Department of Business Administration Master of Science in International Business
Luxury Online in China and India
What is the influence of E‐commerce on luxury goods’ value?
Master Thesis Author: Paulina Katarzyna Dylkiewicz Supervisor: Robson Silva Rocha Character count: 131,967 Aarhus University, Business and Social Sciences November 2013
ABSTRACT The growth of Electronic commerce and expanding consumerism patterns in emerging markets of China and India are indicated to have impact on many business areas and industries. One of the examples of business that can be highly influenced by those factors is the luxury industry. The characteristics originally associated with luxury in uniqueness and exclusivity, in the context of Internet that is related to the speed and common access, the luxury industry online can be seen as a paradox. This thesis is an investigation of the key factors influencing the value of luxury online in the consumer perspective of the Chinese and the Indian consumers. A qualitative case study approach has been applied to explore the phenomenon of luxury in the Internet context. Telephone interviews have been carried out to get the in‐ depth perspective of the consumers from China and India. The results of the research not only show what are the factors influencing luxury’s value, but also what are the implications for the luxury brands taking into consideration this consumer paradigm shift.
ACKNOWLEDGMENTS I would like to offer my gratitude to my supervisor Robson Silva Rocha for sharing his knowledge and advices, and giving me the flexibility to write this thesis all over the world including Singapore, Poland and Denmark. I want to thank my parents for their support, patience and motivation and thereby this thesis is dedicated to my parents, for giving me the two most important gifts you can give a child: roots and wings. Paulina Dylkiewicz Koszalin, Poland, October 2013
PART I FOUNDATION OF THE RESEARCH .................................................................................................................................. 1 1.INTRODUCTION ...................................................................................................................................................................... 1 1.1. INTRODUCTION TO THE TOPIC OF RESEARCH ............................................................................................................... 1 1.2. RESEARCH QUESTIONS AND HYPOTHESES .................................................................................................................... 2 1.3. DELIMITATIONS ............................................................................................................................................................. 3 1.4. OUTLINE OF THE THESIS ................................................................................................................................................ 3 PART II CONCEPTUAL AND THEORETICAL FOUNDATION .......................................................................................................... 3 2. CONCEPTUALIZATIONS.......................................................................................................................................................... 3 2.1. LUXURY DEFINED ........................................................................................................................................................... 4 2.1.1. LUXURY INDUSTRY ................................................................................................................................................. 5 2.2. ELECTRONIC COMMERCE .............................................................................................................................................. 6 2.3. BRIC COUNTRIES AND THE FOCUS ON CHINA AND INDIA ............................................................................................. 6 3. THE WORLD ONLINE .............................................................................................................................................................. 7 3.1. LINKING LUXURY, E‐COMMERCE, CHINA AND INDIA..................................................................................................... 7 3.1.1. THE STATISTICS OF THE ONLINE WORLD ................................................................................................................ 8 4. THE LUXURY CONSUMER ONLINE ......................................................................................................................................... 9 4.1. CONSUMER BEHAVIOR AND VALUES............................................................................................................................. 9 4.1.1. VALUES AND MOTIVATIONS IN LUXURY PURCHASE EFFECT ANALYSIS ................................................................. 9 4.1.2. THE DIMENSIONS OF LUXURY VALUE AND THE INTERNET .................................................................................. 10 4.1.3. EXPERIENTIAL VIEW OF LUXURY VALUE ............................................................................................................... 12 4.2. CATEGORIZATION OF CUSTOMERS .............................................................................................................................. 12 5 .THE LUXURY WORLD ONLINE .............................................................................................................................................. 14 5.1. THE BENEFITS AND BARRIERS OF E‐COMMERCE ADOPTION BY CONSUMERS ............................................................ 14 5.1.1. THE BENEFITS ....................................................................................................................................................... 14 5.1.2. THE BARRIERS ....................................................................................................................................................... 16 5.2. THE INFLUENCE OF INTERNET ON LUXURY BRANDS ................................................................................................... 17 5.2.1. INTERNET CAPABILITIES BEYOND REACH ............................................................................................................. 18 5.2.2. EXCLUSIVITY VERSUS UBIQUITY ........................................................................................................................... 18 5.2.3. CREATIVE DESTRUCTION IN LUXURY .................................................................................................................... 20 6. THE ASIAN LUXURY CUSTOMER ONLINE ............................................................................................................................. 21 6.1. ASIA AS THE WORLD’S BIGGEST MARKET .................................................................................................................... 21 6.2. THE DRIVERS OF THE EMERGING ................................................................................................................................. 22 6.2.1. CHINA ................................................................................................................................................................... 24 6.2.2. INDIA .................................................................................................................................................................... 25 6.2.3. CHINA AND INDIA RESHAPING THE LUXURY MARKET ......................................................................................... 27
PART III METHODOLOGY ......................................................................................................................................................... 27 7. RESEARCH DESIGN .............................................................................................................................................................. 27 7.1. THE THEORETICAL PERSPECTIVE IN QUALITATIVE RESEARCH ..................................................................................... 28 7.2. THE APPROACH TO KNOWLEDGE CREATION ............................................................................................................... 28 7.3. RESEARCH STRATEGIES ................................................................................................................................................ 29 7.4. THE METHOD OF DATA COLLECTION ........................................................................................................................... 29 7.5. THE SELECTION OF RESPONDENTS .............................................................................................................................. 30 7.6. THE DATA COLLECTION PROCESS ................................................................................................................................ 30 7.7. THE METHOD OF DATA ANALYSIS ................................................................................................................................ 30 7.8. RELIABILITY AND VALIDITY ........................................................................................................................................... 31 7.9. LIMITATIONS ................................................................................................................................................................ 32 PART IV THE PRESENTATION AND THE ANALYSIS OF FINDINGS ............................................................................................. 32 8. THE CONSUMER AND THE LUXURY ..................................................................................................................................... 32 8.1. CUSTOMERS’ DEFINITIONS OF LUXURY ....................................................................................................................... 33 8.2. PERCEIVED LUXURY VALUE .......................................................................................................................................... 34 8.3. LUXURY PURCHASE MOTIVATION AND BENEFITS ....................................................................................................... 35 8.4. LUXURY PURCHASE CHANNEL CHOICE AND INFLUENCE ............................................................................................. 35 8.5. OFFLINE SHOPPING AS AN EXPERIENCE ...................................................................................................................... 36 9. THE EXPERIENCE OF LUXURY ONLINE ................................................................................................................................. 37 9.1. ADVANTAGES OF LUXURY SHOPPING ONLINE ............................................................................................................ 37 9.2. DISADVANTAGES OF LUXURY SHOPPING ONLINE ....................................................................................................... 38 9.3. THE DRIVER OF THE PRODUCT CATEGORY .................................................................................................................. 39 9.4. WEBSITES AND SOCIAL NETWORKS ............................................................................................................................. 40 10. THE INSIGHT INTO ONLINE EXPERIENCE ........................................................................................................................... 40 10.1. WEBSITE CONVEYING LUXURY VALUES ..................................................................................................................... 41 10.2. FACTORS INCREASING AND DECREASING THE VALUE OF LUXURY ONLINE .............................................................. 42 PART V THE DISCUSSION AND CONCLUDING REMARKS ......................................................................................................... 44 11. DISCUSSION OF THE FINDINGS ......................................................................................................................................... 44 11.1. COMPARATIVE ANALYSIS OF CHINA AND INDIA ........................................................................................................ 44 11.2. THE KEY CONCLUSIONS FROM THE RESEARCH .......................................................................................................... 46 11.3. IMPLICATIONS FOR THE BRAND ................................................................................................................................ 48 PART V CONCLUDING THE RESEARCH ..................................................................................................................................... 49 12. FINAL CONCLUSION ........................................................................................................................................................... 49 12.1. LIST OF REFERENCES .................................................................................................................................................. 51 12.2. APPENDICES ............................................................................................................................................................... 53
PART I FOUNDATION OF THE RESEARCH 1.INTRODUCTION 1.1. INTRODUCTION TO THE TOPIC OF RESEARCH The world is currently experiencing the digital revolution (Okonkwo 2010). The number of Internet users is growing globally, no longer only in developed countries, but in emerging countries that some years ago did not even have access to technology (Internetworldstats 2012). The consumers become driven by the technological innovations, but create innovation drivers themselves. There are generations of consumers who no longer imagine their everyday lives without continuous access to Internet (Mulcahy 2007). The increasing digitalism of consumers has big impact on the lives of consumers, thereby impacting their consumer behavior, which in economical terms leads to consequences that different industries are experiencing. The Internet is synonymous with easy access, accessibility for everyone, speed, and availability of information. These key words seem like advantages for consumers and businesses. They can however become a threat to industries that originally value extremely different principles. A core example of such industries is the luxury industry. Luxury for years has been associated with originality, uniqueness, and exclusivity. Thompson et al. (2010) state that “One of quintessential traits of luxury has always been its superiority to the ordinary” (Thompson et al. 2010: 1). This superiority and uniqueness of luxury could be viewed as conflicting in the context of the Internet and virtual communities of consumers. That is why the luxury companies for years have not been engaging in electronic markets, being focused on very selective distribution channels with appealing and extravagant luxury stores in prime locations in the fashion capitals of the world (Okonkwo 2010). The luxury business has been doing well for years as opposed to other industries, it also has been well responding to economic crises and downfalls, with luxury consumers continuously willing to purchase more of the luxury products (Walker 2009). However, the market rules have recently changed. Firstly, the change has been associated with the growing group of the middle class consumers with the disposable incomes who also want to own luxury products, and join the wealthy class shopping for luxury products. The amount of the luxury they purchase is clearly less than what the millionaires buy, but since the middle class is such a big consumer group, the value of luxury they purchase is already taking over the ultra‐wealthy’s share. Secondly, the emerging markets continue to grow. Initially it was the Japan as the leader in luxury shopping, where the luxury has become the way of live and the Japanese started to get locked into the luxury habit. The growing popularity of Western luxury brands in emerging markets has impact not only on the increasing sales margins of luxury brands. The Asian consumers are believed to have different definitions of luxury. The shift towards the emerging markets becoming big spenders on luxury is assumed great impact on the sales of luxury, but also on the luxury values. The relationship between the value and the luxury is to be investigated in the key emerging markets of luxury. In this context, there is another factor that needs consideration – the 1
Internet. E‐commerce sales are growing, with China and India being indicated to contribute to online shopping the most. The consumers have high expectations from the retailers not only to offer their products online, but also to get engaged in the interactive relationships with customers. How will the luxury brands respond to the new consumer expectations? Will they engage in online sales to increase their margins, risking the loss of the key luxury values of exclusivity and uniqueness? Or maybe there are business approaches or strategic tools that can guarantee the luxury companies to retrieve their principles and engage in online sales without the danger of luxury commoditization? These questions are believed to be answered by investigating consumers’ perspectives towards their current luxury values, and the values that luxury has in the context of the online environment. The projections of growth for both the participation in the electronic markets, as well as the purchasing of luxury are the biggest for the countries of China and India. These countries are also dramatically different both in the economic and cultural context. The investigation of the E‐commerce trend for luxury will be based on the research of the Chinese and the Indian consumers. The research question investigates the influence of the E‐commerce on luxury good’s value. The problem is further linked to the hypotheses related to the loss of luxury value online, and the difference between the online and offline consumer. 1.2. RESEARCH QUESTIONS AND HYPOTHESES Based on the foregoing, this thesis will address the following research question: What is the influence of E‐commerce on luxury goods’ value? Furthermore the research problem will be supported by the two following hypotheses: ‐
Increasing presence of luxury goods online leads to a loss of key luxury values
‐
The online luxury shopper is different from the traditional offline customer
The research question aims to investigate the influence on the growing E‐commerce trends towards the value of luxury goods from the consumer perspective. It is also assumed that the results of the research will contribute in implications for the luxury brands. The first hypothesis statement assumes that the increasing popularity of luxury goods online leads to a loss of luxury values. These values are those originally associated with the notion of luxury, such as the exclusivity and uniqueness. These characteristics when combined with the synonyms of Internet, where speed and ease of accessibility play a role, all appear to be paradoxical. The second hypothesis drives the direction of the research towards the characteristics of the consumer who is willing to engage in luxury shopping online, as opposed to the traditional customer appreciating the experience of luxury in physical stores. The assumption that the online luxury shopper differs is again related to the original luxury value, where the luxury characteristics drive consumers towards the limited distribution channels of luxury. Thereby, the online luxury shopper who accepts the commonplace of the Internet, and decides to engage in luxury experience virtually, is assumed to differ from the traditional consumer. 2
The investigation of the research question and the hypothesis statements will be based on the perspectives of consumers in China and India. The choice of these two markets to be key focus in this thesis will be explained in this thesis further, it is assumed however that China and India have distinct growth projections for both luxury and E‐commerce, thereby are indicated to have strong future influence on the shape of the business structures of luxury market and the Internet as sales channel. The research will be supported by relevant theories and frameworks related to the notions of luxury, consumer value, consumer behavior, and electronic channel adoption. 1.3. DELIMITATIONS The delimitations of a study arise from limitations in the scope of the study, and from conscious exclusionary and inclusionary decisions made by the researcher in the development of the study (Simon & Goes 2013). When selecting the problem for this research, there are several related topics that could have been chosen but were rejected. Firstly, this research only focuses on the luxury goods industry in the presence of E‐commerce influences, while the other product sectors such as other retail categories, FMCG, F&B, etc. have been screened off from the view. The luxury industry has been chosen as a key focus due its distinct characteristics from other type of goods; these will be presented in the thesis further. It is not known whether the consumers buying other categories of products would have the same view on the online shopping as the luxury product buyers. Additionally, the analysis only includes China and India. These countries have been selected as they are indicated to have the biggest E‐commerce growth this year (The Wall 2013), at the same time projected to become global luxury market leaders in less than 10 years (Deoras 2013). There are other markets that have growth projections on either E‐commerce or luxury shopping, but due to the limited scope of this thesis, it was not possible to consider more markets. It must be recognized that other factors could also be influencing the luxury buying behavior of customers, for example economical changes, cultural aspects, or geographical dispersion, these however have also been excluded due to restricted timeframe and scope of this thesis. 1.4. OUTLINE OF THE THESIS The thesis is divided into 5 parts. Part I including the foundation of the research and the introductory discussions, Part II presents the conceptual and theoretical foundation related to luxury market, E‐commerce, and China and India. Part III shows the methodological approach of the research, with its results presented in Part IV together with analyses and discussions of findings. Part V includes the concluding discussion.
PART II CONCEPTUAL AND THEORETICAL FOUNDATION 2. CONCEPTUALIZATIONS “Fashion goes out of style, luxury is timeless” Geoffroy Masuy (Luxury Society Report 2010: 42) 3
2.1. LUXURY DEFINED The term ‘luxury’ is commonly used in everyday life to describe products, services and lifestyle, sometimes seen as a culture and philosophy, but despite the widespread utilization of the world ‘luxury’, it still elicits no clear understanding (Wiedmann et al. 2009). Luxury characteristics are dramatically different from other type of goods, and thereby ‘luxury’ as a term requires a thorough insight into its definitions (Rosa 2012). Originally, the meaning of the word ‘luxury’ is derived from ‘luxus’ denoting sensuality, pomp, splendor, whereas its derivative ‘luxuria’ stands for extravagance, riot, etc. (Yeoman & McMahon‐Beattie 2005). On the other hand, the dictionary explains luxury as “something adding to pleasure or comfort, but not absolutely necessary” (Merriam Webster 2013). One of the oldest theories of luxury – Veblen’s ‘conspicuous consumption’ (1899), states that consumers’ purpose of luxury acquisition is mainly to show off their wealth and prosperity (Yeoman & McMahon‐Beattie 2005). Although modern context has impact on the meaning of luxury towards individual interpretations, it can be agreed upon that luxury’s synonyms are pure pleasure and indulgence (Okonkwo 2009). To achieve a complex definition of luxury, there are several studies to be looked at. In words of Kapferer (1998), luxury is explained as “beauty; it is art applied to functional items. Like light, luxury is enlightening. Luxury items provide extra pleasure and flatter all senses at once” (Wiedmann et al. 2009: 626). This definition relates to semiotics of the word ‘luxury’ and the sociological references, where the possession of luxury goods brings esteem on the owner without any functional utility. Here, luxury enables consumers to gain satisfaction of psychological needs. Nueno and Quelch (1998) on the other hand, relate the definition of luxury brands to their price and quality ratios. This means that the price of luxury product is drastically greater than the price of products with comparable tangible features (Nueno & Quelch 1998). This definition however limits the view on luxury goods to a simple typology that the brands are either luxurious or not luxurious thereby this classification, in the view of Vigneron and Johnson (1999), can be misleading. Based on studies of Phau and Prendergast (2000), it is the consumer perspective determining luxury brands’ ability to evoke exclusivity, induce brand identity, and increase brand awareness. Literature shows that there is a relation between exclusivity or rarity and luxury (Wiedmann et al. 2009). Originally, it is the societies that develop norms for what is considered luxurious and necessary, these, however, can be unclear and vary over time, across classes and cultures (Csaba 2008). Today, the concept of luxury has changed radically and it is exceptionally fluid. Luxury is no longer the preserve of elites, there has been a cultural shift towards personal fulfillment through experience. This is an argument for ‘luxury’ to be seen as ‘experience’ and ‘authenticity’, rather than monetary value (Yeoman & McMahon‐Beattie 2005). The view of luxury as the experience instead of luxury as the status symbol in the contemporary literature is known as the ‘feminization’ of luxury (Danziger 2005). Danziger’s (2005) work, as well as the researches of Silverstein & Fiske (2005) and Thomas (2008) account for the typology of the ‘new luxury’. The key focus in the ‘new luxury’ is not only associated with the democratization and increasing affordability of luxury, but mainly 4
with the shift to more individualistic and experiential concept of luxury. Furthermore, researchers including Okonkwo (2010) believe that luxury has innate characteristics, intrinsic to its form, and elements that speak to passion than to reason (Okonkwo 2010). The presented approaches and luxury typologies show that it is difficult to view luxury only as a type of product as the notion of luxury is complex. Luxury is also believed to have gone through a process of development, as the definition, the characteristics, and the consumers of luxury continuously change. This is supported by Danziger who stated ”The natural evolution of all luxury concepts is from class to mass. First luxury is introduced and embraced by the affluent, then inevitable it is translated and reinterpreted down to the masses. Thus today’s luxuries become tomorrow’s necessities” (Danziger 2005: 3). It is believed that various definition and interpretations give an integrative overview of the concept of luxury. 2.1.1. LUXURY INDUSTRY For the purpose of further analysis, the luxury goods industry needs to be defined. There are several segments that compose the luxury goods industry. The core of the business of luxury industry is the fashion industry. Aside from the fashion segment consisting of ready to wear, jewelry and watches, etc., brand diversification is wide ‐ many of luxury companies enter areas outside their traditional specialty. The figure below shows this increasingly adventurous product diversification (Boroian and De Poix 2010).
Figure 1. Product Diversification of Luxury Goods (Source: Adapted from Boroian and De Poix 2010)
The luxury fashion industry is relatively insulated from economic changes and crises. The luxury market has been doing well compared to other industry segments, since the customer group of luxurious fashion have the best financial security and keep on their purchasing habits despite the global economic instabilities (Walker 2009). In the economical setting, the world of affluence and luxury is a rare example of a case resistant to disinflation; here the prices are rising rather than falling as they target consumers’ aspirations (Yeoman & McMahon‐Beattie 2005). The strong position of the luxury industry makes it an appealing point of focus, and explains the interest in the luxury industry of this thesis. Evidently, luxury as an industry is complex and economically different from other industries, highly dependent on many factors and contexts. It is believed that the definition of ‘luxury’ will continue transforming not only in terms of its core meaning, but also its 5
markets, customers, key users. Luxury for many years has been associated with rich deposits of demand in places like London, New York, Paris, Milan and Tokyo. While these mature markets still play a significant role in the share of sales, there has been a shift towards nontraditional luxury markets (Bellaiche et al. 2010). 2.2. ELECTRONIC COMMERCE Electronic commerce (E‐commerce) will be looked at in the context of luxury, not only due to its growing presence in the majority of businesses and lives of consumers, but also because it can have a great influence on the shape of the luxury industry. Electronic commerce has the potential to change the industry structures and have impact on how the businesses compete for markets. Such effects are already apparent in some other industries and specific business organizations (Marshall et al. 2000). This change is being felt by every society in all aspects, and will continue to resonate in business sectors regardless whether technology‐ driven or unreceptive to transformation (Wiedmann et al. 2009). While e‐commerce can be linked to many meanings and has been subjected to a range of definitions, a rather exclusive definition will be used in this research. Electronic commerce will be considered as “involving and selling of goods and services over the Internet, and related information provision and gathering” (Marshall et al. 2000: 2). In the current scenario of digital evolution, the Internet has become an indispensable medium for growth prospects, reaching a wider international clientele, and projecting a brand’s core essence to broader customer group; all of these also in terms of the luxury industry (Wiedmann et al. 2009). 2.3. BRIC COUNTRIES AND THE FOCUS ON CHINA AND INDIA The primary countries to be analyzed in this thesis are China and India. Both are considered as part of the BRIC (Brazil, Russia, India and China). All these countries are the fastest growing and largest emerging markets economies speculated to achieve by 2050 more wealth than most of the current major economic powers (Investopedia 2011). The size of these economies, their wealth and future potential for growth make BRIC countries an interesting choice for the luxury goods industry research. These countries have distinct characteristics and have a great potential for luxury brands to either enter the markets or increase their current presence there. The BRIC can be divided into the potential world’s dominant suppliers of raw materials – Brazil and Russia, and the world’s dominant suppliers of manufactured goods and services – China and India (Investopedia 2011). The fact that China and India have such well developed manufacturing, especially in the textile and clothing industry, and world’s top export rates within this industry, make this thesis even more interesting. This is because many Western luxury goods come from the opposite source and are usually imported to China and India, not the opposite. Furthermore, there is an interesting indication that BRIC countries if categorized in terms of importance would actually build an acronym of CIRB countries (Economywatch 2011). This is a subjective view; however it is another argument for the choice of China and India as the countries of focus in 6
this thesis. Apart from the growth characteristics of the BRIC countries, they are believed to have little in common (Economywatch 2011). They are primarily seen as an investment category, but the political, economic and socio‐cultural factors still drastically differ. Importantly, China and India have a very particular luxury consumer behavior and E‐commerce statistics, which will be explained further, but at this point the subject matter of luxury and E‐commerce trends with the focus on China and India is believed to constitute valuable combination. 3. THE WORLD ONLINE “Everything is up for grabs and consumers are willing to accept totally new, unexpected definitions of what luxury is and where luxury can be found” (Danziger 2005: 2) 3.1. LINKING LUXURY, E‐COMMERCE, CHINA AND INDIA The relation between the luxury, E‐commerce, and China and India can be viewed in the context of the evolving luxury landscape, the earlier explained aspects can confirm the so‐called ‘Era of Diversification’. Consumers’ drivers change towards utilitarian and hedonist attributes, E‐commerce plays a role when it comes to strategy of diversification, at the same time with increasing consumption levels in China and India. The graph below illustrates how the luxury landscape has evolved over the years. It also summarizes the reasoning behind combining the topics of E‐commerce, luxury goods, and China and India in this thesis, as they all fit a paradigm shift.
