International Marketing ReviewThe influence of value perceptions on luxury purchase intentions in developed andemerging marketsPaurav Shukla

Article information:To cite this document:Paurav Shukla, (2012),"The influence of value perceptions on luxury purchase intentions in developed andemerging markets", International Marketing Review, Vol. 29 Iss 6 pp. 574 - 596Permanent link to this document:http://dx.doi.org/10.1108/02651331211277955

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The influence of valueperceptions on luxury purchase

intentions in developed andemerging markets

Paurav ShuklaBrighton Business School, University of Brighton, Brighton, UK

Abstract

Purpose – Despite the growing debate about differences in consumer attitudes and behavior inemerging and developed markets, there is little research on the differences in consumer valueperceptions and their influence on purchase intentions. Focusing on the theory of impressionmanagement, the purpose of this paper is to introduce a conceptual framework incorporating thesocial (conspicuousness and status), personal (hedonism and materialism) and functional (uniquenessand price-quality perceptions) value perceptions using the context of luxury goods.Design/methodology/approach – Data were collected through a structured questionnaire- basedstudy of consumers in four countries, representing two leading Western developed luxury markets (theUS and the UK) and two important Eastern emerging markets (India and Malaysia). Multiple-groupSEM analysis was used to analyze the data.Findings – The findings show several differences in the influence of value perceptions on consumerpurchase intentions in the Western developed and Eastern emerging markets. The study highlightsthe importance of understanding the homogeneity and heterogeneity in consumer consumptiondecisions and provides managers with a basis to adapt their strategic responses.Originality/value – The results offer needed empirical support and cross-cultural stability to themuch theorized construct of value perceptions by exploring their effects within and between Westerndeveloped and Eastern emerging markets. Additionally, it unifies and complements the previous workby integrating the theory of impression management and value perceptions framework, thusproviding a comprehensive theoretical framework with empirical support.

Keywords Value perceptions, Impression management, Emerging markets, Consumer behavior,Structural equation modelling, Luxury brands, Brands, Consumer behaviour, United Kingdom,United States of America, India, Malaysia

Paper type Research paper

1. IntroductionZeithaml (1988) defines value as an overall assessment of subjective worth of a productor service considering all relevant evaluative criteria. Extant research suggests thatthere is currently little agreement about the dimensions of product value as perceivedby customers due to its subjective nature (Smith and Colgate, 2007; Wiedmann et al.,2009). Recent research, however, highlights the emergence of several fundamentaldimensions of value including social, personal and functional value perceptions

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0265-1335.htm

Received 29 July 2011Revised 9 January 201215 March 2012Accepted 20 March 2012

International Marketing ReviewVol. 29 No. 6, 2012pp. 574-596r Emerald Group Publishing Limited0265-1335DOI 10.1108/02651331211277955

The author would like to thank Dr Michael Chattalas, Dr Ernest Cyril de Run and Dr KeyoorPurani for their help in data collection as well as highlighting several important issues within thepaper. The author would also like to thank Professor Russell Belk, Professor Mike Hobday andProfessor John Cadogan for their insightful comments and inputs in shaping the paper. Theauthor would also like to thank Dr Keith Perks and Dr Steve Hogan at the University of BrightonBusiness School and the three anonymous reviewers for their help in various stages of this paper.

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(Shukla and Purani, 2011; Tynan et al., 2010; Vigneron and Johnson, 2004; Wiedmannet al., 2009). Researchers have long argued that attempts to explain the social behaviorof consumers in one culture based on another culture would be inadequate due todifferences in the psychology of consumption and value associations (Belk, 1999;Sheth et al., 1991). As a consequence, the findings relating to the changing effects ofvalue perceptions on consumers in developed and emerging markets are inconclusive.For example, many argue the case for accelerating the emergence of a homogenousglobal consumption culture which leads to similarity among consumers’ valueperceptions and their influence on purchase decisions (Hofstede et al., 1999). On theother hand, many researchers counterargue that local culture remains influentialon consumer value perceptions and consumption patterns differ significantly indeveloped and emerging markets (De Mooij, 2004; Sharma, 2010; Shukla, 2010).A further argument is that consumer consumption behavior is increasingly the productof a transmutation of global and local cultural influences (Fu et al., 2004; Hung et al.,2007). It is hence unclear whether the effects of value perceptions are the same forconsumers in both developed and emerging markets. Moreover, many researchershave called for further investigation of the underlying value perceptions in today’smarketplace (Fu et al., 2004; Smith and Colgate, 2007; Wiedmann, et al., 2007, 2009).

The theory of impression management proposes that consumers are highly affectedby the internal drive to create a favorable social image using their purchase behavior(Goffmann, 1959; Tsai, 2005). There are two notable aspects to it, namely instrumentaland expressive self-presentation. The instrumental aspect focusses on consumptiongeared toward influencing others and gaining rewards while the expressiveaspect deals with building an image which reflects one’s own personality. Froma value perceptions perspective, this role of instrumental and expressiveself-presentation is referred to as social and personal value perceptions in this study.Earlier studies have segregated socially oriented motives into two sub-dimensions,namely conspicuousness (O’Cass and McEwen, 2004; Shukla, 2008) and statusconsumption (O’Cass and McEwen, 2004; Shukla, 2010). Arguing, however, from abroader perspective in exploring consumer perceptions and motives behindpurchasing products, Tsai (2005) and Sharma (2010) suggest that socially orientedmotives are not sufficient in explaining luxury purchase decisions and highlight theneed for studying personally oriented motives which reflect self-image building. Thisstudy proposes that the simultaneous examination of personally oriented motivessuch as materialism and hedonism (Hung et al., 2007; Vigneron and Johnson, 2004)with socially oriented motives may help us better understand the effects of valueperceptions. For example, in a recent cross-cultural study with respondents from theUSA, Turkey and Denmark, Belk et al. (2003) found evidence that materialistic valuesare spreading globally. Sharma (2010), however, observes that, while materialismseems to be growing in eastern emerging markets, it is slowing down in westerndeveloped markets. This study posits that such differing trends may explain some ofthe disparity in the effects of value perceptions in developed and emerging markets.

