Consumer Behaviour (Ayokunle)

Written report by: AYOKUNLE BAJULAIYE

Student Number: A4094870

CONSUMER BEHAVIOURF A S H I O N M A R K E T

C A S E S T U D Y : V E R T U , L O U I S V U I T T O N A N D G U C C I

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Contents

Contents................................................................................................................................................2

1.0Introduction....................................................................................................................................3

2.0Background.....................................................................................................................................3

3.0ConsumerDecisionProcesses........................................................................................................5

3.1.1NeedRecognition/ProblemAwareness..............................................................................6

3.1.2InformationSearch..............................................................................................................7

3.1.3EvaluationofAlternatives...................................................................................................7

3.1.4Purchase...............................................................................................................................7

3.1.5Post-PurchaseEvaluation....................................................................................................8

3.2InfluencingMarketingExperiencethroughtheInstrumentalityofthePhysicalRetailEnvironment:TheCaseofGucci,LouisVuittonandVertu..............................................................9

4.0MotivationandSelf-Concepts......................................................................................................10

5.0CulturalInfluences......................................................................................................................10

6.0Conclusion.....................................................................................................................................11

References...........................................................................................................................................12

AppendixA..........................................................................................................................................14

AppendixB..........................................................................................................................................15

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1.0 Introduction

The basic economic question every producer wants to answer before production can be

determined by three economic agents (the consumer, producer and the government)

(Boulding, 1970) – the consumer being the major and key determinant. By their choices,

consumers determine what will be produced and the pattern of spending. The common

notion has always been that production is allocated only to those who can afford to pay; and

that consumers with no money cannot afford to buy anything only in the exception of free

public goods (e.g. roads) offered by the government. However, observers of human

behaviour believes that beyond a consumer’s income and purchasing power, certain

processes such as national or emotional motives can influence the choice of a consumer.

The attainment of esteem or even envy of others can influence one’s behaviour in terms of

consumption (Yeoman and Beattie, 2005).

To that end, this analysis draws on three brands (Gucci, Louis Vuitton and Vertu) in the

fashion and telecommunication industry in order to understand the purchasing processes

that influence their customers and how the physical retail environment and experience

marketing affects their decisions. Among other things, this review also covers the extent to

which national culture influences consumer behaviour taking into cognizance the case of

Gucci, Louis Vuitton and Vertu.

2.0 Background

Due to the rapid revolution and changes in the area of technology, and perhaps the internet

or the social media and the insatiable needs of consumers (customers), luxury brands

cannot always rely on their existing products and innovations. The fashion industry, having

only metamorphosed from home productions and orders from tailors and dressmakers, has

become a product of the modern age with different brands competing in the marketplace.

Gucci and Louis Vuitton being some of the prestigious luxury fashion brands that command

a high level of customer loyalty irrespective of trends and geographical constraints for

decades. For instance, Gucci is considered a luxury brand, not because of its functionality,

but the craftsmanship (Seringhaus, 2002). The firm engages its workers and artisans in

hand-stich handles, prepare leather strips for woven stitching and hand emboss customer’s

initials (Gucci website). Craftsmanship alongside peerless materials and innovative

technologies also defines the hallmark to the uniqueness of the Vertu brand (www.vertu.com

; www.altair.com).

Vertu unlike Gucci or Louis Vuitton emerged as a luxury brand in the marketplace in 2000.

The brand is known for its continuous collaboration with Ferrari (www.design-people.dk) as

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well as its expensive and sophisticated mobile phones that cost thousands of pounds

(Jobber, 2009). The Vertu strategy was to market phones as seen in the fashion industry;

and also market phones in the same vein as luxury watch brands like Patek Phillipe (Jobber,

2009).

Louis Vuitton products, like Gucci products, have a touch of handmade craftsmanship in

addition with blended mechanisation. The aim is to enhance productivity whilst maintaining a

great level of product quality, without losing the allure that comes with handmade quality

(Jobber, 2009). In order to promote uniqueness, all Louis Vuitton products comes with the

eponymous LV initials (Jobber, 2009).

The table below highlights the three brands alongside what they stand for in the

marketplace.

Gucci Louis Vuitton Vertu

Industry Luxury fashion and Design Luxury goods Luxury communication products like mobile phones.

Headquarters Italy France United Kingdom

Other locations

Paris, Florence, London, Tokyo, New York, Hong Kong, Palm Beach.

Las Vegas, Los Angeles, Dubai, New York, etc.

Singapore, Paris, Hong Kong, New York.

Founded 1921 1854 1998

Capacity 278 directly operated stores as of 2009

Over 600 Stores, including 70 Vertu Boutiques in 66 nations.