Figure 2. The evolving luxury landscape (Source: Adapted from Ramesh 2012)
The beginning of the Era of Diversification, shown in the figure, in the landscape of luxury has been driven by changing consumer patterns, economical changes and new markets increasing their importance in the industry. One of the phenomena that can be indicated to have significance in driving all these factors is globalization, accelerated by the Internet (Giddens 1999). The broad definition of globalization explains it as “the widening, 7
deepening and speeding of worldwide interconnectedness in all aspects of contemporary social life from the cultural to the criminal, the financial to the spiritual” (Held et al. 1999: 2). Such interconnectedness is visible in many companies increasing their international presence, entering new markets, and procuring more globally. Multinational companies and organizations have used the Internet for better integration and knowledge sharing, enabling to reach out to more partners and customers by the participation in electronic markets. Apart from the benefits that companies obtain when participating in electronic markets, in the view of Standing (2009), the growth of electronic markets has changed the expectations of customers. Internet connectedness of companies is now a requirement for consumers, and the possibility for online interaction enhances the perception of company’s service (Standing 2009). 3.1.1. THE STATISTICS OF THE ONLINE WORLD The Asian population constitutes the majority of the global online community. The Asian Internet user group represents only 27.5% of the Asian population. In comparison that Internet penetration rate in the North America makes up as much as 78.6 % of entire population. Another factor, however, that differentiates these two geographical areas is the growth of the Internet usage in years 2000‐2012, where the growth in the North America was 153.3% and in Asia was 841.9% (Internetworldstats 2012). These numbers show the speed of increasing Internet usage in those two regions and confirm that Asia is extremely fast growing the number of online users. This confirms the potential of Asian consumer as a top online buyer. The potential of online users is also showed by E‐Marketer, where in 2012 B2C E‐commerce sales in the Asia‐Pacific region grew more than 33% to around $332 billion. The same report predicts that this year, the region will reach another extreme raise of sales by additional 30% thereby reaching more than $433 billion. Such result will account to over one‐third of all global B2C ecommerce sales, for the first time surpassing North America. The most essential outcome of the E‐Marketer report is that the countries listed as key markets to Asia’s rapid are China, India and Indonesia. These three markets will have the faster B2C e‐commerce sales growth than all other markets worldwide this year. The giant driving the Asian e‐commerce performance is China, believed to be the emerging e‐commerce powerhouse with already some impressive success stories of online stores. An example of this is the company Alibaba. Last year Alibaba’s online sales portals handled around $170 billion in sales, more than eBay and Amazon combined. This is an indication that the Chinese customers are lapping up online shopping (The Wall 2013). These websites however differ from the luxury online platform. Luxury has been operating in non‐ corporate structure for years, and thereby many of the luxury brands have not made their presence online. Researchers like Okonkwo (2010) believe that it is very difficult to convey the luxury value in the online environment, as the core definition of luxury is not synonymous with the meaning of Internet (Okonkwo 2010). There are however some companies that have entered electronic markets with success such as Louis Vuitton, Gucci, etc. (Hennings et al. 2012). Despite the barriers, the luxury brands will have to make significant strategic decisions to cope with the growing size of electronic markets. 8
4. THE LUXURY CONSUMER ONLINE “The online consumer society, which has exhibited the highest shift in behavioral change, is currently driving the direction of luxury online although luxury brands have also understood the importance of steering the wheel of the online luxury experience” (Okonkwo 2010: 19) 4.1. CONSUMER BEHAVIOR AND VALUES Consumer behavior can be defined as a study of how people behave when obtaining, using, and disposing of products and services. Understanding consumer behavior involves analyzing the purchasing processes (Kumra 2007). There are 3 basic domains that define purchasing behavior which are reflected in The Wheel of Consumer Analysis. Firstly, consumer affect and cognition refers to customers’ feelings and emotions. Secondly, consumer behavior is the overt behavior of psychological actions of consumers which can be directly observed and measured, and thirdly, the consumer environment refers to all external factors that can influence the affective/cognitive response of consumers and their behaviors. Consumer environment includes physical objects (products and stores), special relationships (locations of stores and products there), and social behavior of other people; all of these can change consumers’ thoughts, actions, and feelings (Perez‐Schafer et al. 2008). The wheel is a valuable framework to structure consumer behavior phenomena, and understand it at various levels, that of individual consumers, market segments, industries, etc. 4.1.1. VALUES AND MOTIVATIONS IN LUXURY PURCHASE EFFECT ANALYSIS The framework of the Wheel of Consumer Analysis shows that the luxury value is created dynamically by consumers. Consumers get triggered by interactions with other people, hedonic values, object qualities, and also from retailers and social environment interaction (Perez‐Schafer et al. 2008). Subsequently, the self‐ conscious individuals manifest the relation of values and motivation towards consumption of luxury. Further understanding of what are these consumer manifestations can be obtained from the theory of Vigneron et al. (1999) summarized in the table below. Values Motivations Conspicuous Veblenian
Value Perceived Perceived Conspicuous Value
Unique
Snob
Perceived Unique Value
Social Emotional
Bandwagon Hedonist
Perceived Social Value Perceived Emotional Value
Quality
Perfectionist
Perceived Quality Value
Figure 3. Values and Motivations of Luxury Consumer (Source: Adapted from Perez‐Schafer et al. 2008)
The value that consumers perceive can explain their luxury consumption; it also allows defining different luxury consumer profiles. In general, values can be explained as “beliefs that guide the selection or evaluation of desirable behaviors or end states” (Wiedmann et al. 2009: 627). The consumption values directly explain consumer choices of buying and avoiding products. The Veblenian Effect of perceived conspicuous value views the consumption of luxury brands as a signal of status and wealth. The expensive prices of products can 9
enhance the value of such signal – the perceived conspicuous value. Veblen Effects are known to exist when consumers are willing to pay higher price for a functionally equivalent product. Incarnations of Veblen’s theories state that the price can enhance product’s utility (Bagwell et al. 1996). Additionally, the conspicuousness of a product is related to its susceptibility to group influence, where publicly consumed luxury products are more likely to be considered conspicuous than privately consumed ones. The Snob Effect relates to the perceived unique value. It can occur in two circumstances either when a new prestige product appears in the market – the snob will adopt the product to be the first taking advantage of the limited number of products, or the snob will reject a product when it is seen to be consumed by too many people in snob’s view. The Bandwagon Effect relates to the role‐playing aspects and the social values of luxury brands purchase as important issues in the decision‐to‐buy process. It can be indicated that trend‐setters and trend‐followers buy luxury for opposite reasons; however their basic motivation is actually the same ‐ they want to improve their self‐concept. The Hedonist Effect is triggered by emotional value and determines the brand selection by subjective and intangible associations. Here, consumer choices may be driven by unconscious and uncognitive motives. In consumer’s view, certain goods possess emotional value in excess of their functional utility. The Perfectionism Effect is related to the perceived quality value, where luxury brands are seen as superior of exceptional quality. Studies show that in this case, the quality has a specific function for the customers and is necessary to satisfy that (Perez‐Schafer et al. 2008). The above framework is important as it shows that the perceived value by consumers can drive their specific attitudes towards consumption of luxury. It also defines certain attributes, points of parity for luxury category, and points of differentiation aligned with the brand’s culture, all leading to differentiation of customers. 4.1.2. THE DIMENSIONS OF LUXURY VALUE AND THE INTERNET The previous differentiation of value effects showed how consumers can be viewed in terms of their luxury considered value. It all originally relates to the value of luxury in general, not in relation to the Internet as a purchase channel. With the assumption that luxury goods are primarily purchased for what they symbolize, it is important to look into what values luxury brands promote in the online context. The predominant management orientation of luxury brand research identifies the consumers’ personal perceptions in terms of financial, functional, individual, and social aspects (Hennings et al. 2012). Here, consumers’ luxury value perception for luxury consumption is not tied to a set of social factors such as displaying wealth, success, etc., it also depends on brand’s utilities. The conceptual model of the determinants of consumers’ luxury value perceptions is illustrated further.
10
Figure 4. Luxury Value Dimensions (Source: Adapted from Hennings et al. 2012)
Each of the dimensions presented in this framework can be translated to consumer behavior in the online environment, and this is the key explanation for including this framework. The elements illustrated in the figure will be looked at individually in relation to luxury and in Internet context, as they show how the original luxury value can be translated by consumers to the online environment. The financial dimension of luxury value addresses the monetary aspects and refers to the value of a product as expressed in particular currency (Wiedmann et al. 2009). Despite the fact that a high price is widely accepted as a compulsory component of luxury products, there is a need to acknowledge that luxury is qualitative not quantitative (Hennings et al. 2012). The consumption of luxury products requires granting social and psychological enhancements (Okonkwo 2009). Because of that, the price–value relationship is very important. Internet is a public place of instant buying and selling, often offering discounts on prices. The price premium of exclusive and unique products of extraordinary quality, craftsmanship, as well as perfect service needs to be guaranteed in the virtual environment – this can be done through limited distribution (Hennings et al. 2012). The functional dimension of luxury value refers to the core product benefits and utilities, including quality, usability, uniqueness, reliability and durability (Wiedmann et al. 2009). Apart from the direct product‐related functions, the functional value in an online environment can be seen in the usability, quality and uniqueness of the appearance on website and further online applications. Despite the lack of senses as smell and touch, the internet can leverage movement, music, texture, space and community ‐ all to recreate brand‘s characteristics online (Hennings et al. 2012). The individual dimension of luxury value centers on consumer’s personal orientation towards consumption of luxury and addresses personal matters such as materialism, hedonism, and self‐identity (Wiedmann et al. 2009). Consumers experience luxury as symbolic sources supplying them vital tangible cues. Such stimulus allows them to define themselves and transfer the brand’s social symbolism into their own aspired identities. The offline appearance of the brand should be therefore transferred to the online environment based on customer opinions and needs (Hennings et al. 2012). The social dimension of 11
luxury value relates to the perceived utility consumers acquire with products recognized within their social circles. This includes conspicuousness, prestige, etc. (Wiedmann et al. 2009). Here, online social networks play a role (Hennings et al. 2012). A big group of wealthy internet users engage in social media applications (Unity Marketing 2011). It is believed that some digital natives might not be potential luxury brand customers, but the brand advocates in online communities. Luxury used as social symbol by customers when being broadcasted in social groups also contributes to promotion of the brand itself. Brands can turn into a part of the consumer’s online identity and the other way round (Hennings et al. 2012). 4.1.3. EXPERIENTIAL VIEW OF LUXURY VALUE The luxury consumers of today are less concerned with social status and prestige as it used to be, but with the intrinsic ownership of the luxury item. This view expressed by Hoffmann and Coste‐Manière (2012) also adds on that the customers value the whole luxury experience which includes innovative design, exceptional quality, and superior service (Hoffmann & Coste‐Manière 2012: 20). This experential view on customers is also underlined by Danziger, who believes that luxury consumers are looking for new experiences, valueing them more than pursuing materialism only for the sake of materialism (Danziger 2005). She further explains that “everything is up for grabs and consumers are willing to accept totally new, unexpected definitions of what luxury is and where luxury can be found” (Danziger 2005: 2). This view could explain the shift towards the Internet as the distribution channel, but also the Internet as the experience for luxury consumers, which could be important in the translation of luxury values to online environment. 4.2. CATEGORIZATION OF CUSTOMERS To better understand the online luxury consumer, it is essential to look at the consumer segments. There are many different approaches for customer categorization. Originally, the studies on luxury customers focused mainly on those with highest affluence. An example of that is Ziccardi’s (2001) identification of 4 consumer segments. These include the Millenium money – people who made fortunes around the turn of century, the Old money – those who inherited wealth, the New money – working wealthy more careful about money, and the Middle money ‐ upper‐middle class. This categorization shows the different segments of luxury customers, but includes only the wealthy (Ziccardi 2001). On the contrary other researchers, including Chevalier and Mazzalovo (2008) state that that the actual customer segment of luxury buyers does not include the millionaires only. It is believed that the luxury client is almost everybody, but some people simply purchase luxury objects rarely (Chevalier & Mezzalovo 2008). Luxury objects seem to be accessible to more people in the contemporary world compared to years back when only aristocrats could own luxurious objects. This has changed not only due to increasing wealth of customers, but also due to changing meanings of luxury. The group of customers that drives the luxury sales is the so‐called ‘the new’ luxury customer. The new luxury consumers are younger, better informed, have better global exposure, they are simply more sophisticated. A 12
big portion of these consumers are so‐called baby boomers (born in 1946‐1964), who want to define their own rules, are less materialistic and more experential. The other key groups of consumers are generation X (born in mid‐1960‐1980) and Y (born in 1980‐2000). According to Ramesh (2012), generations X and Y believe in luxury for everyone but different for everyone, they are driven by the need to buy and display. They view luxury as a mean of expression of their status (Ramesh 2012). Tungate (2009) indicates that young affluents, who are roughly corresponding to the Generation X and Millennial generations, will play an important role in the target market for global luxury over the next 10 to 20 years (Tungate 2009). Another generation of customers that is relevant in the contemporary market is so‐called Generation N or N Gen, who has grown up with computers and the Internet. Demographically, it is the age group of 16 to 29 year olds. Their use of technology has contributed to social transformation. N Gens have unprecedented information access, global orientation, and strong tie to innovation, all resulting from their addition to technology and Internet (Mulcahy 2007). There is no available information on what is the luxury spending of N Gens, it is only known that they already represent big population of corresponding to generation Y in the U.S., and possibly growing population in other countries. The relationship of N Gens with Internet has a great potential to influence the market in terms of Internet distribution and online customer relationships. Another interesting consumer group when looking at the luxury is the affluent that is more price conscious than before. Despite the previous statement in this thesis by Walker, that the luxury industry is quite immune to the economical crises, it is believed that the crisis can have impact on the consumer behavior of the affluent people. This has been confirmed by Danziger, stating that wealthy people and affluents like to bargain (Chadel 2008). In her studies, she shows that even the millionaires started to appreciate sales offers and cheaper product. The change of the affluents becoming more price‐conscious, results in them searching for more exclusivity from luxury they purchase, and being more aware about luxury brand’s source of origin, positioning, and value of the brand (Ramesh 2012). Supporting this viewpoint, Danziger states that “bargains, convenience, accessibility and time efficiency have made online retail for luxury goods and services mandatory” (Chadel 2008: 24). The Google study shows that ultra‐affluents (individuals with net worth of $1 million or more) make use of Internet for purchasing luxury online, especially when they have already experienced the brand and products in physical stores. The study also shows that 91% of those surveyed, always or often read product reviews of luxury before their purchase. This research indicates that the Internet fits the new paradigm shift of consumer behavior of high‐net‐worth individuals (Chadel 2008). The selected categories of customers and their purchasing patterns have been presented to show how customers are changing in terms of the luxury and in relation to the online sales channels. Despite that many of those typologies are based on the researches in Western countries, it is assumed that the changing trends in developed economies would further affect the emerging markets of luxury goods. It is important to recognize those changing patterns. Firstly in regards to the key buyers of luxury, it should no longer be assumed that only 13
the richest contribute to biggest luxury sales. Secondly, the economic changes lead even the millionaires towards increasing price consciousness and more common use of electronic channels for luxury purchase and luxury information search. The current industry structures could also get influenced by the growing presence of new generations, like N Gens, whose strong association to Internet could bring chaos to the traditional view on the key luxury consumer generations and consumer behavior patters. 5 .THE LUXURY WORLD ONLINE “Most big luxury brands are risk‐averse. Their slowness to embrace the internet is another example of their disinclination to explore new terrain. But risk taking is necessary if innovation is to occur” (Tungate 2009: 225) 5.1. THE BENEFITS AND BARRIERS OF E‐COMMERCE ADOPTION BY CONSUMERS One of the basic assumptions regarding consumer choice in economics is that individuals behave rationally, making their choices to best suit their goals, budget constraints, and earning power; and being primarily interested in value maximization (Josiam & Hobson 1995). Many marketing studies show that perceived customer value is a determinant of consumer’s purchase intention and decision making, as well as a determinant in understanding consumer behavior. Anckar (2003) argues that while those value considerations have been linked to the overall pre‐purchase evaluations of the product’s utility, the core idea of the concept should be equally relevant to the examination of the advantages coming from the technological innovations, commercial media, electronic distribution channels, etc. In this context, the traditional value equation as a tradeoff of benefits and quality versus costs is too simple when creating an understanding of the key motivators and inhibitors to the adoption of e‐commerce. Anckar further suggests that the value concept should be the interpretation of the trade‐off between get and give components, not in the monetary components, but in the broader terms. He indicates that consumers acting rationally make their decisions on channel adoption or rejection based on their perceived channel net value. This is a tradeoff between all the benefits customer gets by using electronic channels as compared to traditional alternatives, as well as the barriers that consumer encounters when using them (Anckar 2003). Detailed overview of the key benefits and barriers will be presented further in form of a tables including the explanation of the characteristics, as well as the relevant literature where it has been researched. Understanding these allows for a better evaluation of the growing trend of online shopping, and also might influence the perceived customer value regardless of product’s category but due to the purchase channel. 5.1.1. THE BENEFITS The benefit Accessibility and convenience
Key characteristics of the benefit Internet as the possibility to shop anytime, from everywhere
Relevant literature Jarvenpaa & Todd 1996‐1997, Kangis & Rankin 1996
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No geographical boundaries of e‐commerce, consumers benefit from wide selection of products and vendors, also for hardly available products or difficult to find offline Shopping in many places almost and the same time, conducting product and price comparisons Internet shopping reducing costs of search ‐ for pricing and product information
Benjamin & Wigand 1995, Hoffman et al. 1995
Real‐time factor
Real‐time information on prices, availability, delivery times, etc.
Franz 2000
Time savings
Advantage of faster shopping process, due to the speed of search and fast transaction processes Online access to greater amounts of dynamic information, supporting queries for decision‐making of consumers Information about products not only on original brand’s websites but from social networks, blogs, etc.
Benjamin & Wigand 1995
Global choice
Possibilities for comparison shopping
Access to extensive information
Hoffman et al. 1995 Bakos 1998
Hoffman et al. 1995 Okonkwo 2010
Privacy and anonymity The asocial nature of purchasing
Purchasing process offers consumers privacy and anonymity/pseudonymity
Parsons 2002
Some consumers may prefer impersonal purchasing process for asocial reasons, or when they see verbal contact with seller as time consuming. The lack of physical contact with sellers creates no pressure to buy
Zellweger 1997
Competitive prices
Price as key factor in consumer decision making for purchase on the Internet Price reductions benefit from increased competitions of more suppliers competing online, or due to lower operational/transaction costs, and manufacturers internalizing activities Option to utilize price comparison sites and shopping agents’ sites to obtain and compare prices, increasing the pressure on brand prices as lower price levels become transparent Direct online contact with companies, opportunities for personalized interactions, product customization, easier as in physical marketplaces
Radón 2012 Turban et al. 1999 , Benjamin & Wigand 1995 Radón 2012
Personalization/ customization
Anckar 2003
All the above listed benefits encourage consumers to be active participants of the online market, either by purchasing goods online, or by using the web as a source of information. It is specified that those customers who have not used the Internet to buy goods, claim to have used it for information searching which ultimately let them to purchase items through traditional channels (Radón 2012). The Internet for some customers is the sole information source and shopping channel, whereas others combine the experiences of online with offline shopping. An example of that is the practice of so‐called ‘showrooming’, meaning that customers visit a physical store to experience a luxury product in person, and then purchase the product online (Accenture 2012). This means that the Internet can have impact on the consumer decision making from two sides. On one hand, giving consumers the opportunity to learn more about products, research the reviews and use
15
comparison tools, leading them to purchase online or offline. The other side is when consumers research and try the products in physical stores, then make purchases online. In relation to the benefits of E‐commerce adoption by customers, studies by Anckar show that in terms of importance and significance, the most important benefit for customers is the accessibility and convenience, stated by 80% customers surveyed (Anckar 2003). Greenfield and Activmedia research (2000), however, indicates that price is an extremely important factor in purchases online, with the statistics of 60% of purchases of clothing online being driven by the price (Radón 2012). Chen (2001) also makes the point that price is the key most important factor in online shopping. Another study by Cyberdialogue (2000) showed that 79% of online shoppers stated that price discounts encouraged them to return to a website (Radón 2012). These various studies differ in terms of customers’ indicated priorities. It is not known whether the luxury consumers are driven towards online shopping by same factors as consumers looking for other products, it is assumed however that the luxury customers must acknowledge above listed advantages. The consumer perception of online markets is not complete without the barriers and problems that customers see and experience, and these will be looked at further. 5.1.2. THE BARRIERS The barrier
Key characteristics of the barrier
Relevant literature
Quality evaluation Security risks
Quality evaluation barrier as difficulty to ensure that tangible products presented online have the desired features Transaction security over Internet
Kangis and Rankin 1996
Lack of trust
Fear to be cheated when shopping online and the risk of loss
Jarvenpaa & Todd 1996‐1997, Hoffman et al. 1999,
Service barrier
Lack of personal service online
Kangis & Rankin 1996
Delivery times Search difficulties
Delivery times and the waiting time for delivery Difficulties with locating stores, products and information online, as a result of limited online skills of the users, and from poor site usability
Anckar 2003
Time‐ consumption
E‐commerce as time consuming incl. time used for locating product, price and product comparisons, registration to access services for purchases, etc.
Anckar & Walden 2002
Lack of enjoyment
Physical shopping experience found by customers relaxing and enjoyable, electronic shopping cannot substitute the same leisure experience Cost of acquiring or getting access to a computer or Internet
Jones 1999
Difficulties operating computer or browsing websites. Low bandwidth connections, increased time consumption and customer dissatisfaction
Anckar 2003
Cost of entry Limited experience
Rose et al. 1999
Jarvenpaa & Todd 1996‐1997, Rose et al. 1999
Anckar 2003
According to studies by Anckar, the most important issue associated with online shopping for customers is the quality evaluation barrier, meaning that the consumers are afraid of receiving their online shopped product and not being satisfied with the quality. This was also confirmed in studies on home‐shopping by Kangis and Rankin (1996) that showed that the need to feel and touch can be the dominating disadvantage for online shopping (Kangis and Rankin 1996). Most customers also indicate the security risk and lack of trust to virtual 16
sellers as key problems to their Internet shopping experience (Anckar 2003). Another aspect that needs consideration is that the presented motivators and impediments to e‐commerce are in terms of consumers’ reaction to online retail availability, they represent only one side of benefits and barriers of Internet retail facing the customers’ side of business. The other important aspect is that while those factors have the impact on the customers’ purchasing habits, they can also influence consumers’ perspectives on brands. 5.2. THE INFLUENCE OF INTERNET ON LUXURY BRANDS The reach of the Internet can be impacting not only the consumers, but also the luxury brands. The brand has functional, tangible, or rational dimensions different from other products, oriented towards consumer and their identity (Kotler et al. 2009). Brands, in order to be categorized into the luxury brands, simply, need to offer luxury products (Heine and Phan 2011). One of the approaches to defining the total significance of a brand is identifying values that are most influential on the brand. A study by Dubois & Duquesne (1993) categorized them into mythical, exchange, emotional, ethical and identity values. The mythical and the exchange value directly relate to brand’s existence and monetary aspects, while the ethical value linked to the social responsibility in the market. The emotional value constitutes consumer impressions and emotions, and the identity value ‐ the way the brand is used by consumers to convey their individuality (Chevalier & Mezzalovo 2008). Despite the applicability of this typology to any brand category, in this view the brand’s value only to small extent is defined by the consumers. On the contrary, a framework with a stronger focus on the customer defining the value of a brand, which is also more related to the luxury industry is the Brand Luxury Index (BLI) developed by Vigneron and Johnson (2004). In their view, key luxury dimensions need to be established in order to create a lasting luxury brand. It is expected that different sets of consumers would have various perceptions on the level of luxury for the same brands, and the total luxury level of a brand would integrate all these perceptions. The framework is illustrated below.