Researchers also highlight the specific functional dimensions of uniqueness andprice-quality perceptions as motives behind consumer purchases (Sheth et al., 1991;Smith and Colgate, 2007; Tynan et al., 2010). Earlier studies have predominantlyfocussed on functional value perceptions in isolation. By measuring the influenceof functional value perceptions simultaneously with social and personal valueperceptions between developed and emerging markets, this study provides interestingtheoretical and contextual contributions. Luxury goods provide a useful context in this

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regards due to the significant socio-psychological and functional motives involved inpurchase and consumption (Wiedmann et al., 2009). By analyzing the value perceptionsthat are grounded in American and European consumption research in other emergingmarkets, this study will help build a more accurate and precise theoretical framework.To summarize, focussing specifically on luxury goods context this paper addresses thefollowing gaps in the extant literature:

(1) Identifies the simultaneous influence of:

. social value perceptions (i.e. status and conspicuousness);

. personal value perceptions (i.e. materialism and hedonism); and

. functional value perceptions (i.e. of uniqueness and price-qualityperceptions) in affecting consumer luxury purchase intentions.

(2) Explores the issue of value perceptions within and between western developedand eastern emerging markets context and thereby provides evidence tosupport the global/glocal debate associated with value perceptions.

(2) By unifying multiple standards of comparison into a single framework,it extends the previous work which has examined value perceptions inisolation and provides a comprehensive framework, with empirical supportacross developed and emerging markets.

To address the above-mentioned gaps, this study develops a conceptual framework(Figure 1) incorporating social, personal and functional value perceptions andhypothesizes several differences in the influence of these variables on the luxurypurchase intentions of consumers in developed and emerging markets. The frameworkis empirically tested using a sample of 1004 luxury goods consumers in four countries– two western developed markets (the USA and the UK) and two significant easternemerging markets (India and Malaysia). The next section discusses the aptness ofluxury goods as a context and builds the conceptual framework and hypotheses. Thisis followed by the methodology and results with a concluding section focussing ondiscussion, implications and future directions.

2. Conceptual framework and hypotheses2.1 Luxury consumption in developed and emerging marketsLuxury goods enable consumers to satisfy their material as well as socio-psychologicalneeds to a greater degree than regular goods (Vigneron and Johnson, 2004; Wiedmannet al., 2009). Luxury brands are one of the most profitable and fastest-growing brandsegments, yet at the same time, the social influences associated with luxury brands arepoorly understood and underinvestigated (Shukla, 2010; Wiedmann et al., 2009; Tynanet al., 2010). Increasing exposure to global media and the depiction of western lifestylesin local media seem to have increased the desire for high-quality goods and servicesamong consumers in emerging markets (Belk, 1999). With regards to luxury productsand services, studying the consumption patterns in emerging markets is particularlyimportant due to the phenomenal growth of luxury consumption among consumers inthese markets. For example, according to Bain and Company estimates (Krauss, 2009),85 percent of all luxury stores will be opening in emerging markets over the comingdecade. The report also predicts that while overall luxury sales will be down 16 percentin America, 10 percent in Japan and 8 percent in Europe, due to recessionary trends,consumption will grow by more than 10 percent in large emerging markets such as

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China, India, Russia and Brazil as well as in smaller emerging markets such as Malaysia,Egypt, Thailand and Turkey. Understanding the differing patterns of consumptionamong the emerging markets is not only important because of their market size andgrowth, but also because the growth is fuelling the aspirations of an emergent global classwith discretionary purchasing power approaching western levels. Researchers observethat these nouveau riche consumers in emerging markets are one of the most importanttarget markets for luxury firms across the world (Shukla, 2011). Therefore, the samplecountries used for this study include two western developed markets (the USA and theUK) and two eastern emerging markets (India and Malaysia).

2.2 Value perceptionsThere have been numerous attempts to define “value” by a wide range of philosophersand researchers (for a review see Zeithaml, 1988). Babin et al. (1994) note that earlierresearch on consumer value perceptions largely focusses on quality and price issuesand there is no agreement among academics regarding a single conceptualization andoperationalization of the consumer value construct. Moving beyond the transaction,exchange and acquisition utility, Zeithaml (1988) defines value as the overall

Social value perceptions Social value perceptions

Personal value perceptions Personal value perceptions

Functional value perceptions Functional value perceptions

Developed markets Emerging markets

Conspicuous value

Status value

Hedonism value

Materialism value

Uniqueness value

Price-qualityperceptions

Conspicuous value

Status value

Hedonism value

Materialismvalue

Uniquenessvalue

Price-qualityperceptions

Purchaseintentions

+

++

++

+

++

++

++

+

+

++

+

+

Notes: +, strength of relationship; ++, stronger relationship than +

Figure 1.Conceptual framework

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assessment of subjective worth of a product or service considering all relevantevaluative criteria. This definition fits well in the case of luxury goods whereconsumption is significantly focussed on the social and personal outcomes (Shukla,2010). Moreover, it also reflects the instrumental and expressive dimensions of thetheory of impression management and provides a coherent picture.

Focussing on earlier work carried out in the domain of luxury goods, Vigneron andJohnson (2004) propose a “brand luxury index” by classifying two major dimensions ofluxury value perceptions namely, personal perceptions (which entail perceived hedonicvalue and perceived extended self), and non-personal perceptions (which entailperceived conspicuousness, perceived uniqueness and perceived quality). FollowingKarl Popper’s philosophy, Berthon et al. (2009) conceptualize that luxury brands havethree distinct value-based dimensions: objective (material), subjective (individual) andcollective (social). Wiedmann et al. (2007) extend these conceptual frameworks by usingfour latent dimensions: social value (i.e. conspicuous value, prestige value); individualvalue (i.e. self-identity value, hedonic value and materialistic value); functional value(i.e. usability value, quality value, uniqueness value); and financial value (price value).The preceding evidence suggests that the debate on luxury value perceptions is welldeveloped on theoretical dimensions. Tynan et al. (2010), however, significantly stressthe need for empirical testing of the value perceptions framework to extend the validityand reliability of the theoretical foundations.

