27

The Role of Conspicuous Consumptionin Branding and PositioningRyan Weatherford

Introduction

Since the ages when kings ruled, people have had a desire to have

possessions that show the world that they have amassed a certain level

of wealth and prestige. Kings built statues, designed palaces, collected

valuables all in effort to display to their peers, subordinates, and

superiors how well off they were. This desire to use products and items

to display status has not changed over time and has been classified

under the marketing umbrella, as conspicuous consumption. The

research into this phenomenon has revealed a recognizable truth- that

consumers utilize products in an effort to display social status.

While there are different levels of consumer involvement, at

various points on the socioeconomic spectrum, consumers seek to

define public perception of themselves through the products they own.

Conspicuous consumption creates a tremendous opportunity and

market for companies to position their products in the consumer

consciousness as “luxury items.” Luxury, in this context, means that the

perceived value of the product in the eyes of consumers, elicits thoughts

of exclusivity. This suggests that only those individuals, who are

financially above average, consume the product. Marketers recognize

the opportunity that comes from positioning products with the luxury

or quality tag and aggressively price items in hopes that the price and

additional promotional activities will successfully communicate the

social and psychological benefits consumers will receive from using

the product.

There is value to both consumers and marketers with the

development of such products, however there is a negative consequence

to conspicuous consumption, and that is poverty. Consumers have long

desired objects and products to display their social standing; this desire

has paved the way for marketers to develop and promote products to

help satisfy this need to demonstrate prestige. While consumers have

benefited from branding and positioning of such products, conspicuous

consumption has compounded the social issue of poverty.

History of the Concept of Conspicuous Consumption

The definition, and introduction, of the theory of conspicuous

consumption into the field of marketing, starts with the work of

Thorstein Veblen. Veblen, who was an economist and sociologist, sought

to study the social factors that influence economic behaviors. When

examining the social factors that have an influence on consumption

he realized that consumers make purchases based on their social

surroundings and thus the concept of conspicuous consumption began

to take form (Bagwell and Berheim, 1996).

Conspicuous consumption in its simplest form can be described

as individuals’ purchases of products in an attempt to display

accumulated wealth and social status. This desire for consumers to use

products to communicate wealth to their peers is not a recent

phenomenon and has been a behavior of consumers for a long time.

Veblen wrote that, “those who put wealth ‘in evidence’ are rewarded

with preferential treatment by social contracts” (Bagwell and Berheim,

1996). These social contracts are informal in nature, but conspicuous

consumers have a belief that by displaying their wealth, people who

witness it will develop an opinion regarding it. This belief about

perceived status, gives the conspicuous consumer a level a satisfaction

which completes the contract.

In essence, consumers want others to recognize and give

approval for conspicuous purchases. Once the buyer receives this

praise, the return on investment of the purchase begins to increase.

While this process seems to be farfetched, it is important to keep in

28

29

mind that in American society, people have a somewhat innate need for

social acceptance. If consumers feel their real self is not sufficient they

will look for product extensions to attach attributes to themselves to

compensate in those areas where they feel insufficient.

These insufficiencies have the propensity to fuel people to

build their self image through material possessions in hopes for social

acceptance and status recognition. Conspicuous consumption is a

process of gathering and utilizing goods to establish wealth and

prestige as attributes of individuals’ real self concept. While the

products displayed are a vital part of this self-concept, the feedback

buyers receive from acquiring and showing off these goods is needed

to validate the idea of wealth that the consumer wishes to convey.

Consumer Behavior and Branding

The consumer’s desire for a variety of products that will endow him

with attributes implying status comes, in part, from the marketing

function of branding. Branding is the process by which marketers,

in addition to the tangible functionality of a product, attach human

attributes to products in an effort to differentiate and add value to a

product for consumers. The purpose behind branding is to lure

consumers to a product due to the intangible attributes that are

associated with the product. Examples of these attributes are quality,

uniqueness, luxury, prestige and convenience.

These characteristics, while nonphysical in nature, are affected

by decisions made in developing the marketing strategy. The

controllable factors that directly go into branding efforts are price,

promotion, place, and product. These four marketing elements are the

tools marketers have to brand a product, the rest is up to the attitudes

consumers develop about that product. Consumer attitudes determine

the success of branding efforts because they are the ones who will, or

will not, purchase a product based on how it is branded and presented.