Figure 5. Brand Luxury Index (Source: Adapted from Vigneron & Johnson 2004)
The BLI framework has importance as it entirely shifts the focus towards the consumers defining the brand’s luxury value. Furthermore, it considers both the personal and non‐personal motives for consumption. Each one of the dimensions presented in the graph above, is strongly correlated. All of these factors are highly relevant for luxury companies to create and maintain a lasting luxury brand (Vigneron & Johnson 2004). This framework is also vital in showing that luxury should also be associated with not just the technical features, but also the elements that are symbolic and emotional (Chadel 2008). The environment of luxury in the online context brings many dangers and threats for brands to retain their image in customers’ perception. Supporting this 17
view, “Luxury goods and luxury brands, more than any other product and brand categories have a great deal to gain, but also a lot to fear from the Internet. Internet could extend the access for many customers to increase the luxury sales, but at the same time it could be a threat to brand image. Especially for brands that create their image base on excellence and very selective channels of distribution, Internet could be seen as a danger of commoditization” (Radón 2012: 76). From this statement, it can be already indicated that there are various factors that can impact the perceived value of brands in the online context. 5.2.1. INTERNET CAPABILITIES BEYOND REACH Some researchers like Sinha (2000) believe that wide spreading availability of information obtainable on the Internet about product prices and features can pose a threat to brands. This is because the consumers can get price and information transparency online. Chen (2001) states that choice and possibilities for product comparisons make the information provided by brands redundant, as the key role of a brand is to represent its quality or showcase some features that differentiate the product or service from competitive offerings (Radón 2012). Many customers search for information about products and prices online, but as discussed earlier in this thesis, the Internet can be channel of purchase for customer, but also an information providing tool. In relation to that, Peterson (1997) states that the Internet has all the qualities to be the effective communication and transaction tool for luxury goods, and this view considers the characteristics of luxury as high cost, relative low frequency of purchase, high differentiation features, and high value. Nevertheless, this also means that the counterfeit goods, that have high conspicuous and symbolic values, could have increasing sales online (Radón 2012). Grossman and Shapiro (1988) describe that the public, especially in the luxury industry, is well aware of the availability of bogus products in the market (Grossman and Shapiro 1988). The presence of counterfeit can have great impact on luxury brands. Firstly, the Internet is known to be a channel for counterfeit shopping and when it comes to non‐deceptive consumers, Internet serves it purpose of fulfilling the demand for fakes. In case of deceptive shopping however, the Internet can pose a danger to the brands as many consumers can have difficulties distinguishing copies from authentic products (Radón 2012). All the aspects explained above can contribute to lack of trust towards the brands from the consumers’ side, and have impact on the brands’ image. 5.2.2. EXCLUSIVITY VERSUS UBIQUITY The luxury associated with the exclusivity when combined with the Internet synonymous with speed, can be seen as contradiction, and thereby a challenge to the industry of luxury. This leads to a question of whether it is possible to twist the core principles of the Internet, turn it into a well balanced platform to exhibit and distribute luxury products, but still keep and respect their sense of unaffordable and unattainable (Chadel 2008). Limited accessibility and rarity are bases of luxury that also justify the premium price of luxury products, maintenance of exclusivity factor contributes to satisfaction of highly demanding customers (Kapferer & Bastien 2012). The old‐fashioned view of luxury, despite many modern notions of the new or the experiential 18
luxury, is still focused on the limited availability to customers (The Wall 2013). On the other hand, there are views that luxury product should no longer be considered only in terms of its exclusivity, but values such as quality, craftsmanship, etc. are well representing a luxury brand (Hoffmann & Coste‐Manière 2012). Another aspect that has importance, when looking at the relationship of luxury and Internet, is that the experience of luxury purchase has two dimensions, the personal one and the social one. These have been defined by Kapferer and Bastien (2012) as ‘luxury for oneself’ and ‘luxury for others’. The first dimension is linked to the personal pleasure when acquiring an object. The latter has connotations with more public recognition, and in order to sustain it, there should be more people being familiar with the brand than those who can actually afford to buy its products. Differentiation of the personal and the social dimension is believed to be an essential source of pricing. In the context of Internet however, ‘luxury for oneself’ and ‘luxury for others’ could create challenges for brands. On one side, the Internet increases the brand’s awareness, but on the other allows anyone to make luxury purchases there. This is a threat because the reputation of a brand comes from the image of brand’s product owners, thereby electronically available by everyone, it could harm the brand’s value (Kapferer & Bastien 2012). A theory that is similar to Kapferer and Bastien’s framework is the so‐called the ‘dream equation’ from Dubois and Paternault (1995). This formula, which is in fact a mathematical equation, links awareness, purchase and dream value to explain luxury. The dream is consumer’s willingness to own luxury, and similarly as in previous theory, the dream must be continuously recreated by making more people aware of the brand than those who can afford it. Then it is the purchase that destroys the dream, because it removes a portion of dream with the product (Hoffmann & Coste‐Manière 2012). The dream equation underlines the importance of expanding luxury brand’s awareness, which in fact can be achieved through Internet only with a careful marketing approach. Overexposure of luxury online can bring disadvantages for the brands. E‐retailing however brings several advantages including not limited, constant accessibility, more intimate and fully controlled purchasing experience, where clients look for advice only when desired. All of these cannot be present in traditional shopping, thereby according to Hoffmann and Coste‐Manière (2002), online sales should no longer be considered as an appendix of offline world, but as one of the fastest growing distribution channels (Hoffmann & Coste‐Manière 2012). The problem that brands have to face is how to strike the balance between exclusivity and ubiquity. This can viewed as a paradox explained by Okonkwo, who wrote that “a major existing paradox however lies in creating and retaining the ‘desire’ and ‘exclusivity’ attributes of luxury brands on the mass and classless Internet world and at the same time maintaining and enhancing the equity of the brand” (Okonkwo 2009: 304). It is evidently a challenge for luxury brands to use mass marketing strategies and simultaneously put emphasis on the exclusivity dimension of their luxury products. However, the Internet has the potential to be the perfect environment for luxury products to create the required sense of desirability through content that appeals to customers and at the same time remains exclusive in terms of selective distribution of products 19
(Hennings et al. 2012). There is no ultimate answer to the question of what is the stage of a brand becoming too attainable that it no longer represents luxury and how far can Internet contribute to that. With the Internet being such a strong driver for commoditization, the answer to that question could possibly be answered only by customers and their experiences of branding, marketing and distribution, and their view on the image and emotional experiences of buying luxury goods (Chadel 2009). 5.2.3. CREATIVE DESTRUCTION IN LUXURY The attention of brands towards consumer’s dream, and the importance of the balance between exclusivity and ubiquity can be related to the notion of creative destruction. The phrase “creative destructive” has been originally formulated by the economist Joseph Schumpeter (1942) to describe the drastic transformation that accompanies innovation (Twyford 2010). It is believed that when the market makes a move based on a leap in technology or innovation, some brands are not able to react and catch up with the change. On the other hand, when such radical transformation takes place with innovation, brands can differentiate themselves from competitors and secure long term success. One of such examples is for companies to look at the distribution channels and emerging markets (Twyford 2010). Another possibility is to analyze the new emerging generations of consumers and drive the product development and sales towards them (Tapscott 1997). The creative destruction also means that often the leaders of change who initially gain great market successes, when caught up by their competition can lose their leading position in the market after a while. This leads to a deliberation whether the luxury brands who first become top facilitators of online luxury sales, reach high online transparency, build big Internet consumer network, etc. would not become at risk of creative destruction. On the other hand, creative destruction can be associated with the relationship between the brand and the consumer population, particularly the Generation N, as it is believed that N Gen is one of the most powerful demographics of all time with potential to change the marketplace (Mulcahy 2007). N Gens are loyal to brands, at the same time building a culture that is opposing to mass communications used by brands at the moment. Their strong tie to Internet requires more interactivity from brands to build relationships with N Gens (Tapscott 1997). If the population of N Gens keeps growing, the luxury brands will have to reevaluate their current business strategies in the context of Internet. This view brings the discussion back to the original values of luxury associated with the tradition of luxury brands, and the innovation of luxury. When it comes to combining heritage and creativity, the destruction is a term that can make heritage unusual, clearing the way for creativity. There are already some trends that are influencing the markets of luxury brands. These include evolving customers’ tastes, cultural shifts, critical transparency, hyper‐connectivity, etc. The key trend here is the hyper‐connectivity, which is basically related to the growing pervasiveness of instant communication technologies. The implication of this trend relates to both consumers and brands as it results in changes of marketing and advertising strategies. This includes a range of activities from the use of networking platforms 20
for advertising to allowing customers for online product customization. Hyper‐connectivity engages consumers to become online fans of brands. To achieve success effective branding, companies need to create true virtual stories that would inspire the online public (Bendell 2012). This is one example of the new approach towards the online customer. It is not known however what the reach of electronic progress is before it comes across creative destruction. 6. THE ASIAN LUXURY CUSTOMER ONLINE “Consumers come and go, economies boom and busy – but luxury endures” (Tungate 2009: 228) 6.1. ASIA AS THE WORLD’S BIGGEST MARKET The research by PwC (2012) looked at the worldwide spending on luxury good, and based on that it has been concluded that the emerging markets have the best growth potential for luxury goods. Half of the luxury goods sales have been indicated to be made by customers in emerging markets, led by China, while the mature luxury markets have not been showing much increases in the growth anymore (PWC 2012). Other studies predict that in the next years the emerging markets will constitute almost 50% of the world’s total consumption, China and India will account for two‐thirds of this expansion (Interbrand 2013). The actual size of the Asian spending can be even higher, because the Asian consumers are travelling abroad to shop (Chadha and Husband 2006).The expansion of consumption is associated with increasing retail sales, for the next 5 years projected to grow in the rates of 4.1% in North America, and 2.4% in Western Europe, while in China with 13.9% growth, and 10.6% in India. It is also believed that the growth in e‐commerce will outpace the physical retail in those countries as well. The growth of luxury in Asia can be explained by a framework known as The Spread of Luxury Model. It well shows the stages of luxury market trends in both China and India, the problem this model however is that the most recent positioning of the countries has been carried out and explained by Chadha and Husband in the year of 2006. At that time Japan was the luxury leader, with China and India slowly following up. Despite the fact that the stages for these countries are outdated, the framework will be presented further as it well explains consumer behaviors in China and India.
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
Subjugation
Start of money
Show off
Fit in
Way of life
•Authoritarian rule •Poverty and deprivation
•Economic growth •Masses buy white goods •Elites start buying luxe
•Acquire symbols of wealth •Display economic status
•Large scale adoption of luxe •Fueled bu need to conform
•Locked into luxe habit •Confident, dicerning buyers
CHINA
JAPAN
INDIA
Figure 6. The Spread of Luxury model (Source: Adapted from Chadha and Husband 2006)
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Illustrated in the graph above, the first stage as part of the model is subjugation. Every country in Asia has already gone through some form of this stage. In case of China it is the subjugation of the Communists, whereas India was under the British. The fact of subjugation in both countries led to difficult times in the society which further became a driver towards a desire, or a dream. This leads to the second stage defined by the economic growth, increased purchases, and the establishments of luxury goods for the elites. Stage number three, the show off stage is the moment when people start acquiring the symbols of wealth and displaying them. This stage can be described by Veblen’s rules. This stage includes increasing presence of Western brands in Asia and growing awareness of brands. The show‐off stage lasts five to ten years, when the market typically reaches the tipping point, the moment when the luxury culture spreads rapidly. The fourth stage fit it is a moment when big group of population own their status markers. At this stage the critical point is to conform to the new set of rules about how to express one’s status. The last stage was already seen in Japan already in 2006, where the luxury culture has become a way of life. Here, the economic recessions play no role and do not influence the purchasing decisions of luxury goods customer group (Chadha and Husband 2006). The Model in 2006 positioned China in the third stage with a high potential of growth of the luxury market. This development was explained by increasing GDP growth rates leading to expansion of the domestic luxury goods market, also by increased travel expenses by Chinese customers. India, on the other hand was at the time in the second stage of the model, according to Chadha and Husband, inclined to be one of the most desirable markets for international luxury brands. This was further explained by the emerging middle class in India increasing their quality of life and a small segment of wealthy elite consumers engaging in luxury brands, who were the first customers of luxury brands in India. Both China and India had a growing presence of the new rich with a potential to be a wider customer group as the elites. India can be compared to China in terms of the eventual market size, but the forces shaping the development of Indian market are slightly different (Chadha and Husband 2006). This model also shows that the Indian market is slightly behind the Chinese market in the expansion of luxury. Wong and Ahuvia (1998) state that the practices of consumption are directly shaped by cultural orientation (Csaba 2008). The other view by Wiedmann et al. (2007) is that while the cultural differences might cause different consumer behaviors, there are other important factors associated with the phenomena of globalization. This point of view drives towards categorizing consumers into consumer groups by observed consumerism patterns instead of using cultural typologies (Wiedmann et al. 2007). This approach will serve as a base for exclusion of cultural reasons for luxury purchase, but focus more on the market characteristics of China and India. 6.2. THE DRIVERS OF THE EMERGING Changing dynamics in the market bring companies new challenges associated with the world of luxury. The BCG study (2010) indicated that in order for companies to overcome new problems, there is a need for a better understanding of consumers and their shopping behaviors. They have analyzed six markets of Brazil, China, 22
Europe, Japan, Russia, and the United States. In 2010 they accounted for about 90% of global luxury household spending based on their wealth and how much they spend on luxury items. The categorization of consumer segments from the study can be seen below.
Figure 7. Consumer Segments Source: Adapted from Bellaiche et al. 2010)
The results of the study allowed categorizing customer groups into 5 segments. It turns out that the least‐ established customer groups spend the most on luxury. The new money is the biggest contributor to luxury sales, it is formed by the high‐net‐worth households which have at least €725,000 in bankable assets. The second most influential group in luxury purchasing is the aspirational mass market. The households in this group have incomes accounting to at least €55,000 in developed markets and €18,000 in emerging markets. These consumers tend to have average jobs and backgrounds, but aspire to have above‐average lifestyles. They do not spend too much on luxury, but as they represent a very big consumer group, they play a significant role in total luxury spending. The third group contributing to luxury sales is the rising middle class. Finally the most established segments of the old‐money and the beyond‐money contribute to the smallest share of luxury spending (Bellaiche et al. 2010). The results of this study show that the markets that have biggest luxury customer group do not rely on the traditional wealth customers, but gain big sales share through the new emerging consumer groups. This is in alignment with previously explained view of Chevalier and Mezzalovo. Despite the fact that India has not been included in BCG’s research, as it was not contributing to such high luxury sales in 2010, the results of the study show the trend that the new luxury buyers are not necessarily the wealthiest. The significance of the middle class population is also confirmed by the studies showing that the middle class in Asia‐Pacific has most rapid growth projections for the next 20 years (PWC 2012). The growth of younger consumer generations has been looked at by Tungate, quoted previously in the thesis, stating that young affluents are very important for the future luxury market. This applies not only to mature markets as United States and European countries, which respectively have median age of 36.5 and around 40 years old consumers, but also to developing luxury markets like Brazil, India and China. These populations are more youthful as a whole, where the median is 24.9 years for India and 32.7 for China. Tungate inclines that Baby Boomers that have been targeted as ideal customers for so many years, might be substituted bu the 23
young affluents, who have different ideas about luxury and different priorities (Tungate 2009). Another aspect that differentaties the emerging markets from the traditional luxury markets is related to what customers value when engaged in luxury purchasing. Research by PwC has compared the drivers towards luxury in the two markets ‐ the traditional and the emerging. The traditional markets value quality, innovation, service, exclusivity, shopping experience, and direct interaction. In contrast to this, the emerging market can be associated with excess, extravagance, tradition and ostentation, status display, brand loyalty, etc. All these factors can lead to the assumption that not only the emerging consumer is different, but there are drivers important for new customers, more towards the online shopping (PWC 2012). 6.2.1. CHINA Serge Brunschwig, the former managing director of Louis Vuitton, described China’s luxury market as follows: “One thing that has surprised us in the last ten years is the speed at which it has developed. What are we seeing today is a customer who understands a certain aspect of luxury goods and is really hungry for buying it” (Chadha and Husband 2006: 141). China could be seen as a miracle when it comes to the luxury consumer market, taking into consideration the fact that such market was almost nonexistent some 20 years ago (Hoffmann & Coste‐Manière 2012). Despite the growing inflation that increases the labor costs in China, the retail outlook remains positive with projections of double‐digit rise in annual expected sales, and high growth opportunities in second‐ and third‐tier cities (Interbrand 2013). The Chinese market for luxury goods has been rapidly on the rise and is forecasted to take the U.S. as the biggest luxury goods market (PWC 2012). The sale of luxury is expected to reach $27 billion by 2015, up from $16 billion in 2010 (Wu 2013). The GDP in China is quickly growing at almost 10% per year (PWC 2012). The growth of GDP leads almost all luxury groups to heavily invest in China (Hoffmann & Coste‐Manière 2012). The economical growth contributes to the increasing wealth of Chinese population. Looking at the number of Chinese billionaires, already in 2010, there were twice as many as in 2009 (PWC 2012). The wealthy class is growing, at the same time there is a rapid increase in household disposable income. In fact, the growth of household disposable income has been most prominent in the highest income segment, followed by the high income and upper middle income segments. These groups are also believed to be the biggest luxury goods spenders (Fung 2013). The segment of aspiring Chinese consumers spends around $12 billion a year on top luxury brands. Young and affluent Chinese also spend a lot on luxury goods and consumer electronics. The projections show that sales of luxury goods in China are projected to outpace the growth of any other retail categories in China (Interbrand 2013). Online sales in China are also on the rise; current $23 billion online retail market is forecasted to reach $81 billion in the next 5 years (Interbrand 2013). At the same time the luxury online sales reached $1.6 billion in 2011 with a 69% increase over the previous year. The market is expected to grow by around 30% per year in 24
the next years to reach around $6 billion by 2015 (Wu 2013). The growth of online shopping is associated with improving country’s infrastructure and evolving online behaviors. At the moment however, it is only 34% of Chinese population that uses Internet (Interbrand 2013). The analysis below shows the estimations and forecasts for the online purchases of luxury goods by Chinese.
Figure 8. Online purchases of luxury goods by Chinese (Source: Adapted from PWC 2012)
International brands have already taken actions to enter Chinese E‐commerce environment. For example, a global luxury retailer Net‐a‐Porter acquired Shouke.com and rebranded its website into Outnet.cn. Other companies, such as Armani, DSquared2, and PPR group (which holds Bottega Veneta, Gucci, YSL, Alexander McQueen, Balenciaga, and Sergio Rossi) have used services, offered for example by Yoox, which helps foreign brands host their own e‐commerce operations in China (Wu 2013). Others, enter the Chinese online market by investing in local platforms, such as Macy’s that bought a $15 million stake in Chinese VIPStore which is a parent company of a popular luxury fashion retailer Omei.com, so that Macy’s can increase their offer and generate more sales (Interbrand 2013). The market entry of international luxury brands, especially to the online world in China, brings for brands extra risks to protect brand’s sovereignty. China is listed as one of the major contributors of the counterfeiting which leads to drastic cannibalization (Hoffmann & Coste‐Manière 2012). Trademark squatting in China is another problem which happened recently to Hermès, when someone else legally registered their famous trademark (Interbrand 2013). China can be described as dynamic, present and long‐term oriented, where social‐status consciousness and progression gives the promise towards China’s growth and online luxury market continuous expansion (Hoffmann & Coste‐Manière 2012). China is also believed to be mature enough to cope with risks and keep up with the market growth, as Chinese clients become more sophisticated and require more customization and personalization as their individualism level will increase (Hoffmann & Coste‐Manière 2012). 6.2.2. INDIA The Indian luxury market is estimated to be valued by $5.8 billion, and has reached out not only to the key megacities, but also into smaller cities in India, adopting global trends (Mineweb 2013). India is believed to become the world’s fifth largest luxury market by 2025 (Hoffmann & Coste‐Manière 2012). Indian luxury 25
market is projected to reach $14.7 billion in 2015 (Deoras 2013). Already by 2015, a quarter of the global share of luxury market would be between India and China (Mineweb 2013). Today’s Indian luxury market of almost $6 billion, can be divided into $2‐bn cars, $1.5‐bn personal luxury goods, $1‐bn premium hospitality, and the rest of this market lies in other items. These numbers, however in comparison to China are not that impressive. China’s luxury car market is almost 30 times bigger, and the luxury watch market in mainland China alone is estimated to be 15 times larger than in India. China’s luxury market’s value is $25 billion, this means that India’s luxury market is a fourth of China’s. At the moment India has about 70 luxury stores, with China’s luxury stores of over 1,000. When looking at the example of Italian retailer Ermenegildo Zegna, the number outlets in China is more than all luxury brands put together in India (Punj & Kaushik 2013). The luxury market in India, however, is poised to expand in the next years. This is associated with increasing number of millionaires expected to multiply 3 times in another 5 years, growing purchasing power in the upper class, and increasing brand awareness among the young Indians. India will follow the global trend of rising consumer spending, and while global spending is estimated to reach $40 trillion by 2020, the Indian consumer spending is expected to grow 4 times reaching $3.6 trillion within this period. This growth is assigned with increasing incomes and aspirations of Indian population. The number of high net worth individuals in India grew by 200% from 2006 to 2013. Households with annual disposable income of over $100,000, increased by 60%, from 700,000 in 2006 to 1.1 million in 2013, and are projected to grow by another 300%. While the market continues to evolve, and the population of high net worth individuals is growing, there is an indication that the Indian market will experience a shift towards the new money (Punj & Kaushik 2013). India’s world’s second‐largest population has a large and growing middle class, and almost 50% of its population is under 20 years old (Hoffmann & Coste‐Manière 2012). Such composition of Indian population has the capability to influence the consumption basket (Punj & Kaushik 2013). The young population is a great potential market for Internet sales. It has been estimated that 121 million of Indians have access to the Internet, and more than half of them access web on their mobile devices. There is also a visible growth in the number of online transactions. Last year, the value of online business in India was worth about USD $10 billion. The wealthy class of customers uses Internet extensively and regularly shops online (Interbrand 2013). India and China clearly respond to the global economic factors, and exhibit sustained growth. This hives a solid foundation for future global economic environment and can be seen in the demand in global luxury in these emerging economies. China and India as the members of the BRIC, that currently accounts for 11% of worlds’ total luxury sales, are projected to become the global luxury market leaders in the near future. While China is already ahead of India, soon to become the world’s second largest luxury market (within the next 5 years), India is slowly catching up with its expansion pace. There are a lot of estimations that project a stable growth of the luxury sales in India (Deoras 2013). Confirmed spread of luxury in those two countries combined with the 26
speed of Internet expansion give great possibilities for international luxury brands both in the offline and online environment. Similarly to the case of China, success in India is definite, taking into consideration Indian customer characteristics, Indians expect beautiful products and luxury to surround them (Hoffmann & Coste‐ Manière 2012). 6.2.3. CHINA AND INDIA RESHAPING THE LUXURY MARKET The previously presented background of luxury and E‐commerce show that there is not only a change in the market of luxury, but a rapid advancement of digital world which can lead to a challenging new business order. There is a current transformation of customers’ mindsets worldwide. It is believed that luxury clients will demand more from luxury brands, in terms of the products, but also the services offline and online. The way luxury has been seen for ages and the consumer perceptions might change, this further being accelerated by the Internet and electronic media. The change of customer perception can lead to new ideas, attitudes, behaviors and expectations towards luxury. Okonkwo further indicates that this era could be eventually viewed as a before and after the Internet (Okonkwo 2010). Looking at the predictions of the growth of the Chinese and Indian markets in the context of luxury and E‐commerce, it can be indicated that these two countries will have a great, if not the greatest impact on this industry. The changes will take place in the upcoming years or decades, it is essential however to already be researching customer’s attitudes towards the digital revolution.
PART III METHODOLOGY 7. RESEARCH DESIGN The previously presented theoretical foundation for this thesis serves as secondary information to support the understanding of the topic and the context surrounding luxury goods, E‐commerce, China and India. The next step is to design a methodological research approach. There are different elements required for designing a research; these will be examined in the following paragraphs. The first two essential components of research design incorporate the formulation of research question and the goals of the study. As the research question has been previously stated to be investigating the influence of E‐commerce on the value of luxury, the goal of this study is to provide further insights into the effect of Internet on the value of luxury and the perceptions of luxury customers. The unit of analysis of the research, which serves the purpose of breaking down the research question into deciding what objects should be included and at what level the research is performed, allows for examination of measures to be used to answer the research question (Blumberg et al. 2005). As this research is examining the effect of Internet on luxury goods, the object will the buyers of luxury goods – the luxury customers, and the variable will be the shopping environment of luxury goods (online vs. offline). There are two widely recognized approaches of qualitative and quantitative methods, dependent on the needed information in order to carry out examination of the research question. Simple differentiation between 27
the two approaches can be explained by Blumberg et al. (2005), where “quantitative studies rely on quantitative information (i.e. numbers and figures), while qualitative studies base their accounts on qualitative information (i.e. words, sentences and narratives)” (Blumberg et al. 2005: 124). Here, the quantitative studies have more of a numeric approach in the analysis, whereas the qualitative studies seek for more meanings. The qualitative approach describes the problem from the subjective point of view from the individuals experiencing it, in an in‐depth format. Contrary, the quantitative research is more objective looking at the observed data, being less exhaustive in details (Blumberg et al. 2005). Another key difference is that the qualitative research concerns about understanding from actor’s own perspective and is more process oriented, while the quantitative research can be defined as more outcome‐oriented (Blaxter et al. 2006). This clarification confirms the suitability of the qualitative research for this thesis, as the goal is to explain and understand the phenomenon, the complexity of the topic of E‐commerce in the luxury goods sector, and how the customers make sense in this context. The purpose of this research has an exploratory character, particularly to investigate the phenomenon of E‐commerce in luxury good context, and identify important categories of meaning for customers. 7.1. THE THEORETICAL PERSPECTIVE IN QUALITATIVE RESEARCH Based on the subject’s viewpoint, it is possible to differentiate the perspectives in qualitative research; such perspectives include the symbolic interactionism, ethnometodology (related to routines of everyday life), and structuralist or psychoanalytic positions (related to psychological or social unconsciousness). They all differ in terms of their theoretical assumptions, the methodological center of interest and the way of recognition the subject of study. The perspective that studies the subjective meanings and the meaning making by individuals is the symbolic interactionism. This perspective underlines the focus on the meanings of luxury customers. The first assumption here is that human beings act towards things based on the meanings that things have for them. Secondly, the meaning of such things is derived from or arising out of social interactions. Thirdly, these meanings are handled through an interpretative process used by a person in dealing with encountered things (Flick 2006). These assumptions allow analyzing the luxury customers as they see the world from a subjective point of view, and in this way the researcher can reach the phase of seeing the world from their perspective. 7.2. THE APPROACH TO KNOWLEDGE CREATION The process of creating business knowledge can be differentiated by three methodological approaches – the analytical, the systems, and the actors approach. The analytical approach assumes objective reality and explains the phenomena where knowledge is not dependent on individuals. The systems approach assumes objective accessibility to reality and knowledge depending on systems. The actors approach, however, combines the subjective viewpoint, where the actors can see the reality as a social construction. Knowledge creation in this approach depends on the individuals, where the reality/knowledge composes socially constructed meaning structures. The actors approach is also dependent on the actors’ meaning making (Arbnor 28
& Bjerke 1997). It is thereby assumed that this approach is most appropriate for the purpose of this research, as it will give insight on the actors’ views and understanding their reality will lead to an insight into the field of investigation of how online environment influences customers’ view on luxury. It is also assumed that each individual actor’s finite provinces of meaning referring to how actors view themselves and others, how they interpret and see relations between these, can overlap in different areas when looking at all the actors. This means that the actors will have individual knowledge and the knowledge shared by only some actors. The features that are common to all actors are the key relevant areas of interest in this research, and can also lead to an improved understanding of the actors (Arbnor & Bjarke 1997). 7.3. RESEARCH STRATEGIES There are several approaches to research strategy, and according to Yin (1994), the conditions for strategy selection include the type of research question posed, the extent of control over actual behavioral events by the researcher, and the degree of focus on contemporary versus historical events (Yin 1994). The aim of case studies is mainly the precise description or reconstruction of a case, and the term ‘case’ can be in this context broadly understood. The key goal for the researcher then is to identify a case significant for the research question (Flick 2006). A case study as an empirical inquiry investigates a contemporary phenomenon within the real life context, especially when there is no clear evidence of boundaries between the phenomenon and context. This means that this strategy allows covering contextual conditions that might be highly relevant to the research topic. When looking at the luxury goods industry, taking into the consideration the contemporary context of the luxury customer, and the shopping environment, it confirms the approached strategy for this research to have a good fit as a case study about luxury goods. The case study enquiry also benefits from the preceding development of theoretical propositions to guide data collection and analysis, which has been done prior the research phase in this thesis (Yin 1994). 7.4. THE METHOD OF DATA COLLECTION As the methodological direction for this thesis has been defined, the next step is the explanation of the primary data collection tool. In the early stage of this thesis preparation, the method of e‐mail interviewing was believed to be the most appropriate choice. After further considerations this idea has been neglected. Despite the advantages of e‐mail interviewing such as convenience for response time of participants or lack of social pressure from the interviewer’s side, the e‐mail interviewing is believed to be not as suited to this research as the telephone interviewing. It is assumed that respondents could be less forthcoming and enthusiastic in their responses with email interviewing (McCoyd & Kerson 2006).The key aspect however in favor of verbal interviewing is that from the researcher’s side online survey gives no opportunity to probe or clarify misunderstandings (Seale 2012). Since the research looks into the perceptions of luxury customers, it is vital to probe for the in‐depth answers, for the researcher to better understand the interviewee’s point of view and get a detailed explanation of participant’s standpoint. For that reason, the interviews were carried out as 29
telephone interviews (with the use of Skype). All interviews were semi‐structured including an interview guide, where the researcher asks questions specific to the topic’s focus points (Yin 1994). Here, questions are open and probes are used upon interviewer’s judgment whether these is more to be disclosed at a particular theme in the interview (Gillham 2005). 7.5. THE SELECTION OF RESPONDENTS The population of respondents/interviewees was chosen on the criteria of their nationality, either Chinese or Indian, who are buyers of luxury goods, regardless of their purchase frequency. The terms ‘respondents’ and ‘interviewees’ will be interchangeably used further. The initial aim of the respondent selection process was to reach out to as many luxury buyers as possible, and carry out the interviews with them first, followed by a snowball sampling. This means that the respondents recommend the next participants for the interviews; they recruit these subjects from among their acquaintances (Castillo 2009). This method in the context of luxury goods is assumed to be efficient, luxury buyers tend to form similar social groups. Due to geographical distance of the researcher and the interviewed subjects, this method also works in advantage of the researcher, as the targeted population is assumed to be difficult to sample. 7.6. THE DATA COLLECTION PROCESS The data collection process has taken duration of one and a half month, from the late August till the end of September 2013. At the initial stage, social networking websites such as Facebook and LinkedIn have been used as tools for reaching out to potential respondents. A few of the respondents have been first contacted by email, whereas the others have been directly called. The very first point of contact was to inform respondents about the purpose of the research, confirm their willingness to participate, and schedule the interview slot. All of the interviews have been scheduled ahead. The process of obtaining participants began by contacting around 60 persons – either already assumed potential luxury buyers from China and India or persons who might have acquaintances that fit such criteria. From this desired group, 35 interviews have been scheduled, of which 24 has successfully taken place and being fully completed. The other planned interviews have either been rescheduled or failed due to language barrier, unfulfilled respondent selection criteria, or simply due to respondent’s refusal to participate further. During the process of data collection, a spreadsheet has been created to keep track on the interview process. The next step in the data treatment after receiving the responses was expanding the spreadsheet by combining transcribed answers from all the participants. This complex document was essentially produced for the coding process. 7.7. THE METHOD OF DATA ANALYSIS Each of the interviews was transcribed and subject to qualitative content analysis. McMillan and Schumacher (1993) defined qualitative research as “primarily an inductive process of organizing data into categories and identifying patterns (relationships) among categories” (McMillan & Schumacher 1993: 479). This definition 30
implies that data and meaning emerge naturally from the research context. The analysis of the results involved categorization of responses into certain themes, some of which were inherent in the interview questions, and some of which emerged through the responses of interviewees to questions posed. The approach used for breaking down big portions of data into smaller approachable chunks is formed from the subjective viewpoint, which is the theoretical coding. This coding technique represents the operations of breaking down the data, conceptualizing it, and putting back together in new ways. The initial step in the process of coding is the general open coding, followed by axial coding that allows for distinguishing the categories from open coding. The more analytical direction can be reached by selective coding (Flick 2005). Coding in this research was an essential part of data analysis, however according to Agar (1991), the qualitative analysis is an extensive process that does not hold one single path for analysis, and a use of extensive coding techniques might not lead to a single optimal strategy of data treatment. He argues that critical for the examination is the actual thinking process, where the first goal for the researcher is looking at collected data and making sense from it. Secondly, it is vital to look for different connections and patterns across, as well as within the recorded data. The last goal of successful data analysis is discovering the most important areas of the phenomena. Coding techniques should not be used over extensively as this might lead to generation of less usable data (Seidel 1998). These two approaches of thorough coding and researcher’s critical examination were intended to be used in combination in the data analysis. Thereby coding was carefully considered in this research to achieve best results, theoretical coding was combined with the researcher’s own sense making. In the following data analysis, the results will be presented in a logical structure of specific categories that have been obtained from coding; combined with an analysis. In citing from the interviews, the convention C1, C2…, I1, I2… (C for Chinese and I for Indian). It has been adopted in order to keep the anonymity of interviewees, while maintaining the differentiation of their country of origin. 7.8. RELIABILITY AND VALIDITY According to Patton (2010), the two factors of reliability and validity should be the main concern for any researcher during the research design and the process of carrying out a study. Reliability and validity are also significant when analyzing the outcomes of the study, and thereby evaluating its quality (Golafshani 2003). Reliability deals with the way the research has been executed. It also refers to the extent of a case if another researcher was examining the same question whether the same conclusion would be reached then (Blaxter, Hughes, Tight 2006). This explains the degree of consistency in the measure of the study. It is believed that this research is reliable on the assumptions that the respondents’ answers were independent and objective; also that the respondents if participating in such research again would state the same answers about their experience and views on the online luxury goods as they did in this research. Another aspect confirming the reliability of this study is that there can be a pattern derived of similar answers from interviews. From the researcher’s side in this survey, all the data collections steps have been carried out operationally, step by step, with case study protocol, and case study database in spreadsheets. The concept of validity has been a widely 31
discussed topic in research related literature, as some researchers do not believe that validity should be considered in qualitative studies. Others develop their own interpretations of the meaning of validity in qualitative research concept, these include rigor of the study, quality and trustworthiness (Golafshani 2003). Following this logic, these terms contribute to the validity of the research and can be measured when evaluating the study by checking whether the method used, techniques and approaches chosen, measure the area of exploration in the study. It is believed that all these requirements are fulfilled in this research as the process has been carried out in a thorough manner, with theoretical background and research design on purpose to well measure the problem formulation. This relates to all the steps included in this thesis, the research design phase (external validity), the process of data collection (construct validity), and the final data analysis (internal validity) (Yin 1994). 7.9. LIMITATIONS This research project requires a discussion of limitations, as Patton (1990) has indicated that there are no perfect research designs, but there are always some trade‐offs. Limitations can be derived from the conceptual framework and the study design (Marshall 1999). The biggest issues as limitations to this research are associated with the population and sampling. Firstly, there is a risk of sampling bias using the snowball technique, as the initial subjects tend to nominate people they are very familiar with, thereby they might share the same points of views. Despite this risk of obtaining only a small subgroup of the entire population, it is assumed that this bias should not be a threat as many different people from various social groups have been initially sampled before the snowball effect took place. It is also believed that there is a limited access to targeted population, as the biggest luxury buyers in China and India are the most wealth‐off societies, thereby they highly protect their privacy and anonymity and many contacted were highly reluctant to interviews. The sampling method for this research has played its role and allowed to reach a relative sample size, however there might be the wealthiest of the wealthy that have not been managed to be interviewed for this research. Another limitation that aroused was associated with the fluency in language, especially in the case of the Chinese. Some of the contacted persons for interviews had problems with English language, thereby their answers were short and potentially not as explicit as they could have been when carried out in native languages. For that reasons, these interviews have been counted as the successful interviews, thereby excluded from transcription and inclusion in this research.
