpose of displaying wealth or social power or consumption deliberately intended to cause envy, was originally coined by Veblen (1899).
In the early 1980s, a number of researchers carried out studies based
on the original work of Bourne (1957) focusing on the influence of reference groups on luxury brand consumption (Bearden and Etzel, 1982;
Mason, 1981, 1992). Exclusivity (Bearden and Etzel, 1982; Dubois and
Paternault, 1997; Pantzalis, 1995), scarcity (Dubois and Paternault,
1997; Horiuchi, 1984; Mason, 1981, 1992; Pantzalis, 1995), and snob
appeal (Dubois and Laurent, 1994, 1996; Leibenstein, 1950) are linked
Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
1913
Choice
First (4)
High CC • High MC or
High CR • High MR
Second (3)
Third (2)
Fourth (1)
Low CC • Low MC or
Low CR • Low MR
Unchosen (0)
Lowest
Medium
Highest
Price
Fig. 1. Theory of chronic and manipulated conspicuousness and rarity moderating price influence on choice.
to the uniqueness value of prestige. In addition, many authors demonstrate that the price of a good may have a positive role in determining the perception of its quality (Erickson and Johansson, 1985;
Lichtenstein, Bloch, and Black, 1988; Tellis and Gaeth, 1990). Conspicuous consumption has deep evolutionary roots in that it is used
as a proxy for male fitness in that it signals control over financial
resources linked to higher status (Saad and Gill, 2000).
2. Theory
According to commodity theory (Brock, 1968, in Lynn, 1991), scarcity (or rarity) enhances the value or desirability of anything that can be
possessed, is useful to the possessor, and is transferable from one person
to another. Scarcity influences the processing of price information (Suri,
Kohli, and Monroe, 2007) and is used by marketers to increase the subjective desirability of products (Jung and Kellaris, 2004). The effects of
scarcity on purchase intention, however, vary among individual consumers. Perceived quality, information costs saved, and perceived risk
of purchasing prestigious or credible brands influence purchase intentions differently for high versus low self-expressive consumers (Baek,
Kim, and Yu, 2010). Consumers respond differently to perceptions of
scarcity (along with perceptions of product quality and the monetary
sacrifice required to obtain the product) depending on relative price
levels and consumers' motivation to process information, with perceived quality and sacrifice contributing to perceptions of value (Suri
et al., 2007). Finally, cross-national or cross-cultural differences can
also explain differences in the effect of scarcity on purchase intention
where familiarity, uncertainty avoidance, and the need for cognitive closure moderate the effect of scarcity on purchase intent (Jung and
Kellaris, 2004).
Prior studies (Gierl and Huettl, 2010; Stock and Balachander, 2005;
Verhallen, 1982; Verhallen and Robben, 1994) report mechanisms
through which scarcity signals are expected to have a positive effect
on consumer responses. First, consumers may respond positively to
scarcity signals when products can be used to communicate with
friends or colleagues (Verhallen, 1982; Gierl and Huettl, 2010). For instance, possessing scarce products might evoke feelings such as envy
and respect. Products that can be consumed to satisfy such social
needs are referred to as conspicuous consumption goods. Typical examples of such goods are automobiles, apparel, jewelry, and home appliances (i.e., goods that can be noticed by guests and friends). A second
mechanism through which scarcity signals are expected to positively
affect consumer responses involves consumers using scarcity signals
as heuristic cues to simplify their assessment of a product's quality
(Gierl and Huettl, 2010; Stock and Balachander, 2005).
The research reported here identifies the effects of the conspicuousness (brand seeking), rarity (uniqueness), and price (economic
value) of products on the purchase intentions of women in their
twenties and thirties who are power customers in the luxury market.
The broader study aims to determine whether women in their
twenties and thirties show off symbolically by displaying fashion
products that are conspicuousness, unique, and high in economic
value in order to gain status and power. The study focuses specifically on how chronic conspicuousness and rarity, when combined with
manipulated conspicuousness and rarity, moderate the effect of
price on purchase/choice.
The study proposes the following theory with eight tenets: (1) Consumers vary in their chronic desire for conspicuous consumption (CC).
(2) Consumers relatively highest versus lowest in CC more frequently
select brands positioned to be high versus low in conspicuousness.