Luxury branding becomes a little more difficult. When

branding products that will be frequently consumed and have low

consumer involvement, marketers find success in focusing more on the

functionally and convenience. However, when branding products with

the “luxury” moniker, different elements have more importance.

Characteristics that luxury brands must contain would include

aesthetics, quality, uniqueness, and sensuality (Emile and Craig-Lees,

2011). Since luxury brands are consumed with the primary objective to

achieve flash, products must have an aura of beauty which will lure the

buyer in, but also will be attractive to the viewing public.

Product quality is a term that has varying meanings for

consumers. Quality is a combination of functionality, durability, and

perceived value of the inputs used to make a product. The uniqueness

of a product is essential to the luxury branding process. Consumers

must feel the product they desire to purchase has a high level of

differentiation and individuality that only this particular brand offers.

At a minimum, one product characteristic must be unparalleled in the

eyes of consumers.

One of the key contributors to luxury branding is the sensuality

of the product, or its ability to appeal to the senses of the consumer and

the consumer’s audience. While the external senses are important, the

internal feeling the product gives the user, which can come from usage

or feedback from the user’s surroundings, is the most important factor.

If the consumer of a luxury item feels an unrivaled level of internal

satisfaction, it will drive that consumer to continue to indulge in the

brand. This internal satisfaction is derived from positive feedback from

spectators who experience a consumer using the product.

When branding a luxury product, marketers must find the right

mix between product attributes and marketing stratagem to lure

consumers to the product or there will be a high chance of failure. An

example of this potential failure can be seen in the case study done on

the strategies of Gucci and Guess in their attempts at luxury branding.

This study showed that, while Guess utilized a similar strategy to Gucci

in logo design, the company failed at matching up the price and

promotion of the product. This failure to fully brand the product left

Guess appearing to be an imitator of a luxury brand and created

negative consumer attitudes towards its brand (Majic and Majic, 2011).

30

31

Guess is a prime example of the difficulties of luxury branding for

marketers. In summing up, branding is a process in which difficulties

increase as the product is positioned towards higher social groups and

classes. For these target markets, the focus of marketers goes from

functionality to aesthetic and sensual features.

Product Position and Branding

Product position is a process that is derived from product branding.

Positioning is the strategic placement of a product and its attributes in

the minds of consumers. Positioning is an important marketing activity

because when consumers are able to retrieve a product, that is

perceived to have the attributes needed to meet their needs from their

conscious or subconscious minds, they will be more motivated to select

that product over alternatives. Luxury positioning, as luxury branding,

has an increased level of difficulty. The decision to position a brand as a

luxury brand is done by the brand manager, and once the decision is

made, proper actions are necessary to maintain this positioning (Emile

and Craig-Lees, 2011).

Consumers do not choose if a brand has luxury positioning- that

is the marketers’ choice. However, consumers do have an impact on the

longevity of a brand’s luxury positioning. Luxury position is strongly

linked with the promotion of a product or how marketers choose to sell

the benefits of their product to consumers (Uggla and Lashgari, 2012).

Promotion is the primary means of communication between marketers

and consumers. While price is a crucial element to the luxury positioning

of a product, advertising can take a product from being aggressively

priced to a luxury good that has the aesthetics, quality, and social impact

that other luxury goods possess. Luxury positioning requires proper

endorsement, subtle flare, and a reception from the upper tier social

classes acknowledging that this brand is indeed for them.

Conspicuous consumption and the use of products to signal status

creates opportunities in the retail market space for marketers to brand

products to meet these needs. “The market for luxury goods and services

has been enlarging, steadily and strongly since the early 1990s. …The

32

economic factors driving this trend are increasing disposable income … as

well as a growing wealthy class in emerging countries” (Truong, 2010).

These economic drivers have created opportunities for marketers to brand

products to satisfy the increasing need for luxury goods.

Personal and Social Orientation in the Luxury Market

The most obvious opportunity for marketers to maximize profits is

through the supply of goods for individuals in the luxury market.

Consumers that participate in economic activities in this luxury

marketplace have two needs that need to be fulfilled: personal

orientation and social orientation. The personal orientation for luxury

consumers is the desire for self fulfillment and actualization. When

consumers have attained a certain level of wealth, the next step is to

give themselves rewards that give them an internal feeling that they

are indeed the wealthy individuals.

