International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
Segmenting Luxury Market Based on the Type of the Luxury Consumed. Empirical Study on Young Female Luxury Consumers by Raluca Ciornea, Marius-Dorel Pop, Mihai-Florin Băcilă Babes-Bolyai University of Cluj-Napoca, Romania Babes-Bolyai University of Cluj-Napoca, Romania Babes-Bolyai University of Cluj-Napoca, Romania
[email protected],
[email protected],
[email protected] Abstract. Due to frequent changes in the luxury sector but mostly to its specificity, the answers to two of the most important questions are still controversial: “who is the luxury consumer?”and “how he/she consumes? “. Conducting a study among young female luxury consumers, the main purpose of the paper was to identify the existence of significant differences in luxury products and services consumption. The TwoStep cluster analysis indicated a five cluster solution based on the categories of luxury consumed and the differences were significant as the segments vary from segments of consumers who have only luxury cosmetics/perfumes to segments of consumers who engage in consumption of almost all types of luxury. Unexpected luxury consumers were discovered, with family precarious financial situation that doesn’t stop them to desire and consume luxury – they may engage in trading-up or down actions, consume accessible luxury or even take part to the “sugar daddy” phenomenon. The study is unique by approach and brings significant contribution both to luxury literature and for the luxury business domain. Key words: luxury consumer, luxury consumption, luxury market segmentation JEL classification: M31
1 Introduction
2 Literature review
The main purpose of the study is to investigate the heterogeneity of the population of young luxury female students with respect to luxury consumption (past and present consumption of luxury products and services purchased by themselves or receives as gifts). Through the identification of luxury consumers segments, the contribution of the study concerns on one hand the academic literature as aims to bring new information on the luxury consumer, the profile and the consumption behaviour, and secondly the business sector as luxury companies may use the findings to design their strategic actions. Although in the literature there are several classifications or profiles of the luxury consumer, most of them have significant limitations. The study is the first that attempts to segment the luxury consumers in Romania, while its contribution may be extended as no similar studies – as approach, and even theme - were found in the international luxury literature.
Less researched but very controversial, the luxury domain is atypical and characterized by a set of paradoxes, especially from marketing points of view (Dubois, 1992; Laurent and Dubois, 1996; Dubois, 2003; Vickers and Renand, 2003) that makes many academics dream at discovering the mechanism behind it. If lately most of the studies both academic and in business are focused on the final luxury consumer, the results obtained still differ especially due to “the ambiguity in the domain” (Dubois et al, 2001) - a consequence of the lack of a generally accepted definition of the luxury, of what are the luxury products, who are the luxury brands and who is the luxury consumer. More, there are frequent changes on the global economy with impact on the luxury industry (WWF report, 2007; Luxury Institute report, 2004-2011), the luxury producers have changed having more financial power, more extended businesses and use different marketing strategies (Kapferer and Bastien, 2009; Husic and Cicic, 2009), luxury goods have changed
143
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
with the introduction of more affordable products and services (Allérès, 1997; Silverstein and Fiske, 2005; Danziger, 2005; Okonkwo, 2007), luxury consumers have changed and with them the consumption patterns (Okonkwo, 2007; Silverstein and Fiske, 2005; Danziger, 2005). While several authors mention the existence of different new forms of luxury as opposed to the often called “traditional luxury” or “real luxury”, Silverstein and Fiske(2005) introduced the “new luxury” category – a more diluted luxury emerged due to luxury democratization and middle class willingness to consume accessible luxury- and argue that the “new luxury” is a sustainable trend. Regarding the types of existing luxury, one of the most interesting and widely accepted approach is offered by Allérès(1991) that basing on the level of accessibility divides luxury in inaccessible, intermediary and accessible - the consumption in each category being specific to different socio-economic classes. For a long time, there were maintained some preconceptions about the luxury consumption and luxury consumer identity, as Dubois (1992) mentions they were seen as people from higher social classes, the elite. However, most of the authors observed that consumers in the present are different from those in the past, as they can be from different social classes (Allérès, 1997), are younger, make more money more rapidly (Twichell, 2002), are more complex and thus more difficult to understand and satisfy. They have new consumption behaviours as they are trading-up and trading-down (Silverstein and Fiske, 2005) to get the luxury wanted. As Silverstein and Fiske (2005) mention, luxury consumers are both women and men, of all ages, single or married, of any profession, thus segmentation is imperative even though some managers in the domain think the opposite. In literature can be met a large variety of luxury consumer classifications or even profiling that are based on various variables as age or generation (e.g. swing generation, baby boomers, generation x, millennials - Danziger, 2005), social-class (e.g. elite social-class, professional social-class and middle class – Allérès, 1997), type of luxury consumed (e.g.
