In times of economic downturn, luxury brands face distinctive challenges due to shifts in consumer demands, spending behavior, and altered perceptions of luxury. Salah Hassan, Melika Husi?-Mehmedovi?, and Philippe Duverger explore how global luxury brands have maintained resilience and allure amidst these changes, focusing on the influence of brand globalness on consumer perception.
To understand if the globalness of a luxury brand mitigates the negative impacts of economic crises, allowing these brands to retain their value and appeal, and to investigate how consumers perceive and value luxury in times of economic hardship.
A survey, comprising 200 professionals from a European country, was conducted during the peak of the economic crisis. This country has a mix of local and global luxury brands, offering a diverse view on consumer preferences.
- Brand Globalness as Value Creator: Global luxury brands like Louis Vuitton and Gucci have demonstrated resilience during economic downturns, possibly due to their global presence. Brand globalness serves as a competitive advantage, appealing to consumer segments with homogenous needs and wants across different cultures and countries.
- Consumer Perception & Value Consciousness: Consumer’s perceived value is crucial. Value-conscious consumers seek lower prices for equivalent quality and are more brand loyal. Consumers prefer global brands due to perceptions of brand superiority, quality, and prestige. During economic recessions, consumers may experience luxury shame, impacting their purchasing behaviors. Psychological segmentation considering consumers' emotional reactions can be effective in such times.
- Shifting Consumer Demands: Consumers in emerging markets are developing sophisticated tastes, and their demand is shifting modes. While spending is generally reduced during crises, high-income households maintain a consistent expenditure on luxury brands.
- Economic Impact & Growth Trends: Despite the economic downturn, the luxury market has sustained growth, with an annual growth rate of approximately 2 percent. Growth trends are diverse, with remarkable growth forecasted for markets like Russia, China, and India. Financial instability and luxury shame make consumers hesitant to own or use luxury goods as they are perceived as outward displays of wealth.
Brand globalness appears to be a significant factor in maintaining the allure and value of luxury brands during economic downturns. This study brings forth the importance of understanding consumer psychology and behavior during economic recessions, which impact their perception of luxury and subsequently, their purchasing decisions.
Value creation through brand globalness is significant in sustaining luxury brands amidst changing global conditions and economic hardships, indicating that brand resilience is intertwined with global presence and consumer perception of brand luxury and value.
- Global luxury brands have maintained resilience during economic downturns due to their wide-reaching presence and consumer perceptions of value and luxury.
- Consumer Perception is pivotal; global brands are perceived as superior, affecting consumer preference and purchase likelihood.
- Brand Globalness serves as a competitive advantage, creating value and appealing to homogeneous consumer segments across different cultures and countries.
- Economic Recession influences consumer behavior, causing shifts in spending patterns and creating luxury shame among consumers.
- Market Growth: Despite economic downturns, the luxury market has experienced sustained growth, especially in emerging markets.
