From Louis Vuitton to Michael Kors: An exploration of the of affordable "new luxury" brands as signals of status amongst women.

From Louis Vuitton to Michael Kors: An exploration of the of affordable
“new luxury” brands as signals of status amongst women.
Introduction
For years it has been reported that the global luxury market was booming and even expected
to gross $1 trillion by 2025 (Truong, 2010). The main drivers behind the success of this
industry were globalisation, and the resulting wealth creation and an increase in consumers
from emerging economies such as China and India (Kastankis and Balabanis, 2014).
However, a closer analysis suggests that the luxury industry may have taken a turn for the
worse.
The global luxury market is currently experiencing a slowdown in growth, as a result of slow
economic growth and political instability in emerging economies (Financial Times, 2014;
Bain & Company, 2014). For example, China’s love affair with luxury brands has always
been credited for contributing to the growth of the luxury industry (Tynan et al, 2010).
However, a dip in the economic growth of China and strict guidelines imposed by the
government to curb corruption and extravagant giving, has led to brands such as Burberry
and LVMH group reporting a drop in sales (Financial Times, 2014). Similarly, other luxury
brands have expressed feeling the effects of EU and US sanctions against wealthy Russians
could have affected performance within key markets (Financial Times, 2014).
Whilst recent economic woes may have played a role in the slowdown of the luxury goods
industry, changes of the perception of luxury in a contemporary context must be taken into
consideration (Lim et al, 2013). Traditionally, the consumption of luxury goods was only
reserved for the elite, but now available to the mass market (Granot et al, 2013). A wide
range of offers has accompanied the “democratisation” (Schroeder & Morling, 2006;
Remaury, 2002) of the luxury market and firms in response are creating goods and service
that fall into the category of “New Luxury” (Truong et al, 2009: 376). These goods are
affordable, but still maintain a level of perceived prestige and quality, which differentiates
them from middle range products (Silverstein and Fiske, 2003).
Unfortunately “smart and savvy” (Macdonald and Uncles, 2007) consumers are opting to
purchase affordable luxury goods, rather than traditional luxury brands, as budgets are
tightening (Bain & Company, 2014). Whilst brands such as Mulberry have reported profit
loses, affordable luxury brand Michael Kors had one of the bestselling handbags on the
market, retailing from £260-£345 (Guardian, 2014).
Focusing on personal luxury goods, this study will investigate the increasing popularity of
“New luxury” amongst female consumers. It is perceived that traditional luxury brands are
signals of high social status and wealth, however does this also extend to affordable luxury?
Drawing on the costly signaling theory, which suggests that animals and human engage in
acts that seem to involve a sacrifice, to convey or communicate their elevated status
(Zhavi,1975), this study seeks to explore how the ownership of affordable luxury goods may
elicit favorable treatment amongst women.

Research Question
Are affordable “New Luxury” brands a signal of status amongst women?
Aim: To investigate whether affordable “New Luxury” brands can be perceived as a positive
signal of status amongst female peers.