2.2.1 Social value perceptions. Social value represents the perceived utility of analternative resulting from its image and symbolism in association, or disassociation,with demographic, socio-economic and cultural-ethnic reference groups (Sheth et al.,1991). In other words, social value perceptions are largely outer-directed consumptionpreferences relating to the instrumental aspect of impression management. Consumerluxury purchase behavior is subject to the pressures of social norms and theexpectations of social institutional rules such as those arising from family and otherreference groups (Shukla, 2011). Tsai (2005) suggests two primary motives behindluxury consumption, namely social salience and social identification. This notioncould also be traced back to the theory of impression management (Goffmann, 1959),which emphasizes that consumers are highly affected by the internal drive to create afavorable social image from the outcome of their purchase behavior. Belk (1988) arguesthat one of the important motivating forces that influence a wide range of consumerbehavior is the aspiration to gain status or social prestige from the acquisitionand consumption of goods. On the basis of earlier work carried out in the area, thisstudy identifies two specific sub-dimensions of social value perceptions: conspicuousvalue and status value.

Conspicuous value is derived from the consumption process which is solelyfocussed on the display of wealth (Mason, 1993). Extant research suggests thatconspicuous consumption plays a significant part in shaping consumer preferences formany products that are purchased or consumed in the public context (Vigneron andJohnson, 2004; Wiedmann et al., 2009). Luxury goods have been one of the preferredmedium for many consumers in building social presence (Belk, 1985, 1999; Shukla,2011). Thus, a luxury brand associated with conspicuous signaling may be highlypreferred by consumers. Shukla (2010) observes that consumers in eastern emergingmarkets are significantly driven by ostentation when consuming luxury products. Thisreflects the largely interdependent nature of society wherein consumers highlyassociate with others’ self-concept (Belk, 1985, 1999). Wong and Ahuvia (1998) positthat when super-achievers emphasize their conspicuous consumption in societies

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which have significantly higher interdependent self such as in India and Malaysia,its effects cascade down very quickly to middle income consumers who are alsopressurized to follow this consumption trend. As a result, consumers in emergingmarkets may have a stronger affinity toward conspicuous consumption than theirdeveloped market counterparts. Hence:

H1. The influence of conspicuous value on luxury purchase intentions will besignificantly higher among consumers in eastern emerging markets thanconsumers in western developed markets.

While conspicuousness is related to external displays of wealth, O’Cass and McEwen(2004) suggest that luxury brands may be purchased for status-laden reasons also.They distinguish between conspicuous and status dimensions of luxury and suggestthat status value is associated with consumers’ desire to gain prestige from theacquisition of status-laden products. In their study, using real consumers, perceptualmapping and 26 brands across three luxury product categories, Truong et al. (2008)support the distinction between status value and conspicuous value. Focussing on thevalidity and reliability concerns, however, they identify the need for further empiricaltesting. Wong and Ahuvia (1998) and Shukla (2010) assert that consumers belonging towestern developed markets have a much higher focus on their actual self-concept. Thisis also reflected by Markus and Kitayama (1991) who posit that the independentconstrual of the self is more dominant in western cultures. For these consumers, theirinner self is more significant in regulating their consumption behavior (Wong andAhuvia, 1998). As status value relates strongly toward acquisition of status-ladengoods, this study posits that consumers in western developed markets will showhigher levels of status value than consumers in eastern developing markets. Thus:

H2. The influence of status value on luxury purchase intentions will be significantlyhigher among consumers in western developed markets than consumers ineastern emerging markets.

2.2.2 Personal value perceptions. One of the emerging thoughts in the area of luxurymarketing is the importance of consumption directed toward satisfying the self(Tsai, 2005) which relates to the expressive dimension of impression management. It isobserved that an increasing number of consumers are purchasing luxury brands toderive self-directed hedonic experience and symbolic benefits (Wong and Ahuvia,1998). Researchers such as Tsai (2005) and Wiedmann et al. (2009) argue thatconsumption directed toward the self has been understudied and requires furtherattention. Personal motive oriented consumers are concerned with being able toidentify their internal self with the product, gain an enjoyable experience from theproduct and match their individual tastes to the product’s image (Wong and Ahuvia,1998). These consumers seek to gain self-directed pleasure from consumption byfocussing on the achievement of hedonistic gratification and self-awareness ratherthan pleasing others’ expectations (Tsai, 2005). In such a context, the internal(hedonism) and external (materialism) facets of the self (Hirschman and Holbrook,1982) may become more pronounced. Therefore, this study focusses on twosub-dimensions of personal value perceptions, namely hedonism and materialism.

Hirschman and Holbrook (1982) define hedonic consumption as the “consumerbehavior that relates to the multi-sensory, fantasy and emotive aspects of product use.”

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This behavior is strongly correlated to the symbolic attributes of the product andluxury products provide an ideal environment for this consumption concept (Vigneronand Johnson, 2004). Hedonistic value primarily gratifies the expression of the internal,private self which reflects the expressive aspect of impression management.Consumers focussing on hedonism may consider the value aspects of self-directedpleasure and life enrichment to be the most important perceptions (Wiedmann et al.,2009). Wong and Ahuvia (1998) propose that people with an independent self-construalemphasize the importance of the internal self and also hedonistic experience as amotivation for luxury consumption. Research relating to hedonism reveals thatconsumers who are exposed to western developed markets seek more hedonisticexperience than those in eastern emerging markets (Tse et al., 1989). Therefore, it isproposed that:

H3. The influence of hedonism on luxury purchase intentions will be significantlyhigher among consumers in western developed markets than consumers ineastern emerging markets.

While hedonism focusses on emotional fulfillment (Hirschman and Holbrook, 1982),acquisition and possessions also play a central role in driving consumptionexperiences (Belk, 1999). It is observed that highly materialistic individuals relyheavily on external cues, preferring those possessions that are displayed in publicplaces (O’Cass and McEwen, 2004). Furthermore, materialistic consumers usepossessions as a method of communication to others to show and project who theythink they are (Belk, 1985). Researchers observe that materialism is a common traitamong consumers around the world (Belk et al., 2003). Differences, however, insocio-economic and cultural environment, may affect its magnitude across cultures.More specifically, Sharma (2010) suggests that materialism seems to be growing in theeastern emerging markets, but slowing down in the developed markets. He alsosuggests that materialistic consumers in emerging markets may attach a higherpremium to luxury goods because they may help them attain a greater social statusthan their developed market counterparts. This shift in behavior is also noted byBurroughs and Rindfleisch (2002) who show that many consumers in western developedmarkets are moving toward more abstract and less materialistic consumption pattern.Moreover, recent studies highlight the significantly strong influence of the materialismtrait with luxury consumption in emerging markets (Lertwannawit and Mandhachitara,2011; Podoshen et al., 2011; Sharma, 2010). Therefore, it is hypothesized that:

H4. The influence of materialism on luxury purchase intentions will besignificantly higher among consumers in eastern emerging markets thanconsumers in western developed markets.