old luxury consumers, new luxury consumers Okonkwo, 2007), discretionary household income (e.g. affluent, super-affluent, wealthy consumers – American Express Publishing and Harrison Group, 2007), the level of their investable assets (e.g. mass affluent, HNWI, Ultra-HNWI - Merrill Lynch and Capgemini, 2010), household income (e.g. comfortable affluent, super-affluent, ultra-affluent - Unity Marketing, 2009), wealth and the annual amount of spending (e.g. aspirational masses, rising middle class, new money, old money, beyond money - BGC and Concept M, 2010), consumption behaviour and income (e.g. cocoons, butterflies, aspirers, x-fluents – Danziger, 2005), motivations for consumption (e.g. Veblen consumers, snob consumers, bandwagon consumers, hedonist consumers, perfectionist consumers - Vigneron and Johnson, 1999) etc. Thus, one can identify in the literature various categories of luxury consumers categorized by one or more variables, but the main limitation regarding these categories is the fact that most of them are mentioned in business materials and specific to business literature is the fact that it offers the results of the study but not the methodology used in data gathering and analysis necessary to repeat the study in different times or spaces. More, regarding the main purpose of the paper weren’t found studies on segmentation based on the type of the luxury products and services consumed. 3 Research methodology To provide optimal conditions for future work, due to the ambiguity of the luxury domain, it is necessary to clarify and detail aspects regarding our research methodology as the population studied, the physical data collection, the identification of luxury consumers (a more “delicate” issue) and the data gathering instrument. 3.1 Data collection The study is based on a primary research, in which data have been collected by specialized personnel using face-to-face interview
144
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
questionnaire. The study population consisted of female students from one of the biggest faculty in Cluj-Napoca city, a significant university centre in Romania and the sample consists of 380 persons. The 367 lately validated questionnaires were separated in the database into luxury consumers and nonconsumers, and the filter is represented by the answers to 2 questions regarding the consumption of luxury. Thus, we considered a luxury consumer a person who consumed at least once a luxury product or service, from the categories given in the questionnaire. The choice regarding the consumption frequency is based on the idea of existence of so called “excursionist” (Dubois and Laurent, 1996). In order to help our respondents understand their position regarding the luxury consumption and thus to reduce the number of cases where non-consumers consider themselves luxury consumers, we had an intervention before the completion, asking them to check a list of luxury fashion brands annexed in the questionnaire (the list was taken from Okonkwo 2007: 45-47). After division, have been identified 273 luxury consumers (74,4% from total sample), a much higher percentage than we expected.
vacation, luxury restaurant meals, luxury dentist/beauty treatments/plastic surgery, luxury health and fitness, luxury locations for entertainment, luxury hotel accommodation, luxury event planning services, luxury medical care services, luxury home care services, luxury financial services, luxury services regarding adventure sports, luxury childcare and nanny services, luxury pet care services. The items used in the previous mentioned questions were established basing on the categories met both in scientific and business luxury literature (e.g. Unity Marketing Research Co., 2009, Chevalier and Mazzalovo, 2008; Danziger, 2005, Okonkwo, 2007; Castarede, 2003). 4 Findings and discussion The collected data had been analyzed using the statistical program SPSS 19. Table 1. Frequencies for the luxury products and services consumption
3.2 Measurement The questionnaire was designed using both open questions and multiple-choice (single and multiple answer) questions. For the segmentation were used two questions with multiple-choice multiple answers, representing two categories of variables - namely luxury products consumption and luxury services consumption - which include a total number of 29 variables. Regarding the luxury products consumption, were suggested the following categories: luxury clothes, luxury shoes, luxury bags, luxury accessories, luxury lingerie, luxury cosmetics/perfumes, luxury jewellery, luxury watches, luxury electronics-mobile, luxury houses, luxury cars, luxury home decoration, luxury delicacies(bought from stores), luxury products for pets, luxury gifts (for others), while for luxury services consumption the variables were: luxury transport, luxury travel and