Average Pricing

A handbag starts at €400 and go up to €2800.

Basic Constellation model begins at €3500.

Products Shoes, Jewellery, Perfumes, Home goods, baby wear, luggage and handbags, men and women’s wear, eyewear, waters.

Textiles, writing materials and accessories, leather goods, as well as handbags.

Signature collection, Bordeaux stainless steel, duo stainless steel.

Business Strategies

Situated on high street, online purchasing, directly operated stores, backward integration for watch business and expansion of brand.

Street locations, high street locations, online purchasing (US only), exclusive shopping malls alongside other brands.

Directly operated stores, high streets, operated stores, leading department stores, client suites, fine jewellers, partnerships and online purchasing

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Table 1: A Comparative Background Description of Gucci, Louis Vuitton and Vertu. (Source:

Computed from: Jobber, 2009; www.vertu.com ; www.louisvuitton.com ; www.gucci.com).

3.0 Consumer Decis ion Processes

To a large extent, an in-depth insight about customers is a stepping stone to a successful

marketing; and since consumers are individuals who buy products and services, an

understanding as to why they buy is very important. The aim is to examine psychological,

situational and other factors that affect when, what, and how consumers buy what they do.

That is, the actions consumers perform in consumption process (Peter and Olson, 2008).

Figure 1: Showing a five-stage decision-making process (Source: Riley, 2015)

The need recognition/problem recognition is the first stage any consumer will go through.

Once the need or problem has been recognized, the second stage which is the information

search will commence. Information search has to do with finding alternative ways to solve

problems/needs. Needs can either be hedonic or utilitarian. Illustratively, a consumer may be

interested in buying a Gucci or Louis Vuitton purse because she needs a bag, but the need

becomes hedonic when she decides to get the purse because the purse is a luxurious item

from Gucci or Louis Vuitton.

Gucci Louis Vuitton Vertu PSYCHOMETRIC SEGMENTATION

Age Groups 20’s or 30’s (Jobber, 2009)

Mature users (25+)

Social Class Upper-Upper Class; Working population,

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Groupings with high quality, fashionable products. Those who aspire to be part of the jet set lifestyle (Jobber, 2009)

celebrities, models and others with financially stable background

Gender Group Mostly women Mostly females DECISION-MAKING PROCESS

Need Recognition (Hedonic or Utilitarian)

Hedonic; usually because of its symbolic image and meaning

Hedonic; to enhance status; fashionable

Benefits, quality of product features

Information Search E.g. online and trial purchase online (Gucci website); commercial sources; public sources and experiential sources.

Celebrity endorsements (Jobber, 2009); public sources; online information, experiential sources

Experiential sources, online information

Evaluation of Alternatives

Formal decision rules; by comparing specific brand attributes

Formal decision rules; by comparing specific brand attributes; psychological benefits

Functional benefits

Purchase High involvement purchase

Affective involvement Low affective involvement

Post-purchase evaluation

Table 2: Decision-Making Process of Gucci, Louis Vuitton and Vertu Consumers

3.1.1 Need Recognition/Problem Awareness

This is the first stage every consumer will go through in any industry including the fashion

industry which Gucci and Louis Vuitton represent. Fashion is the prevailing styles in

behaviour and the newest creations of textile designers (Fashion, 2012). It can be distinctive

or a habitual trend in the method someone chooses to dress. For some, psychological and

social impact as well as features and symbols may be more important than the actual

function. However in the case of Gucci, like Louis Vuitton‘s customers, its customers

patronise the brand to improve their status (Broke, 2009) and self-identity (Escalas and

Bettman, 2003, Wiedmann, et al 2009). A term called ‘hedonic need’ or ‘conspicuous

consumption’ as described by Thorsten Veblen (1899).

For example, designer clothing such as Versace, Gucci, and Bebe is often purchased on the

basis of its symbolic meaning and image, particularly by teenagers and young adults. (Belch

and Belch, 2003).

Although, Vertu range of phones (i.e. the Signature Touch, Constellation and the flagship

model - Signature) are made of premium and materials of high quality such as the full

QWERTY sapphire sculpted keys present on Vertu’s first smartphone (Quest) or the 5 carats

of ruby bearings on the Signature, the hedonistic urges of customers still outpace the actual

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functionalities in terms of the driving factor that influences consumers patronage, majority of

whom belong to the upper-upper class hierarchy.

Vertu realised that users of mobile devices are often motivated by newer and improved

technology (and these products often lose their values as a result of new researches and

advances); hence a new approach was introduced to get consumers attracted to status

symbols. This is evident in Vertu’s presence in fashion shows in Paris.