An example of this can be seen with significant disposable

income increases that occur with a promotion. An individual who goes

from middle management to the executive level will want to use that

income to validate to himself that he indeed is an executive. This could

include a luxury car, or designer clothes. Any luxury good that validates

and actualizes the individual’s self perception is an option. Socially, we

develop perceptions about what professionals and individuals at certain

levels should look, dress, and act like.

Social orientation is externally driven, meaning luxury

purchases are made to impress others with one’s wealth. These two

needs provide the marketer with the opening to brand products to satisfy

these needs. As discussed, to do this, marketers must utilize price,

product, promotion, and place; however with an increasing market, new

consumers will want products to fit their personal conspicuous desires.

Some conspicuous consumers may just desire a high price tag; others

may want brand prestige or well known luxury brands to ensure that

others are impressed. A growing group of luxury consumers also desire

up and coming brands. These people want the get their hands on the

latest luxury brands and be the opinion leaders of their social group.

33

Luxury Partner Brands

Another affect that conspicuous consumption has on branding is the

increasing phenomenon of luxury partner brands. Luxury partner

brands can be defined as premium brands that use their perceived

product quality, unique value, hedonistic value, social value, and

conspicuous value to enter a partnership in a host brand’s market to

transfer these qualities to the host brands markets and consumers

(Uggla and Lashgari, 2012). These partnerships are successful due

the effectiveness of each brand to reach its market.

The luxury brand will attract those consumers who desire a

prestigious product while the host brand will attract consumers who

have significantly lower income than those who consume the luxury

brand. The attributes of the luxury partner add intangible value to what

is perceived as an inferior product, while still offering an acceptable

price. Two examples of these partnerships are the Eddie Bauer Ford

Explorer and the Ferrari-Acer computer co-branding.

The Eddie Bauer Ford Explorer was an attempt by Ford to

integrate features that the Eddie Bauer brand possesses in the world of

male fashion into a Ford vehicle targeted to men. This Explorer contains

a few insignificant physical changes but the perception that this car was

designed for a stylish, successful “Eddie Bauer” man attracted a target

market beyond Ford’s usual base. The Ferrari-Acer relationship

contained the same dynamic. What some view as an affordable, inferior

in quality, technology brand decided to partner with a prestigious,

quality automotive brand to offer more value to the host (technology)

brand’s consumer base.

Partnerships of this nature are made available because

conspicuous consumers increase the awareness of luxury brands in the

eyes of the public. When this public awareness happens, luxury brands

can attach their intangible value to less prestigious brands. Acer

leadership hoped the co-branding with Ferrari would create an

opportunity to develop and market a product with a higher perceived

quality. Conspicuous consumption affords marketers with opportunities

to create and adapt brands to satisfy the luxury consumer segment. This

34

behavioral phenomenon also offers a window for less prominent brands

to partner with luxury brands to appeal to average consumers as well as

those who are wealthier.

Conspicuous Consumption, Positioning, and

Advertising Methods

While conspicuous consumption has a more direct impact on branding

strategies, it also has influenced how marketers choose to position a

product. Positioning revolves heavily on what the promotion managers

do for a product. In order to place a product in the consciousness of

consumers, that product must have its attributes communicated in the

proper way so that when the need or want to purchase a product

becomes evident, the consumer will be drawn to

a particular brand.

This means that advertising campaigns have to do great job of

designing the creative message and tactics, as well as creating an appeal

for the sensual and hedonistic features that individuals look for in a

product. However, these advertising methods must be adapted when

marketing luxury products, especially to conspicuous consumers.

Advertising for a luxury item must portray the product with

some sense of exclusivity, elegance, and class. This means there cannot

be large discounts or a large amount of television advertisement

because consumers’ impression of the product will shift. Luxury brand

marketers do not want to deter individuals with the ability and desire to

frequently purchase their goods because they may shy away from

discounts and advertisements aimed at the mass market. Instead these

marketers allow their product to be the advertisement.

For example, Movado watches have been one of the more

prestigious watches an individual can buy. These watches are not in the

same class as Rolex but differentiated enough from lesser brands to

have the “luxury stigma” placed upon them. In recent advertisements

for watches designed to attract a younger generation to the brand, there

was no humor, no sex, not even a location where the watch could be

purchased. There was merely a song to simulate the rush the product

will give to owners when wearing the black watch.

How does conspicuous consumption play a role in the

advertisement? The answer is simple. Simply sell the product, free of

bells, whistles, and gimmicks (Han et al., 2010). Marketers gave as little

information about the product as possible, so consumers would only

know the elegant black watch was a Movado. No price was given

because the price does not matter when you can afford a Movado.