PART IV THE PRESENTATION AND THE ANALYSIS OF FINDINGS 8. THE CONSUMER AND THE LUXURY The population of respondents included 11 Chinese and 13 Indian respondents, the majority of the interviewees represent the Generation Y, the second biggest generation of the interviewees constitutes the Generation X. All of the respondents indicated that they purchase luxury, some very often, while others only 32
few times a year. There is no assumption that the perspectives of more frequent luxury buyers can have more validity than the responses from rare luxury buyers. This is based on earlier presented studies from Chevalier and Mazzalovo who disregard the typology of luxury buyers based on their frequency of purchase and their wealth, but believe that any consumer participating in the luxury market has importance. This statement can be related to income levels of the respondents, as some who indicated none or low income, at the same time stated to be frequent luxury buyers. This leads to a conclusion that they rely on family or household income, or are part of the old money customer segment from Ziccardi’s categorization. 8.1. CUSTOMERS’ DEFINITIONS OF LUXURY Many of the Chinese respondents have very complex definitions of luxury, which is dependent on many factors, brand’s image, product diversification, product utilities, emotional associations, etc. An example of such multifaceted luxury definition can be seen from a statement by the Chinese respondent: “…that would be some fancy car for me, some fancy gadget like … watch or some jewelry, so basically luxury for me is something that I don’t need for pragmatic reasons but it’s something that I want to have just to feel better, to kind of show off, or something that I attach with a super brand, basically in fashion industry that would be some brands like Dolce&Gabbana, Dior, whatever, in car industry that would be Ferrari, Porsche, Maybach…” (Interview C1). This response sheds light on a variety of factors that help customers differentiate luxury from other products. It can be assumed, however, that this response gives an overview of other Chinese answers. Many of them have similar associations to luxury and also have indicated that luxury products make them feel better or feel special. The emotional associations with luxury are related either to the sociological references with luxury regardless of product’s functional utility, or could be extended further to the notion of the ‘new’, ‘experiential’ view on luxury conceptualized by Danziger. The majority of Chinese when discussing the definition of luxury indicated that luxury products give them a higher social status or allow them to show off. Such approach to conceptualization of luxury brings association to the ‘Veblenian Effect’ of luxury having conspicuous value. Indians when asked about luxury, listed down product categories such as high‐end and branded clothes, watches, jewelry, cars, antiques, etc. Some mentioned particular brands as denominators of luxury goods. When analyzing their answers, it is possible to group them into three categories. The first one is exclusivity, as many Indians said that something exclusive, owned by a few, custom or from limited edition can be considered a luxury. The association of luxury with exclusivity is related to the non‐personal perceptions of customers and highly dependent on the brand’s perception as it has been shown in the BLI framework. The second frequently stated characteristic for identifying luxury is the price. Here, the particular functional qualities do not matter for the Indian respondents, as one of the interviewees, stated that luxury good is “any piece of item that is sold at a premium but serves the same purpose as a product that is sold at a lower cost” (Interview I6). In the price value context, the customers associate luxury with its price and quality ratio as in Nueno and Quelch’s typology. The third, most popular answer relates to the customers’ relationship with what is considered as 33
necessity, evidently as the respondent stated, “Any good that is beyond the regular, every day use good. Like something I can do without, but having it with me makes life easier and more comfortable. It might or might not be extremely expensive. (…) It’s something that I can live without, but having it is always better!” (Interview I3). This view on luxury as something not necessary is stated by many interviewees, this view also relates to luxury product not valued by its utility. The result that the respondents combine the personal and non‐personal perceptions when formulating definitions of luxury, confirm the applicability of the BLI framework, which furthermore explains that all these perceptions can be highly correlating in consumer creation of complex luxury definition, also in relation to the brands. 8.2. PERCEIVED LUXURY VALUE The respondents clearly associate the definition of luxury with the values of luxury. In that context, the features of products become important for the interviewees. The Chinese respondents continued to underline the importance of luxury with its conspicuous value, but also acknowledged the brand’s image and functional utilities of luxury products. This can be confirmed by this statement: “Price definitely tells a main difference from normal or necessary products. A high price can relate to a very good brand, which normally means a Western brand in China. As a customer for luxury brands, I consider the quality should be good, but the most important aspect is that the brand represents I am from a higher class in the society, which I can use to expand my network in both doing business and lifestyle” (Interview C5). This statement again shows that the Veblenian effect still has the resonance in China. Such result can be explained by the third stage of the Spread of Luxury Model, where China for the last few years was positioned in the ‘show off’ phase. Luxury product as a status marker has a tight relationship with branding and brand’s image. This is because only recognizable brands can contribute to conspicuous value in the view of consumers. Another respondent also highlighted the importance of self image by stating, “I think it’s the image, so basically the way you feel having or using such luxurious goods.. so more like self confidence and the fact that you can afford something really fancy…“ (Interview C1). This answer combines the image with the emotional cues, which could be assumed as a hedonist motivation of possessing and showing around a luxury product. Several other Chinese respondents also have explained their perfectionist motivations towards the luxury value, where they perceive the quality, design, uniqueness, etc. as characteristics of superior luxury items. The responses of the Indians in the context of the luxury value were mainly associated with the quality values, not so much with the conspicuous or emotional values. The Indians have indicated that the popular attributes of luxury are associated with the superior and exceptional quality, durability, design features and price. Many respondents also discuss the brand’s image and branding itself as factors increasing the value of luxury. Some see value in product customization and limited availability of a product to be considered a luxury. These results show that the Indian respondents are more influenced as explained by Hennings et al. by both the situational variation, and the individual characteristics, with high influence of the perfectionist motivation. 34
8.3. LUXURY PURCHASE MOTIVATION AND BENEFITS The Chinese who previously indicated the importance of showing off their wealth and status with a possession of luxury products, when asked why they buy luxury mainly valued the quality or the emotional rewards. Several of interviewees confirmed again that the key motivation to luxury purchase is to reflect their current financial status. It has been indicated however that for the actual purchase of a luxury product, its characteristics and the ‘feel good’ aspects are important as well. One of the Chinese interviewees explained her luxury purchasing as follows: “(I buy luxury) because I feel that I deserve something good after one month’s hard work. It just like some people choose to spend some money on a meal in the restaurant, some people choose to lie on the beach. For me, I will use a fixed percent of my income to buy luxury goods” (Interview C5). Luxury in this context functions as reward, this function of luxury has also been indicated by other interviewees. Consumers rewarding themselves increase their satisfaction levels. The benefit of improved customer’s well‐being after a luxury purchase has also been indicated in this statement by C5: “The biggest benefit is the happiness and being satisfied after owing one more piece of luxury good. Sometimes I feel that that piece belongs to my collection, therefore I would love to own it. In addition, there is a great pleasure to shop around and get inspired” (Interview C5). Many other Chinese respondents furthermore confirmed that they find pleasure from the luxury shopping experience itself, as it can also contribute to their happiness. It appears that the majority of responses in this category relate to the social value of the luxury as defined by Hennings et al. Satisfaction and happiness, as examples of emotional rewards that luxury products give their owners, have been stated by the Indians. The majority of Indians indicate they buy luxury in order to get some emotional rewards. They purchase luxurious products to feel better, be happier, reward and pamper themselves. This is a surprising result when compared to the stated luxury value, where most of the respondents listed physical or functional qualities of luxury. When it comes to the value, only a few Indians evaluate the value of luxury in terms of product quality, product uniqueness or the brand itself. On the other hand, the most quoted benefit of luxury purchase for young Indians is the luxury product itself. This could mean that the comprehensive definition of luxury product combines the values of luxury, but essentially what customers see and get is the product itself, with all the qualities the product represents in their view. This relates to the superiority of luxury to other products, and the perfectionist motivation to luxury explained by Perez‐Schafer. The second most important benefit that Indians indicated is the brand. Brand associations and brand image have importance for the Indians, and from their answers, a conclusion can be drawn that the purchase of a luxury product is seen as a particular representation of the product’s brand with all the perceptions as reflected in the BLI framework. 8.4. LUXURY PURCHASE CHANNEL CHOICE AND INFLUENCE The question to find out where the Chinese and Indian customers buy luxury, aimed not only to see whether there is a difference between those two nationalities, but also to check whether they initially think of online 35
shopping in the context of luxury. This part of the interview was also intending to investigate the main influence towards the choice of preferred shopping channel, and thereby analyze whether it is applicable in relation to the online channel as well. Online shopping as a luxury shopping channel was commonly indicated by the Chinese. The big majority of them said that they shop online for luxury products either as a main shopping channel, or among other options. It is important to note, that another most popular answer by the Chinese was that they shop on holidays or business travels. Their preference of shopping abroad for luxury is related to a better choice and availability of luxury products abroad. These answers could be confirmed through the research by Chadha and Husband, where they indicate that the Asian spending should be estimated to be higher as shopping abroad could add up a big portion to the luxury market share. The Chinese respondents when asked about the main influence on the choice of their shopping channel have usually stated the price and the availability of products. These answers can be related to the trend of shopping abroad and shopping online for luxury. On the contrary, the Indian respondents clearly have no particular pattern when indicating where they shop for luxury the most. This is clear as many respondents buy various luxurious goods in their hometowns, on business trips, and holidays. Only very few initially thought of online websites when asked about their source of luxury purchases. It can be also concluded that there is no one key driver towards Indian customer’s choice of the shopping channel. 8.5. OFFLINE SHOPPING AS AN EXPERIENCE The question about the importance of the shopping experience has brought different opinions from the Chinese customers. While many see a lot of benefits and evidently value of the in‐store experience, many others do not appreciate the exposure to the physical world of luxury. Many Chinese consumers have indicated that going to a physical store takes too much time, they highly value the time savings as explained by Benjamin and Wigand (1995). The other respondents appreciate the luxury shops, due to customer service, well trained employees and the store’s ambience. Many Chinese respondents also stated that they highly value the possibility to touch and feel the luxury products in person and this contributes to their positive view on the experience of shopping offline, which confirms the research by Kangis and Rankin. One of the Indian respondents well summarized all different aspects that are important for Indian customers when shopping offline, by stating “Objects shown online may be different than they appear, or least people think so. The experience of going out, in a physical store, physically inspecting the product, hearing someone, salesperson, pitch one product, over the other, and getting instant gratification are important pillars of shopping, especially in luxury purchases” (Interview I5). His list of aspects of shopping in a physical store portrays well the variety of benefits that the Indian customers acknowledge when going into physical stores. 36
Almost all of the interviewed Indians stated that the experience in a physical store is important for them. In fact, some indicated that the physical store itself can be a driver towards their purchase decision. This can lead to a conclusion that Kapferer’s definition of luxury related to semiotics of the luxury can be related not only to the possession of luxury product, but extended to the psychological satisfaction from the actual luxury shopping experience. Physical stores can give emotional satisfaction to buyers, further confirmed by a statement: “The manner in which I’m treated by the salesperson has an impact on my purchase. If I’m treated as an important customer, I am more likely to purchase something in the store” (Interview I13). This leads to the conclusion that the experience in a luxury store can be seen as an important experience, highly influential on purchase decisions. 9. THE EXPERIENCE OF LUXURY ONLINE The survey shows that there is a big difference between the experiences with online shopping of the interviewed Chinese and Indians. Here, all of the interviewed Chinese had made some previous luxury purchases online, whereas this has been indicated only by about a half of the interviewed Indians. Those who have good experiences with luxury online said that once they have an established trust for a brand, they really appreciate shopping online for that brand’s products, and this was also confirmed in the Google Study. Others have been driven towards online shopping by the item’s price, when they were able to find better offers of a product online than in the physical store, confirming the studies from Greenfield and Activmedia. Interviewee I1 stated: “There is a definite price benefit to buying online. It’s also possible to get genuine advice and reviews for the products online. One additional plus point is that I don’t have to deal with snooty staff when I am buying online.” The responses of the Indians can also lead to a conclusion that those who have tried online shopping before can easily indicate both the advantages and disadvantages of the Internet as a shopping channel, while those Indian interviewees who have never done any luxury shopping online have mainly negative associations with the Internet shopping. 9.1. ADVANTAGES OF LUXURY SHOPPING ONLINE As stated in Anckar studies, pre‐purchase evaluations of the product could be linked to the advantages coming from such sources like the electronic distribution channels. The further analysis aims to look into the factors driving consumers into the virtual channel adoption. The majority of the Chinese respondents see the biggest value in the convenience of online shopping for luxury, as well as the bigger availability of luxury products online as compared to physical stores in their hometowns. The responses of the Chinese interviewees’ show that the most valued benefits are associated with the practical gains that Internet shopping offers. The answers of the Chinese are aligned with Anckar’s research, majority of interviewed customers indicated accessibility and convenience as the key benefits. The responses, however, do not confirm the Activmedia’s or Cyberdialogue’s studies, as not many of the interviewed Chinese indicated the price benefits as most important drivers towards online shopping. Moreover, many Chinese claim that the luxury shopping online is not much different from 37
online shopping for any other product. This could be confirmed by the statement “That would be just like for any other purchase online, basically the time, also the availability, time of delivery and availability. Luxurious goods is not something that I can easily buy around the corner, not all the brands of such products are available in my city, and also for luxurious goods not all the models are available at the store right away. (…) Price doesn’t matter here, I don’t think you buying luxury goods online for the sake of being cheaper” (Interview C1). This statement not only supports that the benefits drive consumer towards the actual shopping online, but also well summarizes the attitudes of the majority of Chinese who underline the convenience, availability, time aspect, etc. as most important drivers towards luxury shopping on the Internet. The analysis of the previous responses by the Indians has already shown that there is a difference in the opinions about luxury online shopping between the customers who have tried it before and those who have not. Those customers who have shopped for luxury online, quickly list down the benefits and elaborate on the experience with positive attitudes. One of the respondents listed them as: “1. Can get reviews online – gives me the opportunity to get an unbiased view‐point. 2. Don’t have to deal with staff at the store. 3. It’s possible to get good deals online sometimes” (Interview I7). This answer combines various benefits that customers get, but at the same time compares the online marketplace with the offline shop. The Internet gives customers the option to look for objective reviews from other users as compared to shopping assistants in physical stores who, as I7 indicated, could be opinionated. This answer also explains that the customers might not be likely to appreciate the contact with the shops employees or already have some negative experiences with them, such view can be related to the studies of Zellweger. Finally the Internet is discussed as a shopping channel offering good product deals. This view was confirmed by other interviewees who believe that Internet is cheaper than the physical marketplace, and allows for product comparisons. The price as benefit of online shopping can be related to the Affluent Consumer Survey, and the conclusion that consumers have started to appreciate the price discounts as well. The results of the benefits listed by Indians who have not done online shopping before show that despite general negative attitude towards online shopping by inexperienced customers, the benefits they acknowledge are the same as the advantages listed by the frequent shoppers. This also confirms Anckar’s indication that it is the availability and convenience driving the net value of electronic commerce. 9.2. DISADVANTAGES OF LUXURY SHOPPING ONLINE In general, the answers of the Chinese in regards to disadvantages of online shopping can be categorized into 3 groups. The first one as problems associated with the online quality evaluation difficulties, second related to the fear of counterfeits, and the third one related to the after‐purchase process (shipping, delivery, satisfaction). Their answers do not differ much from other studies of online consumer behavior, and Anckar’s results, where it was the quality evaluation barrier seen as the biggest problem with online shopping. One of the respondents when discussing this problem, stated: “Certain things need to be tried and experienced with one’s own eye” (Interview C3). This view was expressed by many Chinese. The same with the second most 38
often cited problem of the security risk and lack of trust to virtual sellers related to studies by Rose et al.. Jarvenpaa & Todd, and Hoffman et al. The important result from the Chinese interviews is related to the counterfeits issue. Almost all of the Chinese respondents raised their concerns about the availability of fakes online. They also mentioned that because of the counterfeit problem in China they do not use common shopping portals, but only authorized and trusted online stores. Their answers confirm that the counterfeit market in China is a well acknowledged problem, what was previously stated by Grossman & Shapiro. This finding could have a twofold result in regards to the luxury market. On one side, it can be viewed in relation to Radón’s research, were a situation when consumers not being able to distinguish counterfeits from original products can pose a danger to the brands. On the other hand, the growing counterfeit market of luxury, when looked at through Kapferer and Bastien’s theory of ‘luxury for oneself’ and ‘luxury for others’, can be seen as a positive factor as it increases brand’s awareness. In the case of Indian answers, the frequent online shoppers stated that the biggest disadvantage is the missing possibility to see and touch the products before they purchase. The respondent I7, when asked about the disadvantages, stated, “Not being sure of the quality of the final product. While, luxury brands are a safe bet as they do promise uniform quality standards. The risk is of not knowing how the product really feels. I have noticed many instances where I have bought online and been disappointed either by the size of the product or by the material used“ (Interview I7). Several of the Indians confirmed the same view. This barrier as researched by Kangis and Rankin has been confirmed to be the biggest issue for the majority of consumers. Some other respondents follow the studies of Rose et al., where customers express security risks. They are worried about the product shipping process, and indicated that products might get damaged or lost while being delivered. The Indian interviewees who have not tried online shopping for luxury goods agree with the frequent online shoppers that the biggest problem is associated with the quality evaluation of a product on the Internet. These findings indicate that the studies of Kangis and Rankin can be applicable to all consumer segments. Offline shoppers also agreed that Internet lacks personal contact with shop personnel. Some stated that they enjoy the experience of shopping in an actual store more than online, which would also explain why they do not engage in online shopping. Those respondents who do not shop online listed a lot more problems with Internet shopping than the frequent online shoppers. 9.3. THE DRIVER OF THE PRODUCT CATEGORY The respondents were further asked whether the product type could have influence on their decision on either shopping for it online or offline. The majority of the Chinese believe that their purchase channel decision is solely dependent on the product need, and should not been viewed in terms of the product category, etc. Some however indicate that products that are easily counterfeited are carefully considered before online purchase. A lot of the Chinese respondents indicated that they tend to engage in online shopping for brands which they already trust. On the other hand, the analysis showed that the big majority of interviewed Indians 39
agree that product category has importance where deciding on the shopping channel, this means that the product diversification of luxury goods could be important in the context of Internet shopping. The majority of the Indian respondents agree that the product category they are most likely to purchase on the Internet is the electronics. The choice of the shopping channel could be dependent on whether the shopper has expectations of particular shopping experience. The biggest barrier for online shopping has been indicated to be the fit of a product. This mainly related to clothing and shoes as product categories. 9.4. WEBSITES AND SOCIAL NETWORKS The Chinese respondents indicated a slightly bigger likelihood to make their luxury purchases on the original websites of luxury brands. This preference can be explained by a statement: “If I want to buy them (luxury goods), that means I don’t care about the price. So what’s point of searching for special promotion and discount?” (Interview C3). This view indicated that other websites are often associated with cheaper prices and bargains, which is not necessarily a positive aspect for the luxury buyers. Other Chinese interviewees who indicated use of other websites, based on the reputation of those websites or good experiences. The majority of Chinese also stated that they do not engage in social networking sites regarding luxury. This is evident as one respondent stated, “Facebook is not working in China. But we do private clubs… We can meet with friends in the clubs where people are relaxed and open. It is a good place to do social networking in a higher class“ (Interview C5). This answer could mean that the luxury has appreciation in the community, but not the online community. The results show that Hennings et al. indication that the social dimension of luxury value can be translated to online context through online communities, might not be applicable, as the consumers not necessarily appreciate such communities. Slightly bigger group of Indian interviewed customers prefer original websites as the initial source of their luxury shopping. Many combine their shopping from both sources. Those who use other websites mentioned special sales websites that offer luxury products at good discounts, or shops with good online reputation. This result is in accordance with Cyberdialogue’s research. The big majority of Indian respondents said that they do not engage in any social networking sites, forums or blogs for luxury evaluation, which again indicates uncertainty towards the translation of the social dimension of luxury from online to offline environment. Some stated that luxury and social networking do not have a good association together. This is confirmed by the statement by I10, who said that “Social networks make luxury goods feel more commonplace.” (Interview I10). 10. THE INSIGHT INTO ONLINE EXPERIENCE Most of the respondents who have experiences shopping for luxury online have practiced showrooming and confirm the researches of Accenture and Google study. Many of the Chinese indicated that they visit the physical stores, get in‐depth overview of the product by personally inspecting them, then engaging in conversations with salespersons, understanding the advantages and disadvantages of the products, but not 40