(3) Consumers vary in their chronic desire for uniqueness (e.g., desire
to achieve rare acquisitions) (CR). (4) Consumers relatively highest versus lowest in CR more frequently select brands positioned to be high
versus low in uniqueness. (5) The negative impact of price increases
on choice is lowest for the brand positioned as delivering high conspicuousness among consumers highest versus lowest in CC. (6) The negative impact of price increases on choice is highest for a brand positioned
as delivering low conspicuousness among consumers high versus low in
CC. (7) The most profitable price-points vary by different combinations
of CC and manipulated conspicuousness (MC) whereby a very high
price is most profitable for the highest CC when coupled with high manipulated conspicuousness (MC); a moderate price-point is most profitable for the lowest CC coupled with high MC; and a low price-point is
most profitable for a lowest CC when coupled with a high MC; a profitable outcome occurs for a low price-point for the combination of lowest
CC or CR low MC or MR, and lowest price. (8) Demand is so low for all
three price-points among the highest CC or CR coupled with low MC
or MR, that no price-point is profitable (demand curve j–k–l in Fig. 6);
such consumers are vigilant about avoiding low conspicuousness or
rarity items even when the items are available at bargain prices.
The research reported here examines the nomological validity of a
system of relationships among chronic and manipulated variables.
Nomological validity is supported when measures of different but related constructs behave in predictable ways. For example, a chronic desire
for status (i.e., seeking products with conspicuousness and/or rarity to
signal status) should be highly correlated with demand for prestigious
products or luxury brands. The demand for luxury brands, however,
1914
Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
should relate negatively with price sensitivity (Goldsmith, Flynn, & Kim,
2010). Chronic variables in this study represent relatively stable traits or
individual variables (e.g., seeking or desire for conspicuousness and/or
uniqueness in products); manipulated variables represent experimental
treatments or product variables. Specifically, this research examines the
relationship between chronic conspicuousness (CC) and manipulated
conspicuousness (MC), and chronic rarity (CR) and manipulated rarity
(MR), and how conspicuousness and rarity interact with price to influence choice. The research design permits testing and confirming the
nomological validity of a system of relationships among chronic
and manipulated conditions. Normally, higher prices serve as a
damper on choice, but in the case of luxury brands, high prices may
signal quality (and symbolic values of conspicuousness and rarity).
Conspicuousness and rarity are, therefore, expected to negate a negative main effect of price (i.e., the inverse relationship between price
and quantity demanded) and/or improve a positive main effect of
price (i.e., higher prices are a signal for luxury) on luxury brand
choice.
Nomological validity goes beyond simple trait validity of constructs
(Campbell, 1960; Peter, 1981). Trait validity, what is tested in most
research, is concerned with whether or not a construct measures what
it purports to measure, is internally consistent, and is different from
other constructs; in other words, trait validity includes convergent
validity (i.e., a measure correlates highly with other measures of the
same construct), reliability (i.e., the systematic variance within scores
is consistent), and discriminant validity (i.e., measures of constructs
that should not be related to the construct of interest have low correlation with measures of the construct of interest). In order for a construct
to be useful for making theory-derived predictions, the construct must
possess nomological (law-like) validity. The research here examines
the theoretical and empirical relationship between different constructs
(i.e., chronic/stable trait constructs and treatment/manipulated constructs). For nomological validity to be supported, both theoretical and
empirical relationships between/among measures of the constructs
must be validated (Peter, 1981).
Most experimental research assumes that treatment conditions can
be induced for all participants in the study. Participants are rarely
screened for whether or not they would be appropriate subjects for
the experiment. However, the variable price is expected to have a different effect on the choice of individuals who actively seek conspicuous
consumption and rarity and those who do not—even if conspicuous
consumption and rarity are induced. If the consumer is usually unconcerned about whether others recognize she is wearing a high-fashion
luxury brand name (CC) or that very few, if any, other people will be
wearing it (CR), she is probably not willing to pay a high price for the
item even if the researcher attempts to manipulate conspicuousness
(MC) and rarity (MR).