2.2.3 Functional value perceptions. Functional value represents the perceived utility ofan alternative resulting from its inherent attributes or characteristic-based ability toperform its functional, utilitarian or physical purposes (Sheth et al., 1991; Smith andColgate, 2007). Apart from their social and personal value perceptions, consumersexpect a luxury product to be usable, of good quality and unique enough to satisfytheir urge to differentiate (Wiedmann et al., 2009). Consumers associate luxuryproducts with superior brand quality and reassurance and in turn perceive more valuefrom it. Researchers observe that consumers use the price of product more frequently

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when evaluating the associated prestige (Brucks et al., 2000). With regard to luxury,Beverland (2005) notes that price and quality go hand in hand as luxury brands haveinherent characteristics of high price and excellent quality. Therefore, instead ofseparating the price dimension from quality (see Wiedmann et al., 2007), this studyposits that measuring price-quality perceptions simultaneously as a single dimensionmay reveal interesting insights. Tian et al. (2001) propose that an individual’s need foruniqueness plays a fundamental role in consumption of luxury products. They arguethat a product’s perceived uniqueness increases the value of the product, leading toan improvement in an individual’s standing in the societal hierarchy. Based on thepreceding evidence this study focusses on two sub-dimensions of functional valueperceptions: uniqueness and price-quality perceptions.

Consumer consumption is based on two countervailing needs: a need for conformityand a need for uniqueness. Ruvio et al. (2008) and Tian et al. (2001) observe thatconsumers acquire and display material possessions for the purpose of feelingdifferentiated from others. Luxury goods since inception have primarily targeted theuniqueness trait among consumers. For example, Christian Louboutin is highlyassociated with unique shoe designs and the House of Hermes with unique silk scarves.This uniqueness aspect is so dominant in the luxury goods market, and especially inthe fashion industry, that organizations are forced to develop new designs on aminimum bi-annual basis. The need for uniqueness is strongly associated with theindependent and interdependent self-construal. In eastern emerging markets, theconsumer’s view of self is defined by the center of their relationships (Markus andKitayama, 1991) which includes not only one’s achievements, but also the position ofone’s group, usually family, relatives and kinship clan. Moreover, researchers haveobserved a significant need for conformity signaling among consumers in easternemerging markets (Commuri, 2009). This suggests that consumers in eastern emergingmarkets are willing to purchase luxury goods if such goods are highly recognizableamong their peers. Hence, these consumers will be less interested in a product which ishighly unique and less recognizable. On the other hand, in western developed markets,a consumer’s view of self is defined by one’s own opinion and tastes and not beingswayed by social pressure to conform as is the case in eastern markets (Wong andAhuvia, 1998). Thus, it is proposed that:

H5. The influence of uniqueness on luxury purchase intentions will be significantlyhigher among consumers in western developed markets than consumers ineastern emerging markets.

In their meta-analysis of the relationship between price and quality, Rao and Monroe(1989), found a significantly positive relationship between price and quality. Thisphenomenon is important for most luxury brands as they generally charge higherprices in comparison to regularly purchased brands. For example, an entry levelhandbag at most retailers will cost in the range of 40-100 USD while, an entrylevel Hermes handbag could cost higher than 600 USD. With this price premium luxurybrands have always focussed on quality. For example, the luxury watch brand, PatekPhillippe, is advertised as an intergenerational investment to be, “merely looked afterfor the next generation.” Likewise, Hermes focusses on marketing unique but timelessproducts with exceptional functional quality that will last a lifetime. Researchers haveobserved that when a brand is perceived as expensive in comparison to normalstandards, it becomes more valuable in the consumer psyche (Brucks et al., 2000).

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Additionally, recent research on status signaling using luxury brands (Han et al., 2010)suggests that consumers regularly use price and quality-related signals in building andcommunicating their image. Extant research on information processing suggests thatconsumers use both heuristic and systematic cognitive processing to evaluaterelevant information. It is believed that consumers will employ heuristic processingfor low-involvement products and systematic processing for high-involvementproducts (Petty and Cacioppo, 1986). This is mainly due to the stronger relevance ofhigh-involvement products to the consumer’s self-concept and decision processes(Ratneshwar and Chaiken, 1991). As luxury goods are high-involvement products formost consumers, and a systematic processing will be dominant. However, researchersstate that systematic processing requires a well-established and vivid existing schemato support decision making. In this regards, Shukla (2011) opines that due to theirlongevity of exposure to global luxury brands, consumers in western developedmarkets may give higher emphasis to a brand’s price-quality dimensions due to anelaborate existing schema. Hence, it is proposed that:

H6. The influence of price-quality perceptions on luxury purchase intentions will besignificantly higher among consumers in western developed markets thanconsumers in eastern emerging markets.

3. Methodology3.1 SampleData for this study were obtained via separate mall intercept surveys carried out withreal luxury consumers in two developed markets (i.e. the USA and the UK) and tworapidly emerging luxury markets (i.e. India and Malaysia). Both the USA and the UKare highly developed, leading markets for luxury products and represent 17 and5 percent of the global luxury market, respectively (Datamonitor, 2009). Additionally,cities such as New York and London are seen as global hubs and leading markets forthe evolution of luxury trends. India is rapidly becoming one of the most prominentluxury goods markets and Malaysia is an important luxury market in the South EastAsian region. Moreover, the selection of Malaysia provides an interesting comparativeoutlook between a large emerging market (i.e. India) and a smaller emerging market(i.e. Malaysia).

As stated earlier, the debate regarding value perceptions is mostly theoretical andlargely based on the western developed markets (Smith and Colgate, 2007; Tynan et al.,2010). The cross-cultural empirical comparison therefore provides an appropriatesetting to test all the hypotheses in this research related to the differences in valueperceptions between consumers in developed and emerging markets. Table I showsthe sample composition for each country.