making their purchase decision yet. They take time to evaluate their potential purchase decision, and then buy the product online. In fact, some of the respondents indicated that showrooming can be considered a current trend. The interviewee C3 explained that by this statement: “That’s the way to go and the current trend. You can experience the product with your own eye; gain reflection time to think about it; and you don’t have to carry bags” (Interview C3). The practice of showrooming could not only be associated with the convenience of one having more time to make purchase decision or the convenience of not having to carry shopping bags. Some of the Chinese interviewees answered that there is a difference between the shopping intentions they have when shopping online versus shopping offline. This means that some of them go to physical stores when they do not know what they want to buy. The Indians also understand and engage in the practice of showrooming. There has been also a statement of an opposite action, where the consumer first looks for products online to get an initial overview, and then goes to physical store to purchase it there, such practice has been previously explained in the Google study which explained the increasing trend of information search online before the actual purchase. It can be indicated that the customers feel that they receive a lot less service online than in a physical store. Some can see that as a big disadvantage. An example of such lack of service is a further statement from I1 who asked to elaborate on what is an example of the lack of service online said, “Like you wouldn’t get any opinion on how you look like in this particular cloth” (Interview I1). This example is a valid point that contributes to the difference between the online and offline shopping, as the Internet has no capability to give consumers opinions on how they look when considering a clothing item to buy, this disadvantage has not been included in the literature overview of the online shopping barriers presented earlier. It is however assumed to be an important factor for customers. Similar opinion has been indicated by interviewee who stated “The most important difference is that in a store product discovery and acceptance is easier. It’s easy to see how a bag looks on you, what the material is like and how big it really is. I would be more inclined to buy something that I have seen and experienced first‐hand” (Interview I7). With this statement, the interviewee indicates that the product discovery and acceptance is easier in a physical store than online, which could mean that actually the purchase decision in physical store is made easier than online. 10.1. WEBSITE CONVEYING LUXURY VALUES The customers were further asked whether the luxury websites convey the values they associate with luxury. When analyzing the answers from the Chinese respondents, their views on that matter differ a lot. Some of them indicate that definitely luxury websites do not differ from other products’ websites, they also think that luxury websites serve as product catalogue not as a intermediary of brand’s values display. Others do not pay their attention towards whether the website displays brand’s values or not, as they describe themselves as familiar with the brands which products they purchase online. On the contrary, there are Chinese respondents who expressed that the luxury websites can offer a lot more information about the brand and brand’s values 41
online than offline. This relates to the details about company’s ethos, brand’s heritage, the famous persons associated with the brand, etc. Such views relate to the translation of the functional dimension of luxury to the online environment as explained by Hennings et al. The respondents also believe that some information available online is missing in regular shops, or that the sales personnel would not engage in conveying such details to the customers in stores. In this context, luxury websites offer additional benefits to Internet users. Another Chinese interviewee underlined that there could be particular website’s features which are valuable to her. She further explained that “Luxury products’ websites are really nicely done, they have high quality, they also show you how you can match the product with some item. There is a lot of nice pictures, how can you wear the bag, what clothes. It also gives you information when you are buying a bag, what kind of other accessories you can also buy…” (Interview C1). This answer shows that some customers can view the luxury website as an actual experience, and enjoy the activity of first browsing and then making their purchase there. Furthermore, it can be related to the studies of Standing, where a positive interaction with a brand online can contribute to good customer perception. The discussions about the luxury websites with the Indian respondents have revealed that the majority of the respondents do not compare the physical stores to online websites. This means that they notice and appreciate a lot more branding efforts and displays of brand image in stores than on brand’s website. These results are more in alignment with Okonkwo rather than Henning et al. Respondent I4 stated that “all luxury products must provide a service on a personal level” (Interview I4). This statement leads to a conclusion that luxury websites are not able to convey the personal aspect as it is in the physical stores. This is also confirmed by I3, who stated, “In a store, the ambience, salespersons, and actually seeing the physical product gives a more luxurious feel than an online store” (Interview I3). The actual experience that luxury stores offer their customers has been valued by many Indian respondents. In the interviews they discussed that seeing and physically inspecting the product is one thing, but the atmosphere of the store, and the ambience is another benefit that luxury shopping gives them. Another interviewed respondent stated that “A physical store with plush interiors, trained and polished staff and general glitter wont matchup to a well made website…” (Interview I5). All the aspects that he listed down contribute to a whole experience linked with the purchase of a luxury product, and this has been confirmed by a majority of respondents. Some of them believe that a ‘weak’ website could actually contribute to damaging the image of a brand and this further can impact the functional dimension of the luxury value. 10.2. FACTORS INCREASING AND DECREASING THE VALUE OF LUXURY ONLINE The customers expressed the view that the luxury website could play a role in their perception of luxury online, some also indicated that it can either increase or decrease the value of a brand online. These elaborations lead to the theme of factors that can have impact on the actual value of luxury online. Many of the Chinese consumers believe that the online environment has no impact on the actual value of luxury. This is expressed 42
by the following statement, “I don’t think anything increases the value of online luxury. In my opinion when you buying something online, (…) I don’t think there is any impression that when you buying online you are gonna feel special or anything like that. It’s more a pure pragmatism of buying something quickly and having it delivered at your door” (Interview C1). This interviewee explains that the online shopping is an action based on a common understanding of the product’s value and brand’s qualities, and the fact that it is available online has no association to its value. There are also statements that indicate that actually the online presence of luxury is required for a brand to remain reliable to consumers. The respondent explained it as “… not having a website is considered not serious. Every company must have activities online. It gives convenience to those who doesn’t need physical shopping experience but just need to have the product in time, such as celebrities. For me, I will also check up the apps of the brands to follow up their collections and other activities and news” (Interview C5). This statement shows that some customers do not imagine a luxury brand not establishing their presence only; this view is supported by previously referred research by Standing. This can be seen as a paradigm shift, where consumers have the expectation for brick and mortar companies to allow them virtual interaction, and this is a requirement, no longer an option (Standing 2009). In relation to that, Internet is a source of information, news, details about the collections, etc. Following this attitude towards online visibility of luxurious brands, some Chinese believe that the presence online is not a thread to brand’s value at all. As one of the respondents stated, “A brand can go online but still maintain its prestige and exclusivity in its brand image” (Interview C4). The statement that a brand can maintain its exclusivity online is however doubted by some of the Chinese respondents as the interviewees stated: “If I saw goods available online I do not think it is luxurious (even with a price tag of 5 million Yuan), more like an up sale technique to me. Everyone has its own understanding about luxury goods” (Interview C3). This statement brings the direction of the discussion back to the topic of exclusivity versus ubiquity online, and as previously stated by the Hennings et al. the brands need to establish their distribution pattern, and this can be done by either limiting it online or choosing particular pricing strategy. The Indian respondents had problems naming the factors that increase the value of luxury online. Many were unsure of the answers, whereas others answers differed a lot from others. Some people simply believe that online products cannot have more or less value than products offline. Other respondents stated brand recognition as a factor that has importance in the luxury value. Other views are directly related to the brand’s website which when appealing could add more value to luxury, and the other way, the unattractive website could decrease it, which can be related to the functional dimension in Hennings et al. framework. One response gives a unique point of view on the values striking between online and offline luxury environment. The respondent, I4, gave an idea of combining the physical experience with the online shopping world. He stated, “… Say I visit an online store and give basic details showing minimal interest. I soon get a follow up phone call/email, quickly followed by an info book posted to me, or a well dressed guy coming to me to showcase the products. … The best of virtual efforts are no match for a simple physical gesture, which can 43
astound” (Interview I4). This response drives attention towards the individual dimension of luxury value. According to Hennings et al. it is important for brands to follow consumer opinions and needs in terms of translating the offline experiences to online environment, and thereby it could be an indication for a brand to include the personalization aspects. Furthermore, the biggest problem that Indian customers see with luxury online in alignment with Okonkwo is that the increasing availability of luxury online could decrease its value. The respondent I4 when asked whether luxury could lose its value online, answered: “Yes, it becomes more commercialized and accessible to people of all income brackets” (Interview I4). Another respondent stated that when the product is available on the original website or sales websites along with other luxurious products, then the product maintains its value, as opposed to luxury products appearing on any other sales sites. Some believe, that luxury products online could actually entirely lose, this is explained as “Sometimes if there are extremely exclusive items like a collector’s edition watch, it would be better to have it only a store... Having it online dilutes its brand value” (Interview I3). Some other Indians, however, still leverage on the Internet’s capabilities and believe that the Internet could contribute to expanding the reach to non‐targeted customer groups. “The internet is a great equalizer. The anonymity and accessibility of the online format mean that anyone and everyone can buy the product. Brands which have target customers in mind would not be able to control who buys and uses their products. I have seen cases of people who have the money, yet are too simple‐ looking to walk into a luxury store. Those people would probably prefer to buy online” (Interview I7). This answer underlines the advantages of Internet indicated by Parsons (2002), but can be viewed as a negative in relation to Kapferer and Bastien’s theory, where luxury loses its value when bought by customers not fitting to brand’s image, and this cannot be controlled online.
PART V THE DISCUSSION AND CONCLUDING REMARKS 11. DISCUSSION OF THE FINDINGS “Emerging markets have more buying power now, more spend on luxury goods, peer pressure and brand image becoming more and more stronger” (Interview I9). 11.1. COMPARATIVE ANALYSIS OF CHINA AND INDIA It can be clearly indicated that the consumers from China and India are different. Both groups of interviewed customers being the Chinese and the Indians acknowledge the functional and price utilities when differentiating luxury from other products. The Chinese recognize the emotional value coming from the hedonist motivation to luxury possession. They also see luxury as a display of their wealth. The interviewed Indians have not emphasized this as being most important. For them the initial association when comparing luxury with other products is the exclusivity. They highly value the limited availability of luxurious products and customization. They also differentiate luxury same as Nueno and Quelch, where the price has importance, as well as indicate the customer’s relationship to necessity of owning a luxury product. In terms of the perceived 44
value, the biggest difference between the Chinese and Indians is that the Chinese are highly concerned about their self image and view luxury products as status markers. The Indians however have more of a functional approach towards product’s quality, features, and price. Indians also pay more attention to the brand’s image as an indication of the product’s value. The question related to the main motivation to luxury purchase revealed that luxury is a very complex notion in the customers’ view, which confirms the view of Rosa (2012). The Chinese, who firstly underlined the importance of showing off their wealth and status via luxury products, indicated that the main driver to luxury purchase is the quality or the emotional rewards. On the other hand, the Indians who originally stated their value functional aspects of luxury confirmed that the feelings associated with luxury purchase and possession are also important. These varying answers do not necessarily contradict each other. Firstly, it can only be confirmed that the consumers’ definition of luxury is formed both by situational variation and the individual characteristics from Hennings et al., and as many presented theories differently approach the notions luxury, the consumers have the same difficulties finding one luxury definition. Secondly, it can indicate that the luxury is clearly going through Danziger’s feminization process. From the answers of both the Chinese and the Indians, a conclusion can be drawn that the current trend is indeed the luxury representing a consumer‐centric, experiential view of luxury. Customers emphasize the personal and emotional dimensions of luxury, thereby the individual consumer is the ultimate arbiter of luxury (Csaba 2008). The Chinese frequently engage in online shopping and travel for luxury shopping. Such shopping channel patterns have been indicated to arise from the limited availability of desired luxury products in China or the hometowns of the customers. On the other hand, the Indian respondents shop for luxury from many channels. They key difference is that only very few Indians thought of online shopping. The Indians also did not indicate that the limited availability of a product in their location is the one key driver towards their decision of the shopping channel, but many different drivers such as the brand, shopping environment and shopping experience, influence from their friends, etc. The answer of the Indians could be viewed in the context of the ‘The Wheel of Consumer Analysis’, as it can be clearly depicted from Indian answers that the influence to their consumer behavior comes from many factors. These include the physical objects such as the stores, special relationships, or social behavior of other people, all from the consumer environment. The consumers also differ in their opinions about the importance of the experience in the physical stores. While the Chinese are generally indifferent, the Indians highly value the experience of luxury offline. All of the interviewed Chinese consumers bought luxury online, as compared to only half in the case of Indians. The Chinese respondents highly value the convenience of online luxury shopping. In case of Indians, customers who have shopped for luxury on the Internet, quickly list down the benefits and elaborate on the online experience with a positive attitude. The customers who have never tried luxury shopping online show more 45
negative approach. The Indians also value the price benefits from online shopping a lot more than the Chinese. And while the Chinese stick to the convenience as most important, the Indians have high appreciation to the time savings the Internet offers them. Furthermore, the Chinese have indicated quality evaluation difficulties, the fear of counterfeits, and the after‐purchase service as biggest problems with online shopping. The Indians agree with Chinese on the problem quality evaluation, all in accordance to Anckar’s studies as well. People who have not tried online shopping have a lot more concerns. All of the Chinese also mentioned the threat of counterfeits online, while the Indians are not so much concerned about that. The Chinese believe that the product category could have influence their decision of whether to shop online or not, but it should not be seen as the key driver. If they already enjoy shopping online, they are generally more likely to use Internet for shopping regardless of the product category. The Indians, on the other hand are more likely to make decisions on the shopping channel based on the product type. Both the Chinese and Indian expressed slightly bigger likelihood to use luxury original websites to make their purchases online. They all do acknowledge that there are other sites offering either better price deals or more extensive product selection, but it is the trust towards the source that encourages them to shop there. Social networking sites are not well associated with luxury for both consumer groups. The Chinese and the Indian respondents who have experiences shopping for luxury online agreed to have practiced showrooming, they confirmed that it can be viewed as a trend. When discussing the websites and whether they convey the values of luxury online, the Chinese respondents had many different standpoints. The Indians, on the other hand, clearly do not think that websites could recreate the same luxury value online, as in the physical store. This is mainly because they clearly associate the value of luxury with the experience of its purchase. Both the Chinese and the Indian customers fear that over availability of luxury online, or the combination of luxury products with lower‐ticket products could harm their perception on the value of luxury. The main findings also show that it is the country’s market character that defines the popularity of online shopping, and not the national culture. This result can be related to Wiedmann et al. who stated the importance of consumerism patters, not the cultural typologies as an objective consumer behavior explanation. 11.2. THE KEY CONCLUSIONS FROM THE RESEARCH The initial aim of the research based on the research question was to investigate “What is the influence of E‐ commerce on luxury goods’ value”. This question can be answered based on the previous comparative analysis of China and India, as the first key finding from this research is that there is a difference between the Chinese and the Indian consumers. The answer to the question of what the influence is of E‐commerce on the luxury good’s value shall begin with the statement that this influence can be either a positive or a negative influence to be differentiated further. 46
This separation is related to the actual value of luxury either increasing or decreasing due to the presence of luxury goods in the online environment. It can be clearly indicated that the E‐commerce has the influence on the value of luxury. Based on the analysis of the research, the positive influence on the value appears when the customers see additional benefits from purchasing luxury online as opposed to shopping in physical stores. Here, factors that increase the value of luxury are associated with the convenience of luxury shopping online (Jarvenpaa & Todd, Kangis & Rankin), time savings it can offer them (Benjamin & Wigand), the benefit of gaining more information about luxury products (Hoffman et al., Okonkwo), or enjoying the experience of luxury website features (Hennings et al.), etc. E‐commerce can have a negative influence on the value of luxury however, only when it threatens the original value of luxury in the customer’s view. In relation to the creative destruction, this occurrence takes place when the online environment has a damaging effect on the core luxury brand’s principles. The loss of luxury value on the Internet can appear when the products become too available in customers view, by either appearing on unreliable websites, social networking sites that are not appreciated by consumers, or when they are too often mixed with other categories of products. These problems are all related to the economic, basic, identification and social utilities from Hennings et al. The value of luxury also decreases with the escalating fear of counterfeit products on Internet. From the survey, it can be indicated that the one of the most important benefits for consumers strictly associated with the purchase of luxury is the experience. The experience of luxury for some is satisfying in the online environment, some increase their contentment from combining the online and offline luxury experience with the practice of showrooming (Accenture, Google study), while others are indifferent towards the online experiences, and simply still choose the physical store as their main shopping channel, using Internet only as a source of information (Google study). Such customers’ approach could confirm that as long as there is the option of the actual shopping in a physical store, customers, regardless of their purchasing pattern, are satisfied and the creative destruction is not a danger. The customers make use of E‐commerce whenever they see the biggest benefit of it, but take the advantage of luxury shopping in stores if they have the need for it. Therefore E‐commerce has the influence on luxury goods’ values in customers’ view by either increasing their benefits through online shopping or harming the product and brand’s image. This conclusion also confirms that the increasing presence of luxury goods online can either lead to an increase or a loss of key luxury values, and this is based on the previously explained factors. Other conclusions to the research also support the statement that the new online luxury shopper is different from a traditional offline customer. The new online luxury shoppers are better informed, more experiential, have their own, individualistic definitions of luxury and follow the ‘new luxury’ typology of luxury customers (Danziger). They are also younger, and more affluent (Google study), come from middle class that now wants to own luxury as well (Bellaiche et al.), or represent the N generation of Internet addicts (Mulcahy) . The offline traditional customers are not projected to engage in online shopping in the near future, they are generally more negative towards the use of Internet, and still value the shopping experience of a physical store the most. 47
Furthermore this hypothesis that the new online luxury shoppers differ, can be extended to a statement that the new online luxury shopper is highly dependent on the market characteristics. This means that factors such as availability of luxury products play a role when defining the particulars of the frequent online luxury shopper (Anckar, Benjamin & Wigand, Hoffman et al.). These results show that clearly the new online luxury customers has a strong influence on the digital revolution as they set new requirements towards the luxury brands. 11.3. IMPLICATIONS FOR THE BRAND The result that the E‐commerce can have a positive or a negative influence on the value of luxury goods, can be interpreted as highly dependent on the actions taken by the luxury brands in the context of online environment. The findings related to the characteristics of the new online luxury shoppers could also be considered by brands for enhancing the brand’s image for particular customers segments. Due to limited length of this thesis, only several aspects important for brands will be highlighted. These however could be implied as suggestions for future research. The most vital aspects important for the marketers to be drawn from this research can be grouped into the 3 following themes: the brand perception, the shopping experience, and the country characteristics, as the key drivers for brands to be considered in the context of growing E‐ commerce. The brand perceptions as a driver towards the popularity of a luxury product online can be further divided into several categories. Firstly, the brand perception as the image of brand in terms of trust and reliability is an important factor driving popularity of online sales of that brand’s products online. The Chinese and the Indian consumers have indicated that once they have positive brand perception, they are more likely to engage in online shopping. For example, the Indian interviewees listed iPads and iPhones, both ‘Apple’ products, as merchandise they often buy online. Without going in‐depth into the discussion about Apple’s company values, it can be clearly indicated that this company has a well established image and reputation among the online community. Furthermore, it can be the brand products’ categorization in the consumers’ view leading to the increasing purchases online. Consumers are likely to shop online, when the convenience factor is high. This could be an indication for brands to review their offered services online to make them more appealing to customers. The second implication for brands is associated with the shopping experience. This point is very important especially in India, where the shopping experience in a physical store is highly valued. The consumers stated that the shopping experience is associated with the ambience, the design, the atmosphere, etc. but one of the key factors is the personnel. From the responses, it is evident that the shop’s employees can enhance the shopping experience by well approaching the customers, treating them with high respect and importance, sharing their knowledge about products, but also harm brand’s image. The findings show that the physical gestures are very important, especially for the Indian customers, there are however responses that the personalization and customization online could translate the experiences offered in physical stores. The third implication is associated with the country characteristics, and the conclusion that there are evidently 48
differences between the Chinese and Indians. This could be related to the interpretation of the associated value of a luxury product by customers in different countries, but also to the development stages of luxury spread in those countries as explained by Chadha and Husband. It has been indicated that the Indians value the experience and personal interaction, but the Chinese want to show‐off their wealth, the Indians appreciate price discounts, while the Chinese want the convenience benefits, the Chinese are highly afraid of the counterfeits, the Indians greatly rely on the brand’s image, and the Chinese get emotional benefits from shopping, etc. There are more conclusions that could be drawn, which could contribute to the sales of the luxury online, as they show the luxury value in consumers’ eyes. When projecting the future of Chinese online luxury, one of the respondents stated “With a population of nearly 1.4 billion, anything is possible” (Interview C3). With this attitude, one could only deliberate what could be the future of the online luxury market. One of the respondents stated “Advances in technology would probably enhance the online shopping experience in the future…” (Interview C7). This sentence can well end the discussion of what is the future as the customers are continuously getting used to the changes that the contemporary market economy constantly brings to the consumers.
