Luxury Goods Case Study

Analysis of the luxury goods market in the emerging countries - business strategies, transformations and growth trends.

Case study: Poland.

CHAPTER I – GENERAL THEORIES

1.1. Definition of luxury - its theory, philosophy and history

Most of us are able to recognize a luxury product but we are unable to agree on its overall definition. It is indeed a very broad term that includes a wide range of materialistic goods and services, which are mainly available for narrow social groups whose incomes and earnings are much higher than the rest of the society. Luxury brands have traditionally been found in certain product categories, such as fashion, jewelry, wines and spirits, automobiles and hotels.

According to Euromonitor’s definition, “luxury

A Luxury Value Model

- transformation from the traditional model (pure luxury doesn’t exist anymore) (pg.11)

- the reasons behind peoples buying luxury → In a global context, it is critically important for luxury researchers and marketers to understand why consumers buy luxury, what they believe luxury is and how their perception of luxury value impacts their buying behavior.

- It is important to understand the perceptions of customers in order to construct appropriate business and marketing strategies

-

Whilst the interpersonal factors of maintaining one’s ego certainly play an important role in the consumption of luxury goods, one must also not forget other factors, which influence the consumers’ behaviors. In order to take into an account a wider perspective of the reasons behind the consumption of the luxury goods, researchers Wiedmann, Hennings and Siebels introduced an integrated conceptual framework, which explains how the perception of luxury value impacts the buying behavior. Even though the “pure luxury” no longer exists and the whole concept of the luxury is changing, the research proves to be useful to improve the overall purchase value for customers who acquire luxury good (in this context we stay with the definition of Vigneron and Johnson: the highest level of prestigious brands encompassing several physical and psychological values ). Understanding what really adds luxury value in the consumer‘s perception can serve as basis to successfully create,

It refers to the dollar value of the item.

Functional dimension stands for the usability and utility of the product itself. Here variables such as quality, uniqueness and permanence are observed.

Individual aspect is related to customer‘s personal orientation on luxury consumption and addresses matters such as personal satisfaction, materialism and egoistic value.

Social dimension on luxury value perception focuses on a luxury playing an important role in underlying a social function. It relates to the perceived utility individuals acquire by consuming products or services recognized within their own social groups such as prestige value, which may significantly affect the evaluation and the predisposition to consume luxury brands.

There indeed exists a strong inter-correlation between the variables but they are not indistinguishable, as it can be seen in the Figure 1 above. Significant part of the model play antecedent variables (price, usability, quality, uniqueness, self-identity, hedonic and materialistic values, conspicuousness, prestige), which all in a different manner affect the first order latent