Consumer behaviour Generational cohorts in luxury product purchase

Introduction

formulated with consumers, their behavior and consumer purchase decision making pattern in mind. Consumer behavior is a dynamic process which is complex to understand. Product design, product development, placement, pricing, promotional strategies are developed based on the knowledge about consumer behavior. This article will analyse the consumer behavioral differences between baby boomers and the millennial generation in purchasing luxury products.

Consumer behaviour

Blackwell et al (2001) defined consumer behaviour as the activities performed by a consumer while ‘obtaining, consuming and disposing’ of products and services.

The consumer behavior is determined by cognition process, affected by emotions and conation behavior and also influenced by external and internal factors (Sethna and Blythe, 2016). The below figure depicts the consumer behavior dynamics.

Figure 1 Consumer behaviour dynamics

Source: Hawkins, Mothersbaugh and Best (2013)

Market segmenting

Based on demographic factors, consumers are segmented into Baby Boomers, Generation X and Millennial generation. These four generations are known as the Silent Generation, Baby Boomers, Generation X, and Generation Y or the millennials. According to generational theory, members of each generation are distinctive in terms of their traits, values and beliefs, interests and expectations (Li et al, 2013).

Market segmentation based on generation or age cohort is

“the process of describing and explaining the attitudes, values, and behaviours of an age group as well as predicting its future attitudes, values, and behaviours” (Hawkins and Mothersbaugh, 2013, pp. 147).

Figure 2: Generational Cohorts

Source: Ginsberg (2017)

Consumer behaviour towards luxury jewellery

Motivation

Veblen’s Theory of Leisure Class stated that people try to imitate the upper class society characteristics and propose the idea of conspicuous consumption to express their wealth, power and status. This is called as Veblen effect, prestige seeking consumer behavior (de Carvalho, 2014).

In this context, 52% millennial consumers purchases expensive jewelry to show off their style and taste. They like to look trendy and classy to define their affluence. Millennials are considered to be disruptive as they have the motivation to build their own trend and fashion in jewelry (Swartz, 2016). Meanwhile, Baby Boomers had the many reasons to buy jewelry, for example, for an occasion like wedding, for gifting a loved one. They consider purchasing jewelry as an investment. They had more purchasing power and modest lifestyle (Gem and Jewelry Information Center, 2016).

Figure 3: Motivation factors for purchasing jewelry

Source: De Beers (2016)

For example, De Beers , leading manufacturer and retailer of diamond jewelry, in a survey found that the factors like celebration of self, love, impressive designs and other reasons motivate millennial consumers to purchase diamond jewelry as shown in Figure 3 (De Beers, 2016).

Another theory suggested for consumer behavior is Hedonistic motivation which states that luxury goods possess emotional value and provide intangible advantages. Perception of benefits and utility of luxury brands and jewelry will arouse emotional feelings among consumers. Consumers look for highest quality while buying luxury jewelry. They also give importance to the value in the form of superior attributes and uniqueness (Smith et al, 2016). As shown in the above figure, millennial consumers earn more and have more cash flow but have less accumulated wealth when compared to Baby Boomers. The value luxury in terms of unique experience (Rowe, 2015).

Figure 4: Millennial and how they value luxury

Source: Rowe (2015)

Theory of planned behaviour

Schiffmann and Kanuk (2015) referred to the theory of planned behavior (TPB) is based on the Theory of Reasoned Action (TRA) of Fishbein and Ajzen (1975). The theory of reasoned action (TRA) is affected by behavioral intention, which, in turn, is affected by attitude and subjective norms. But the theory of Tri-component attitude model states that consumer attitude in purchasing product is influenced by: cognition (knowledge/ beliefs about the product); affect (positive and negative assessment of the product) and conation (behavior towards the product) (Schiffmann and Kanuk, 2015).

As per the theory of Planned Behaviour, attitudes refer to the beliefs that an individual has about buying luxury products and social norm refers to the opinion of important others about buying luxury goods (Loureiro and de Araújo, 2014).

Attitude

It was stated by Linde et al (2016) that millennials are similar to their older generations in having positive attitude towards jewelry and diamonds but they vary in their shopping pattern and decision making. Swartz (2016) stated that millennials are similar to their older generations in having sentiment towards jewelry. Similar to Baby Boomers this spend thrift generation will make a high price purchase based on a deep emotional connection like gifting to a loved one or self-purchase for an achievement. Millennials consider technology as luxury more than jewelry. Positive Luxury is a popular brand in jewelry. In a survey, they found that Baby Boomers and millennials chose jewelry brands which represent their values (Positive Jewelry, 2016).