PART V CONCLUDING THE RESEARCH 12. FINAL CONCLUSION The aim of the research based on the research question was to investigate what is the influence of E‐commerce on luxury goods’ value, supported by hypotheses testing of increasing presence of luxury goods online leading to a loss of key luxury values and the online luxury shopper being different from the traditional offline customer. The conceptual and theoretical background of the thesis showed that the luxury is a very complex notion linked to many different typologies and frameworks. The key original associations with luxury can be linked to factors such as superiority, uniqueness, exclusivity, limited distribution etc. These, in the context of Internet associated with fast access and availability, can be seen as contradicting. The e‐commerce has been indicated to be on the growth, especially in the emerging markets of China and India. These two countries not only have increasing numbers of the digital users who are projected to contribute to e‐commerce sales, but also growing consumption of luxury products. The E‐commerce has been looked at in the context of luxury goods and the luxury value. The electronic market has also been viewed in terms of the benefits and advantages, as well as barriers and drawbacks, which could potentially encourage or discourage the consumers towards online shopping. The influence of Internet can be also further extended to luxury brands, which in the online context can gain big market share and increase brand’s awareness, but also become to attainable and lose the original luxury value. The success of luxury brands in the online environment has been explained to be dependent on the translation of the basic, economic, identification and social utilities of luxury value from the offline environment to online. 49
The research on the value of luxury goods in the online environment has been carried out in a form of a qualitative telephone interviews. The respondent population consisted of consumers from China and India, which have been indicated to soon become market leaders both in the Internet usage and the luxury consumption. The research included 35 interviewees, 13 from India and 11 from China, where the consumers expressed their views on luxury, its value, their consumer behavior, purchasing patterns, attitudes towards online shopping, etc. After the process of coding and thorough analysis, the conclusions have been reached regarding the value of luxury in the online context, as well as valuable implications for the brands. The answer to the question of what the influence is of E‐commerce on the luxury good’s value can be related to either a positive or a negative influence. This differentiation is related to the actual value of luxury either increasing or decreasing due to the presence of luxury goods in the online environment. It can be clearly indicated that the E‐commerce has the influence on the value of luxury. Based on the analysis of the research, the positive influence on the value appears when the customers see benefits from purchasing luxury online as opposed to shopping in physical stores. Here, factors that increase the value of luxury are associated with the convenience, time savings, information availability, or enjoying the experience of luxury website features. E‐ commerce can have a negative influence on the value of luxury however, only when it threatens the original value of luxury in the customer’s view. The loss of luxury value on the Internet can appear when the products become too available, appearing on unreliable websites, when mixed with other categories of products. The value of luxury also decreases in relation to the counterfeit products. The research also reveals that the new online luxury shoppers are better informed, more experiential, have their own, individualistic definitions of luxury and follow the ‘new luxury’ typology of luxury customers. They are also younger, more affluent or from growing middle class, some are strongly addicted to the use of the Internet. The traditional customers, on the other hand, are not projected to engage in online shopping in the near future, they are generally more negative towards the use of Internet, and still value the shopping experience of a physical store the most. Furthermore this hypothesis that the new online luxury shoppers differ, can be extended to a statement that the new online luxury shopper is highly dependent on the market characteristics. This means that factors such as availability of luxury products play a role when defining the particulars of the frequent online luxury shopper. The most vital aspects important for the marketers to be drawn from this research can be grouped into the 3 following themes: the brand perception, the shopping experience, and the country characteristics, as the key drivers for brands to be considered in the context of growing E‐commerce. The research showed that the Internet revolution is unavoidable and the consumers continuously become more comfortable with online shopping. The industries that have been previously reluctant towards their online presents, have to make vital strategic decisions in order to follow up with the changes and succeed in the continuously changing markets, which right now is driven by the consumers, and not the brands anymore. 50
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Reports: Accenture (2012). Luxury Shopping Survey. November 2012, Accenture Management Consulting. www.accenture.com/SiteCollectionDocuments/PDF/Accenture‐Luxury‐Shopping‐Survey‐Key‐Findings.pdf Fung Business Intelligence Centre (2013). Luxury Market in China: Huge growth potential ahead. April 2001. www.funggroup.com/eng/knowledge/research/china_dis_issue109.pdf Luxury Society Report. (2010). The Digital Agenda. A State‐of‐the‐Industry Briefing on E‐commerce & Online Marketing. Perez‐Schafer, E., J. Camilo, V. Baklanova. (2008). Consumer Behavior: Luxury Consumer – Online Satisfaction. fido.palermo.edu/servicios_dyc/encuentro2007/02_auspicios_publicaciones/actas_diseno/articulos_pdf/ADC001.p df PWC. (2012). Market Vision Luxury. Challenges and opportunities in the new luxury world: winners and strategic drivers. www.pwc.com/it/it/publications/assets/docs/marketvision‐luxury‐2012.pdf ART12 Twyford, C. (2010). What Makes Big Brands Stay Big? In Nielsen Featured Insights: Delivering consumer clarity. March 2010. es.nielsen.com/news/documents/BigBrandsFI.pdf Unity Marketing (2011): Luxury Trend Report. Affluent Consumers and How They Use the Internet, Social Media and Mobile Devices: an In‐depth Profile of the Online Luxury Customer, www.unitymarketingonline.com/ cms_luxury/luxury/luxury3/Internet_Social_Mobile_Media_1‐26‐2011.php Internet sources: Castillo, J.J. (2009). “Snowball Sampling: Chain Referral Sampling” in Explorable. April 24, 2009. explorable.com/snowball‐ sampling Deoras, N. P. (2013). “Indian luxury market to be worth Rs 82,000 in 2 years”. February 8, 2013. www.business‐ standard.com/article/companies/indian‐luxury‐market‐to‐be‐worth‐rs‐82‐000‐cr‐in‐2‐years‐113020800578_1.html Interbrand. (2013). www.interbrand.com/en/BestRetailBrands/2013/articlesinterviews/emerging‐markets‐fuel‐ growth.aspx Internetworldstats. (2013). www.internetworldstats.com/stats.htm Investopedia. (2011). www.investopedia.com Merriam Webster. (2013). www.merriam‐webster.com Mineweb. (2013). www.mineweb.com/mineweb/content/en/mineweb‐gold‐analysis?oid=137270&sn=Detail Mulcahy, Seana. (2007). “Generation Net‐Obsessed” in MediaPost, July 16, 2007. www.mediapost.com/publications/article/64019/?print#axzz2iSDHAwsv Punj, S., M. Kaushik. (2013). “Money can buy you luxe” September 1, 2013. businesstoday.intoday.in/story/how‐luxury‐ brands‐are‐changing‐to‐win‐the‐indian‐market/1/197547.html The Wall. (2013). wallblog.co.uk/2013/05/24/asia‐takes‐centre‐stage‐for‐ecommerce/ The front cover picture: blog.maia‐intelligence.com/wp‐content/uploads/2013/01/shopping‐online.jpg
12.2. APPENDICES 53
Interview C1 Paulina: What’s your gender? Respondent: Female P: What’s your age? R: 28 P: What’s your nationality? R: Chinese P: What’s your occupation? R: IT manager in multinational company P: What’s your income level? R: Above average income level in China P: What do you consider a luxury good? R: In terms of luxury goods, that would be some fancy car for me, some fancy gadget like … watch or some jewelry, so basically luxury for me is something that I don’t need for pragmatic reasons but it’s something that I want to have just to feel better, to kind of show off, or something that I attach with a super brand, basically in fashion industry that would be some brands like Dolce&Gabbana, Dior, whatever, in car industry that would be Ferrari, Porsche, Maybach, this kind of brand .. so it is something I don’t need for pragmatic reasons, but more that I just enjoy having it P: How would you define the value of the luxury of a product (for example uniqueness, price, quality, etc.)? R: I think it’s the image, so basically the way you feel having or using such luxurious goods. Yeah so more like self confidence and the fact that you can afford something really fancy…. Not really something that is .. of course quality is there of course, but it is not the main purpose of having such good P: How often do you buy luxury goods? R: Like you mean once in a year? Or? P: Yeah… R: Let’s say 4 times a year P: Why do you buy luxury goods? R: To reflect my current financial status P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: It’s the shopping experience and my self confidence and feeling once using that luxury good P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: It depends what that is, if this is something small and something that is not really rare purchase, then I browse that online and try to buy it via internet, that would be for example a watch, a bag, something tangible, but like portable. If this is something that is really fancy item, like electronic gadget, a car, a scooter, then I would go to the shopping centre or to the dealer. I would like to learn more about that product from the sales person, take a look, get familiar how it looks, how it works, you know, get just close to it, so I can get more of a feeling of that item, of course more recommendations from the salesperson and advice on the choice P: Do you think that the shopping experience in a physical store is important? Why? R: Yes I think that when you are buying the luxury goods the customer is treated with more attention and a lot of care from the sales person, the reason for that is that such customers are rare and also that it is possible that you can be a repeated, …, you gonna repeat your purchase once in a while or you can tell your friend how you were treated in such a store, I think that this is important to feel really being taken care of, some of the luxury goods are a really big expense and you want to.. on top of the thing itself you want to have a good perception of the entire process, right so looking for the thing, learning more about it, having a chance to try it, then purchasing it, and also something like having some ongoing support like some warranty, or some ongoing upgrades, whatever. So I think that’s important the feeling how you are treated when you are spending a huge amount of money P: What do you consider as the main benefits/advantages of purchasing luxury online? R: That would be just like for any other purchase online, basically the time, also the availability, time of delivery and availability. Luxurious goods is not something that I can easily buy around the corner, not all the brands of such products are available in my city, and also for luxurious goods not all the models are available at the store right away. So it’s not that I can enter and buy the stuff, purchase it and then go out with it. So sometimes you have to wait for such products, that’s why I prefer doing it online. When I know what I want to buy, which model, then I do it online. Price doesn’t matter here, I don’t think you buying luxury goods online for the sake of being cheaper. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Well, of course there is always a threat that such good will be fake. That’s why it shouldn’t be bought on some like common portals, but rather from the electronic store, where you can have your own profile and get it directly from the producer or really authorized store. Also the reason is that .. you know .. to put the extra safety, you are paying a lot of money for that so you don’t want anyone to get the details card and you don’t want to pay a huge amount of money for something that is either not gonna come at all or is gonna come destroyed. That would be the threats of buying luxury goods online. That would be the only ones I can think of. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Yes, I am a part of such a community when it comes to some of the luxury goods, and this is regarding bags. So Louis Vuitton has this service where you can borrow a bag for like couple of days or weeks, or also so you can exchange with others. So this is what im using and this is the only one … . also ok so that would be for purchases or exchanges, but also when I am looking for a product then I am trying to review the forums and learn some like other peoples opinion about like the product, if they liked it or not, if it was working like as they were expecting it to work and so on. Yeah but this is not specific for a product, I do it for any product I buy online. P: As you mentioned, when buying luxury online or looking for information about this products, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: No no no, for luxury I only go to the brand’s websites, to the original ones. I look for the information there, because I know if I’m gonna buy, I will buy through such online store… not through any intermediates. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: So.. when I go to a physical store I normally don’t know what I want to buy. Going to the store for me is a way for me of browsing for product not only going to purchase it. So when I go to the physical store I look at the products and normally I am not decided right away. When I go online I’m decided, I know what I want and I just go there maybe to read about it a bit but then go click and purchase it. So that would be the main reason. Of course you don’t have the sales person online, so you don’t get much of an individual advice, much of individual discussion. But as I said if you are decided for something this is something you don’t need that necessarily. Also, like for the real store I often enter the ones when I don’t think I’m gonna buy something. I’m more just doing some window shopping, just looking around what’s there, just at the beautiful things.
P: Ok perfect, because your answer just links us to the next question. Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? R: Yes, so I did that, I mean I do it quite often. I enter the store to get some of the help from the salesman, to get some pros and cons, and so on, get some advice. And then when I am decided I and I’m not in the city where they have it or I know it is not gonna be available right away, then I go and buy it online. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yeah definitely. Luxury products’ websites are really nicely done, they have high quality, they also show you how you can match the product with some item. There is a lot of nice pictures, how can you wear the bag, what clothes. It also gives you information when you are buying a bag, what kind of other accessories you can also buy, maybe you need a wallet, or a smaller purse. Yeah so I think the luxury websites are really appealing as well. P: What do you think increases the value of online luxury? Why? R: I don’t think anything increases the value of online luxury. In my opinion when you buying something online, there is a common understanding that when you buying something online you are looking for a cheap version or you are looking for something cheaper or not in the store. I don’t think there is any impression that when you buying online you are gonna feel special or anything like that. It’s more a pure pragmatism of buying something quickly and having it delivered at your door. P: Do you think luxury goods can lose their values when being available on Internet? R: Well, I think that they can lose value online, they cannot get value online. For instance by some intermediate, other stores, if you can buy some luxury bag on eBay, hehehe, it is not the same impression as buying it on the original website. So they cannot get more value, but they can lose some value. P: Do you think that the popularity of luxury online is dependent on your culture? R: I wouldn’t limit it to the luxurious products, I would consider it more like electronic shopping in general. I am sure it is popular in Western countries versus some other countries. Because there ecommerce is more advanced, and it was there earlier, and it is used more. It is reflected in all kind of product, not limit it only to commodities or luxury goods. In general, yes, it is a condition to the culture and geographic but it is not limited to luxurious goods. P: Do you think you will be buying more luxury online? Why? R: Hmm, then I do now? Well, I mean, it really depends on what’s my plan and what am I going to buy. So as I said if this is something small and portable, then surely I would buy it online, but if this is something more expensive and more unique purchase I will go through the regular trade channel. Interview C2 P: What’s your gender? R: Female P: What’s your age? R: 37 P: What’s your nationality? R: China P: What’s your occupation? R: I work for Real Estate Investment Strategy, my job position is Senior Vice President. P: What’s your income level? R: USD $250‐$300 P: Ok thanks, firstly I want to find out some general definitions in your view regarding the luxury products. So, first question is what do you consider a luxury good? R: It’s pretty simple. Not necessity goods. I mean the things that I don’t need, but I want to have them. None of them are related to my basic needs like essential food, accommodation etc. but also when looking at clothes for example. One way is that true the clothes you initially need only some, but then you buy some more, and even though you don’t need them, you buy, because you want to have more. This is not luxury yet. This is because having more clothes is related to the need of having better choice in your wardrobe. Luxury is something you really really don’t need, because you already have some hundreds of options, but you still decide to buy it. And you don’t need it at all. P:Ok, based on what you just said, how would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: High quality is the main thing. This is the key thing explaining the value. Luxury products have usually distinctive quality. P: How often do you buy luxury goods? R: Not regularly, but whenever I have feel like or have time to go shopping. P: Does this mean it is often? R: Yeah, I would say so, probably yes. I don’t have much time, but when I do I go shopping and spend a lot. And I mean a lot here. A lot! P: So why do you buy luxury goods? R: As I said, it is good quality mainly. And timeless pieces. Oh yes, timeless pieces. This is important. They last forever. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: In fact, most of the things you just suggested in the question ,… quality, the service and guarantee provided. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Holiday. Or online. Both. P: What is the main influence on where you buy luxury? R: Time, when I have time. As I said this is the main thing for me. Time. P: Do you think that the shopping experience in a physical store is important? Why? R: No, not at all. P: Why? R: Going to a physical store sometimes takes too much time. I don’t see the value. P: Now I want to find about more about your habits of purchasing luxury online. So firstly, have you ever purchased any luxury goods online? What product and why online? R: Yes, I do that all the time. P: What product? R: Handbags, clothes, skin care products, probably a lot more. P: Why online?
R: Save time and sometimes no sales taxes, depending where I am at. Sometimes when I get posted on some business projects to other country, I take advantage of no sales taxes and order there some products online, so I can take the advantage of that. It is actually very good, I do it often. And it’s just so simple or fast. Shopping online is very good for my lifestyle, also because I have no time as I said before. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Save time and sometimes no sales taxes, all what I said just before P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: There is always a risk that could be piracy products which could be inferior quality, but you can check that yourself. There are some websites you can trust or some ways to check that beforehand. I don’t see that as really big problem because I always use some verified sources. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: No, not at all. P: Why? R: If it about whether I feel I need the product or not. When I want to have something I just want to have it and that’s it. If I can buy it online, then it’s perfect, fast and quick, go online, buy, get delivered. I don’t care about taking taxis to some shops, waiting in lines, talking to annoying salesman, this is too bad. Online, I go and I buy. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Not always use the original website. I also use some others, hmm, let me think, for example, www.Gilt.com . It’s really very good, you should totally try it. I use it a lot. P: Why this website? Why should I try it? R: Yes, it’s reputable website. I used it many times, and it’s always good. No disappointments, no problems at all. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No, not at all. P: Why? R: I do not like advertising campaigns. I will only buy when I feel I need the products P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Save time P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes. Sometimes, buying online is cheaper or save sales taxes, or do not have to carry the physical products myself. Sometimes those shops cannot deliver. It happens to me that I have some extra time in my lunch break I go to some shops, and even when I want to buy some products they don’t offer delivery service. This is bad, because of course I cannot go back to work with shopping bags, but I can go back to the office and shop online for those things, then have them at home when I am back from work. Life is pretty good like this. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Sure! P: Please explain R: I usually know the product well, and do not need the website to help conveys the values. I would not buy something that I do not know. So what I mean is that it fits the expectations. That’s simply it. P: What do you think increases the value of online luxury? Why? R: Reputation, and reasonable return policy. P: Why? R: It simply relates to customer satisfaction and trust P: Do you think luxury goods can lose their values when being available on Internet? Why? R: No, not at all. P: Why? R: Meet the demand of customers who do not have time to go shopping in the physical stores. Do you know what I mean? It supplies to consumers like me who have no time, so how can they lose their values? I know what I am buying. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Maybe P: Why? R: Do not know how to answer this question, but I think culture can have some influence here. Depends what culture. P: Do you think you will be buying more luxury online? R: Yes. As long as it is a reputable website, I will be buying. Researcher’s notes: Person very conscious on time saving aspect, appears to be the most important factor. Interview C3 P: What’s your gender? R: Male P: What’s your age? R: 25 P: What’s your nationality? R: China P: What’s your occupation? R: Student P: What’s your income level? R: Disposable credit around ¥500,000 annually. P: Let’s start with the customer’s definition of luxury. What do you consider a luxury good? R: Rare and unheard by the public, with unique design and organizational independence. Organizational independents means that they are not owned by a parent company. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Unique design and philosophy, without the appealing to general public. P: Ok then please tell me how often do you buy luxury goods?
R: Maybe once a year. P: Why do you buy luxury goods? R: Please myself. Mainly that’s why. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The luxury product itself. P: Ok, perfect. Then please tell me, where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: On site shopping around major commercial street in China. P: What is the main influence on where you buy luxury? R: No meaning at all. As Chinese customers are infamous in foreign countries, I do not intend to join them. P: Do you think that the shopping experience in a physical store is important? Why? R: Maybe P: Why? R: Depends on the product. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Convenience P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Certain things have to be tried and experienced with one’s own eye P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? R: Yes P: Can you tell me a bit more why? R: Well there are some product I want to buy online, and some that I don’t. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Official ones P: Why these? R: If I want to buy them, that means I don’t care about the price. So what’s point of searching for special promotion and discount? P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No, it’s lame. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Actually no difference, assuming I am certain about the quality and experience of the product. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: That’s the way to go and the current trend. You can experience the product with your own eye; gain reflection time to think about it; and you don’t have to carry bags. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Partly. P: Please explain this, your view a bit more. R: Checking website helps. I can usually gain understanding of the basic specification about the product. So I can go on a Sunday shopping trip with specific target and do not sound too dumb. P: What do you think increases the value of online luxury? Why? R: Safety. P: Why? R: Usually means large quantity money transfer on Internet when you buy some luxury products. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes P: Why? R: If I saw goods available online I do not think it is luxurious, even with a price tag of 5 million Yuan, more like an up sale technique to me. Everyone has its own understanding about luxury goods. P: Do you think that the popularity of luxury online is dependent on your culture? R: No P: Why? R: Most Chinese who shopping ‘luxury goods’ have low incomes, they are usually feel insecure and actually quite poor. P: Do you think you will be buying more luxury online? Why? R: Yes P: Why? R: With a population of nearly 1.4 billion, anything is possible. Researcher’s notes: Some really interesting statements, include for some quotations. Interview C4 P: What’s your gender? R: Female P: What’s your age? R: 35 P: What’s your nationality? R: Chinese P: What’s your occupation? R: Finance P: What’s your income level? R: I don’t want to answer that P: Ok let’s begin with the definition of luxury. What do you consider a luxury good?
R: Premium quality, exclusive, limited availabilities. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Quality, brand image, price (say no discounted offers) P: Ok now let’s move towards the consumer’s purchasing pattern. How often do you buy luxury goods? R: 3 to 4 times a year P: Why do you buy luxury goods? R: For superior product quality, exclusiveness and … status symbols. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The brand recognition and shopping experience. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Travelling and hometown, online sometimes. P: What is the main influence on where you buy luxury? R: Price, where I can get better offers. P: Do you think that the shopping experience in a physical store is important? Why? R: Yes P: Why? R: Because it offers teaching of the products sometimes to help me select the right thing. Also physical touch is important. P: Ok. What are your experiences with luxury online. Have you ever purchased any luxury goods online? R: Yes. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Convenient and for those not available at home town. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Cannot physically examin the products before ordering. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes P: Why do you think that? R: For high ticker items, for example jewelry and those need physical touch for example shoes, I’ll buy offline. For those that I know what to expect, for example perfumes and cosmetics, I won’t mind to buy online. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Both P: Which websites? R: I surf Net a Porter, Yoox’s sites etc. P: Why these? R: Reputation is good . P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No P: Ok, what is the most important difference for you when buying online as opposed to shopping in a physical store? R: Convenience most important. Product offering and detailed description of the products also help. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? R: No. P: Why? R: No time. I have no time. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: No I see it more like a product offering catalogue. But when it offer discounts online it may give me incentive to buy online. P: What do you think increases the value of online luxury? Why? R: Mainly is the convenience and can buy products not available at home country. P: Do you think luxury goods can lose their values when being available on Internet? R: No P: Why? R: A brand can go online but still maintain its prestige and exclusivity in its brand image. P: Do you think that the popularity of luxury online is dependent on your culture? R: Not sure P: Do you think you will be buying more luxury online? R: Maybe. P: Why is that? R: Convenience and if I have good experience e.g. after services, exchange and refund etc., I won’t mind buy more online. Interview C5 P What’s your gender? R: Female P: What’s your age? R: 29 P: What’s your nationality? R: Chinese P: What’s your occupation? R: Buyer P: What’s your income level? R: 50,000RMB/month P: Ok now we move on to the questions about luxury goods, what do you consider a luxury good?
R: A luxury good for me is a product that makes me feel special and that not something everyone can afford to buy, which gives a higher social status. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Price definitely tells a main difference from normal or necessary products. A high price can relate to a very good brand, which normally means a Western brand in China. As a customer for luxury brands, i consider the quality should be good, but the most important aspect is that the brand represents I am from a higher class in the society, which I can use to expand my network in both doing business and lifestyle. P: Consumer’s purchasing pattern. How often do you buy luxury goods? R: Once a month. P: Why do you buy luxury goods? R: Because I feel that I deserve something good after one month’s hard work. It just like some people choose to spend some money on a meal in the restaurant, some people choose to lie on the beach. For me, I will use a fixed percent of my income to buy luxury goods. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The biggest benefit is the happiness and being satisfied after owing one more piece of luxury good. Sometimes I feel that that piece belongs to my collection, therefore I would love to own it. In addition, there is a great pleasure to shop around and get inspired. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Business travels and holidays as well as airports. P: What is the main influence on where you buy luxury? R: It really depends on the location of the brand that I like. P: Do you think that the shopping experience in a physical store is important? Why? R: Yes P: Why? R: In a physical shop can I get a real good customer service, where I can also meet other people with the same interest. In my world, the company must have invested a lot to train their employees as well as the atmosphere in a store, why not just enjoy it? P: Now the topic of purchasing luxury online. Have you ever purchased any luxury goods online? What product and why online? R: Not often, actually, but I have done that. P: What product? R: Clothes mainly. P: Why online? R: For clothing, it is easier to get an overview of the whole collection. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: it saves time and it is not limited on business hours. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: You will miss the whole experience of shopping and service. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes. P: Can you give me some examples? R: For example bags. I don’t buy on line because I am not able to tell whether it is used or fake products. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Yes. P: Which websites? R: For example www.hermes.com P: Why this one? R: I tried it the first time and I experience they are real and selling real items, and then I trust it and continue to use it either for reference or for shopping. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Yes. Facebook is not working in China. But we do private clubs. P: What are those private clubs? Can you explain that a bit more, please? R: We can meet with friends in the clubs where people are relaxed and open. It is a good place to do social networking in a higher class. P: Insight into online experience. What is the most important difference for you when buying online as opposed to shopping in a physical store? R: the biggest difference is the good service level and atmosphere. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Not often P: Why? R: When I am able to afford the luxury product, it doesn’t make sense for me to try to save some money by doing it online afterwards. It is a waste of time. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: No. P: Please explain R: I don’t experience any difference between a luxury product website and a normal product website. P: What do you think increases the value of online luxury? Why? R: No. P: Why? R: I prefer more physical experience. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: I don’t think so. P: Why? R: because not having a website is considered not serious. Every company must have activities online. It gives convenience to those who doesn’t need physical shopping experience but just need to have the product in time, such as celebrities. For me, I will also check up the apps of the brands to follow up their collections and other activities and news. P: Do you think that the popularity of luxury online is dependent on your culture? Why?
R: I don’t know. More no. P: Why? R: The whole world is using internet. People who are buying luxury goods tend to have higher education and higher income. I don’t think it has too much to do with culture, but maybe it is more about the target group’s shopping habits and whether the physical stores locates in a long distance. For instance, not every big cities in China has all the luxury brand stores, so online shopping will give more opportunities to people who are from smaller cities. P: Do you think you will be buying more luxury online? Why? R: Maybe. I will buy online only if I am in urgent and can get a very, very good deal. Interview C6 P: What’s your gender? R: Male P: What’s your age? R: 23 P: What’s your nationality? R: Chinese P: What’s your occupation? R: Student P: Ok let’s talk about the luxury goods now. What do you consider a luxury good? R: Something that you have to consider wisely before buying, (laughing). P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: The design, uniqueness, limited editions. And usually you’re paying a high price for the design, and sometimes quality P: How often do you buy luxury goods? R: Once a fortnight P: Why do you buy luxury goods? R: Quality, and design. These two things for sure. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: Quality. Knowing that the products from a particular brand, for example Bottega’s leather will be of a certain quality. Design ‐ some designs stand out, but does not scream much of the brand. This can be by an example of Ricardo Tisci for Givenchy, or Neil Barrett, also Jil Sandler. P: Really interesting examples, thanks for them. Ok, now another topic. Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: I like shopping when I am abroad, especially in London – Selfridges, Harvey Nichols, Dover street market, Liberty’s. Online, my favorite sites are Luisaviaroma and Ssense P: What is the main influence on where you buy luxury? R: Price, availability, convenience. P: Do you think that the shopping experience in a physical store is important? Why? R: Yes. The brand’s image. And sometimes the assistant’s service may influence the buyer’s decision. P: Ok let’s talk now about your experiences online. Have you ever purchased any luxury goods online? What product and why online? R: Yes P: What products? R: You mean recently or in my all life? P: Ok, I guess if it’s all life then it will be too long. Maybe just recently then? R: Clothes, belt, in fact I did that yesterday. P: Why online? R: Availability of stock, some things you cannot by here. Only online. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Home delivery, and convenience of not having to go to the shops. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Wrong size, inconvenience of exchanging size if it doesn’t fit, or inconvenience of returning items. May not be home to receive the items. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes P: Why? R: If I know my size, if I have been buying from a particular brand for a while, then I would not mind buying it online. But if I’m uncertain of my size, would prefer to go to the shop to try it physically P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Other sites, like Luisaviaroma, Ssense, Matches, Mr Porter, some others P: Why these? R: They may have a wider selection than the original website. Because these sites are wholesale, for example the buyers for such websites may have selected pieces that have not been chosen by the brand itself to be in the collection, and being wholesale means that the items may sometimes be released earlier than on the original website. Such websites also allow you to purchase from many different brands. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Not really P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Shipping costs P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes P Why? R: Might be much cheaper online. Or the store did not have stock for my size. Customer service was bad.
P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yes P: Can you tell me a bit more why. R: Most websites include pages on the company’s ethos and brand’s heritage, which sometimes cannot be seen in a store P: Ok, few more questions left, now in terms of luxury value. What do you think increases the value of online luxury? Why? R: The value of the products? P: Well, the value of products or the value of luxury, depends how you understand that, but I mean whether there are some advantages that Internet can make some luxury products more valuable to you than in physical stores? What do you think? R: Hmm.. I don’t know actually, I don’t think so. They can gain maybe because of the convenience, but I don’t think this makes them more of luxury. Maybe for other products, yes. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: No P: Why? R: The quality and design of the products have not changed. Only their availability has, but this does not define the value of luxury good, but rather exclusivity. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes. I think a lot of Chinese are looking for luxury items that are usually not available in China, so this increases the popularity of luxury online because there is a wider range of choices available online. The ease of internet availability has also popularized online shopping. P: Do you think you will be buying more luxury online? Why? R: Yes P: Why? R: If It’s more convenient than buying from boutiques Interview C7 P: What’s your gender? R: Female P: What’s your age? R: 25 P: What’s your nationality? R: Chinese P: What’s your occupation? R: I work in public sector P What’s your income level? R: More than 4000 dollars a month P: Customer’s definition of luxury is the first topic of the interview. Please tell me what is your definition as well as what do you consider a luxury good? R: Something more expensive than average and rare P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Rarity, quality and price P: Consumer’s purchasing pattern. How often do you buy luxury goods? R: About once every two months, sometimes more often, sometimes less. It depends. P: Why do you buy luxury goods? R: I believe it has better quality than average products, meaning it is more durable. The service at boutiques selling such products are also way better. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The guarantee provided. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: On holidays and online P: What is the main influence on where you buy luxury? R: Price and service P: Do you think that the shopping experience in a physical store is important? Why? R: Yes. P: Why? R: You get to see and feel the goods and all your answers are answered immediately. There is also less hassle. If you need something, you simply ask for it. P: Purchasing luxury online. Have you ever purchased any luxury goods online? What product and why online? R: Yes. P: What product, can you give me some example? R: Yes, for example branded bag P: Why did you online? R: It was cheaper than buying it in a store. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: The price P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Cannot be sure whether it is authentic or whether it has any defects P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes. I would not buy electronics or shoes because it is a hassle to return items bought online, and I cannot test electronic products if I buy them online. For shoes, it is difficult to know whether they fit because sizing differs according to the cut of the shoes. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Special sales websites. Which ever offers the products for cheaper, but the website has to be reliable too P: Why these, what was the main reason?