145
Category – products Clothes Shoes
%* 58,2% 28,6%
Bags Accessories
19% 33,7%
Lingerie Cosmetics/ perfumes Jewelry
15% 90,5%
Watches
25,3%
Electronicsmobile Houses
9,5%
Cars Home decoration Delicacies (stores) Products for pets Gifts
3,7% 6,6%
17,9%
2,2%
19% 1,8% 22,7%
Category – services Transport Travel and vacation Restaurant meals Dentist/beauty treatments/plastic surgery Health and fitness Locations for entertainment Hotel accommodation Event planning services Medical care services Home care services Financial services Services regarding adventure sports Childcare and nanny services Pet care services
%* 37% 21,2% 31,3% 4% 15,4% 26,4% 22,3% 7% 5,9% 2,2% 2,6% 8,1% 0% 1,1%
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
Before initiating the cluster analyses, in an attempt to reduce the number of consumption items (29), were calculated frequencies (table 1) which showed that for all the luxury categories there is at least one respondent that consumed at least once the product/service except for the variable “luxury childcare and nanny services”. Thus, all variables were used for future analysis except the “luxury childcare and nanny services”. Although there are several techniques suitable for market segmentation, we decided on clustering as is considered “the most popular and widely applied method” (Dolnicar, 2003:5). To perform the segmentation was considered more appropriate the TwoStep cluster procedure that basing on hierarchical clustering (Chiu et al, 2001) it deals both with qualitative and quantitative variables and is adapted to process the amount of data from the given sample. In terms of data cleaning required by TwoStep (Li and Sun, 2011) was initiated the procedure to check for missing values, but it wasn’t the case for filling as no missing values were found. Since in clustering is essential the differences between records as large value scales could dominate the cluster solution, we used a rudimentary standardization process similar to min-max approach (Tsiptsis and Chorianopoulos, 2009) namely the records were coded with 0 and 1. In the first phase, was used the automatic clustering option that determines automatically the number of clusters. Both Schwarz’s Bayesian Criterion (BIC) and Akaike’s Information Criterion (AIC) used to optimize the model, suggested same solution of two clusters - a number somewhat expected given the high number of variables used (28). The result was considered unsatisfactory due to several motives: as suggested in literature the automatic clustering leads too few clusters and not necessarily useful (Horn and Huang, 2009); the use of categorical variables is usually problematic in clustering (Tsiptsis and Chorianopoulos, 2009; Bacher et al, 2004); practical researches showed that there are cases when TwoStep don’t offer automatically the correct number of clusters (Bacher et al, 2004); the automatic option it’s a specific approach for
“starting model training” (Tsiptsis and Chorianopoulos, 2009). As suggested in literature we continued the study with alternatives apart from automatic clustering (Tsiptsis and Chorianopoulos, 2009). Repeated tests have led us to choose the alternative of a five-cluster solution. The other cluster solutions (3, 4 and higher than 5), were characterized by a dominant cluster with a value over 40% and Ration of Sizes higher than 2 – these were not considered the most appropriate as is recommended to avoid solutions with dominant clusters that may indicate further segmentation (Tsiptsis and Chorianopoulos, 2009). For the chosen solution of 5 clusters, the Ratio of sizes is 1,29, while the quality of cluster solution given by the silhouette measure of cohesion and separation is Fair (figure 1), indicating a satisfactory cluster solution. The dimensions of the five clusters (figure 1) calculated based on the entire sample of 273 luxury consumers are: 19,9%, 22,8% (the largest), 20,3%, 19,2% and 17,8%(the smallest). Figure 1. Quality of cluster solution and sizes of clusters
Using chi-square statistics (case of categorical variables) TwoStep clustering quantifies the contribution of the used variables to the creation of the clusters (Horn and Huang, 2009). Thus
146
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
the most significant importance predictors and the coefficient of importance are the luxury clothing(1), luxury shoes(0,84), luxury transport(0,77), luxury gifts(0,69), luxury services regarding adventure sports(0,68),
entertainment(0,63), luxury travel and vacation(0,61) and luxury watches(0.6), the other variables have less importance. The structure of the clusters is represented in table 2.