3.2 ProcedureTo test the hypotheses, a structured questionnaire in English was designed focussingon proposed value perceptions and their influence on luxury consumption purchaseintentions. The initial sets of items were derived from established existingmeasurement scales. Questions relating to social value perceptions (i.e. conspicuousand status value) were derived from Truong et al. (2008). An additional item wasadded in the scale depicting “luxury brands make me feel acceptable in my workcircle” following expert panel suggestions. The scale items relating personal valueperceptions (i.e. materialism and hedonism) were derived from Babin et al. (1994) and

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(49.

33%

)(5

1.67

%)

(46.

00%

)(5

4.00

%)

(44.

30%

)(5

5.70

%)

(57.

00%

)(4

3.00

%)

Tot

al1,

004

453

551

514

480

410

594

501

503

(100

%)

(45.

12%

)(5

4.88

%)

(51.

19%

)(4

7.81

%)

(40.

83%

)(5

9.17

%)

(49.

90%

)(5

0.10

%)

Table I.Sample composition

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Richins and Dawson (1992). The functional scale items (i.e. uniqueness and price-quality perceptions) were derived from Ruvio et al. (2008), Tian et al. (2001) and Tsai(2005). Following extant literature, the luxury purchase intentions construct wasmeasured using a self-reported item by asking respondents “how likely is it thatyou will buy a luxury accessory within six months from now?” All measures used afive-point Likert-type response format, with “strongly disagree” and “strongly agree”as anchors.

The conceptual and functional equivalence for all constructs was assessedsubjectively by the multi-ethnic, multi-cultural, multi-national and multi-institutionalresearch team members. These scales were evaluated by a panel of expert judges forcontent and face validity. The expert panel included two executives each workingin the field of luxury marketing in the USA, the UK and India. The questionnairewas then submitted to two academics who were asked to assess each item forrepresentativeness, specificity and clarity. A pilot test was carried out (n¼ 20 for eachcity) to identify any impolite, unclear or difficult to understand questions. Thequestionnaire was distributed in Greater London and Sussex, UK; New York, USA;Mumbai, India and Kuala Lumpur in Malaysia. London and New York were chosenbecause they are the leading cities across the world in terms of luxury fashion trends.Mumbai and Kuala Lumpur are, respectively, major centers for Indian and Malaysianluxury consumers. Further, these two cities are among the most dynamic in the region,where particularly over the last decade they have experienced a significant rise in theconsumption of western luxury brands.

Respondents were contacted on major shopping streets in each city wherenumerous luxury brand stores are located such as Bond Street and Sloan Street inLondon, Madison Avenue in New York, the Phoenix and Atria Millennium malls inMumbai and the Bukit Bintang district of Kuala Lumpur. Respondents who werenot nationals of the particular countries were not included in the study. To avoidrespondent and response bias, data were collected over a five-week period with thesurvey team rotating the location of interviews, the times of the day and the days ofthe week to make the final sample representative of the population of shoppers. Tocapture the views of real luxury consumers a similar procedure of filtering theconsumers was followed to that suggested in extant literature (Christodoulides et al.,2009; Han et al., 2010; Shukla, 2010, 2011). The respondents were asked if they hadbought any luxury accessories or luxury products in the past six months. They wereasked to recall the brands they bought, thus creating an appropriate environment forthe study. In total, 1,004 fully completed questionnaires were used for the analysis. Thecomposition of respondents for each nationality is: American (n¼ 202; response rate:43.03 percent), British (n¼ 312; response rate: 57.33 percent), Indian (n¼ 190; responserate: 41.44 percent) and Malaysian (n¼ 300; response rate: 53.94 percent).

To avoid interviewer bias, each interviewer was trained with a similar brief anddebriefing sessions were held at the end of each day to standardize the process as muchas possible.

To minimize and estimate the effect of common method variance, severalrecommended procedural and statistical remedies were used as suggested byPodsakoff et al. (2003). Order bias was controlled by counterbalancing the order of themeasurement of the variables. The scale items order as well as the position ofthe predictor and criterion variable were changed. To avoid response format bias, theparticipants completed a series of filler tasks unrelated to the study in between.To reduce method bias, the respondents were guaranteed anonymity and were also

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assured that there are no wrong or right answers and that they should answerquestions as honestly as possible.

4. Data analysis and findingsSince this study uses data collected from four different countries, it is important to assesscross-cultural measurement invariance for all the scales. Steenkamp and Baumgartner(1998) suggest using a structural equation modeling approach for this, with a multi-stepprocess putting increasingly restrictive constraints on a multiple-group measurementmodel and testing the significance of changes in model fit. A maximum likelihoodestimation procedure with LISREL 8.8 was used for this purpose.

4.1 Measure validity and reliabilityBased on a participant’s country, four country groups were defined first. Theconfigural invariance of the scales was examined by testing the fit indices for anunconstrained model across these four groups. The measurement model shows a goodfit ( w2¼ 1,236.63, df¼ 707, w2/df¼ 1.75, RMSEA¼ 0.053, NNFI¼ 0.96, CFI¼ 0.97)with all indices better than the recommended cut-off values (RMSEAo0.06, NNFIo0.09, CFIo0.09). The w2 difference was also o3 as recommended by Kline (1998).Table II shows the factor loadings of all the scales.

As seen in Table II, the average variance extracted for the measures was 0.50 andabove for all constructs, which is greater than the level recommended by Dillonand Goldstein (1984). Discriminant validity was assessed using the test suggested byFornell and Larcker (1981). According to this test, a scale possesses discriminantvalidity if the average variance extracted by the underlying latent variable is greaterthan the shared variance (i.e. the squared correlation) of a latent variable with otherlatent variable. As Table III shows, this criterion was met by all the variables in thestudy as no correlation exceeds the square root of the average variance extracted.In a further stringent test of discriminant validity, a procedure suggested by Bagozziet al. (1991) was followed. In this procedure, each pair of constructs is analyzed througha pair of measurement models with and without the correlation between the constructsfixed to unity. Changes in w2 were far greater than the critical value in each case,supporting discriminant validity in each model. The composite reliability was above0.70 across the constructs, exceeding the recommended threshold value, which alsoprovides strong evidence of discriminant validity.

4.2 Invariance measurementAs seen in Table II, all the factor loadings are 40.5 and significant (po0.01) across thefour samples. This suggests that the scales exhibit configural invariance, indicating asimilar pattern of factor loadings across the four samples (Steenkamp andBaumgartner, 1998). To assess the similarity of response patterns among consumersacross countries, metric invariance testing was employed. Scalar invariance was usedto test cross-national differences in the means of the observed items. Table IV providesthe results of the stepwise process used for testing the difference measurementinvariance levels as suggested by Steenkamp and Baumgartner (1998).