This simple advertisement is what appeals to conspicuous

consumers. These individuals may need a reminder periodically, but

the more subtle the advertisement is, the more it appeals to them. While

the impact that conspicuous consumption has on positioning strategies

may not be quantifiable or exact, it can be said the social status-driven

consumers want goods that they will use to show their wealth. And

these goods must be marketed in a unique way so that only a limited

number of people are made aware of the product and these few people

are in the appropriate social group.

Conspicuous Consumption and Poverty

While demand has created opportunities for marketers to develop,

communicate, and deliver luxury products to satisfy wealthier

consumers, conspicuous consumption can have the effect of

compounding poverty. An individual’s status is defined by the social

inferences made about the individual’s unobserved income. While

social inferences can be made by communications and interactions, they

primarily are derived from an individual’s conspicuous consumption

(Moav and Neeman, 2010).

Due to the importance of “first impressions” in our society,

people are motivated to present themselves as though they are endowed

with a respectable amount of wealth. With social inferences based on

outward appearance, impoverished people may see their outward

appearance as an opportunity to escape their living conditions both

physically and psychologically.

People who have to live in poverty everyday will often find ways

to escape their reality and conspicuous consumption is as option. Very

35

economically disadvantaged individuals see conspicuous consumption

as a relief from their circumstance because of the internal and external

benefits. Externally, people who are not familiar with them will infer

their financial well being based on how they dress, accessorize, and

transport themselves. For those few moments, they do not feel as those

their economic status matters. When people acknowledge their

purchases, poor conspicuous consumers experience an external reward

system. This external reward drives them to continue these conspicuous

purchase patterns.

In addition to external compensation for status purchases, there

is an internal benefit that occurs inside these impoverished consumers.

Consumption leaves consumers with positive, negative, or unchanged

experiences based on the involvement consumers have with the

purchase. When poor individuals purchase luxury goods a positive

feeling arises within them because it is an opportunity to present

themselves as a person with wealth. This psychological state comes

from a desire for momentary happiness. For a limited window they will

know what it feels like to be seen as a person with expendable financial

resources and their social class will not have defined them.

The problem arises when this short term benefit, experienced

by underprivileged people who are escaping their current circumstance,

leads them to increase the economic hole that they are already in. These

purchases exacerbate their problem because these consumers decide to

spend money that they may not have on these products. For example,

when people below the poverty line decide to purchase a luxury vehicle,

it compounds the debt that they may already have incurred through

other purchases. Research shows that consumption of status products,

and the related enhancement of social standing that comes with

conspicuous habits, can cause consumers to sacrifice their financial

standing in order to achieve a certain level of social standing. These

purchases often increase the consumer’s debt load through use of credit

lines and loans (Thomas and Wilson, 2012).

Conspicuous consumption describes the thinking used by low

income individuals to connect a product or brand to social standing.

36

37

When products are branded as luxury items, after initial consumption

by the target market, awareness of the brand slowly moves down the

social ladder. This awareness is increased through media and

communication channels. Use of spokespeople enhances a luxury image

and consumers will perceive that the spokesman uses the products.

Attributes of the individual will transfer to the product.

This process of luxury brand marketing to less fortunate

individuals was not the initial target of marketers attempting to satisfy

the need for luxury goods. It seems likely, however, that as marketers

realize that poor people also wish to buy status endowing goods, ways

will be found to service that segment of consumers as well. Conspicuous

consumption has an undeniable impact on poverty. People who

experience hard economic times want to escape, they want to be

branded by something other than their current economic condition.

So they use luxury items to temporarily relieve the feelings created by

poverty. The rewards of conspicuous consumption outweigh the cost

of increased poverty to these individuals, at least momentarily.

Is Conspicuous Consumption Good or Bad?

It is difficult to apply the label of good or bad to the subject of

conspicuous consumption. Conspicuous consumption is not the primary

reason that poverty exists. Poverty exists not because of what marketers

do, but based a whole series of circumstances that can reduce

individuals to a state of economic despair. The aim of a marketer when

branding luxury items is to service a market that desires to display its

accumulated wealth. In a marketplace where goods are not

homogenous, the well off will purchase different products than those

who are in a less advantageous financial position.

Even if branding did not intentionally place these products as

luxury goods, society would still note the difference between brands that

the wealthy buy versus those that the rest of society buys. We are a

comparative society which strives to compete with one another in so many

different areas. As a society we like to differentiate levels of social standing

with descriptors that enhance and exaggerate even the slightest differences.

