Luxury Marketing

Luxury Marketing University Of Southampton WORD COUNT: 1928 27509796 Index: 1. Introduction....................................................................3 2. Main Body......................................................................3 2.1 The impact of COO on luxury brands through customer’s need recognition..............................................3 2.2 The impact of COO on luxury brands through customer’s information search ..........................................5 2.3 The impact of COO on luxury brands through customer’s alternative evaluation.......................................6 2.4 The impact of COO on luxury brands through customer’s purchase decision ...........................................7 2.5 The impact of COO on luxury brands through customer’s post-purchase evaluation ................................9 Conclustion.................................................................10 Reference....................................................................11 1. Introduction Definition of COO: Country of origin (COO) means that the country which a brand’s beginning and belonging to (Martin and Jean, 1992). In recent years, following the increasing number of customers started to focus on country of origin (COO) of luxury products, the effect of COO on consumers’ perception and purchasing purposes of luxury consumption is becoming a daily subject in marketing research (Godey et al., 2012). This essay will critically discuss the significant effect of COO on consumers’ purchasing making of luxury commodities depends on five steps of customers’ buying behavior (need recognition, information search, alternative evaluation, purchase decision and post-purchase evaluation) (Erasmus et al., 2010). 2. Main body Firstly, the COO has a significant effect on a luxury brand by effecting customer’s need recognition of the brand image. During the step of need recognition, the customers aware that they have an unimplemented demand or want (Lee and Ganesh, 1999). When consumers want to buy a luxury product, they may confuse to choose which brand they prefer to purchase and which brand is better in this area. Some surveys found that in this process, brand image and COO will play a significant role cause of every customer has their own image to brands and this image will be affected its COO to a large extent (Lee and Ganesh, 1999). The brand image is totally impressive and various associations of this brand in customers’ mind. For example, consumers will easily associate with COO of France and romantic when they talking about a bottle of Chanel and COO of Italy and gentleman will be appeared in customers’ mind when they purchasing an Armani clothe (Schaefer, 1997). Due to such brand images of the COO, these luxury brands already have some advantages than others in the need recognition of clients in their own field. However, in recent decades, in order to decrease the costs of labor and tenement, many luxury brands tended to move their country of manufactured (COM) to overseas and this phenomenon lead to some negative effects on customers’ mind. (Aiello et al., 2009). To some extent, this method is not economical because although these luxury brands owned a wally COO, the changing of COM will reduce the customer loyalty, purchases desire and even brand image of these luxury brands. Finally, they will not only loss the heart of consumers, but also gradually decline the original advantage of COO (Aiello et al., 2009). However, the study of Godey (2012) finds that sometimes the positive brand COO can reduce if the COM of this brand has a negative image. Therefore, both the COO and COM have a great effect on brand image and the need recognition of customers’ luxury consumption, but the impact of COO is more significant than COM for a luxury brand. Secondly, information search of customers’ luxury consumption has been affected by the COO to a large extent. The information search is tantamount to gather information relevant to the product which you need to solve the problem (Schaefer, 1997). For example, if customers want to purchase a luxury watch, they may search the various of luxury watch brands online and understand their respective features, and they will easy find the luxury watch brand which possess COO of Switzerland is most famous such as Patek Philippe (Erasmus et al., 2010). Thus, the information of a luxury product is dramatically influenced by the image of the product’s COO (Godey et al., 2012). Additionally, the image of a COO comes from a serious of standards that measuring the quality of a nation’s product. It includes design style, technology, innovative approach, status of domestic brands and workmanship (Godey et al., 2012). Moreover, its effect is one of the strongest on customers who do not understand much about the brand or the type of product especially luxury brand’s products. Similarly, it is a survey investigates a difference in the strength of COO’s country image effect between luxury and necessity goods and find that the effect of country image of COO are much stronger for luxury commodities rather than necessary products (Piron, 2000) Furthermore, there are several studies demonstrated that customers prefer to possess a relative preference to the luxury commodities from some countries which have a good country image of the COO, and reversely have some bias or against to the products from other nations (Fornell, 1992). In academic, it called the nationality bias. For example, Louis Vuitton is a luxury brand which famous all over the world by its COO (France), the hometown of luxury products. The country image of France is luxury, rarity, high quality and romantic, it is very suitable for the image of Louis Vuitton and the COO produces some extra points for LV. (Phau and Prendergast, 2000). So, the country image of the COO can significantly affect the customer purchasing behavior especially in luxury products buying. Thirdly, the higher development level of a luxury brand’s COO will produce a positive influences in the alternative evaluation of customer’s luxury consumption, and vice versa (Papadopoulos, 1990). Firstly, the alternative evaluation is a process of evaluating a customer’s needs, preference and financial resources available for buying. And people divide counties of developed and less developed through its