After achieving the configural invariance (M1), the next step involved testing thedata for full metric invariance (M2). This was carried out by constraining the factorloadings to be equal across the four groups and comparing the fit statistics with theunconstrained model. The difference between M2 and M1 was Dw2 (41)¼ 155.85( po0.05). Moreover, some notable deterioration in fit measures such as RMSEA was

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observed. Hence, the probability level of the equality constraints was examined usingthe Lagrange multiplier (LM) test to identify the parameters that would significantlydecrease the w2-value if they were freely estimated subsequently (Byrne, 1994).A look at the LM w2-value shows four constraints to be untenable. Releasing the

Scale items USA UK India Malaysia

Social value perceptionsConspicuous value

Owning luxury goods indicates a symbol of achievement 0.78 0.80 0.67 0.52Owning luxury goods indicates a symbol of wealth 0.72 0.69 0.70 0.83Owning luxury goods indicates a symbol of prestige 0.77 0.84 0.83 0.88Owning luxury goods attracts attention 0.52 0.67 0.51 0.81Average variance extracted 0.66 0.75 0.63 0.78Composite reliability 0.79 0.84 0.78 0.85

Status valueI buy luxury goods just because it has status 0.83 0.81 0.64 0.67Luxury goods are important to me because they make mefeel that acceptable in my work circle 0.57 0.81 0.64 0.67I purchase luxury goods to gain/increase social status 0.72 0.91 0.93 0.77Average variance extracted 0.62 0.84 0.68 0.60Composite reliability 0.75 0.88 0.79 0.75

Personal value perceptionsMaterialism

Purchasing luxury goods increases my happiness 0.75 0.84 0.75 0.71It is important to me to own really nice luxury goods 0.75 0.62 0.70 0.60It sometimes bothers me quite a bit that I can’t afford tobuy all the luxury goods I want 0.56 0.50 0.56 0.77Average variance extracted 0.57 0.52 0.53 0.52Composite reliability 0.73 0.70 0.71 0.70

HedonismWhile shopping for luxury goods, I feel the excitement of the hunt 0.69 0.74 0.64 0.67When shopping for luxury goods, I am able to forget my problems 0.78 0.75 0.80 0.62When in a bad mood, shopping for luxury goods enhancesmy mood 0.70 0.70 0.52 0.70Average variance extracted 0.63 0.65 0.51 0.51Composite reliability 0.77 0.77 0.70 0.70

Functional value perceptionsUniqueness

I often buy luxury goods in such a way that I create a personalimage that cannot be duplicated. 0.82 0.84 0.78 0.83I like to own new luxury goods before others do 0.56 0.69 0.68 0.60When a luxury product becomes popular among others, I avoidbuying or using it. 0.59 0.79 0.71 0.76Average variance extracted 0.52 0.73 0.64 0.61Composite reliability 0.70 0.82 0.77 0.75

Price-quality perceptionsI believe luxury goods are of superior quality 0.53 0.50 0.55 0.64In my mind, the higher price charged by luxury goods indicatehigher quality 0.75 0.64 0.77 0.59You always have to pay a bit more for the best 0.70 0.92 0.87 0.79Average variance extracted 0.52 0.60 0.67 0.54Composite reliability 0.70 0.74 0.78 0.72

Table II.Scale summary

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equality constraints for these four items provided a w2-value of (1,266.28, df¼ 744)which is higher than the unconstrained model but the difference between the w2-valuesis not significant (Dw2¼ 29.65, D df¼ 37). Furthermore, the other fit indices are betterthan the recommended cut-off points (RMSEA¼ 0.054, w2/df¼ 1.70, NNFI¼ 0.96 andCFI¼ 0.97). Thus, support for partial metric invariance is observed.

The full scalar invariance was then tested. This constrained model shows thew2-value of 1,979.26 (df¼ 809). The difference between the w2 of full scalar variance(M4) and the partial metric variance (M3) is significant (Dw2¼ 712.98, D df¼ 65,

CO ST MT HD UN PQ

USAConspicuous (CO)Status (ST) 0.46Materialism (MT) 0.57 0.49Hedonism (HD) 0.56 0.45 0.37Uniqueness (UN) 0.52 0.25 0.26 0.41Price-quality perceptions (PQ) 0.45 0.28 0.21 0.43 0.50UKConspicuous (CO)Status (ST) 0.50Materialism (MT) 0.64 0.57Hedonism (HD) 0.49 0.39 0.40Uniqueness (UN) 0.57 0.40 0.48 0.37Price-quality perceptions (PQ) 0.54 0.43 0.48 0.38 0.48IndiaConspicuous (CO)Status (ST) 0.37Materialism (MT) 0.44 0.63Hedonism (HD) 0.38 0.33 0.37Uniqueness (UN) 0.35 0.30 0.37 0.46Price-quality perceptions (PQ) 0.38 0.37 0.46 0.54 0.42MalaysiaConspicuous (CO)Status (ST) 0.26Materialism (MT) 0.42 0.38Hedonism (HD) 0.36 0.28 0.44Uniqueness (UN) 0.46 0.32 0.36 0.37Price-quality perceptions (PQ) 0.26 0.31 0.31 0.25 0.28

Table III.Correlation matrix

Modelcomparison w2 df w2/df Dw2 Ddf RMSEA NNFI CFI

Full configural invariance (M1) 1,236.63 707 1.75 0.053 0.96 0.97Full metric invariance (M2) M2-M1 1,392.48 748 1.86 155.85 41 0.060 0.95 0.96Partial metric invariance (M3) M3-M2 1,266.28 744 1.70 126.2 4 0.054 0.96 0.97Partial metric invariance (M3) M3-M1 1,266.28 744 1.70 29.65 37 0.054 0.96 0.97Full scalar invariance (M4) M4-M3 1,979.26 809 2.45 712.98 65 0.078 0.93 0.93Partial scalar invariance (M5) M5-M4 1,323.76 791 1.67 655.50 23 0.054 0.96 0.97Partial scalar invariance (M5) M5-M1 1,323.76 791 1.67 87.13 79 0.054 0.96 0.97