Normally, higher prices have the effect of reducing demand for
a product (i.e., making the brand less attractive and reducing choice/
purchase intention of the brand). In the case of luxury brands, however,
higher prices often have the opposite effect. Higher prices, coupled with
conspicuousness and rarity, often make the luxury brand more attractive, increasing choice and/or intention to purchase the brand.
From this logic based on the literature in the previous section, the
study tests the following hypotheses:
H1a. Very-high chronic conspicuousness (CC) coupled with very-high
manipulated conspicuousness (MC) versus very-low CC coupled with
very-low MC decreases the negative effect of price on purchase
intention.
H1b. Very high chronic rarity (CR) coupled with very high manipulated
rarity (MR) decreases the negative effect of price on purchase intention.
H2a. Incongruent chronic and manipulated conspicuousness (e.g., very
low CC coupled with very high MC), does not counteract the negative
effect of price on purchase intention.
H2b. Incongruent chronic and manipulated rarity (e.g., very low CR
coupled with very high MR), does not counteract the negative effect of
price on purchase intention.
Individuals very high in CC · MC or CR · MR prefer (possibly unconsciously) luxury brands with fairly high prices. Only when prices
become prohibitively high do individuals high in both chronic and manipulated conditions reject the idea of purchasing these brands. (The
mid-level dot represents the combination of two conditions such as
very high CC and very high MC occurring together.) Individuals very
low in CC · MC or CR · MR perceive things differently (also possibly
unconsciously); they are negatively sensitive to higher rather than
lower prices. Fig. 1 summarizes these perspectives.
3. Method
A between-groups lab experiment was performed to test the effects
of conspicuous consumption, desire for rarity, and price on intentions to
purchase luxury clothing and accessories. Targeted at women who
range in age from 21 to 40 and live in Seoul and Gyeonggi province, a
survey was conducted with undergraduate and graduate students
Table 1
Scale items for chronic conspicuousness (CC)a. Principal component analysis. Varimax rotation with Kaiser Normalizationb.
Scale item
Component fame
I prefer foreign brands to domestic brands if they have the same value.
When I buy a fashion item, I have in mind that the item will be praised by other people.
I prefer a foreign famous fashion item although it's somewhat expensive.
I will buy a suit of famous brand clothes rather than several suits of (branded) clothes.
I consider brands when I buy small items (e.g., purses, belts).
It looks more sophisticated if the fashion item is more expensive.
I won't buy a fashion item if it is too cheap even if I like it.
When I buy a cheap item and my friends ask me about the price, I am reluctant to tell it.
Even if presented with a luxurious and expensive fashion item, I am too busy to buy clothes very often.
When I where a famous brand of clothes and people do not praise me about the clothes, I am disappointed.
I lose my nerve when I meet a person who possesses stuff I cannot obtain.
Accessories such as belts, watches, jewelry, handbags, etc. represent the possessor's economic level.
It is very important to wear good clothes because how people are treated depends on their clothing.
People wear famous brand clothes because the brand is symbolic of wealth
When you want to belong to a particular class, you should wear the clothes that people at that class level wear.
I don't want to wear old-fashioned clothes even if they are not too old fashioned.
I tend to buy new clothes in new styles.
I tend to be interested in TV actors to learn about fashion styles.
.730
.584
.818
.720
.647
a
b
Chronic conspicuousness (CC) is the need for or seeking of conspicuous consumption.
Rotation converged in 6 iterations.
Belonging
3
4
5
6
7
.891
.572
.800
.636
.694
.655
.781
.748
.828
.754
.832
Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
Table 2
Scale items for chronic rarity (CR)a. Principal component analysis varimax rotation with
Kaiser Normalizationb.
Scale item
Component 2
1
When products or brands I like become extremely .836
popular, I lose interest in them.
When a product I own becomes popular among the .781
general population, I begin using it less.
I often try to avoid products or brands that I know
are bought by the general population.
Products don't seem to hold much value for me
when they are purchased regularly by everyone.
I give up wearing fashions I've purchased once they
become popular among the general public.
As a rule, I dislike products or brands that are
customarily purchased by everyone.
The more commonplace a product or brand is
among the general population, the less interested
I am in buying it.
a
b
3
4
.797
.734
.866
.857
.714
Chronic rarity (CR) is the need for or seeking of uniqueness or rarity.