38

Poverty does not begin with marketers; however, marketing can

compound the problem. It is difficult to suggest an alternative to luxury

branding of products that will not have an adverse affect on product

sales. Consumers do not always rely on rationality to make purchases.

Even if impoverished consumers were confronted by the potential

financial impact of their purchases, their behavior might not change.

It is difficult to change purchasing behavior that does give an individual

a momentary boost in self esteem. Consequently, there is no logical or

compelling reason to ask companies to stop marketing luxury goods to

all consumers. The intended market does purchase these goods, and

eventually so will secondary and tertiary markets. So it must remain the

responsibility of poverty stricken people themselves to ignore the

psychological benefits of conspicuous consumption.

Conclusion

In conclusion, conspicuous consumption is the recognition of purchases

for the purpose of displaying wealth and financial achievement. While

this form of consumption varies in price and frequency, consumers

engaging in it have the same goal in mind- to create a perception of how

much money they have and to receive acknowledgement of it. Marketers

have noticed this behavior and have developed and promoted products

that help consumers satisfy this need for social standing and acceptance.

In addition to developing products to meet luxury consumers’

needs, marketers have also used co-branding strategies to reap the

intangible benefits that luxury brands have in the eyes of consumers.

Consumers are the ultimate deciders of whether a brand receives the

luxury placement in society. Once consumers are receptive to a luxury

product, then the luxury connotation of the product begins to trickle

down the social ladder; at this point less financially well off individuals

begin to use their income on the good. These less well off people use

this item in the same fashion that the rich do. The only difference is that

the wealthy are trying to project their image through the product, while

others are trying to create this image through the same product.

39

Less fortunate individuals want to create this image in order to

escape the reality of their living standard. Since our society believes that

living standard is a function of social class, these individuals want to

escape it through conspicuous purchases. Even though they are poor

they do not have to feel it when they venture out into the world. “I may

be poor but this BMW isn’t.” The purpose of this research is to illustrate

that some of the behaviors of marketers and consumers that create

status symbols, can really skew the priorities of impoverished people.

Because of conspicuous consumption effects, people in need may lose

sight of fiscally responsible methods of trying to build wealth through

sustainable means such as education, and use their scarce resources to

buy material goods that only momentarily alleviate the pain of reality.

40

References

Bagwell L. S. and Bernheim, B. D. (1996). Veblen effects in a theory of

conspicuous consumption. American Economic Review, 86(3), 349-373.

Dimotfe, C., Johannson, J., and Bagozzi, R. (2010). Global brands in the United

States: How consumer ethnicity mediates the global brand effect. Journal of

International Marketing, 18(3), 81-106. Doi: 10.1509/jimk.

Emile, R., and Craig-Lees M. (2011). A luxury perspective on brands –

characteristics, value, and the eye of the beholder. Advances in Consumer

Research, 39, 307-310.

Hamilton, K. (2012). Low-income families and coping through brands: Inclusion

or stigma? Sociology 46(1), 74-90. Doi: 10.1177/0038038511416146.

Han, Y., Nunes, J., and Dreze, X. (2010). Signaling status with luxury goods:

The role of brand prominence. Journal of Marketing, 74(4), 15-30.

Lasaleta, J. D., Elbert, J., and Bennet, C. (2010). Do we really want to keep up

with the Joneses? A closer look at luxury, concealment, social interaction,

and justification. Advances in Consumer Research, 37, 804-841.

Majic, O., and Majic, H. (2011) “Case study of Gucci v. Guess – the failure of

brand strategies that rely on Veblen’s conspicuous consumption.

International Journal of Management, 13(4), 132-140.

Moav, O. and Neeman, Z. (2010). Status and poverty. Journal of the European

Economic Association, 8(2/3), 413-420.

Thomas, S. and Wilson, P. R. (2012). Youth consumerism and consumption of

status products: A study on the prevalence of social pressure among students

of professional courses. IUP Journal of Business Strategy, 9(2), 44-64.

Truong, Y. (2010). Personal aspirations and the consumption of luxury goods.

International Journal of Market Research, 52(5), 653-671.

Uggla, H., and Lashgari, M. (2012). Portfolio strategy for luxury partner brands:

Strategic guidelines. IUP Journal of Brand Management, 9(2), 18-28.