Table 2. Representation of the 5 clusters solution
Category of variables
Cluster 1
Cluster 2
Cluster 3
Cluster 4
Cluster 5
YES %
NO %
YES %
NO %
YES %
NO %
YES %
NO %
YES %
NO %
Clothes Shoes Transport Gifts Services regarding adventure sports Accessories Restaurant meals Locations for entertainment Travel and vacation Watches Bags Lingerie Cosmetics/perfumes Jewelry Electronics-mobile Delicacies (stores) Home decoration Cars Houses Products for pets Dentist/beauty treatments/plastic surgery Health and fitness Hotel accommodation Event planning services Medical care services Home care services Financial services Pet care services
0 0 0 0 0
100 100 100 100 100
36,5 3,2 22,2 4,8 1,6
63,5 96,8 77,8 95,2 98,4
76,8 16,1 21,4 12,5 0
23,2 83,9 78,6 87,5 100
94,3 75,5 60,4 32,1 0
5,7 24,5 39,6 67,9 100
87,8 55,1 87,8 71,4 42,9
12,2 44,9 12,2 28,6 57,1
0 0 0 0 0 0 1,8 100 0 0 1,8 0 0 0 0 0
100 100 100 100 100 100 98,2 0 100 100 98,2 100 100 100 100 100
20,6 41,3 22,2 28,6 38,1 15,9 12,7 84,1 4,8 3,2 11,1 1,6 1,6 0 0 0
79,4 58,7 77,8 71,4 61,9 84,1 87,3 15,9 95,2 96,8 88,9 98,4 98,4 100 100 100
19,6 0 0 1,8 1,8 25 1,8 76,8 5,4 0 5,4 0 0 0 0 1,8
80,4 100 100 98,2 98,2 75 98,2 23,2 94,6 100 94,6 100 100 100 100 98,1
54,7 47,2 62,3 13,2 20,8 11,3 28,3 96,2 26,4 20,8 24,5 13,2 5,7 1,9 3,6 1,9
45,3 52,8 37,7 86,8 79,2 88,7 71,7 3,8 73,6 70,2 75,5 86,8 94,3 98,1 96,4 98,1
79,6 69,4 51 65,3 67,3 44,8 32,7 91,8 59,2 26,5 57,1 20,4 12,8 10,2 6,1 18,4
20,4 30,6 49 34,7 32,7 55,2 67,3 8,2 40,8 73,5 42,9 79,6 87,8 89,8 93,9 81,6
1,8 0 1,8 0 0 0 0
98,2 100 98,2 100 100 100 100
1,6 34,9 1,6 4,8 1,6 0 1,6
98,4 65,1 98,4 95,2 98,4 100 98,4
7,1 0 0 1,8 0 0 0
92,9 100 100 98,2 100 100 100
18,9 17 0 3,8 1,9 3,8 0
81,1 83 100 96,2 98,1 96,2 100
53,1 61,2 34,7 20,4 8,2 10,2 4,1
46,9 38,8 65,3 79,6 91,8 89,8 95,9
*percent from total members of each cluster
luxury accessories(0,65), meals(0,64), luxury
luxury restaurant locations for
Following we’ll present the clusters interpretation, mentioning that after the
147
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
segmentation other additional analyses were performed using different variables for a better understanding of the clusters through profiling (Tsiptsis and Chorianopoulos, 2009). The additional variables are “the importance given to luxury”, “family monthly income”, “most expensive luxury product/service in the past three years”, “past willingness to make compromises for luxury (to lie, to be engaged in a relationship with a man, to get married, to be the mistress of a married man, to make a child, to be financially supported by someone, to engage in intimate relations without emotional involvement, or to financial fraud- as seen most of them are specific to the “sugar daddy” phenomenon)”.
expensive luxury product or service that they bought or received is a luxury perfume (98,2%) or luxury cosmetics (1,8%). Secondly, the monthly income of the family for most of them (89,1%) is less than 4000 lei (almost 910 €). And thirdly, they would like to have luxury products, as “the importance given to luxury” in terms of desire has a Mean of 3,18 (the importance scale takes values between 1-6, where 1 means “not at all important”, 6 means “very important”) while the Chi Square analysis indicated a link of low intensity between the variables in the cluster and “the importance given to luxury” (Sig.=0,048, Contingency Coefficient=0,321). Thus there is desire for luxury products but very rarely a financial possibility, specific to “excursionists”.