Rotation converged in 6 iterations.
enrolled in seven different Korean universities over a two-and-a-half
week period. For this study, a total of 450 questionnaires were distributed of which 396 were completed and useable.
The 396 respondents served as subjects in the experiment that
took place approximately two weeks after completion of the survey.
The experimental design was a three-way (2 × 2 × 3) betweensubject design testing two levels of conspicuousness consumption
(high vs. low), two levels of desire for rarity (high vs. low), and
three levels of price (high vs. medium vs. low) for a total of 33
respondents per cell.
Each respondent received a four-part questionnaire that included a
seven-page shopping list-questionnaire plus three additional pages of
questions related to demographics, conspicuous consumption, and
desire for rarity questions. The shopping list and experimental design,
measurement items for luxury brand consumption behavior, and demographic measures were created by the researchers. Scales used to measure the chronic value for seeking conspicuous consumption included
dimensions of brand, high price, social gain, social status, and desire
for trends (Husic and Cicic, 2009; Marcoux, Filiatrault, and Cheron,
1977; O'Cass and Frost, 2002; Shukla, 2008).
Specific scale items measuring chronic conspicuousness (CC) appear
in Table 1. Principal component analysis (PCA) with varimax rotation
and Kaiser Normalization resulted in seven components after rotations
Choice
Index
1915
converged in six iterations. The two distinct components of CC used in
this study are “fame” CC (i.e., consumers seek out famous brand fashions
because they desire to be admired) and “belonging” CC (i.e., consumers
seek out famous brand fashions because they desire to be accepted by
others).
Scales used to measure the chronic value for desire for rarity came
from Tian, Bearden, and Hunter (2001). Specific scale items measuring
chronic rarity (CR) appear in Table 2. PCA with varimax rotation and
Kaiser Normalization resulted in four components after rotations
converged in six iterations. Since all seven items used together yield
a Cronbach's alpha of .88, all seven items were used to measure CR
(i.e., desire for or seeking out uniqueness in products).
Measures for the extrinsic and intrinsic values in selection criteria of
luxury brands came from Kim and Kim (2005a, 2005b), Choi and Chang
(2010), Fiore and Damhorst (1992), Forsythe, Kim, and Petee (1999),
and Oh (2000). Finally, sources of measures for the value of luxury
brands (based on perceived conspicuousness, perceived uniqueness,
perceived social value, perceived quality, and perceived emotional
value) were Vigneron and Johnson (1999), Husic and Cicic (2009),
and Vigneron and Johnson (2004).
Shopping and buying is presented in the context of preparing for
your best friend's wedding. The product categories on the shopping
list were dress, handbag, shoes, jewelry, scarf, and necklace. Each product category in the shopping list included four choices represented by a
photograph with a verbal description of the item. One of the four
choices—the treatment item—would be represented by 12 versions of
the verbal description while the messages accompanying the other
three choices did not change.
The message accompanying the treatment dress included the following manipulations in combinations to make up the 12 versions of
the message. Low conspicuous consumption was represented by the
words, “The designer making this dress is not well-known but he is a
qualified grandmaster;” and high conspicuous consumption, “Recognized world-wide for being handcrafted by a designer grandmaster.”
The low rarity version stated, “1000 dresses were made including one
that fit you perfectly;” and high rarity, “only 30 dresses were made,
one of these 30 dresses fits you perfectly.” The prices for the treatment
dress were 100,000 won (approximately US$90, at the time), 500,000
won ($450), and 1,000,000 won ($900).
The message accompanying the treatment shoe included the following manipulations in combinations to make up the 12 versions of the
message. Low conspicuous consumption was represented by the
words, “The designer making this shoe is not well-known but is a qualified grandmaster;” and high conspicuous consumption, “Recognized
Conspicuousness Dresses
First 4.00
•3.86
Second 3.00
•3.73
•3.41
High CC• High MC
•3.17
•2.71
Third 2.00
Low CC• Low MC
Fourth 1.00
•1.89
Unchosen 0.00
Lo w
Medium
High
Price
Fig. 2. Price effects on luxury brand choice moderated by chronic conspicuousness (CC) and manipulated conspicuousness (MC).