economic, technology, education and living standard development (Papadopoulos, 1990). Normally, customers consider that the COO of developed countries has a higher progress level than those of less developed countries. So, when they doing the alternate evaluation, they will prefer to buy the luxury goods with COO from high market and economical development countries (Kaynak et al., 2000). In addition, customer from developed countries will prefer to purchase the luxury products which has the COO of their own country. For example, it is reported by Mintel (2013) that British consumers demand some luxury branded products are designed and originated from the UK. This is because British customers hope to be associated with these luxury brands which coming from in their own country and have higher development level instead of overseas. So they will give up some luxury brands which have the COO of other less developed countries, despite these luxury brands are cheaper than others which has the COO of England. (Vickers and Renand, 2003). Thus, customers prefer to buy the luxury goods which has COO of developed countries cause they can undertake less risk (Usunier, 1996). Furthermore, some surveys found that this phenomenon is not only appearing in developed nations, but also useful in developing nations (Schweiger et al. 1997). Therefore, a luxury brand which has the COO owned a higher development level will attract more customers through their alternative evaluation Afterwards, the COO produces an important impact on purchase decision of consumers when they buying luxury products through brand familarity. The purchase decision means the customer will make a buying decision about which brand and product based on several factors such as price and availability (Erasmus et al., 2010). A number of studies found that the COO plays a significant role in consumers’ attitude about choosing which luxury brand’s product when they are making purchase decision (Tse and Gorn, 1993). However, another investigation of Schaefer (1997) found that the recognition of the COO when customers deciding to purchase luxury products are influenced by brand familiarity and customer brand knowledge. Brand familiarity includes brand insistence, brand preference, brand recognition and brand rejection, its impact is larger in luxury brands than moderate or low brands to customers (Lee, 1999). Moreover, the study of Kaynak and Cavusgil (1983) demonstrates that the high brand familiarity will sometimes be established by some famous COO in the mindset of customers when they purchasing luxury good. Additionally, Customers are prefer to apply intrinsic rather than extrinsic clews such as COO when they are more familiar with the luxury brand. For example, some famous luxury brands which owned the high brand familiarity of COO among customers therefore obtained the initiative in the luxury market, Louis Vuitton is one of them (Lee, 1999). Due to the high familiarity of Louis Vuitton and almost everyone knows its COO is France, customers are willing to buy it even the COM of these LV products are other countries such as America and Spain (Phau and Prendergast, 2000). Not only cause of USA and Spain are also powerful nations in manufacturing industry, the more important reason is that Louis Vuitton has high brand familiarity and famous brand COO among customers (Aiello et al., 2009). Additionally, when a customer wants to make a purchase decision of buying a luxury product, the COO and brand familiarity will become two significant factors in their mind and it is more important than buying the general products (Phau and Prendergast, 2000). Thus, due to the impact of brand familiarity, especially the effect of the COO, customers may relatively ignore other factors when they choosing a luxury brand. Finally, COO will effect on post-purchase evaluation of customer buying behavior of luxury products through quality perception. Firstly, the post-purchase evaluation means the customers will judge whether the purchase of the luxury product actually satisfies their wants and needs (Kuo, Wu and Deng, 2009). In addition, this step has a very significant effect to consumers next buying behavior of luxury products in this category. Customers will decide the quality and function of the luxury product after they actually used it, and produce a quality perception of this luxury product and its brand and its COO (Chao, 1998). However, some surveys indicated that the COO tends to have a stronger effect of luxury items than price and other reasons for product quality assessment (Roth and Romeo, 1992). This implies that when the customer has a positive impression about the luxury good in post-purchase evaluation, they will prefer to the luxury brand which possesses the same COO in their next purchasing behavior. Adversely, the customers tend to have a negative impact of this brand and its COO when they did not satisfy with the luxury product they purchased before (Aiello et al., 2009). Thus, it is important for a luxury brand which owns a reliable COO and therefore possesses a high quality perception and satisfies their customers (Uzgoren and Guney, 2012). For example, in order to guarantee the quality of their product, Louis Vuitton gives up the cheap labor of developing countries and merely manufactured in developed countries such as France which is also their COO to satisfy their clients and cultivate customer loyalty (Aiello et al., 2009). This method receives satisfaction of their consumers and promotes their brand awareness. So, a good COO of luxury brands has a positive effect on customer buying behavior of post-purchase evaluation while a bad COO of luxury brands will has contrary effects in this stage. 3. Conclusion In conclusion, the COO is very significant for a luxury brand’s sales because it can affect the five stages of customer purchasing behavior through the impact of brand image, country image, country development level, brand quality perception and brand familiarity (Erasmus et al., 2010). For example, the brand which possesses a good country image of the COO such as Louis Vuitton has a positive effect on customer decision of luxury consumption. Conversely, some luxury brands which have the undesirability COO may produce a negative effect on their brand image and customers purchasing behavior. 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