De Beers (2016), the leading diamond jewelry maker stated that millennials consider diamond jewelry as the most preferred gift. But the possession of a diamond jewelry varies in different countries as stated in Figure 5. In Japan, China and US, millennials purchase more diamond jewelry than Baby Boomers. This may be attributed to purchase of diamond jewelry for engagement or wedding or for gifting purposes.

Figure 5: Acquisition of diamond jewelry by millennials and older generation

Source: De Beers (2016)

De Beers (2016) also stated that diamond jewelry is also purchased more by Baby Boomers for gifting purposes. While millennials got 37% of diamond jewelry as self-purchase, they got 62% of the diamond jewelry as gift from their parents and grandparents and 7% as gift from others. The 62% depicts that Baby Boomers are still the major acquirers of diamond jewelry as a gift.

De Beers (20160 stated that self-purchasing of diamond jewelry is a pattern among millennials which was seen in Baby Boomers also. But self-purchase of diamonds in bridal category among millennials is increasing in US, China and Japan as shown in Figure 6.

Figure 6: Percentage of diamond jewelry acquired by millennials

When analysing the attitude of consumers- millennials and Baby Boomers for their online shopping attitude for diamond jewelry, De Beers (2016) found that affluent millennials who possess more technical knowledge and have access to internet technologies, have strong affinity for e-commerce and online shopping portals. 60% of them use internet to rate jewelry products while Baby Boomers use 46%. 45% of the millennials check prices on line through their smart phones or laptop to visit the online shopping portal while Baby boomers use only 22%. This shows that Baby Boomers rely on physical stores and like to have personal evaluation of diamond jewelry. The information gathering ability and eagerness is also low in Baby Boomers even if they visit a diamond jewelry store. Only 24% of them gather more information in a store while 44% of the millennial consumers cross check the information gathered online with a retail store. Moreover, millennials are more attracted towards coupons and discounts (43%) when compared to Baby Boomers (25%) as shown in Figure 7. Millennials use their personal network, online resources and traditional information from their parents and friends before purchasing diamond jewelry.

Figure 7: Online shopping and information gathering by millennial and Baby Boomers

Source: De Beers (2016)

Social norm

Subjective norms reflect social influence, they are the person’s perception of the social pressure put on him/her to perform or not perform the behavior (Loureiro and de Araújo, 2014). Jewelry, a luxury good purchase will be influenced by economic factors like disposable income, liquidity of funds etc. Before purchasing jewellery, millennial consumers, research online and talk to family and friends to know about the brand and their opinion as stated by De Beers Group (2016). The below figure depicts that the older generations, Baby Boomers depended on advertisements to know about a product and to take purchase decision. But the millennials uses online resources and personal visits to stores to compare and evaluate a luxury product like jewelry before purchasing it (De Beers Group, 2016).

Figure 5: Generational difference in acquiring information in luxury jewelry purchase

Source: De Beers (2016)

Marketing to millennial consumers

Combination of real and online platforms of promotions are preferred by millennial consumers. For example, in-store selling of super-premium beauty products in beauty salons is welcomed by millennial customers. Millennial consumers have transformed luxury product brands into an art form. For example, luxury pop-stores in urban high streets and department stores are the trends to which young generation responds to as shown in Figure 9 (Walker, 2011). As they are exposed to internet, mobile and social media platforms, marketers have to formulate effective online and mobile marketing strategies.

Unity Marketing (2014) stated that De Beers tagline “Diamonds are forever” worked well for baby boomers who purchased diamonds for a milestone in their life like engagement or marriage. But this tagline did not work well for millennials because the millennials find more pleasure in buying a technology rather than a piece of diamond. Marketers have to develop ‘inspirational’ messages in advertisement rather than ‘aspirational’ messages to attract baby boomers.

Figure 6: Pop-up jewelry store

Source: Stanley (2014)

Conclusion

Luxury products are seen as a symbol of value, social status and exclusivity by the older generations like Baby Boomers. But the millennial consumers have redefined the meaning of luxury products. The generation which grew up with technology, has equated luxury with personalised, tech-savvy and classy products. So marketing strategies must include online and mobile marketing strategies and build meaningful brands to attract the digitally- empowered generation.