1916
Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
Choice
Index
Rarity Dresses
First 4.00
•3.91
Second 3.00
•3.47
•3.42
High CR• High MR
•2.83
Third 2.00
Low CR• Low MR
•2.54
•1.82
Fourth 1.00
Unchosen 0.00
Low
Medium
High
Price
Fig. 3. Price effects on luxury brand choice moderated by chronic rarity (CR) and manipulated rarity (MR).
world-wide for being handcrafted by a designer grandmaster.” The low
rarity version stated, “200 pairs were made including a pair that fit you
perfectly;” and high rarity, “only 8 pairs were made, one of these 8 pairs
fits you perfectly.” The prices for the treatment shoes were 50,000 won
($45), 200,000 won ($180), and 500,000 won ($450).
The instructions at the beginning stated, “Please assume that you are
shopping for fashion items for your best friend's wedding. You are
expecting several of your close friends to attend the wedding. Please
imagine that you will be buying at least 3 of the 6 items on your
shopping list. (You do not need to buy all 6 items.)” On the shopping
pages, respondents were shown four alternatives of each product category and asked to indicate which one she would be most likely to buy
today, which one was her second choice, if her first preference was unavailable, and which one was her third choice. For example, on the dress
page, the word “dress” would be included in each question, and at the
bottom of the dress page, the respondents were asked, “Are you definitely buying a dress today?”
After completing the shopping pages, the respondent was asked to
look over each of the six shopping pages and circle the one item per
page she would like to receive as a gift for participating in the
study. Through a lottery, ten participants received one of the six
items they circled. A comment was included that said the respondent
did not have to pick the items previously selected—“a woman always
has the right to change her mind.” At the end of the shopping section,
participants were asked to “please provide” an e-mail address or cell
phone number where they could be contacted “tonight if you have
won. Thank you.”
The second section of the questionnaire measured the chronic
variables and consisted of the eighteen-item five-point Likert (strongly agree/strongly disagree) scale measuring chronic conspicuous consumption (CC) shown in Table 1 and the seven-item five-point Likert
scale measuring chronic rarity (CR) appearing in Table 2. The section
following measurement of the chronic variables included questions
about the respondent's luxury brand consumption behavior. The
survey ended with demographic items for classification purposes.
4. Analysis and findings
The chronic values for conspicuousness (CC) and rarity (CR) were
obtained by first reducing the scales for each construct, respectively,
Choice
Index
Conspicuousness Shoes
First 4.00
Second 3.00
•3.50
High CC• High MC
•3.10
Third 2.00
•3.13
•2.56
•2.31
Low CC• Low MC
•2.17
Fourth 1.00
Unchosen 0.00
Low
Medium
High
Price
Fig. 4. Price effects on luxury brand choice moderated by chronic conspicuousness (CC) and manipulated conspicuousness (MC).
Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
Choice
Index
1917
Rarity Shoes
First 4.00
Second 3.00
High CR• High MR
•3.18
•2.82
•2.75
•2.76
Third 2.00
•2.69
•2.13
Low CR • Low MR
Fourth 1.00
Unchosen 0.00
Low
Medium
High
Price
Fig. 5. Price effects on luxury brand choice moderated by chronic rarity (CR) and manipulated rarity (MR).
through factor analysis. From the reduced scale, responses were ordered
from the highest to lowest values and divided into quintiles. The highest
20% became the very high CC (CR) cases; the lowest 20%, the very low
CC (CR) cases. Using only the top and bottom quintile to represent the
extreme high and low chronic groups moves from variable-based to
case-based analysis, helps eliminate the noise associated with cases of
mixed high/low aspects of the trait, and attempts to examine the effects
of rather consistent behavior by examining the extremes (McClelland,
1998). Using simple median (dichotomous) splits to obtain cases for
high and low values of the chronic variables is inappropriate because dichotomizing continuous independent variables reduces the statistical
power available to test hypotheses and can create spurious significant
results if the independent variables are correlated—which they likely
are (Fitzsimons, 2008).
