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“Buying Status” by Choosing or Rejecting Luxury Brands and their Counterfeits
Stephanie Geiger-Oneto
Assistant Professor
University of Wyoming
Department of Management and Marketing
1000 E. University, Dept 3275
Laramie, WY 82071
Phone: 307.766.3458
(Corresponding Author)
Betsy D. Gelb
Larry J. Sachnowitz Professor of Marketing & Entrepreneurship
Bauer College of Business
University of Houston
334 Melcher Hall
Houston, TX 77204-6021
Doug Walker
Assistant Professor
Iowa State University
College of Business
Department of Marketing
2350 Gerdin Business Building
Ames IA 50011
James D. Hess
C.T. Bauer Professor of Marketing Science
University of Houston
375H Melcher Hall
Houston, TX 77204-6021
KEYWORDS: Status Consumption; Counterfeit Goods; Brand/Product Choice; Luxury Goods
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This is the final submitted version. If you would like a copy of the published version fromJournal of the Academy of Marketing Science, 2012, Vol. 40, please send an e-mail to Jim Hess:.
“Who’s got money, who doesn’t, it’s always going on in my head. So, I put on my armor. I have the [hand]bag. I have the shirt. I know people can’t tell my background by looking” (New York Times 2005, p A19).
Buying to make “the right” impression in order to gain status may not always involve the constant attention described above, but it is hardly rare. Goods with designer labels that provide “armor” to the insecure offer one approach to status seeking, but that quest is a complex one. An authentic designer label surely sends a message – but at what may be an impossible price. A counterfeit of that label sends what may be viewed as the same message, or may be viewed as a different message entirely by those who value authenticity. Finally, goods lacking aluxury-brand label may be viewed by some consumers as sending a better message -- that status comes from characteristics other than the labels on one’s purchases. This complex choice is the one investigated here.
Specifically, our study examines the choices that consumers make when considering goods, either authentic or counterfeit, with luxury-brand labels, or instead select brands clearly in neither of those categories to indicate that they have better claims to status than do those who must purchase it via status-signaling brand names. We developed and tested a theoretical model of antecedents to predict choices among these three brand-types for goods often purchased with status in mind.
We used a nested logit model to examine antecedents to the choices among these three brand types. We also investigated how the choice is structured in the mind of consumers. Specifically, we considered whether consumers categorize brand-types in terms of the amount of status they confer on their owners (i.e. authentic and counterfeit brands versus non luxury brands), or if they instead categorized brands as inexpensive vs. expensive or genuine vs. fake. These three alternative structures are shown in Figure 1. Understanding the antecedents and the choice structure not only has theoretical significance, but also can improve segmentation and targeting decisions for a range of goods and services that are both socially visible and branded.
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In describing our research, we begin with the motivation behind many purchases of goods offered with designer labels or logos: the buying of status. We then introduce the relevant constructs for brand-type choice alternatives: authentic luxury brands, their counterfeits, and non-luxurybrands – those that make no exclusivity claim. Third, we describe the variables employed to predict choices among these brand-types and hypothesize relationships between these variables and such choices; the predictors are occupational prestige, status insecurity, reliance on consumption to demonstrate status, and value consciousness -- all shown in Figure 2. We then present the research method used to test our hypotheses, offer results, and discuss their managerial and theoretical implications.
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Seeking Status
Social scientists and economists have established that status seeking is auniversal and often advantageous behavior (Leibenstein 1950; Emerson 1962; Frank 1985; Driskell and Mullen 1990). Researchers have found that individuals seek status to increase their power and influence in social relationships (Nelissen and Meijers 2011; Berger et al. 1977; Lovaglia 1994; Ridgeway and Erikson 2000; Thye 2000), gain access to future resources (Lin 1990, 1994; Huberman et al. 2004) and demonstrate their competency and ability to others (Festinger 1954; Braun and Wicklund 1989; Wood 1989).
Evolutionary psychologists likewise take note of status seeking, but rather than attributing it to socialization by one’s culture they attribute it to what Saad and Gill (2000, p. 1006)characterize as a “functional solution to an adaptive problem in our evolutionary past.” Onespecific problem they see as a focus for both men and women – but differently – is what they call reproductive success. For women, behavior to increase the odds of such success is manifest in a concern for their own physical attractiveness and a preference for men with higher earning capacity. For men, it is manifest as demonstrations of that earning capacity.