Literature Review
In the last decade, the luxury industry has experienced a significant change due to the growth
of the aspirational consumer segment, a shift from a “class to mass” target audience (Granot
et al, 2013; Silverstein and Fiske, 2003) and the transition has redefined the meaning of
luxury. In the contemporary market, luxury falls into two categories- “Old Luxury and New
Luxury”. “Old Luxury” describes high end brands with an established history that targets the
wealthy, whilst “New Luxury” refers to products and services that possess high levels of
quality, taste and aspiration than other goods in the category, but are not too expensive as to
be out of reach (Silverstein and Fiske, 2008).Whilst there is evidence revealing that
consumers are driven by value, regularly “luxe bargain shopping” which involves
“purchasing a luxury brand at a bargain, which generates value in association with both the
product (luxury brands) and process (bargain shopping)” (Lim et al, 2013) , little attempt has
been made to document the phenomenon of “New Luxury”.
The most referenced theory to describe the motivation behind the indulgence of luxury is
conspicuous consumption, stipulating that consumers seek to buy expensive goods to display
wealth and obtain greater social status (Veblen, 1994). Research tends to focus on extending
this theory, therefore studies have focused on the symbolic meanings of luxury possession
(Vickers and Renand 2003, Wong and Ahuvia,1998), emotional and hedonic values attached
to luxury brands (Tynan et al, 2010; Wiedmann et al, 2007), uniqueness (Park et al, 2008;
Zhan and He, 2012) and self-gift giving (Tsai, 2005). Unfortunately, these studies cannot
explain the “democratization” of luxury in today’s value orientated shopping environment
(Kastanankis and Balabanis, 2012; Kim et al, 2007), as they fail to consider the emerging
sectors of consumers within the marketplace.
According to the evolutionary theory, humans preferences for luxury brands stems from
costly signaling, suggesting that we seek to own luxury brands to signal desirable traits of
ourselves to others (Griskevicius et al, 2007; Miller, 2009; Nelissen and Meijers, 2011;
Sundie et al, 2011). Costly signaling theory suggests that signals communicate underlying
characteristics of on organism and it is linked to fitness qualities (Zhavi, 1975). Signals
usually vary in quality and intensity, but must be perceivable by receivers to allow them to
distinguish between individuals who possess the underlying traits (Miller, 2000). In the
context of luxury consumption, goods can be used to flaunt “physical attractiveness,
intelligence, aggressiveness, social status” (Miller, 2000; Sundie et al; 2011). It is apparent
that luxury goods are used by consumers to enforce status; however a majority of the research
focuses on the traditional aspects of luxury and fails to acknowledge the role of the perceiver
in receiving the signal of status, despite Nelissen and Meijers (2011) insisting that it is
crucial, as the way a consumer is perceived by peers may influence future purchase decisions.
Although affordable luxury goods in comparison to traditional brands are less expensive,
theses goods are still pricy when compared to premium brands, hence the use of the costly
signal theory to investigate “New Luxury” goods as a signal of status.

In comparison to men, women have a positive attitude towards the consumption of luxury
brands as a result of the hedonic value, status and uniqueness in comparison to non- luxury
brands (Stockburger-Saur and Teichman, 2013). However, whilst women are known to
indulge in luxurious goods frequently (Stockburger-Saur and Teichman, 2013) research
exploring the signals of luxury goods tends to focus on luxury consumption as a signaling
system to attract the opposite or to deter women from “poaching a relationship partner”
(Wang and Griskevicius, 2013). Thus far, one study has confirmed that other females
perceive women who own traditional luxury brands as more “attractive, flirty, young,
ambitious, sexy and less loyal, mature and smart” (Hudders et al, 2014: 570) confirming the
notion that luxury is a signal of high status with positive perception amongst peer.
Unfortunately these findings were from a follow-up study, lacking depth and failing to define
the sector of luxury the study focused on.
Furthermore, a review of past literature has revealed that whilst there is a large amount of
research available confirming luxury goods as a signal of status, scholars have failed to
conduct research into affordable luxury goods, despite changes in the market revealing its
increasing popularity amongst consumers. In addition, research exploring the relationship
between luxury goods and female consumers focuses on a luxury as a tool to threaten other
women or attracting the opposite sex, with little consideration on how luxury is perceived
amongst peers. However, research indicates that women are driven by communal goals, thus
are concerned by their friends opinions on their purchases which influences future buying
behavior (Stockburger-Saur and Teichmann, 2013).

Conclusion
The novelty of this study is that it will be the first to explore the relationship between
affordable “New Luxury” as a signal of status, extending the understanding on how the cost
or the branding of an item can influence peer perception. For example, amongst women is a
Michael Kors handbag considered a signal of high status, despite it being an affordable
version of luxury? Research conducted into “New Luxury” focuses on defining the
phenomenon, but fails to explore how the brand is perceived. It is clear that a large
proportion of female consumers are increasingly value driven, thinking twice about spending
£1000 on a new handbag. Therefore, it is necessary that further research is carried to
understand this emerging trend, to help us better predict the future of the luxury industry.
At present this study is at the early stages, and further investigation will be carried out to
ensure it makes a strong theoretical contribution to the existing body of research. As it is an
exploratory study, the first stages will consist of a series of focus groups with female
participants based in the UK who have purchased an affordable luxury brand in the past year.
There will be 6 focus groups with 12 participants in each one. The second stage will be a
questionnaire, based on the findings of the focus group. The research design adopted for this
study is described as explanatory sequential design, which prioritizes the collection and
analysis of qualitative data and then using a quantitative method to test or generalize the
findings (Creswell, 2013).

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