A simple choice index was created to be the dependent variable. If
the participant did select a dress (or shoes) “to buy today,” she was
asked to report the dress (shoes) she would most likely buy, her second
choice, and her third choice. Thus, the researchers were able to report
willingness-to-buy scores (i.e., 4 = first choice; 3 = second choice;
2 = third choice; 1 = fourth choice; 0 = no dress or shoes chosen to
buy).
The findings support H1a and H1b for dresses but not for shoes. The
medium versus low price level does not reduce demand for dresses
Choice
b
First (4)
significantly for the very high CC coupled with very high MC and does
increase demand significantly for very high CR coupled with very high
MR. The extremely high versus the medium price does overwhelm this
lack of price influence—choice of the target luxury brand of dresses
does decline significantly (p b .01) for the highest versus the mid-level
price. For shoes, choice declines as price increases for both high
CC · MC and high CR · MR. Conspicuousness and rarity seem to matter
more in the choice of high fashion, luxury dresses than high fashion, luxury shoes, as the comparisons in Figs. 2–5 show for dresses versus shoes.
Results are mixed when chronic and manipulated conditions are incongruent (i.e., low chronic conspicuousness and/or rarity with high
manipulated conspicuousness and/or rarity and high chronic conspicuousness and/or rarity with low manipulated conspicuousness and/or
rarity), providing partial support for H2a and H2b. Congruity between
chronic and manipulated variables—especially when both are high—
tends to minimize the effect of price compared to the other combinations of CC and MC as well as CR and MR.
When both CC and CR are low but MC and MR are high, price effects dominate (i.e., as price increases, demand or choice decreases).
When chronic variables are low, preference is higher at the lowest
price and decreases with increases in price. In the case of shoes,
however, preference increases from the low to the medium price
and drops off at the highest price for both very high CC coupled
Highest CC or CR and highest manipulated
conspicuousness (MC) or manipulated rarity (MR)
d
= high firm profits
c
Second (3)
a
g
e
Third (2)
j
f Lowest CC or CR and lowest MC or MR
h
Fourth (1)
i
k
l
Unchosen (0)
Lowest
Medium
Lowest CC or CR and highest MC or MR
Highest CC or CR and lowest MC or MR
Highest
Price
Fig. 6. Price influence on choice among the lowest and highest chronic need for conspicuousness (CC) or rarity (CR) group.
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Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
Conjunction of highest chronic rarity or CR and manipulated high rarity or MR
1.00
Profit
Index
0.50
0.00
-0.50
Conjunction of customers with lowest
chronic rarity or CR and manipulated
low rarity or MR
Low
Moderate
Conjunction of lowest chronic rarity
or CR and manipulated high rarity or MR
High
Price
Fig. 7. Profit curves as a function of price and conjunction of customers with varying chronic desires for conspicuousness and rarity and manipulated conspicuousness and rarity.
with very low MC and very high CR coupled with very low MR. The
tables in the Appendix provide details for the findings appearing in
Fig. 2.
In summary, the price effect on choice is significant for all four
combinations of high and low CC and MC combinations in Fig. 2
(conspicuousness dresses) and Fig. 3 (rarity dresses) and in Fig. 4 (conspicuousness shoes) for the very high CC coupled with very high MC
versus the very high CC coupled with very low MC conditions. In Fig. 5
(rarity shoes), a significant decrease in average choice as price increases
occurs for the incongruent high CR · low MR group only. Rarity seems
to work better for shoes than for dresses.
5. Discussion
The study examines consumer experiences that combine chronic
and manipulated conspicuousness (CC and MC, respectively) and
chronic and manipulated rarity (CR and MR, respectively) as well as
price's influence on the choice of luxury products. The manipulated conspicuousness and rarity of a luxury product tend to dampen the negative effect of price on preference or choice. The effect on choice or
preference of the price of a luxury product differs, however, based on
whether or not the consumer has a chronic desire for conspicuousness
and/or a chronic desire for rarity in a luxury product. If the consumer
lacks a chronic desire for conspicuousness and/or rarity in product
choices, then price effects dominate (i.e., preference is highest at the
lowest price and decreases as price increases). If the consumer possesses high chronic desire for conspicuousness or rarity, the parallel manipulated variable overrides the price effect for a wide range of prices.