Using this framework, Saad (2006) refers to the Darwinian roots of consumption phenomena,and Miller (2009, p. 277) asserts that the evolved “will to display” (gaining fitness benefits through prestige and status) can be even more important than the “will to power” (gaining fitness benefits through dominance). This “will to display” provides the link to our research. Nelissen and Meijers (2011) cite numerous studies confirming that the desire for status is an important force driving the market for luxury goods. One explanation, they note, is costly signaling theory: the idea that apparently wasteful behavior shows qualities desirable in a mate, specifically resources beyond basic needs. They offer brand labels as an example, while noting that the association of such labels with wealth and high status is not a conscious connection. However, their research demonstrated that when participants in a field study were asked to rate the status, wealth, attractiveness, kindness, and trustworthiness of an interviewer wearing a shirt with a designer logo, comparing those ratings to those of individuals wearing an identical shirt with no brand designation or an ordinary brand showed higher status and wealth ratings but no difference on the other three traits.
Whatever framework one selects to provide an explanation, clearly one way to gain status is through purchase choices. Notes the New York Times: “Luxury once denoted stuff that was costly and hard to obtain…well-upholstered and Gatsby-esque lives played out against a backdrop of mansions and servants…their trunks from Louis Vuitton, their trousseaux from Christian Dior, and their Dom Perignon by the case.” The same article points out, however, that “carriage trade luxury” now is sought by a new class of people who have “acquired both the ability and the hankering to purchase themselves little nothings from Vuitton, Chanel, or Dior…even in a recession” (Trebay 2009, p. ST 8). As Commuri (2009) observes, the goal of such behavior is either to ostracize others socially by using the brand as a signal of wealth or to avoid such ostracism. And websites such as clear, thrifty signalers have imitations of luxury-labeled goods available to them at the click of a mouse.
Earlier studies in this field focused on the purchase of authentic goods vs. counterfeits (Wee et. al. 1995; Cordell 1996; Nia and Zaichkowsky 2000) by assuming a dichotomouschoice primarily dictated by economic variables, while also assumingstatus-related motives (Cordell 1996). However, not all consumers who buy luxury brands do so to gain status; objects and brands carry a range of possible meanings (Belk 1988; McCracken 1986, 2005). For example, Wilcox, Kim, and Sen (2009) go beyond price issues to consider moral reservations concerning the purchase of counterfeits and the influence of the goals guiding a purchase: is the consumer choosing a luxury brand based on social goals, or based on goals that the authors characterize as value expressive? Similarly, Commuri (2009) identifies a segment of prestigious brand buyers in Thailand and India who are less interested in signaling than they are in simply possessing the best, and the idea that “you get what you pay for” (Gelb, 2010) might prompt the choice of a luxury brand independent of status considerations.
However, our study goes further, including as a social motive – and one related to the pursuit of status – the choice by some consumers not to purchase luxury labels despite the financial ability to do so. We thus explore a new possibility: that consumers engage in status consumption in not only different but opposed ways. That is, they may purchase authentic luxury brands, counterfeits of those brands -- or select non-luxurybrands if they want to communicate that they have alternative paths to claiming status.
Here we refer to a phenomenon different from the choice of a luxury brand that does not display the logo, but carries a design recognized by those “in the know” for its high price and consequent exclusivity (Young, Nunes, and Dreze, 2010). The consumer segment we refer to here chooses a brand to show no need to display luxury at all, a different motive than wanting to display luxury only to those “in the know.”
Luxury Brands and their Counterfeits
Authentic luxury brands convey exclusivity via high price; for example, their designers are able to transform a $10 t-shirt into a $100 sought after treasure (Chatpaiboon 2004). Hermes once placed customers on a two-year waiting list for their most popular Birkin bag, which retailed for $6000; on EBay women engaged in bidding wars over one version of the bag,for which the winner ultimately paid over $13,000 (Rose 2003). Given that such prices place these purchases out of the financial reach of many would-be buyers and add prestige to the brand, it is unsurprising that the most sought-after labels have prompted the manufacture and marketing of counterfeits.
Counterfeit goods are identical in appearance to authentic luxury goods and fraudulently display the brand name being copied (Cohen 2005). These products, which blatantlyinfringetrademarks, are sold at a fraction of the price of the authentic designer version—e.g. Luis Vuitton purse $1100 vs. counterfeit $115.
Non-luxury Brands
The third category, non-luxurybrands, cost about the same as counterfeits of luxury brands, but knowledgeable buyers do not expect them to be perceived as costly. Such brands are therefore a natural choice for consumers who want to make clear that their choice of watch, handbag, sunglasses, or the like was not based on a wish to be associated with materialism in the conventional sense. A related interpretation is offered by Trigg (2001). He refers to observations by the French sociologist Pierre Bourdieu that for the upper classes to maintain their positions of status, a distinction from the tastes of the middle classes is required. Presumably, then, to the extent that the middle classes choose designer labels, some members of the upper class will eschew them.