4.1 Cluster 1 – cosmetics “excursionists” 4.2 Cluster 2 – “hedonic” consumers The cluster includes 19,9% from the total luxury consumers analysed. As can be seen in table 2, the cluster is characterized by the total absence of consumption for the 10 luxury categories that have the greatest importance in clustering (clothing, shoes, transport, gifts, services regarding adventure sports, accessories, restaurant meals, locations for entertainment, travel and vacation and watches). However, the persons in this cluster are luxury consumers as all of them (100%) had at some point at least a product included in the luxury cosmetics/ perfume category. Regarding other types of luxury products/ services consumed, an extremely small percentage of the persons mentioned that bought or received luxury lingerie (1,8%), luxury delicacies from stores (1,8%), health and fitness services(1,8%) or event planning services (1,8%). Given the fact that among the most affordable luxuries are the goods included in cosmetics/perfumes category, most probably these consumers are rather “excursionists” (in terms of Dubois and Laurent, 1996), buying occasionally affordable luxury products. Even though we don’t have additional information regarding the frequency (times) of luxury consumption, our statement may be argued by several observations. Firstly, all consumers have mentioned that in the past three years the most
The second cluster includes 22,8% from the total luxury consumers analysed, being the largest cluster. One of the characteristics is the fact that for all 10 categories of luxury products and services representing the most important predictors, there are consumers that had acquired at least once one of them. Regarding the luxury products they had, almost one third of the consumers mentioned luxury clothing (36,5%), luxury watches(38,1%), luxury accessories (20,6%), but very few had luxury shoes (3,2%). Other products that deserve mentioning are cosmetics/perfumes (84,1%), bags(15,9%), lingerie(12,7%) and delicacies from stores (11,1%), all other percentages for products consumption being smaller than 10%. These consumers enjoyed more luxury services as transport (22,2%), travel and vacations (28,6%), going to locations for entertainment (22,2%), hotel accommodation (34,9%) or eating at restaurants (41,3%). For the other services, the percentage mentioned is less significant. Between the “consumed” services can be observed a connection as they can be considered specific to tourism (transport, vacation, travel, location for entertainment, restaurant meals, hotel accommodation), but even though these luxury consumers like to be
148
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
spoiled they don’t practice adventure sports during their leisure time (1,8%). The monthly income of the family for 68,3% of the cluster members is less than 4000 lei, while for 31,7% is higher. Also, “the importance given to luxury” in terms of desire has a Mean value of 3,7 meaning that 90,05% of the importance values were between 3-6 (the importance scale takes values between 1-6, where 1 means “not at all important”, 6 means “very important”) and as previously mentioned there is a connection between clusters variables and the importance given to lo luxury. Among the most expensive luxury products/ services mentioned to be consumed in the past three years are listed the cosmetics/perfumes (for 30,15% of consumers) but also other categories like watches with values between 120€-12.000€ (for 23,8% of consumers), travels, 5 stars hotel accommodation, bags, clothing , etc. While the most predominant category similar to cluster 1 refers to the most accessible luxuries cosmetics/perfumes, these consumers are different as they consumed also other types of products or services more expensive as luxury watches, luxury cloths, luxury vacations, etc. The diversification in consumption makes us believe that most probably these are not “excursionists” as they even afford to spoil themselves. Given the previous information can be said that in this category are included both persons that afford luxury due to their family financial situation and persons that get luxury by other means – for example, 12,7% of them made compromises (lying, be in relationships, get financial support from men, etc) in the past in order to obtain the luxury products or services wanted.
while 21,4% got luxury transport, but none have eaten to luxury restaurant, didn’t spent time in locations for entertainment or didn’t practices adventure sports. On the other hand, nearly two thirds got luxury clothes (76,8%) and cosmetics/perfumes (76,8%- representing the cluster with the smallest percentage of consumption) and smaller percents had other types of fashion products as shoes(16,1%), accessories(19,6%) and bags(25%). The accent is lesser on watches and jewels. Comparing to the previous two clusters, we meet a slightly higher number of persons that offered luxury gifs. For the luxury consumers, “the importance given to luxury” in terms of desire has a Mean value of 3,54, while the family monthly income is less than 4000 lei for 78,6% and not having categories with income higher than 8000 lei. Among the most expensive products/services got in the past three years, a percentage of 42,85 mentioned the category perfume/cosmetics, secondly mentioned were fashion products especially clothes and only three consumers said they had luxury services. Comparing the average value of “importance given to luxury products” and “importance given to luxury services”, was observed that these consumers see luxury services slightly less important that the products. Thus our main observation regarding the cluster is that for these luxury consumers the appearances are more important as they focus on more “visible” products, while the lack in services consumption (even though there is desire) and the other information on income and most expensive luxury consumption, may indicate that they don’t afford easily the luxury products they got. More, our statement is sustained by the fact that 10,8% of these consumers made in the past compromises for luxury .