Confirmation of the findings from this one set of choice experiments is
necessary before making firm conclusions. In real-life situations, pricing
strategists do not have the opportunity to measure customers' chronic
levels of desire for conspicuousness and rarity before selecting pricepoints for brands. However, the locations shoppers frequent who are
very high in CC and CR are likely to be different from places where individuals with very low CC and CR shop—a speculation in need of confirmation. If so, the practices of selecting higher price-points in luxury fashion
stores for customers very high in CC and CR and lower price-points in
stores catering to customers very low in CC and CR fit well with the findings of the present study.
This research supports the usefulness of considering the combinations
of levels of chronic and manipulated variables for subjects in experiments.
Possession of chronic traits may override or interfere with the desired effect of manipulated variables in experiments leading to inaccurate
interpretation of results. This research design permits testing and
confirming the nomological validity of a system of relationships among
chronic and manipulated conditions and provides further support for
using extreme values for high and low levels of variables rather than median splits.
The intention is not to report that the theory and empirical review
are conclusive. The study is limited in several ways. The theory does
not cover social-economic status (SES) characteristics and the empirical
study does not report on the influences of SES variables on choices. The
empirical study is limited to female university students in one high-tech
oriented country. Additional work in other cultures and elaborations of
the theory would be useful. Future work should include examining the
influence of price on conscious and nonconscious perception of product
quality as well as choice; pretests should establish that price affects
quality perceptions less for consumers chronically very-high versus
very-low in desire for conspicuousness or desire for rarity.
Contrary to economic theory, the impact of price on choice may be
modest and indicate an inverse curvilinear relationship for the highest
chronic conditions and high manipulated conspicuousness or rarity.
One rationale for this psychological marketing theory is that the consumers highest in chronic need for conspicuous consumption are vigilant,
ever watchful, for responding to high conspicuousness or high rarity fashion opportunities and within reason, they expect to pay high versus low
prices for such purchases. The theoretical perspective in Fig. 6 includes
the a-to-b increase in demand for the increase in price and only a modest
decrease in demand for a further substantial increase in price (b-to-c).
This a-b-c visual represents Veblen's dictum that high conspicuous consumption is a recipe that includes high quality, high visibility, and
high price with the additional ingredient that the highest conspicuous
consumption consumers are willing to pay a high premium for such
items.
Fig. 7 represents a ninth explicit statement to add to the theory and
extends the findings that Eskin (1975) reports for convenience food products. For high-end fashion products about the same peak profits are possible with low, moderate, and high prices depending on the recipe of
customer segments and fashion marketing designs at each price point.
The high-end fashion marketer needs to take care to include the low
price in the product design and communication recipe for the price sensitive customer and the high price in the product design and communication recipe for the price insensitive customer. Price sensitive customers
have the lowest relative levels of desires for conspicuous consumption
and rarity while the price insensitive customers have the highest levels
of these desires.
Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
1919
Appendix A
Table 1. Chronic conspicuousness, manipulated conspicuousness, price, and choice dress manipulations.
Panel A: Among the lowest chronic conspicuousness group
Panel B: among the highest chronic conspicuousness group
Dress__conspicuous
Dress__price
Mean
N
Std. deviation
Std. error of mean
Dress__conspicuous
Dress__price
Mean
N
Std. deviation
Std. error of mean
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
3.41
3.17
1.87
2.82
3.57
3.17
1.89
3.00
3.48
3.17
1.88
2.90
17
12
15
44
14
12
9
35
31
24
24
79
1.06
0.83
0.99
1.19
0.85
1.27
0.93
1.21
0.96
1.05
0.95
1.19
0.26
0.24
0.26
0.18
0.23
0.37
0.31
0.20
0.17
0.21
0.19
0.13
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
2.93
2.75
1.57
2.58
3.86
3.73
2.71
3.26
3.24
3.30
2.43
2.96
14
12
7
33
7
15
21
43
21
27
28
76
1.27
0.97
0.98
1.20
0.38
0.59
1.23
1.07
1.14
0.91
1.26
1.17
0.34
0.28
0.37
0.21
0.14
0.15
0.27
0.16
0.25
0.18
0.24
0.13
High
Total
High
Total
Table 2. Chronic conspicuousness, manipulated conspicuousness, price, and choice shoes manipulations.