Elements of the Model
Our study focused on the influences affecting a consumer’s choice among the three brand-types described above and also the structure of the choice process involved. Webegan by developing a model of factors we expected to be influential in the actual brand choice among goods that are authentic luxury brands, counterfeit, or non-luxurybrands (in our model, these three brand-types are denoted by the symbol t). At the individual level (individuals are indexed by the letter i), the factors included are 1) occupational prestige (OP), 2) status insecurity (SI), 3)importance of status consumption (SC) and4) value consciousness (VC).
These variables appear often in the literature as predictors of concern with status, but have not previously been employed as predictors in the three-element choice we investigated. In addition, we employed two control variables:perceived affordability of the authentic brand (AFF), and age of respondent. Each predictor and control variable will be discussed in turn.
Occupational prestige(OPi)
Previous research on status seeking has described social life as an ongoing game in which individuals compete for social status in several areas of life (i.e. work, religion, education, etc.) (Tajfel and Turner 1979; Bourdieu 1984; Milner 2004). The level of status and the domain in which it is achieved is largely determined by an individual’s resources and/or social opportunities – for example, funds for higher education and social networks for status gains through employment.
However, status gained through resources open to few, such as the intellectual capital and persistence required to earn a Ph.D., offer a special cachet, given that the importance or weight of a status symbol depends on the ease with which that status-marker is obtained along with the degree of inalienability (Milner 2004, p.207). For example, it is much more feasible for some to purchase an expensive item of clothing than to complete a graduate school program or become employed in a prestigious occupation. Therefore, it appears plausible that individuals with bases for status that are harder to achieve (i.e. higher occupational prestige) would avoid easily attained status markers (i.e. mainstream elite branded goods) in order to avoid confusion with those who rely solely on those markers for status.
In fact, researchers have found this to be the case. For example, Brooks (2001) showed that highly educated elite consumers rejected mainstream status symbols because they they did want to appear materialistic. Similarly, Berger and Ward (2010) found that individuals with higher cultural capital avoided explicitly branded high-end products because they did not provide adequate differentiations from lower status consumers. It should be noted, of course, that an alternative explanation exists. To the extent that occupational prestige is positively correlated with education/intelligence, those with high levels may simply be more discerning in perceiving that the incremental quality value of a prestige brand is not worth the incremental cost.
In contrast, individuals who lack status in one area may choose to consume luxury brands in order to compensate for their inadequacy, even though they may be aware that the quality gained will not outweigh the incremental cost. For example, Braun and Wicklund (1989) showed that less competent individuals within an occupation or organization were more likely to conspicuous consume publicly visible status goods than were their more competent counterparts. Similarly, Rucker and Galinksy (2009) found that individuals with lower power or status were more likely to purchase goods that were high in status and conspicuously consumed. These studies suggest that individuals purchasing elite brands may do so because they do not perceive viable alternatives to increase or maintain their social status.
Logically, then, some individuals with high levels of occupational prestige may choose to abstain from consuming elite brands in order to distinguish themselves from individuals who are forced to “purchase” their social status. Therefore, these individuals with high occupational prestige, whose claims to status are more difficult to achieve, mayavoid luxury branded goods in order to avoid confusion with those who rely solely on such markers for status. Furthermore, these consumers may most strongly avoid the counterfeits of luxury brands, not only because they give the appearance of purchasing status, but because based on their lower price they are available to anyone.Therefore we hypothesize:
H1a & b: As occupational prestige increases, the likelihood of choosing a non luxury brand increases relative to both the likelihood of choosing (a) an authentic luxury brand and (b) a luxury counterfeit brand.
H1c: As occupational prestige increases, the likelihood of choosing an authentic luxury brand increases relative to the likelihood of choosing a counterfeit luxury brand.
Importance of Status Consumption (SCi)
Researchers across disciplines have long debated the process and/or social consequences of consumption practices designed to display one’s social standing (Veblen 1899; Mason 1981; Bourdieu 1984;Scitovsky 1992; Eastman et al. 1999), referred to here as status consumption. Status consumption has been defined as “the motivational process by which individuals strive to improve their social standing through the conspicuous consumption of consumer products that confer and symbolize status both for the individual and surrounding significant others” (Eastman et al. 1999: 42). Consumers engaging in status consumption are likely seeking satisfaction from publicly displaying their social status to others; Wang and Wallendorf (2006) note that high-materialism consumers place more emphasis on publicly consumed and expensive items and are more likely to value them for their public meanings of success and prestige. In fact, researchers have found that these consumers often want onlookers to admire not the positive attributes of a product, but the amount of wealth displayed by using it (Mason 1981).
To these buyers, status symbols such as luxury brands and their counterfeit counterparts would be more attractive than non-luxury goods because of their ability to signal status and wealth to others. However, because status consumers link purchase choices to social consequences, they will more likely to choose the authentic luxury product over the counterfeit. This leads us to the following hypotheses regarding the simple effect of status consumption on brand choice (when value consciousness and status insecurity are at their means):