4.3 Cluster 3 – “materialistic” consumers With a dimension of 20,3% from total sample of luxury consumers, the cluster can be characterized by the fact that most of the members had luxury products and less luxury services, from the 10 variable with high importance predictor a very small percentage went to luxury vacancies and travel(1,8%),
4.4 Cluster 4 – “well dressed” consumers The cluster includes 19,2% from the total luxury consumers analysed. As table 2 shows, these consumers acquired both luxury products and services. Most of them had luxury clothes (94,3%), luxury shoes(75,5) and cosmetics/
149
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
perfumes (96,2%), almost half had luxury accessories(54,7%) and fewer but yet significant percentages had luxury watches (20,8%), lingerie(28,3%), jewellery (26,4%), electronics-mobile (20,8%), delicacies from stores (24,5%), bags(11,1%), gifts(32,1%) and home decorations (13,2%). For other products categories the consumption is higher comparing to the previous three clusters, but percentages are still smaller than 10. Regarding the services consumption, better than half went to locations for entertainment (62,3%) and used luxury transport (60,4%), while almost half had dinner at luxury restaurants(47,2%). Fewer consumers were accommodated at luxury hotels(17%), have travelled/went in vacancies (13,2%) or acquired health and fitness services(18,9%). “The importance given to luxury” in terms of desire has a Mean value of 3,72, and the family monthly income for 73,6% is under 4000 lei, but there are also persons with values higher than 9000 lei. A 35,84 percentage mentioned that in the past three years the most expensive luxury they’ve got were cosmetics/perfumes, but there were consumers that listed clothes, accessories, jewels, shoes, but no luxury service. Comparing with the previous three clusters, the consumers included in cluster 4 consume more “intense”, as higher percentages were found both for luxury products consumption and luxury services consumption. They give a medium to high importance to luxury and they consume, even though - looking at their family incomes - most of them don’t have the financial means. An explanation can be the fact that 7,6% mentioned that made compromises in the past in order to get luxury. They like to have fun in luxury locations (entertainment, eating) but don’t go in luxury vacancies, they use health & fitness services but don’t use the services of luxury dentists/beauty treatments/plastic surgery or medical care services, they give more importance to clothing in general (clothes and shoes) but less to accessorising (accessories, jewellery, watches, bags) and they use to offer luxury gifts.
4.5 Cluster 5 – “adventurous” consumers Representing 17,8% from the total sample of luxury consumers, this is the smallest cluster and its main distinction is given by the fact that 42,9% of consumers had services regarding adventure sports being the only cluster with this type of consumers. This is the cluster with the most intense rate of luxury consumption, in the sense that for most categories of luxury products or services, the percentages of consumption are significant. Thus, 87,8% used luxury transport services, 65,3% have travelled or went to luxury vacancies, 69,4% ate at a luxury restaurant, 51% went to luxury locations for entertainment while 61,2% stayed at luxury hotels. As expected most of them had luxury cosmetics/ perfumes (91,8%), also high percentages of consumers had luxury clothes (87,8%), luxury accessories (79,6%), luxury watches (67,3%), luxury shoes (55%), luxury jewellery (59,2%), luxury bags (44,8%), consumed luxury delicacies bought from stores(57,1%) and offered luxury gifts(71,4%). Regarding the luxury products, there are other categories with significant consumption values, as lingerie(32,7%), electronics-mobile(26,55), home decoration(20,4%) or houses(10,2%) and cars(12,8%). These consumers are more active and give more importance to health and beauty, as they not only practice adventure sports but also acquire health & fitness services (53,1%), medical care services (20,4%) and luxury dentist/beauty treatments/plastic surgery services (18,4%). Other services with significant percentages of consumption are the planning events services (34,7%) and financial services(10,2%). For these luxury consumers, the Mean value of “the importance given to luxury” is higher comparing to the other 4 clusters (Mean=3,9), as almost 70% of consumers give importance grades between 4-6. Their family financial situation in terms of monthly income is better, as only 53,1% have the income value below 4000 lei, while 12,2% have a value over 9000 lei. A percentage of 6,12 mentioned that their most expensive luxury in the past three years is included in cosmetics/perfumes category, while
150
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org
24,5% went to luxury vacancies or stayed at 5 stars hotels, and the others mentioned they had clothes, jewellery , watches, etc. Also significant to mention is that 24,5% of the consumers in the cluster said they made compromises in the past in order to get the luxury products or services they wanted- this may be an explanation for the inclusion in the cluster of persons with small monthly family income. Thus, comparing to the other clusters, these consumers have more money, consider luxury more important and thus consume more intense, are well dressed, love to spoil including here the practicing of adventure sports, give more importance to beauty and health and like to offer luxury gifts.