Table IV.Measurement invariance

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po0.001) and the other fit indices deteriorated (RMSEA¼ 0.078, NNFI¼ 0.93,CFI¼ 0.93). This suggests that full scalar variance was not achieved. As noted bySteenkamp and Baumgartner (1998), however, full scalar invariance is extremely rarein cross-national studies. Next, a partial scalar invariance model was tested by freeingthe invariance constraints on several intercepts. Three w2-difference tests wereconducted to access the fit of the partial scalar invariance model (M5). The first testcompared M5 to M4 which suggests a significant improvement in model fit. The otherfit indices also improved. The second test compared M5 to M1 which suggested thatthe partial scalar invariance model was not significantly worse than the full configuralinvariance model (Dw2 (84)¼ 87.13, p40.05). Moreover, the other fit indices showedsignificant improvement from the full scalar invariance model (RMSEA¼ 0.054,w2/df¼ 1.67, NNFI¼ 0.96, CFI¼ 0.97). Therefore, it can be concluded that partial scalarvariance has been achieved across the samples.

4.3 Path coefficientsAfter conducting the invariance tests, all the hypotheses of the study were tested bycomparing the difference between developed and emerging markets. To conductthis analysis, the data were pooled to create two groups to represent developed andemerging markets. Table V presents the pooled data as well as individual country-based parameter estimates and respective t-values.

As shown in Table V, the fit indices for both pooled data based models provide agood fit for the data. To test whether significant mean differences existed among thedeveloped and emerging market-based consumers, a series of comparisons between theunconstrained base model and models in which one structural path at a time wasconstrained to be equal between country groups was carried out. Addressing the socialvalue perceptions, with regards to H1, no support was observed among both westerndeveloped and eastern emerging markets and therefore no mean difference analysiswas conducted. With regards to H2, status value had a significant positive effecton consumer luxury purchase intentions in both the western developed (b¼ 0.41,po0.001) and the eastern emerging (b¼ 0.31, po0.001) markets. The mean differenceanalysis showed that the w2 was significant (Dw2 (1)¼ 7.10, po0.01) suggesting thatconsumers in western developed markets demonstrate higher levels of status valueconsideration in their purchase decisions. This was also observed at individual countrylevel too wherein, both American and British consumers showed more significantinfluence of status value than Indian and Malaysian consumers.

Focussing on personal value perceptions, partial support was observed for H3 asthe relationship between hedonism and purchase intentions was found to be significantacross the pooled data and individual western developed countries (b¼ 0.41, po0.001).The relationship was found to be non-significant for the eastern emerging markets.However, in case of individual emerging countries, the relationship was significant inthe case of Malaysia (b¼ 0.13, po0.001). H4 was not supported with a significantlystronger relationship between materialism and purchase intentions among consumersin the western developed markets (b¼ 0.21, po0.001) than their eastern emergingmarket counterparts (b¼ 0.18, po0.001). The mean difference analysis also suggestedthe difference to be significant (Dw2 (1)¼ 4.96, po0.05).

With regards to H5, it was hypothesized that consumers in western developedmarkets will demonstrate higher levels of uniqueness preferences than consumers ineastern emerging markets. Partial support was found for this hypothesis as consumersin western developed markets demonstrate significant levels of purchase association

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Poo

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Table V.Path coefficients

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with uniqueness (b¼ 0.11, po0.001). The mean difference was highly significant (Dw2

(1)¼ 8.82, po0.01) suggesting the higher emphasize put on uniqueness of the luxuryproducts by western developed market based consumers. It was interesting to note thatat the country level the relationship was only significant among the UK consumers(b¼ 0.11, po0.01). For price-quality perceptions (H6), support was found among theconsumers in western developed markets (b¼ 0.27, po0.001) and among the easternemerging market consumers (b¼ 0.21, po0.001). The mean difference was highlysignificant (Dw2 (1)¼ 16.11, po0.001).

5. Discussion and conceptual contributionThe debate regarding value perceptions, especially in the area of luxury consumptionis fairly recent and is mostly theoretical in nature (Berthon et al., 2009; Smith andColgate, 2007; Wiedmann et al., 2007). With the increasing importance of emergingmarkets for luxury goods companies, researchers have highlighted the pressingneed for cross-cultural examination of value perceptions (Tynan et al., 2010;Wiedmann et al., 2009). This paper empirically examines the differences in luxuryvalue perceptions between consumers in both developed and emerging markets,using a common conceptual framework (Figure 1) based on the theory of impressionmanagement, encompassing three key constructs namely social, personal andfunctional value perceptions. In doing so, the study explores the simultaneity ofinfluence of multiple constructs. Congruity theory suggests that consumers rarely takepurchase decisions in isolation but rather consider multiple stimuli. This studytherefore provides multiple standards of comparison in a single framework leading to abetter understanding of value perceptions across markets.

While four of the six proposed hypotheses were fully or partially supported, thefindings show interesting similarities and differences between and within consumersin western developed and eastern emerging markets. The results in turn contribute andexpand the theory of impression management by examining the theory at large in across-national context and demonstrating how each sub-component of instrumentaland expressive dimensions affect consumer decision making. With regards to overallimpression management, compared with consumers in emerging markets, those indeveloped markets use a more elaborate value perceptions schema for their purchasedecisions. The findings suggest that while impression management maybe a commontrait among all cultures and countries, the influence of each micro component maydiffer substantially. Earlier studies demonstrate high correlation betweenconspicuousness and luxury consumption (O’Cass and McEwan, 2004; Shukla, 2008).This study, however, contradicts this, showing that the conspicuousness dimension isnot a significant predictor of luxury consumption across developed and emergingmarkets. This is believed to be a reflection of present times as many consumers acrossthe world are avoiding conspicuous displays of wealth and abandoning luxury goodsthat prominently display their brand names and logos for more subtle and subdueddesigns. Similar observations based on anecdotal evidence have been made by thenews media including The New York Times (Williams, 2008) and The Financial Times(Daneshkhu, 2010).

The results also reflect that preference for status value, associated with consumers’desire to gain prestige from the acquisition of status-laden products, is much strongerfor consumers in western developed markets. The difference is significant at bothpooled and country data levels. The differing effects of conspicuous and status valuealso provides cross-cultural stability to the argument put forward by O’Cass and

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McEwan (2004) and Truong et al. (2008) regarding distinguishing the conspicuous andstatus dimensions of luxury. The results demonstrate how each sub-componentrelating to the instrumental dimensions of impression management theory influencesconsumption decisions.