References

Blackwell, R.D., Miniard, P.W. and Engel, J.F., 2001. Consumer behavior 9th. South-Western Thomas Learning. Mason, OH.

Dazinger, P., 2015. Luxury Brands & Demographic Disruption: What’s Your Strategy? [Online] Available at https://unitymarketingonline.com/luxury-brands-demographic-disruption-whats-your-strategy/ [Accessed 21 March 2017]

de Carvalho, R.M.R.V., 2014. The impact of luxury values and luxury marketing factors on generation y's behavioural intentions (Doctoral dissertation, ISCTE-IUL).

Eastman, J.K. and Liu, J., 2012. The impact of generational cohorts on status consumption: an exploratory look at generational cohort and demographics on status consumption. Journal of Consumer Marketing, 29(2), pp.93-102.

Foulkes, A., 2016. A comparison of luxury perception of Generation X and Y consumers in the United Kingdom. Thesis for: BSc (Hons) Business Management, Kingston University, United Kingdom.

Gem and Jewelry Information Center. 2016. Gems and Jewelry Buying Behavior in Various Generations. [Online] Available at https://www.veniceofeastgems.com/single-post/2016/12/01/Gems-and-Jewelry-Buying-Behavior-in-Various-Generations [Accessed 23 March 2017]

Ginsberg. 2017. Overcoming Generational Differences between Employees. [Online] Available at http://www.ginsbergs.com/owner-center/overcoming-generational-differences-employees/ [Accessed 23 March 2017]

Hawkins, D.I. and Mothersbaugh, D.L. and Best, R.J., 2013. Consumer behavior: Building marketing strategy. McGraw-Hill Irwin.

Li, X., Li, X.R. and Hudson, S., 2013. The application of generational theory to tourism consumer behavior: An American perspective. Tourism Management, 37, pp.147-164.

Linde, O., Martynov, A., Epstein, A. and Fischler, S., 2016. The Global Diamond Industry 2016: The Enduring Allure of Timeless Gems. [Online] Available at http://www.bain.com/publications/articles/global-diamond-industry-report-2016.aspx [Accessed 23 March 2017]

Loureiro, S.M.C. and de Araújo, C.M.B., 2014. Luxury values and experience as drivers for consumers to recommend and pay more. Journal of Retailing and Consumer Services, 21(3), pp.394-400.

Positive Jewelry. 2016. Predictions for the luxury industry. [Online] Available at https://www.altagamma.it/media/source/2016-Predictions-for-the-Luxury-Industry-Sustainability-Innovation_ridotto_1.pdf [Accessed 24 March 2017]

Rowe, L., 2015. Gen Henry: How millennials are redefining luxury. [Online] Available at http://www.pbjs.com/blog/how-millennials-are-redefining-luxury/ [Accessed 23 March 2017]

Sethna, Z. and Blythe, J., 2016. Consumer Behaviour. SAGE.

Smith, R., Aramalay, C., Durst, S., Loretz, M. and Ostrovsky, I., 2016. HEDONISTIC CONSUMPTION: A HIERARCHICAL FRAMEWORK. ASBBS Proceedings, 23(1), p.499.

Stanley, C., 2014. De Beers Arrives in Selfridges' Wonder Room. [Online] Available at http://www.fsrl.co.uk/blogs/de-beers-arrives-in-selfridges-wonder-room-42581512413 [Accessed 23 March 2017]

Swartz, L., 2016. I nsight: What Do Millennials Want from Luxury Watches & Jewellery? [Online] Available from http://luxurysociety.com/en/articles/2016/03/insight-what-do-millennials-want-from-luxury-watches-jewellery/ [Accessed 23 March 2017]

Walker, R., 2011. Spendthrift generation Y the thrust of luxury opportunity. [Online] Available at http://blog.euromonitor.com/2011/10/spendthrift-generation-y-the-thrust-of-luxury-opportunity.html [Accessed 22 March 2017]

Wilcox, K., Kim, H.M. and Sen, S., 2009. Why do consumers buy counterfeit luxury brands? Journal of marketing research, 46(2), pp.247-259.

Credits:

Created with images by Joe Crawford (artlung) - "* LUXURY"

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a Copyright Violation, please follow Section 17 in the Terms of Use.