faculty. For the future, the authors wish to extend the study among young luxury consumers from Romania, regardless of their study or gender and from different locations. Addition of questions regarding the frequency(times) of consumption and the category of luxury consumed (inaccessible, intermediary or accessible) may bring improvements to the future study. References Allérès, D. (1991), Spécificités et strategies marketing des differents univers du luxe, Revue Française du Marketing, 132-133: 71–97. Allérès, D. (1997), Luxe –stratégies-marketing. 2nd ed, Paris, Economica. American Express Publishing and Harrison Group (2007), The Annual Survey of Affluence and Wealth in America, www.amexpub.com, Accessed 22 July 2011.
5 Conclusions, limitations and further study
Bacher, J., Wenzig, K. and Vogler, M. (2004), SPSS TwoStep Cluster - A first evaluation, Arbeits-und Diskussionspapiere, Lehrstuhl fur Soziologie, Sozialwissenschftliches Institut, http://www.soziologie.wi so.uni-erlangen.de/publikationen/a-u-d-papiere/a_04-02. pdf, Accessed 2 April 2012.
The TwoStep clustering analysis among female students luxury consumers, showed a five cluster solution based on the categories of luxury products and services that have been consumed at least once: cosmetics “excursionists” (have only luxury cosmetics/ perfumes), “hedonic” consumers ( give more importance to luxury services consumption), “materialistic” consumers (give more importance to visible luxury products consumption), “well dressed” consumers ( give importance to luxury clothing, eating and entertainment) and “adventurous” consumers ( the most intense consumption of luxury products and services, and love to spoil including practicing adventure sports). One interesting aspect is the fact that for most consumers their family precarious financial situation doesn’t stop them to desire and consume luxury products and services. Most probably they consumed/used especially accessible luxury and engage in trading-up and trading-down actions. In some cases the explanation for consumption of luxury they “shouldn’t afford” can be the existence of the “sugar daddy” phenomenon (past compromises for luxury). Our study has limitations, the most important being the fact that the research was conducted among young female students from a single
Boston Consulting Group and Concept M (2010), The new world of luxury: caught between growing momentum and lasting change, http://www.bcg.com/ documents/file67444.pdf, Accessed 7 August 2011. Castarède, J. (2003), Le luxe, Que sais-je? 3 ed., Paris, Presses Universitaires de France. Chevalier, M. and Mazzalovo, G. (2008), Luxury Brand Management: a world of privilege, Singapore, John Wiley &Sons. Chiu, T., Fang, D., Chen, J., Wang, Y. and Jeris, C. (2001), A robust and scalable clustering algorithm for mixed type attributes in large database environment, Proceedings of the 7th ACM SIGKDD international conference on knowledge discovery and data mining, San Francisco, CA, ACM: 263-268. Danziger, P. (2005), Let Them Eat Cake: Marketing Luxury to the Masses - As well as the Classes, Chicago, IL, Dearborn Trade Publishing. Dolnicar, S. (2003), Using cluster analysis for market segmentation-typical misconceptions, established methodological weaknesses and some recommendations for improvement, Australasian Journal of Market Research, 11(2): 5-12. Dubois, B. (1992), Comment surmonter les paradoxes du marketing du luxe? Revue Française du Marketing, Janvier-Février: 30-37.