Researchers have proposed that personal value perceptions reflecting the expressivedimension of impression management (i.e. hedonism and materialism) play a non-negligible role in consumers’ purchase decisions for luxury goods (Tsai, 2005; Wiedmannet al., 2007). This study provides empirical evidence that personal pleasure seeking andthe symbolic benefits relating to hedonism are important to consumers in westerndeveloped markets, but not in eastern emerging markets. The finding relating tomaterialism contradicts the observations from Sharma (2010) who suggested anincreasing role played by materialism in emerging markets. It was observed thatmaterialism is a significant predictor of luxury purchase intentions in both developingand emerging markets at the pooled data level. However, the role was increasinglysignificant among western developed markets. At country data level, the non-significanteffect of hedonism and materialism among Indian consumers may be due to the higherinterdependent self-construal and collectivist psyche. Douglas and Isherwood (1996) notethat collectivist societies frequently stress modesty and humility in consumption tocontrol the potentially negative consequences of envy. This seems to be the reason for thenon-significance of materialism in India when purchasing luxury goods. The differingconsumption influences of social and personal value perceptions highlight the need toexamine the micro sub-components of impression management theory.

The results show that functional value perceptions are significantly importantto consumers in developed markets who are increasingly seeking to purchaseunique products which have high price quality perceptions. The findings fit with theindependent self-construal observed among consumers in western developed markets(Wong and Ahuvia 1998).The results when considered at the country level showinteresting differences. For example, at the individual country level, uniqueness valueis significant for the British but not for the American consumers although, the price-quality perceptions are strongly reflected in both markets. The UK and the USA sharemany cultural traits, but when it comes to individual level consumption decisions, thefindings suggest that they differ significantly. The results help expand the theory ofimpression management toward functional value associations demonstrating howconsumers use functional values such as uniqueness and price-quality perceptionsto manage their identity. This paper thus connects the functional identity signalingaspect (Berger and Heath, 2007; Han et al., 2010) with the theory of impressionmanagement and in turn builds a more comprehensive picture.

5.1 Managerial implicationsBesides its conceptual contributions, this study offers important managerialimplications for international marketers by identifying the role played by differentvalue perceptions in developed and emerging markets as well as at individualcountry level contexts. A key managerial implication of this study relates to how thesimultaneous examination of value perceptions can enhance strategic decision making.The results, when seen at the pooled data level and individual country level, providemanagers with an avenue to globalize as well as localize their responses whendeveloping their strategic plans for a country or region.

The study indicates that managers should avoid associating their luxury brandswith conspicuous signaling as it is a non-significant predictor of purchase intentions.

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Instead, managers should associate strongly with the status value laden messageswhich highlight consumers’ desire to gain prestige in acquisition rather than display.The significant influence of status value across both developed and emerging marketsprovides managers with an opportunity to standardize their campaigns. At the sametime, hedonism-related personal value perceptions are increasingly influential indriving luxury purchase in western developed markets, thus providing an opportunityto localize strategy. The effect of materialism across markets at pooled data levelsuggests that combining status value and materialism in their campaigns will providesignificant benefits.

The increasing influence of functional value perceptions offers empirical supportto Sharma’s (2010) assertion that international marketers need to identify otherimportant consumer influences besides materialism, such as product differentiation,customization and superior service. It is found that uniqueness and price-qualityperceptions play a significant role in influencing consumers in western developedmarkets. Price-quality perceptions are also significantly important for consumers inemerging markets At the country level the results relating to functional valueperceptions provide an opportunity to customize strategic campaigns. For example, astrategic campaign in the USA should highlight price-quality perceptions, while thecampaign targeting British consumers should highlight uniqueness.

In conclusion, all the aforementioned implications may help international marketersin approaching developed and emerging markets based on important consumer valueperceptions. A strategic campaign which standardizes status value and customizes theother important value perceptions based on the specific market will help marketersretain existing customers as well as gain new customers.

6. Limitations and future directionsDespite the interesting theoretical and managerial implications, this research haslimitations which provide a way forward for further research. First, the studies wereconducted in four different markets. They were, however, conducted in major cities andtherefore the findings may not represent the overall population. With regard to thetheory of impression management, the results highlight the importance of measuringthe micro sub-components for both instrument and expressive dimensions. Futurestudies should re-examine these micro sub-components in various product categoriesand in other countries and cultures. Future studies could also explore potentialinteractions among the sub-components, such as the one between personal and socialvalue perceptions. The findings relating to conspicuousness also needs furtherverification especially in the context of emerging markets where luxury consumptionamong middle class consumers is rapidly increasing. While this study captures viewsof real luxury consumers by filtering them on their past luxury purchases, futureresearches may include a broad sample of those who have not purchased luxury goodsin recent past or are not intending to purchase them in the near future. This study didnot focus on consumer expertise or knowledge of luxury products which may act as amoderator. Future studies could look at other moderators including consumer socio-demographics and situational influences. One of the interesting findings of this studyrelates to the differences within developed and emerging markets. There is a need tostudy further the differences between markets with perceived similar cultural traitssuch as the USA and the UK to evaluate how consumer consumption decisions differ.Comparative studies involving accessible and classical luxury will provide furtheropportunities for international marketers to segment the market and match their

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product offering with an appropriate campaign. Using the value perceptions examinedin this study, future researchers could also explore the differential effects of eachdimension while controlling the other using experimentation as a methodology.

In conclusion, this study contributes to the study of luxury consumptionconceptually, substantively and managerially. Conceptually, the findings extendour understanding relating to the theory of impression management by lookingat it through the lens of value perceptions. The study also provides cross-culturalstability to value perceptions construct. Substantively, the findings demonstrate howconsumers engage in luxury consumption using subtle signals relating to impressionmanagement and value perceptions. It highlights the differences in consumptionmotivations among consumers in western developed and eastern emerging markets.Managerially, this study shows the importance of understanding the homogeneity andheterogeneity in consumer consumption decisions and offers managers a basis to adapttheir strategic responses.

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Corresponding authorPaurav Shukla can be contacted at: p.shukla@brighton.ac.uk

To purchase reprints of this article please e-mail: reprints@emeraldinsight.comOr visit our web site for further details: www.emeraldinsight.com/reprints

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