The Korean luxury market has been experiencing an annual growth rate of 12% despite the economic slowdown. Luxury goods provide unique values that go beyond merely the function and price of products, thus influencing consumers' buying behavior. Noneth...
The Korean luxury market has been experiencing an annual growth rate of 12% despite the economic slowdown. Luxury goods provide unique values that go beyond merely the function and price of products, thus influencing consumers' buying behavior. Nonetheless, research on the effect of values of luxury goods on customers' buying behavior and attitude is rare. Especially the relationship between customers and luxury brands is important because consumers purchasing luxury goods are highly involved in the buying process, thus ultimately affecting customers' attitude and behavior. Therefore, the objective of this study is to examine the dimensions of values of luxury brands and to analyze the relationship among those dimensions of values, relationship quality, and behavioral intention.
The sample used in this study was female university students in Seoul metropolitan area who had purchased forty selected brands within 2 years. In total, 671 questionnaires were analyzed by Structural Equation Model(SEM) using statistical package AMOS 7.0 version to test the research hypotheses. The results suggest that financial, quality, and personal value of luxury brands had a significant positive effect on satisfaction for luxury brands. Financial, quality, personal, and social value had a significant positive effect on trust. Financial and personal value of luxury brands also had a significant positive effect on commitment. Furthermore, favorable behavioral intention was significantly influenced by the relationship quality, namely customers' satisfaction, trust, and commitment for luxury brands. However, satisfaction and trust didn't have a significant effect on unfavorable behavioral intention whereas commitment for luxury brands had a significant positive effect on unfavorable behavioral intention.
Theoretical implications of this study are as follows. First, while previous studies chose luxury brands arbitrarily, 40 luxury brands selected in this study were based on previous literature and newspaper articles. Second, this study provided the theoretical bases by examining the dimensions of values of luxury brands. Third, this study examined the relationship among values of luxury brands, relationship quality, and behavioral intention for the first time in the academic literature on luxury goods.
Managerial implications of this study are as follows. First, if female university students in their 20s perceive that luxury goods are priced too high and unique, it has a negative influence on customers' trust for luxury brands because disposable income of customers in their 20s is relatively low. Hence, luxury goods firms should not only maintain the premium pricing strategy but also take advantage of the downward stretch strategy within the scope that the strategy doesn't harm brand identity. Second, consumers in their 20s tend to find their own ego and identity. Thus, luxury goods firms need to use their brand logo type and slogan more actively that highlight emotional characters of customers in their 20s. Luxury goods firms should also launch ad campaigns featuring successful business women and celebrates that possess elegant and noble image, thus improving the level of satisfaction and commitment for luxury brands. Third, if luxury brands have high-class image and brand reputation, it may have a positive influence on trust for the brands. However, female university students prefer to trust their own judgment rather than care about others. Therefore, social value of luxury brands might not have any influence on satisfaction and commitment for luxury brands. Fourth, quality and personal value of luxury brands were the strongest driver of trust and commitment for luxury brands, respectively. As a result, luxury goods firms will be able to improve the level of trust and commitment for luxury brands by continuously managing quality of products and satisfying personal value of luxury brands such as gaining self-confidence. Fifth, the improvement of relationship quality may induce positive behaviors of customers in their 20s and consequently lead to customer loyalty. Hence, luxury goods companies should manage the relationship with them to improve customer satisfaction, trust, and commitment for the luxury brand. Sixth, luxury goods managers should investigate and analyze those factors that determine customer complaint behavior. Seventh, if the commitment of female students for the luxury goods increases, they may make complaints arisen from deep affection for the brands in order to improve the products and services. As a result, luxury goods firms should consider complaints a golden opportunity to resolve problems to products and services.
Limitations and future research directions of this study are as follows. First, the convenience sampling technique used in this study to select female university students in their 20s may limit the generalizability of the findings of this study. Thus, future research may employ probability sampling methods that include consumers in various ages to increase external validity. Second, the brands that consumers perceive as luxury brands may differ among consumers. Thus, future research should conduct a pilot test to compile a luxury brand list based on a clear conceptual definition of luxury brands and classify luxury brands into various product categories. Third, this study examined the unidimensional aspects of customers' behavioral intention what are named favorable and unfavorable behavioral intention. It prevents managers from devising marketing strategies that cope with various behavioral intentions. Thus, future research needs to examine the various behavioral intentions of customers by adopting more elaborate measurement scale. Fourth, the result of confirmatory factor analysis in this study, the model fits didn't meet the cut off level. Therefore, the factor analysis should be conducted by dividing all the variables into endogenous and exogenous variables or by the high-order factor model in future research.