151
International Journal of Economic Practices and Theories, Vol. 2, No. 3, 2012 (July), e-ISSN 2247 – 7225 www.ijept.org Dubois, B. and Laurent, G. (1996), The functions of luxury: a situational approach to excursionism. Advances in Consumer Research, 23: 470-477.
Merrill Lynch Global Wealth Management and Capgemini (2010), World Wealth Report, http://www.capgemini.com/, Accessed 14 July 2011.
Dubois, B., Laurent, G. and Czellar, S. (2001), Consumer rapport to luxury: Analyzing complex and ambivalent attitudes. Les Cahiers de Recherche 736. Paris, Groupe HEC,http://www.hec.fr/var/fre/storage/original/applicatio n/5ecca063454eb4ef8227d08506a8673b.pdf, Accessed 10 April 2011.
Okonkwo, U. (2007), Luxury Fashion Branding: Trends, Tactic, Techniques, Hampshire, Palgrave MacMillan. Silverstein, M. and Fiske, N. (2005), Trading Up: Why Consumers Want New Luxury Goods-and How Companies Create Them, New York, Penguin Group Inc. Tsiptsis, K. and Chorianopoulos, A. (2009), Data mining techniques in CRM: Inside Customer Segmentation, UK, John Wiley and Sons Ltd.
Dubois, B. (2003), Le luxe, un secteur pas comme les autres, LesEchos France, www.lesechos.fr/formations/ma rketing/articles/article_10_7.htm, Accessed 9 February 2011.
Twitchell, J. (2002), Living It Up : America's Love Affair with Luxury, New York, NY, Columbia University Press.
Horn, B and Huang, W. (2009), Comparison of segmentation approaches, Decision Analyst: 1-9, www.decisionanalyst.com, Accessed 11 April 2012
Unity Marketing Research Company (2009), American Express Platinum Survey- abstract, http://www.unitymar ketingonline.com/cms_pages/about_us.php, Accessed 14 July 2011.
Husic, M. and Cicic, M. (2009), Luxury consumption factors, Journal of Fashion Marketing and Management, 13(2): 231 – 245.
Vickers, J.S. and Renand, F. (2003), The marketing of luxury goods: An exploratory study- three conceptual dimensions, The Marketing Review, 3(4): 459- 478.
Kapferer, J.-N. and Bastien, V. (2009), The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands, London, Kogan Page Ltd.
Vigneron, F. and Johnson, L.W. (1999), A review and a conceptual framework of prestige-seeking consumer Behavior, Academy of Marketing Science Review,1: 1-15, http://www.amsreview.org/articles/vigneron01-1999.pdf, Accessed 26 August 2010.
Laurent, G. and Dubois, B. (1996), Le luxe par-dela les frontières: une ètude exploratoire dans douze pays, Décisions Marketing, 9 (Septembre–Decembre): 35-43. Li H. and Sun, J. (2011), Mining business failure predictive knowledge using two-step clustering, African Journal of Business Management, 5(11): 4107-4120.
World Wilde Fund – UK report (2007), Deeper Luxury: quality and style when the world matters, http://wwf.org.uk/deeperluxury/, Accessed 3 May 2010.
Luxury Institute (2004-2011), Luxury Institute Wealth Surveys–press release, http://www.luxuryinstitute.com/ groups.html, Accessed 13 May 2011.
Authors description Raluca Ciornea is a Teaching Assistant in Marketing at Marketing Department, Faculty of Economics and Business Administration within Babes-Bolyai University of Cluj-Napoca, Romania. Currently she is a PhD Student in Marketing Field and her research and teaching interests are marketing of luxury products and services, consumer behavior and rural tourism. Marius Dorel Pop is a Professor PhD. in Marketing at Marketing Department, Faculty of Economics and Business Administration within Babes-Bolyai University of Cluj-Napoca, Romania. His research and teaching interests are marketing research in general, marketing in education, international marketing, direct marketing, sales promotion. Mihai Florin Băcilă is a Lecturer PhD. in Marketing at Marketing Department, Faculty of Economics and Business Administration, Babes-Bolyai University of Cluj-Napoca, Romania. His research and teaching interests are marketing in education, direct and relationship marketing, marketing on-line, marketing for non-profit services and marketing research in general.
152