R: Whatever was cheaper P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Yes P: What networks? R: Mainly different forums P: What do you use them for? R: To review the items and the reliability of websites P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Not being able to see and touch the object P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? R: Yes P: Why? R: It is important that I get to see and feel and maybe try the item before I spend so much money on it. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Not entirely P: Please explain R: The service aspect is missing. When we think luxury we always associate it with good service. Buying something online can be a frustrating process. P: What do you think increases the value of online luxury? Why? R: The service P: Why? R: Service is important. It can coax you into buying something you would not otherwise buy, and vice versa. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes, possibly. It is very possible. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes. Certain cultures might welcome change better (i.e. changing from physical brick and mortar experiences to online experiences) P: Do you think you will be buying more luxury online? R: Probably P: Why? R: Advances in technology would probably enhance the online shopping experience in the future. Shopping online has its advantages – convenience. Interview C8 P: What’s your gender? R: Female P: What’s your age? R: 25 P: What’s your nationality? R: China P: What’s your occupation? R: I work in logistics company, I have a management consulting role. P: What’s your income level? R: You wish to know that hehe, but I will not tell you of course. I guess you can imagine it is higher than average in China. P: Customer’s definition of luxury is the first luxury related question, what do you consider a luxury good? R: Luxury is something unique, expensive, something that gives me some pleasure, something very goods. In fact it is always related with some good positive emotions, it is a reward for me. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: All of these, I think is complicated to find particular values that define luxury, but I would say whatever makes me happy? Of course it has to be a unique and expensive product, or sometimes very exclusive. Not many friends of mine might have it and sometimes I just want to show off a bit with my new purchases. Yes, I think this is it. P: How often do you buy luxury goods? R: Pretty often. P: Why do you buy luxury goods? R: They make me very happy. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: Them making me happy. As I told you, I am simply feeling better, firstly when I buy some luxury, and later when I have it. When I wear it, here I am talking about some clothes, when I carry them around, this is about bags, or when I drive it, haha, this is about cars. All luxurious. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: I shop in China only a bit, mainly travel and then shop, sometimes online. P: What is the main influence on where you buy luxury? R: It depends what I want to buy. But sometimes I am somewhere, probably travelling or on business and I don’t plan buying luxury, but then ending up actually buying it. Here the influence is not on where I buy, but where I am on what I buy. P: Do you think that the shopping experience in a physical store is important? Why? R: Sometimes yes and sometimes not. Sometimes I like to go to some good shops like Louis Vuitton, just enjoy the atmosphere there. But sometimes those shops annoy me. P: Why? R: The sales personnel is watching you all the time, then can annoy you badly. One time I was on business trip in Europe, I was jogging somewhere in Paris, I saw this one shop, now I don’t remember which brand, Chanel, or Gucci, well I think it was one of those French brands, anyway, I was just jogging, I pass by, I saw some nice bag, I entered and they were like almost killing me with their eyes, so angry I go in my jogging clothes. Can you believe that? They didn’t know I have my credit card in my back pocket, but after how they look at me I don’t think I ever go luxury shopping in my jogging clothes. And if you think of this, it is bad. It should be me consumer feeling good about shopping and going shopping in any clothes I want to wear, not like the staff is acting like this, and looking down on me. Well, anyway, remember, don’t go luxury shopping when jogging.
P: Wow, alright, thanks for that story. I won’t then. Let’s move to the topic of online luxury then. Have you ever purchased any luxury goods online? R: Oh yes, of course. P: What product? R: Many different, some clothes, some bags, some jewelry, shoes. P: Why online? R: It was convenient, fast, I didn’t want to dress up to go to proper shops, etc. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: The convenience, the availability, you can do it from where you want. Even from your mobile phone. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Hmm. I don’t know really. Maybe some problems with delivery? P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: I don’t know, maybe. There might be some products I won’t buy online. Do you think I would buy online some really really extremely expensive things? I don’t know. P: Why? R: I think sometimes when you spend really big amounts of money you need some sort of personal service. But I don’t spend such amounts of money too often, so at the moment I can buy online practically everything. All sorts of luxury. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Both, sometimes the original ones, sometimes some department’s stores, etc. I use this one cool website for cosmetics, and beauty products, they have such good choice, better than anywhere, really fast shipping, and also a lot of perks when you buy there. Not only you get some things for free with your orders, but each time you buy something, you get another extra 1% discount to your orders above some particular price. For example, now I have bought there some things like 20 times, so I have like 20% of discount. Next time I buy, I will get like 21, and so on. P: Oh wow, this sounds like a really interesting site. What happens when you reach 100 purchases there? 100%? R: Haha I wish, but probably it stops somewhere. You want to buy something as well, you can use my profile maybe we add up faster to this 100! Hahahaha! P: Alright, I see we moved to some other topics, now let’s get back to your experiences with online world of luxury. Next question. Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No, not really. We don’t have officially Facebook in China, don’t you know that? Sometimes I read some blogs. P: What blogs? R: There are those fashionable people who have some websites where they post what they are wearing. I know it’s silly a bit, but I really get inspired sometimes of what to wear. It’s pretty good. P: Ok, now some more question about your experiences. What is the most important difference for you when buying online as opposed to shopping in a physical store? R: The experience maybe? I mean the experience is different. P: Is this good or bad? R: Not good or not bad, it depends what you want at the moment. If you want convenience you go online, if you want nice shops, you go offline, or whatever if you want to talk to some salespeople. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes. P: Why? R: I tried some things on but wasn’t sure if I wanted them. Then I went home and decided that yes! I wanted them. So I just went online and bought them, it was some clothes. In fact the deal online was a lot better than in a shop. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Well, it’s same products so same values. P: What do you think increases the value of online luxury? Why? R: Nice websites, maybe. But I don’t think anything increases it. P: Why? R: Luxury is luxury, no less or more value online or offline. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Only when it comes to counterfeits on some websites that are considered reliable and then it turns out they aren’t P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: I think now in China everyone is in a hurry, or at least in my business. Convenience is a key, this is good for online shopping. P: Do you think you will be buying more luxury online? Why? R: Probably yes P: Why? R: Depends on time and money! Interview C9 P: What’s your gender? R: Male P: What’s your age? R: 28 P: What’s your nationality? R: China P: What’s your occupation? R: Consultant P: What’s your income level? R: High P: Ok let’s talk about luxury now. What do you consider a luxury good? R: Something with good quality, expensive.
P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: All sort of quality, price, uniqueness. P: How often do you buy luxury goods? R: Sometimes, maybe once a week. P: Why do you buy luxury goods? R: I am happy when I have them, sometimes I want to show off with them. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The luxury product itself, and that it makes me happy. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Mostly holidays, and online also. P: What is the main influence on where you buy luxury? R: The needs. P: Do you think that the shopping experience in a physical store is important? Why? R: Yes it is important, but sometimes. It depends on what you want to buy. P: Why? R: Like it is an experience, usually a good one. P: Purchasing luxury online. Have you ever purchased any luxury goods online? What product and why online? R: Yes I bought many product online. P: What product? Can you give me some examples. R: Some clothes, some electronics… P: Why did you chose to buy them online and not in a store? R: It was easier to find them online. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Convenience, easy to find, fast, and home delivery. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Sometimes there are fakes online. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes, sometimes it is more convenient, some products I need to buy faster. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Both, sometimes original, sometimes some others. Maybe others a bit more, there are lots of websites. P: What is your main criteria on the choice of the website? R: The reputation or my experience with it. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No. P: Why? R: There is nothing there for me. P: Ok, now we have few more questions left regarding insights into online experience. What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Convenience, availability. Some products they don’t have them in normal stores. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes. P: Why? R: I went to check the product then bought it online because it was cheaper. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yes, it has the same value. P: What do you think increases the value of online luxury? Why? R: Maybe the home delivery. P: Why? R: I don’t have to go to the shop, but the products comes to me after one click. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: No. P: Why? R: Unless it is related to fakes, it cannot lose value. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes, in China a lot of people buy luxury, also fakes, because they want to show off P: Do you think you will be buying more luxury online? Why? R: I don’t know. Interview C10 P: What’s your gender? R: Female P: What’s your age? R: 28 P: What’s your nationality? R: Chinese P: What’s your occupation? R: I work in IT company P: What’s your income level?
R: (quiet) P: Ok, not a problem, you don’t need to tell me if you don’t want to. R: Ok, I don’t want to disclose that. P: Sure. Let’s talk then about the customer’s definition of luxury. What do you consider a luxury good? R: Something expensive, of good quality, luxurious, there are some brands that I know that only have lux products, so these are the luxury things for me. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: All of these, mainly price and uniqueness. P: The next theme of the interview is the consumer’s purchasing pattern. How often do you buy luxury goods? R: Sometimes, maybe every other month. P: Why do you buy luxury goods? R: They make me feel special. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The product itself and that I feel good when I buy it. Luxury goods have a lot of value in the emotions they bring/ P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Shopping here in Shanghai, sometimes I go to Beijing, sometimes travel for business, or holidays, I also buy online. P: What is the main influence on where you buy luxury? R: Sometimes price, but mainly the availability. We don’t have all the European brands here in China, so I like to bring some new things back home every time I travel to Europe. P: Do you think that the shopping experience in a physical store is important? Why? R: Yes, but not the most important. P: Why? R: It also makes you feel good and happy when you go to those shops. P: Have you ever purchased any luxury goods online? What product and why online? R: Yes. P: What product? R: Some branded bags. Some cosmetics. P: Why online? R: I couldn’t get them in Shanghai and I didn’t want fakes. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: It’s fast, convenient, sometimes cheaper. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: There is danger of fakes, there are a lot of fakes online. Sometimes you can have some problems with delivery I suppose. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: No. P: Why? R: If I want some product I can usually buy it both online and offline. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: I use both. Sometimes original, but not all have home delivery service in China. P: What makes you decide on what website you will make purchase from? R: Trust. I read some reviews about websites. Also, my friends also buy online, they tell me what sites are good or not, we exchange information about them. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No, but I read sometimes some reviews. P: What kind of reviews? R: Like some forums and stuff. P: Why? R:I get some information about luxury there, also sometimes I want to compare some product, like electronic, I need to read some reviews or opinions to see which product is better. It helps me make decisions. P: Ok, thanks. Now let’s talk about the experience with the shopping for luxury online. What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Price, time saving, home delivery. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: No, not really. P: Why? R: I have not thought about it. Oh, I actually have done that. I saw some products in normal shops, but these were cosmetics so I didn’t try, but later on I thought about them at home and I bought online. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yes. P: What do you think increases the value of online luxury? Why? R: No. P: Why? R: You cannot increase the value of luxury P: Do you think luxury goods can lose their values when being available on Internet? Why? R: No. P: Why? R: They cannot lose values either. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Not really. P: Do you think you will be buying more luxury online? Why?
R: Yes. Interview C11 P: What’s your gender? R: Male P: What’s your age? R: 30 P: What’s your nationality? R: Chinese P: What’s your occupation? R: I work in finance P: What’s your income level? R: Above average let’s say P: After the little background and introduction, let’s talk about luxury. What do you consider a luxury good? R: Mostly expensive and exclusive products. Things that have some unique value, but usually expensive price, high quality, something unique and distinct from other products, it is also related to product’s durability and long lasting. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: The value of the product usually comes from the qualities of the product, I mean the quality, the fabric it is made of in case of some clothing items for example, with jewelry it is the stone that it has in it, with cars it is the engine, but also the design. There are also some brands that add heritage or tradition to its value, and some customers buy those products because of this P: How often do you buy luxury goods? R: You want to know like what, once a week, once a year? P: Yes, exactly? R: It is hard to say, I buy whenever I want, or feel like. P: Why do you buy luxury goods? R: In fact they make me feel good. I am satisfied when I buy something new, some cool new gadget. I must admit I like to show off a bit sometimes, show my peers some cool things, or to my colleagues. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The value of them. They make me happy, this is the biggest value. And they make my friends jealous, this is value in itself. Ok I am joking, I buy them because I like having them, simple. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: It depends, I buy whenever and wherever. There is no pattern. Mostly when I travel though, it seems I am more inclined to spending when on holidays or some business trips. P: What is the main influence on where you buy luxury? R: It depends where I travel, what kind of shops are at the new location. P: Do you think that the shopping experience in a physical store is important? Why? R: Not really. P: Why? R: I get easily tired of the over knowledgeable shopping people, I can’t get bothered. P: Ok since you don’t appreciated the shopping experience, so much, maybe you indeed prefer to shop online. Have you ever purchased any luxury goods online? What product and why online? R: Oh yeah, many times. I buy all kinds of products, lot’s of electronics, home appliance, gadgets, sometimes even furniture. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Convenience and speed. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: I don’t see any. Ok one, sometimes I order some things online and then go on some travels, so when the delivery arrives, no one is to pick it up. Oh yeah, in fact that happened many times to me. This is too bad. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes, few things are difficult to be judged online in terms of their quality. I sometimes have doubts if the picture online says everything about the product. I even have problems distinguishing colors, or maybe I am color blind. But it happened that I ordered something I thought I expected the color of it, and then the thing was a bit different. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: I try to stick to originals, but probably have used some others too. P: Which websites? R: You want the names? No I don’t remember, but just think of some luxury products and their original websites. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No, not really. P: Why? R: I don’t have time for that. But I sometimes read reviews. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: It is more convenient online, and faster. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes. P: Why? R: Because it was more convenient actually. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yes. It’s the same. Website is a form of shop, the benefit of it is that you don’t have to get out and get to the shop, but just click on some website and here you go. In fact, usually those websites are pretty similar to the store, like in terms of the color theme, etc.
P: What do you think increases the value of online luxury? Why? R: Probably a cool website, or I would rather say a functional website. P: Why? Can you explain please? R: Because it enhances your experience. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Only if they are copied. P: Why? R: I often have some concerns about if the product I am buying is original , I think it is a big problem, especially in China, but other than that I don’t think luxury can lose value online, only gain. Oh unless the website is really bad. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: As I said maybe it is related to the counterfeits, in China people are pretty concerned about that. P: Do you think you will be buying more luxury online? R: Yes sure. Interview I1 Paulina: What’s your gender? Respondent: I’m female P: What’s your age? R: I’m 25. P: What’s your nationality? R: India P: What’s your occupation? R: Human Resources P: What’s your income level? R: Ehhhhh. .. P: You can say medium, high, average, I don’t need a number if it is too sensitive. R: High P: Ok, now I want to know what’s your definition of luxury, and what do you consider a luxury good. R: Hmmm, luxury goods are those that are unique, that are … hmm… expensive in a way because they are done by designers, .. that’s it. P: How do you define the value of luxury of a product? What’s the most important, for example… .. R: Quality! Quality and uniqueness! P: Good! Now I want to know something about your purchasing pattern, or purchasing style. How often do you buy luxury goods? R: Couple of times in a month. P: And why do you buy those luxury goods? R: Because it makes me feel better. P: Ok, and what do you think is the biggest benefit of buying the luxury goods? Is it the product itself, or the shopping experience, or the brand image, …. ? What do you think? R: It’s a combination of brand, service – because they treat you well, and because you have unique clothes that other people don’t. P: And if you want to buy luxury goods, where do you mostly buy? Do you shop in your hometown, or you go for business travels and you shop then, holidays, online .. ? R: Hmmm, everything… so it’s holidays, it’s business trips, and in everyday life. P: So what’s the biggest influence on where you buy? You plan that in advance or it’s more spontaneous? R: Mostly, it is spontaneous. P: And do you think that the shopping experience in a physical store is important for you? R: It is, because you have better service. P: So actually does it happen that if you see a really appealing store, you will enter it just because it looks good and then you end up buying there? R: Yes, it happens for me. P: And now, have you ever bought any luxury online? R: Yes, yes yes. P: What kind of products? R: Dresses… but I tried them in a shop before in my hometown, and they were cheaper online. P: Was that the main reason why you bought them online? R: Yes, because it was the same dress, half of the price. P: So what do you actually think is the biggest advantage of online shopping for luxury goods, is it only the price? R: Sometimes you don’t have time to go shopping here in my city, so online you can buy at any time, and free shipping, within 1 or 2 days. P: Do you think there are any disadvantages with buying online? R: There are maybe some shops that good be freud, so you need to be careful when you shop online. P: Does this make you stay away from online shopping, or not really? R: I shop online but I don’t like it as much as I do it in my hometown. P: So you actually shop a lot less online as in regular stores? R: Yes! P: When you are making the decision that you want to buy something online, is there any difference depending on what kind of products you want to buy? R: Yes … so I wouldn’t buy shoes online. Yeah I wouldn’t P: Why? R: Because it’s very specific, and very unique, and you really have to try them on. With a dress, it’s much different. P: So you fear that the size of shoe is wrong, not the quality? R: Yeah they also might not be as comfortable. P: Ahh, ok! And when you buy something online – do you usually go to the original store’s website, or you go for some other sites, with sales, departments store, etc? R: No.. it’s original.
P: And why do you go there instead of others? R: Because I feel it’s safer, because I know .. it is just safe, you know. P: So do you actually expect the same service online as you do in a physical store of the brand? R: Yes yes, and you can call them for any questions. P: And do you use any social networking sites, forums, etc. to look for information about luxury? Anything? R: Hmm, not really, maybe one blog I read what is in. P: Ok, I have some more questions about online experience. Firstly, what is the most important difference for you when shopping online as opposed to shopping in a physical store. R: Service. P: So you get less service online or more? R: Less service online. P: For example? R: Like you wouldn’t get any opinion on how you look like in this particular cloth. P: Ok, you mentioned before that I happened that you went to a physical store to try something on and then you bought it online. Has it happened more times than once? R: No, it was really one time. P: Do you think this could happen more? You try something on, but maybe you would want to think about it, or check it online, etc? R: Yes, definitely yes if the price is half of it. P: When you look at the original websites of the brands, do you think they convey the same values of the brands as it is in a store? R: Well I think, there are more sales online, the price itself is the same, but at least you can get more sales… and there are outlets online. P: And what do you think increases the value of online luxury? R: Well, it’s convenient, you seat at home, you can order and within 1 day you get it at home, no need to go extra for this thing. P: Do you think luxury brands can lose their values when being online? R: Yes… I think for expensive clothes is nice to go to a normal store. P: Why? R: Because of the service, you feel very special there. Online everything looks the same. P: Do you think that the popularity of luxury online is dependent on your culture? R: I think in Europe it is more popular to buy online. P: Do you know why? R: Yeah, maybe it’s the independence of females in Europe, they are less traditional. P: Do you think you will be buying more luxury online in the future? R: Yes, yeah. P: Why? R: People don’t have much time, they .. time is money, they prefer to shop at home instead of going to shopping centers and losing their time. Researcher’s notes: Doesn’t seem the person is actually shopping a lot online, some contradictory thoughts on the online experience. Person seems to like shopping offline a lot more. Interview I2 P: What’s your gender? R: Male P: What’s your age? R: 26 P: What’s your nationality? R: Indian P: What’s your occupation? R: Banker P: What’s your income level? R: Let’s say not Enough P: First I’d like to find out what is your definition of luxury, and what do you consider a luxury good? R: High end branded clothes, watches, expensive cars, … yeah that’s pretty much it P: How would you define the value of the luxury of a product? R: What do you mean? P: For example what are the values such as uniqueness, price, quality, and so on, that in your opinion define the luxury? R: Most of the luxury goods are made from finest quality materials which make it durable and gives those goods more satisfaction and comfort, … and hence these goods are more expensive P: How often do you buy luxury goods? R: Not that often P: What does that mean? Do you think you could estimate the frequency of your purchase? R: Well, not really. Sometimes I buy it very often, sometimes I don’t buy it for a while, there is no frequency or pattern. I just buy it whenever, and I don’t keep track on time. P: Ok, then why do you buy luxury goods? R: People buy luxury goods because most of them are made from finest quality materials which makes it durable and gives them more satisfaction and comfort. P: What is the biggest benefit of you buying luxury goods, for example the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.? R: Sense of pride I think, and whatever boosts their image and status. Yeah, that’s what I think is the most reason for people. P: Where do you mostly buy the luxury products? Shops in your hometown, travels, somewhere else? R: Mainly on business travel. … holidays … there is not much in Nagpur which is my town. No choice. P: Ok so I understand that one of the aspects that influence your decision on where to buy luxury is because your city doesn’t offer good luxury. R: Town, not city. Yeah, actually that’s why. Yeah, I need to travel to shop deluxe things, otherwise I have no options.
P: So what is the main influence on where you buy luxury? Is it this limited availability or something else? R: No, main influence is the brand and the recognition of that brand. I don’t buy anything I don’t respect. I need to have some brand image first. P: When shopping in physical stores, do you think that the shopping experience in a physical store is important? Why? R: Yes … P: Why? R: It is more sensible since you can physically see the product and you can know the quality of the product. I need to see everything first. Yeah. Quality is very important. Most important, maybe … P: Ok, let’s move towards your shopping experiences online. Have you ever purchased any luxury goods online? What product and why online? R: No. I never bought any luxury online. Actually I never bought anything online. I don’t like it. P: Why? R: I just don’t believe in shopping online. P: What do you consider as the main benefits or advantages of purchasing luxury online? R: I don’t see any benefits since I don’t shop online. P: Alright, what do you consider main disadvantages/ dangers of purchasing luxury online then? R: It’s simple. Can’t judge the product by just its picture and can’t tell about the quality of the product, … even if it is a high end brand …. , buying online luxury product is not feasible. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Never bought a luxury product online P: But if you had to consider buying online, do you think that product type would matter? R: I am not considering buying online, ok? P: Why is that? R: I believe in physically being in the shop to buy a luxury product for the product satisfaction. P: Ok, have you ever used then some luxury product’s websites, either to get an overview of some products, or to read something about the brand? R: No, I don’t buy online. Never use online shopping websites. P: So you haven’t used any sites about luxury just to read some reviews or opinions? Or maybe you have engaged in social networks for luxury, like forums or Facebook? R: None. P: Why? R: I don’t believe in shopping online. P: Ok then. What do you think is the most important difference for you when buying online as opposed to shopping in a physical store? R: Product Satisfaction. This simply includes quality, value for money. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Personally it does not since as a consumer of these goods, I would like to see them physically first for product. Self satisfaction. P: What do you think increases the value of online luxury? R: Brand P: Why? R: Due to its brand recognition P: Do you think luxury goods can lose their values when being available on Internet? R: It is a personal choice. For me it does not but at the same time I would buy it from a shop and not online P: Do you think that the popularity of luxury online is dependent on your culture? R: No P: Why? R: It is a personal choice. P: Do you think you will be buying luxury online in the future? R: No P: Why? R: Cause I will be buying them from the store physically. Researcher’s notes: The person lost patience very fast, very negative towards online shopping, does not seem to consider it at all. Interestingly, he is negative to online shopping in general, not just in regards to luxury. And even the fact that his city or town does not offer much luxury, he does not consider luxury online. Interview I3 P: What’s your gender? R: Male P: What’s your age? R: 25 P: What’s your nationality? R: Indian P: What’s your occupation? R: Teacher P: What’s your income level? R: Normal P: What do you consider a luxury good? R: Any good that is beyond the regular, every day use good. Like something I can do without, but having it with me makes life easier and more comfortable. It might or might not be extremely expensive. For example, for me, a car is a luxury good, and so is a good watch, a new smartphone, or an iPad. It’s something that I can live without, but having it is always better! P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: It should be unique and easily differentiable. It should be of good quality. The brand equity makes a huge difference. Yes, I actually think that a brand here has importance, and makes a difference. P: How often do you buy luxury goods?
R: Twice a year or so, or maybe more, it depends on what I think is a luxury for a moment, but I would say probably couple times a year or so P: Why do you buy luxury goods? R: Mostly to reward or pamper myself. Why else do we earn money, right? P: What is the biggest benefit of you buying luxury goods? Apart from you rewarding yourself, it could be for example the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.? R: The product is the main benefit. For me, the utility and comfort that the product will give to me is the most important. Some brands are also associated with comfort, so I like that. For example, a recliner from Lazyboy is a great buy for me, since it provides me with comfort, and also the brand is such that I can trust them and their products. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: I don’t think I would ever buy a luxury product online. For me, it is very important to see, view and use the product in person before I buy it. So, I normally like to shop in my hometown, here in Delhi. However, if some items are cheaper in another country, I might buy them while on vacation. For instance, I bought a television for my house in India from Singapore, since electronics are cheaper in Singapore. P: What is the main influence on where you buy luxury? R: I should be able to see, use and test the product before I buy it. So I do not prefer online shopping for luxury goods. In fact the chance to see the product, use it and so on has a big importance to me. This is very important thing when I make decisions where to buy, sometimes I specially go to some shops because I can test products there. Testing is very important. P: Do you think that the shopping experience in a physical store is important? R: Yes P: Why, can you please explain? R: Because it lets me see, use and test the product. Also, I can talk to a salesperson or expert about the product, if I have any questions about it. As I told you, I like testing the products. I want to talk to the people in the shops, they are usually experts, they know what they are selling and so on. This is important. In fact, pretty important. P: Have you ever purchased any luxury goods online? What product and why online? R: No. I normally buy in a physical store. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Sometimes there might be promotions and discounts. Also, there might be the convenience of free home delivery. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: The product is not used by you in person, and you might not like it when it gets delivered to you. Again, this is what I said before that the testing and the seeing, touching of product. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? R: Yes it does. P: Why? R: For something like an iPad or a phone, which I know would be the exact same wherever I buy from, I might consider buying online, if there are significant discounts on it online. P: Do you actually use any websites for luxury online, not necessarily when you want to buy something, but also when you want to get overviews of some products? R: I don’t buy online. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No P: Ok, of course. When you consider then the difference between the online and the offline shopping, what is the most important difference for you when buying online as opposed to shopping in a physical store? R: In a physical store, I can use the product and see it right in front of me. Also, I can speak directly to an expert or the salesperson about any questions. This doesn’t happen in an online store. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? R: I have not done this. P: Would you consider doing that? R: Yes I think so. But I would definitely consider doing it if there are online discounts, and/or I can get convenience like home delivery. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: No P: Could you please elaborate a bit more on your answer? R: In a store, the ambience, salespersons, and actually seeing the physical product gives a more luxurious feel than an online store. P: What do you think increases the value of online luxury? R: Not sure. I think there is more value in physical store luxury. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes. Sometimes if there are extremely exclusive items like a collector’s edition watch, it would be better to have it only a store with professional staff. Having it online dilutes its brand value. In fact, a watch is only an example, but I am pretty sure there are lots of other products that could lose their value online, many people don’t want to see expensive things being available online, this is generally a negative. P: Do you think that the popularity of luxury online is dependent on your culture? R: Yes, very much. In India, I believe almost everyone likes to see, feel and use things before buying it. This is true not just for luxury goods, but even for daily items like fruit or vegetables. This is why the concept of online shopping in India is not as popular as the West. However, now people in the main cities have started purchasing more things online, like electronics, due to discounts, and convenience like home delivery. P: Do you think you will be buying more luxury online? R: No I doubt it. P: Why? R: For luxury goods, I would rather go to one or more store, compare features and prices, and then make a decision. Researcher’s notes: The most important benefit for this person is the possibility to see, touch and test the product before buying it. It does not seem that he will be ever encouraged to buy online unless he is very familiar with the product and gets an overview of it beforehand Interview I4 P: What’s your gender? R: Male P: What’s your age?