Panel A: Among the lowest chronic conspicuousness group
Panel B: Among the highest chronic conspicuousness group
Shoes__conspicuous
Shoes__price
Mean
N
Std. deviation
Std. error of mean
Shoes__conspicuous
Shoes__price
Mean
N
Std. deviation
Std. error of mean
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
3.36
2.93
2.13
2.92
2.95
3.23
2.33
2.86
3.13
3.07
2.25
2.89
14
14
8
36
18
13
12
43
32
27
20
79
0.84
0.92
1.13
1.02
1.43
0,83
1.07
1.21
1.21
0.87
1.07
1.12
0.23
0.25
0.40
0.17
0.34
0,23
0.31
0.18
0.21
0.17
0.24
0.13
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
1.73
2.23
1.73
2.23
2.36
2.72
2.58
2.58
2.55
2.52
2.17
2.42
11
13
11
35
11
18
12
41
22
31
23
76
1.19
1.59
0.79
1.29
1.57
1.36
1.16
1.34
1.37
1.46
1.07
1.32
0.36
0.44
0.24
0.22
0.47
0.32
0.34
0.21
0.29
0.26
0.22
0.15
High
Total
High
Total
Table 3. Chronic rarity, manipulated rarity, price, and choice dress manipulations.
Panel A: Among the lowest chronic rarity group
Panel B: Among the highest chronic rarity group
Dress__rarity
Dress__price
Mean
N
Std. deviation
Std. error of mean
Dress__rarity
Dress__price
Mean
N
Std. deviation
Std. error of mean
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
2.83
3.42
1.82
2.71
3.53
3.11
2.27
3.05
3.22
3.23
2.05
2.90
12
12
11
35
15
18
11
44
27
30
22
79
1.11
0.79
0.87
1.13
0.64
0.76
1.19
0.96
0.93
0.77
1.05
1.05
0.32
0.23
0.26
0.19
0.17
0.18
0.36
0.15
0.18
0.14
0.22
0.12
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
3.00
3.31
2.33
2.95
3.47
3.91
2.54
3.28
3.23
3.58
2.45
3.12
16
13
9
38
15
11
13
39
31
24
22
77
1.37
0.85
1.50
1.27
1.25
0.30
1.39
1.23
1.31
0.72
1.41
1.26
0.34
0.24
0.50
0.21
0.32
0.09
0.39
0.20
0.24
0.15
0.30
0.14
High
Total
High
Total
For manipulated rarity alone: F = 1.98; d.f. = 1, 77; p b .16. For manipulated rarity alone: F = 1.37; d.f. = 1, 75; p b .25.
Note: the highest choice mean occurs for the highest chronic segment with high rarity manipulation as the model predicts.
Bold data indicate significance at p b .05.
1920
Y. Hwang et al. / Journal of Business Research 67 (2014) 1912–1920
Table 4. Chronic rarity, manipulated rarity, price, and choice shoes manipulations.
Panel A: Among the lowest chronic rarity group
Panel B: Among the highest chronic rarity group
Shoes__rarity
Shoes__price
Mean
N
Std. deviation
Std. error of mean
Shoes__rarity
Shoes__price
Mean
N
Std. deviation
Std. error of mean
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
2.76
2.75
2.13
2.55
2.75
2.63
2.27
2.51
2.76
2.70
2.20
2.53
17
12
15
44
12
8
15
35
29
20
30
79
0.97
0.87
1.30
1.09
1.29
1.41
1.22
1.27
1.09
1.08
1.24
1.16
0.24
0.25
0.34
0.16
0.37
0.50
0.32
0.21
0.20
0.24
0.23
0.13
Low
Low
Medium
High
Total
Low
Medium
High
Total
Low
Medium
High
Total
3.27
2.54
2.75
2.83
3.18
2.82
2.69
2.93
3.21
2.67
2.72
2.88
11
13
12
36
17
11
13
41
28
24
25
77
1.19
1.45
0.87
1.21
1.13
1.25
1.03
1.13
1.13
1.34
0.94
1.16
0.36
0.40
0.25
0.20
0.27
0.38
0.29
0.18
0.21
0.27
0.19
0.13
High
Total
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