R: 24 P: What’s your nationality? R: Indian P: What’s your occupation? R: Student P: What’s your income level? R: I have no income at the moment P: What do you consider a luxury good? R: It is a product from a good, respected brand, not available to everyone, probably from some limited edition or custom made, it is also something of a premium price, and very high quality. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Brand name, the ambassadors that endorse the brand, limited editions, price and quality P: How often do you buy luxury goods? R: Very luxurious once a year or once in two years, less luxurious more often. P: Why do you buy luxury goods? R: Quality of the product, brand name P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: Superior quality, after sales service, long lasting P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Shopping in my hometown P: What is the main influence on where you buy luxury? R: A place where the sales person can honestly explain the plusses and minuses of the product. P: Do you think that the shopping experience in a physical store is important? R: Yes P: Why? R: Since luxury products are expensive, it requires careful and patient consideration of your options. A sales person should be able to explain all product specifications and details completely before choosing to buy the product. P: Have you ever purchased any luxury goods online? What product and why online? R: No. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: I guess you could buy them for cheaper as suppliers do not have to rent out expensive spaces in prime areas and malls. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Counterfeit products, internet scams, lack of personal relation with a sales person. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? R: Yes P: Why? Please explain. R: You need to make sure the product you’re buying is not easily counterfeited P: Have you ever used Internet to read or get overview of luxury online, if so have you used product’s original website, or some other sites like departments store’s or special sales websites? Which websites? R: I do not use online websites for luxury P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.)? R: No P: Why? R: I do not buy too many luxury products. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Explanation of product features. Sales person can guide you best. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? R: No P: Why? R: Due to internet scams and counterfeit products P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: No P: Can you please tell me why do you think so? R: All luxury products must provide a service on a personal level. P: What do you think increases the value of online luxury? R: None, nothing really. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes P: Why? R: It becomes more commercialized and accessible to people of all income brackets. P: Do you think that the popularity of luxury online is dependent on your culture? R: Not too sure P: Do you think you will be buying more luxury online? Why? R: No P: Why? R: Again because I am concerned about Internet scams and counterfeit products Interview I5 P: What’s your gender? R: Male
P: What’s your age? R: 23 P: What’s your nationality? R: Indian P: What’s your occupation? R: Student P: What’s your income level? R: Zero P: What do you consider a luxury good? R: Jewelry, Watches, Antiques, Designer clothes, Custom/Limited edition merchandise P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Uniqueness, quality and lack of need. P: How often do you buy luxury goods? R: Very rarely P: Why do you buy luxury goods? R: Who from? Basically barely do it online. Big investments, prefer to physically inspect the good before purchasing. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: Spoiling yourself. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: hometown is small. Maybe a trusted place in a big city ;) P: What is the main influence on where you buy luxury? R: A bit of market survey to get from trusted place which has good after sales service if needed (eg. in watches) P: Do you think that the shopping experience in a physical store is important? Why? R: Yes! P: Why? R: Objects shown online may be different than they appear, or least people think so. The experience of going out, in a physical store, physically inspecting the product, hearing someone (salesperson) pitch one product (over the other) and getting instant gratification are important pillars of shopping, especially in luxury purchases. P: Have you ever purchased any luxury goods online? What product and why online? R: No P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Well I'm too lazy to move my lazy bum outside the house even when I'm want to spend a few hundred dollars on something I can get for 50 as well. That’s why I shop online P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: I think there’s no grave danger except for card detail misuse. I trust most online stores to deliver the genuine product. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes! P: Why? R: A book, a ticket, or some groceries or inexpensive common items can be purchased without much deliberation or close inspection. Others like fashion, consumer good, electronics or accessories bring with them the much cherished shopping experience. P: If you were buying luxury online, do you think you would use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Haven’t bought luxury online. But whatever seems more authentic and gives a competitive rate. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Well I am shown a lot of advertisements here. Can’t say haven’t clicked any ever! P: What networks? R: Facebook P: Why? R: It’s an impulsive click! P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: I answered already! P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Haven’t yet. But I wouldn’t mind doing that at all, even if its marginally cheaper online. P: Why? R: I would exploit the physical store model for inspecting the product then exploit online stores low warehousing costs. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: No it’s really hard. P: Please explain A physical store with plush interiors, trained and polished staff and general glitter wont matchup to a well made website. Anyone can invest in a swank website. P: What do you think increases the value of online luxury? Why? R: Hard to say. P: Why? R: Okay. Say I visit an online store and give basic details showing minimal interest. I soon get a follow up phone call/email, quickly followed by a info book posted to me, or a well dressed guy coming to me to showcase the products. P: Why? R: The best of virtual efforts are no match for a simple physical gesture, which can astound. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Maybe. P: Why?
R: Pitched against inferior brands in mega marts. Someone not well‐versed with brands may have slight disregard for names. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes, everything online is! Few years ago idea of anything being sold idea would be disregarded as nonsensical. P: Do you think you will be buying more luxury online? Why? R: Soon! P: When? R: It’s a paradigm shift. Plus I can only buy more luxury when I have more money. Which will be soon! Interview I6 P: What’s your gender? R: Female P: What’s your age? R: 25 P: What’s your nationality? R: Indian P: What’s your occupation? R: Financial industry. Private equity. P: What’s your income level? R: 60’000‐80’000 dollars P: What do you consider a luxury good? R: Any piece of item that is sold at a premium but serves the same purpose as a product that is sold at a lower cost. E.g. bags, mobile phones, dresses P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Unique and high quality. If I’m paying a high price for a product, I would want it to be customized to my needs or something rare that not owned by as many people P: How often do you buy luxury goods? R: Twice‐thrice a year P: Why do you buy luxury goods? R: To reward myself P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The luxury product itself P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Holidays P: What is the main influence on where you buy luxury? R: Variety and choice P: Do you think that the shopping experience in a physical store is important? Why? R: Yes P: Why? R: If I’m buying an expensive piece of item, I want to physically see/touch it before making the purchase to be fully convinced that it is the right choice P: Have you ever purchased any luxury goods online? What product and why online? R: No P: What do you consider as the main benefits/advantages of purchasing luxury online? R: The only advantage I see of purchasing luxury goods online is that you have access to things that are not available locally. Also, you can shop in the comfort of your home and it gets delivered to your doorstep. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: You are not sure if the material/functionality is exactly what you see online. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes P: Why? R: I will only spend on a luxurious item that I need to wear if I know it fits well. However, if the luxurious item happens to be an electronic product, I can base it on the specifications listed online P: If you were considering to buy luxury online, would you consider to use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: The original website P: Why? R: Because of the guarantee that it’s not fake and that you will get proper service before and after purchasing the product P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Physically seeing the product before buying it makes a huge difference for me P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes P: Why? R: I’ve looked at bags in the stores and Mumbai and then purchased the same bag online from its US store as its cheaper and my friend can get it for me P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: No P: Why is that? R: The service while buying the product is not available online P: What do you think increases the value of online luxury? Why?
R: I don’t think online products are any more luxurious than the same thing sold in physical stores P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Sometimes P: What do you mean? R: This depends on which kinds of online stores the product is available in. If the product is being sold on a site along with other luxurious items or on its original website, it does not lose its value. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes P: Why? R: Once you get familiar with online shopping, you tend to do it more often as its convenient and can be done from home. Also, if your friends/family are satisfied with purchasing a luxury good online, you are more likely to do the same if their experience was good. P: Do you think you will be buying more luxury online? Why? R: No P: Why? R: I think I still earn relatively less to buy luxury online items often. When I do purchase it, I would like to see it first Interview I7 P: What’s your gender? R: Female P: What’s your age? R: 28 P: What’s your nationality? R: Indian P: What’s your occupation? R: Student P: What’s your income level? R: Family income 100000k $ per annum P: What do you consider a luxury good? R: Something that is exclusive and is owned by a few P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: The price, the quality and the brand. I value uniqueness too, but I believe the uniqueness stems to a great extent from the brand. P: How often do you buy luxury goods? R: As often as I can afford to. I also am somewhat of an impulse buyer, so I am known to buy things that capture my attention. P: Why do you buy luxury goods? R: For the brand and for the quality of the product. While, I did say brand first, I would never buy anything which is not up to my expected level of quality. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The brand, the product itself, the design of the product P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Shopping in my hometown, online P: What is the main influence on where you buy luxury? R: I don’t get influenced by what is in. I buy those products which are beautiful and aesthetically pleasing. I have a great idea of what brands are good and what brands are not. It is very important for me, therefore, to pick those brands that promise quality for the price. P: Do you think that the shopping experience in a physical store is important? Why? R: Not that much. I think the physical store is more for discovery, thank for me to really enjoy the experience. I don’t enjoy stores where the staff is snooty or acts too busy. I think that is the danger of really exclusive brands. They make the experience dependent on how the staff perceives you. As I do have a good idea of high quality luxury brands, I would be comfortable buying the product online. P: Have you ever purchased any luxury goods online? What product and why online? R: Yes P: What products? R: Bags, clothes P: Why online? R: There is a definite price benefit to buying online. It’s also possible to get genuine advice and reviews for the products online. One additional plus point is that I don’t have to deal with snooty staff when I am buying online. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: There a several things. Should I list them down? P: Yes, please. R: 1. Can get reviews online, gives me the opportunity to get an unbiased view‐point 2. Don’t have to deal with staff at the store 3. It’s possible to get good deals online sometimes 4. What do you consider main disadvantages/ dangers of purchasing luxury online? R: Not being sure of the quality of the final product. While, luxury brands are a safe bet as they do promise uniform quality standards. The risk if of not knowing how the product really feels. I have noticed many instances where I have bought online and been disappointed either by the size of the product or by the material used. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes P: Why? R: Unless I know my size or fit in a brand really well, I would be wary of buying clothes online. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these?
R: Both. P: Which websites? R: Original websites definitely. P: Why these? R: Special sales websites give access to luxury products at good discounts. I am not really particular about the season of a product. I care more about the look, design and quality. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Not really P: Why? : R: I do not do that. I don’t like people knowing what products I buy. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: The most important difference is that in a store product discovery and acceptance is easier. It’s easy to see how a bag looks on you, what the material is like and how big it really is. I would be more inclined to buy something that I have seen and experienced first‐hand. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes P: Why? R: In the hopes that I might be able to find a better deal (price) for the product online. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: I think they do. Well‐known brands would be able to convey more information online than they would in a store. I don’t really think store attendants would spend the extra time to tell you about the history of the brand, famous people who use the brand etc. All of this is possible only on the website. P: What do you think increases the value of online luxury? Why? R: Not sure P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes. The internet is a great equalizer. The anonymity and accessibility of the online format mean that anyone and everyone can buy the product. Brands which have target customers in mind would not be able to control who buys and uses their products. I have seen cases of people who have the money, yet are too simple‐looking to walk into a luxury store. Those people would probably prefer to buy online. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: It is to a good extent. A culture that values brands and showing‐off would encourage people to buy luxury brands. There are websites that let you rent luxury bags for a few days. These rental models thrive in situations where someone attends a lot of parties or events where they are expected to have certain products. P: Do you think you will be buying more luxury online? Why? R: Yes because I like the format and I like the prices. P: Thank you so much for your answers! Interview I8 P: What’s your gender? R: Female P: What’s your age? R: 26 P: What’s your nationality? R: Indian P: What’s your occupation? R: Business Communications Advisor P: What’s your income level? R: about 60,000 USD P: What do you consider a luxury good? R: An item that is very expensive and exclusive ‐ brands such as Hermes, Louis Vuitton, Prada P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Expensive, not generally affordable by the middle class. Niche, available in limited numbers. Branded. Not necessarily high quality but generally more durable. P: How often do you buy luxury goods? R: Very rarely P: Why do you buy luxury goods? R: To treat myself P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The shopping experience, the brand, the good itself P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Shopping Malls P: What is the main influence on where you buy luxury? R: Friends’ recommendations, after research online, Google, forums online P: Do you think that the shopping experience in a physical store is important? Why? R: Yes. It makes it more tangible. You feel you are actually buying something. You can hold it, touch it, feel it. P: Have you ever purchased any luxury goods online? What product and why online? R: Yes. I bought for example a Tiffany bracelet P: Why online? A: Already trust the brand so may as well buy online, it’s easier, shop from home P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Ease, convenience. Fast, don’t have to wait in line. P: What do you consider main disadvantages/ dangers of purchasing luxury online?
R: No customer service, you can’t talk to the shop keeper about the product to understand more. Human touch is missing. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes. It has to be something I have already seen, touched and felt. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Original websites mostly, sometimes others. Which websites? Zalora, Asos. P: Why these? A: They have discounts and give original products P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Yes P: What networks? R: Facebook P: Why? R: Use Facebook most often, trust friends recommendations, easier to go through P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Ease and speed of shopping, comfort of being in your own home P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes. I like to have a look at it first before buying it online P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yes. They try and give the same look and feel online with background sound and everything. P: What do you think increases the value of online luxury? Why? R: The exclusivity P: Why? R: Keeps it different, special and exciting P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes P: Why? R: Because it then becomes mainstream P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes. If the culture is more open to trusting the internet and buying things online then it makes sense. Otherwise people will doubt the quality. I Do you think you will be buying more luxury online? Why? R: Maybe. It’s easier for items we may not get in the country Interview I9 P: What’s your gender? R: female P: What’s your age? R: 30 P: What’s your nationality? R: Indian P: What’s your occupation? R: Sales programs director, DHL Supply Chain, Asia Pacific, Middle East and Africa P: What’s your income level? R: I won’t disclose that P: What do you consider a luxury good? R: High value, high quality product P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Quality, durability, brand or image, price P: How often do you buy luxury goods? R: Once in a quarter P: Why do you buy luxury goods? R: To reward myself for some achievement! P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: Product experience for example quality, brand image, longevity. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Shopping in my hometown and I get it as gifts P: What is the main influence on where you buy luxury? R: Need time to think about what I’m buying rather than impulse buying P: Do you think that the shopping experience in a physical store is important? Why? R: Yes. Need to touch and feel the product since it’s not cheap! P: Have you ever purchased any luxury goods online? What product and why online? R: No P: What do you consider as the main benefits/advantages of purchasing luxury online? R: is it cheaper? Saves time probably P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Can’t touch or feel the product P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why?
R: Yes. There are three reasons. 1. If you’re gifting it to someone else, you may want to buy online as it might be faster, you don’t think as much? 2. If there’s a favorable return policy or an electronic item with specific guarantee/ return policy, you could buy online since there is less uncertainty 3. If you’ve tried out or tested the product in the past and it’s a second purchase, then you can be sure of buying online P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No, not really. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Cannot touch and feel product P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: No, but that’s probably what I would do if I buy online P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Not really, luxury stores have a whole store experience linked with the purchase. P: What do you think increases the value of online luxury? Why? R: Peer pressure, store deco, professionalism of the staff, treatment, etc. All adds to the whole store experience. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes P: Why? P: For example a company wouldn’t launch a new innovative product online! They would rather do it in store. Online they would probably have the last season’s products? Or products that they’re selling cheaper, discounted? P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes. Emerging markets have more buying power now, more spend on luxury goods, peer pressure and brand image becoming more and more stronger P: Do you think you will be buying more luxury online? Why? R: No! P: Why? R: If I buy just once every quarter, would rather do it in store with all the store pampering! Interview I10 P: What’s your gender? R: Male P: What’s your age? R: 25 P: What’s your nationality? R: Indian P: What’s your occupation? R: Energy P: What’s your income level? R: $70‐90k P: What do you consider a luxury good? R: An expensive product that one associates most often with the rich and famous P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Price P: How often do you buy luxury goods? R: Twice a quarter P: Why do you buy luxury goods? R: To know I can afford it, feel good factor P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The brand P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Shopping in hometown P: What is the main influence on where you buy luxury? R: Convenience P: Do you think that the shopping experience in a physical store is important? Why? R: Yes. Buying a luxury good is an experience, and a physical store could be important, especially when visiting a brand for the first time P: Have you ever purchased any luxury goods online? What product and why online? R: Yes P: What product? R: Aftershave, perfume, cosmetics P: Why online? R: Easy when buying a known luxury brand P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Benefits. Ease of buying at the click of a button. Disadvantage, not being able to touch, feel, try what you’re buying before buying it. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Product may not be what the store claims it to be. Damages to good when being shipped to you. Danger of good being tampered with/lost en route. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes P: Why? R: If it’s a clothing item, or something that one needs to try, like shoes, less likely to buy it online for fear that it might not fit. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these?
R: Original websites P: Which websites? R: All sorts of luxury brands’ sites P: Why these? R: Well known brands thanks to good advertising and the right models P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No. It takes away from the luxury good appeal, social networks make luxury goods feel more commonplace. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Ease of purchase, it is far easier to buy a product online. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Yes. It allows you to survey various options and make your final decision without having to go back to a store P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yes P: Please explain R: The design and feel of a website can help convey value if done right P: What do you think increases the value of online luxury? Why? R: The right spokesman/model P: Why? R: Advertising works! P: Do you think luxury goods can lose their values when being available on Internet? Why? R: No P: Why? R: Ease and convenience of shopping should be for everyone, luxury good or not P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes. You usually want luxury goods only when your surroundings (friends/family/culture) desire and appreciate luxury goods too. P: Do you think you will be buying more luxury online? Why? R: Yes. It is far more convenient than having to go to a physical store Interview I11 P: What’s your gender? R: Female P: What’s your age? R: 26 P: What’s your nationality? R: Indian P: What’s your occupation? R: Online fashion buyer P: What’s your income level? R: Low! P: What do you consider a luxury good? R: Something that is not a necessity is luxury for me. P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: Price from USD 150. Great quality and something that is one of a kind. P: How often do you buy luxury goods? R: Once a week P: Why do you buy luxury goods? R: Retail Therapy? Makes me happy. P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The quality of the product and the durability. P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Hometown, I guess. P: What is the main influence on where you buy luxury? R: I like to buy luxury products from places I'm comfortable with. P: Do you think that the shopping experience in a physical store is important? Why? R: Yes and No P: Why? R: Yes, it's a fun trip, you can feel the products before buying. No, because sometimes, it's great online when you click and buy and it never seems like you spend any money! P: Have you ever purchased any luxury goods online? What product and why online? R: Yes for example iMac, if that counts as luxury? P: Why online? R: Because I knew the product. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: Saves the time and effort. P: What do you consider main disadvantages/ dangers of purchasing luxury online? R: Can't feel the physical product before buying. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes P: Why?
R: Clothes I would prefer to see the fitting. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Both. Individual websites. ASOS. HIpVan. Etc. P: Why these? R: Tried and tested. I feel safe. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Yes, Facebook. P: Why? R: There are usually good deals. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Can't feel the product online. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: No. If I like something, I'll buy it there itself. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please elaborate on your answer. R: Sometimes no P: Please explain R: A sales website, sometimes reduces the value of the brand. P: What do you think increases the value of online luxury? Why? R: Website. The better it looks, more value it adds. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes P: Why? R: Same reason as the previous question P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes P: Why? R: Fab India will not be known in Poland I'm sure ! P: Do you think you will be buying more luxury online? Why? R: Yes. It's an experience in itself. Saves time, effort. Interview I12 P: What’s your gender? R: Male P: What’s your age? R: 26 P: What’s your nationality? R: Indian P: What’s your occupation? R: Businessman P: What’s your income level? R: I have a startup business so currently not making any profits out of it. P: What do you consider a luxury good? R: Anything with high quality and durability P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: By its Brand P: How often do you buy luxury goods? R: Rarely P: Why do you buy luxury goods? R: To show off P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The Brand P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: Hometown P: What is the main influence on where you buy luxury? R: Safety P: Do you think that the shopping experience in a physical store is important? Why? R: Yes it’s important but not always P: Why? R: It’s important because you have to look and feel the product. P: Have you ever purchased any luxury goods online? R: Yes P: What product? R: Watch P: Why online? R: Because it was cheap P: What do you consider as the main benefits/advantages of purchasing luxury online? R: It is cheaper P: What do you consider main disadvantages/ dangers of purchasing luxury online?
R: That the product is not as good as I thought and the return policy of the company does not permit any replacement. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? R: Yes P: Why? R: Not sure really. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: Special Sales Website. Flipkart, Amazon, Snapdeal, Infibeam P: Why these? R: Prices are low and you get many options P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: Yes. Facebook P: Why? R: Companies display their latest offers and deals on them P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: It saves a lot of time P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: No it’s always the opposite I see it online and then buy from the physical store because it involves a lot of money P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: Yes P: Why? R: I don’t know how to explain that. P: What do you think increases the value of online luxury? R: I don’t think anything increases the value of online luxury P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes R: Why? R: Because luxury goods have to be seen in person and felt, you just cannot see its image and buy the product. P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: No. Because some products don’t have any cultural boundaries. P: Do you think you will be buying more luxury online? Why? R: No P: Why? R: Because if I am paying a lot of money for that product I need to properly inspect it. Interview I13 P: What’s your gender? R: Male P: What’s your age? R: 27 P: What’s your nationality? R: Indian P: What’s your occupation? R: Entrepreneur P: What’s your income level? R: 10,000 USD P: What do you consider a luxury good? R: Anything that is not an essential purchase P: How would you define the value of the luxury of a product (e.g. uniqueness, price, quality, etc.)? R: The value of a luxury good is determined by its limited availability in the market, its price and the quality of design & manufacturing P: How often do you buy luxury goods? R: Once in a month P: Why do you buy luxury goods? R: I buy luxury goods to differentiate myself from my neighbors, and also to have something of the highest quality and design in my collection P: What is the biggest benefit of you buying luxury goods (e.g. the luxury product itself, the shopping experience, the brand, the service and guarantee provided, etc.)? R: The biggest benefit for me is the brand itself, and the snob value that comes with it P: Where do you mostly buy the luxury products (e.g. shopping in my hometown, business travel, holidays, online, etc.)? R: I usually buy most of the products when I’m on travel abroad because I get better choice and often better prices P: What is the main influence on where you buy luxury? R: The main influence on where I buy is the price P: Do you think that the shopping experience in a physical store is important? Why? R: Yes it is. For example, the manner in which I’m treated by the salesperson has an impact on my purchase. If I’m treated as an important customer, I am more likely to purchase something in the store. P: Have you ever purchased any luxury goods online? What product and why online? R: I haven’t really purchased any product online yet. P: What do you consider as the main benefits/advantages of purchasing luxury online? R: The benefits of purchasing online are the fact that you have more choice, don’t have to step out of the house and also have the option of exchanging products if you’re not happy with them. P: What do you consider main disadvantages/ dangers of purchasing luxury online?
R: The disadvantages are the fact that you cannot touch and feel the product, or enjoy the experience of shopping in an actual store. P: When deciding on whether to buy something online or not, does it make a difference on what kind of product you actually want to buy? Why? R: Yes, it does. P: Why? R: I would prefer to buy the low‐ticket luxury items online, and that too smaller accessories. I’m unlikely to buy clothes as I feel more comfortable trying them on to get the perfect size. P: When buying luxury online, do you usually use product’s original website, or some other sites like departments store’s or special sales websites? Which websites and why these? R: I usually use the product’s original website directly P: Which websites, can you give examples? R: coach.com P: Why this? R: I feel more comfortable buying directly from the brand’s website. P: Do you engage in social networks for luxury (i.e. online forums, Facebook, etc.), what networks and why? R: No, not really. Because I feel social networks are for mass produced goods, and luxury buyers read articles from fashion articles and blogs instead. P: What is the most important difference for you when buying online as opposed to shopping in a physical store? R: Choice and price. P: Have you ever visited a store to experience a luxury product in person and then searched online for the product and purchased the product online? Why? R: Not yet, I would in the future. P: Why? R: To see if I can get a better price. P: Do you think that the website of luxury product conveys the values of the luxury brand as it is in a store? Please explain. R: For the most part, yes. P: Please explain. R: But the personalization & attention you get from salespersons at the store is missing. P: What do you think increases the value of online luxury? Why? R: The uniqueness of the options available online. For example, if there are only a few items in stock, and by being the first to purchase it you differentiate yourself from your neighbor. P: Do you think luxury goods can lose their values when being available on Internet? Why? R: Yes, they can because more people will be aware of the products thereby losing its appeal P: Do you think that the popularity of luxury online is dependent on your culture? Why? R: Yes, it does. P: Why? R: In my culture, people buy luxury goods to show off their wealth unlike other cultures where they are bought for the quality of the product. P: Do you think you will be buying more luxury online? Why? R: I would. P: Why? R: Because I’m looking to buy unique products at a cheaper price.