3.1.2 Information Search

Once the problem is recognized by the consumer, they initiate a search for relevant

information on products that can meet their needs or solve their problems. According to Riley

(2015), different information sources are available to customers. Some of which are:

personal sources (friends, neighbours and family); commercial sources (dealers, advertising,

salespeople, packaging, retailers, point-of-sale display); public sources (newspapers, radio,

television, consumer organisations, specialist magazines); experiential sources (handling,

examining, and using the product). For luxury products (e.g. Gucci, Vertu or Louis Vuitton),

customers give more value and attention to personal sources more than other sources like

commercial (Riley, 2015). Through celebrity endorsements of Louis Vuitton products,

customers also get valuable information. In addition, online services and presence of Gucci

products give customers the opportunity to evaluate product “performance in the light of their

expectations” (Broke, 2010).

3.1.3 Evaluation of Alternatives

Following the information search process is the evaluation of alternatives. The fact that a

product is outstanding in the midst of competition does not imply that consumers will

ultimately purchase the product (Jones, 2014). In fact, in this dispensation where customers

have access to various information sources, they want to sure they have done in-depth and

rigorous research before making a purchase. This trend has been traced with the consumers

of luxury brands like Gucci, Louis Vuitton and Vertu.

Customer’s evaluative criteria can include the colour of a product, the price, and in some

instances the celebrities attached or captured with the product. As shown in Table 2, Vertu

and Louis Vuitton customers evaluate alternatives in terms of psychological and/or functional

gains. Gucci customers on the other hand utilize the formal decision rule by comparing

brand attributes and accompanying consequences (Jobber, 2009).

3.1.4 Purchase

Purchase can either be high-involvement or low-involvement (Riley, 2015). The distinction is

shown in figure 2 and 3 below:

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Figure 2: Showing High-involvement Purchase (Jobber, 2001)

Figure 3: Showing Low-involvement purchase (Jobber 2001)

A purchase is said to be high-involving when extensive and rigorous evaluation is involved.

High-involvement purchases includes Gucci sneakers, Gucci bags among other ego

intensive items (Riley, 2015). Vertu luxury mobile devices are susceptible to low-involvement

purchases due to the experience and trials attached with these products. Another type of

purchase behaviour known as “affective involvement” has also been linked with Louis

Vuitton products. It is affective because customers are emotionally involved by believing that

they really need the product.

3.1.5 Post-Purchase Evaluation

The importance of post-purchase evaluation is that it will influence the likelihood of a repeat

purchase of products or services (Broke, 2010). Often times, customers always raise certain

concerns after making a purchase. A term known as “cognitive dissonance.” These concerns

can either lead to a satisfactory or an unsatisfactory experience as illustrated in figure 4.

Common among first time buyers of the luxury products in focus (i.e. Gucci, Louis Vuitton

and Vertu) is that they spend longer time evaluating their purchase even though they are

strongly motivated to make a purchase. To make consumers satisfied with their purchases,

luxury brands encourage their customers that they have made the right decision.

Personal beliefs

Normative beliefs

Attitudes

Subjective norms

Purchase intensions

Purchase

Awareness Trial Repeat Purchase

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Figure 4: Showing Purchase Behaviour by a Customer (Source: Rakesh, 2011)

3.2 Influencing Marketing Experience through the Instrumentality of

the Physical Retai l Environment: The Case of Gucci, Louis Vuitton and

Vertu

The influence of the retail environment on a product cannot be overemphasised. The

environment can include the location, the décor or architecture, physical appearance of the

employees and how well they capture the attention of prospective buyers. Gucci, Louis

Vuitton and Vertu have created these unique images in the minds of the customers (Bloemer

and Ruyter, 1997). Gucci for instance exhibit this immersive design with charisma, prestige

and experience through stylishly dressed salespersons. For Louis Vuitton, the environment

is usually large with series of luxurious and relaxed spaces (www.louisvuitton.com) as shown

in the Appendix. A comparison of the retail environment of Gucci, Louis Vuitton and Vertu is

presented in Table 3.

The increase interest in online shopping has also caused a revolution in the design of

websites. Whilst these brands trying to create a similar in-store experience on the websites,

they also create images highlighting the product range effectively with options for live chats,

and effective participation, just to mention a few. Sample screenshots are presented in the

Appendix section.

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Brand Description

Gucci Model like salespeople;

stylishly dressed in black;

provocative window; free

flow

Louis Vuitton Store vary in product;

products prominently

displayed

Vertu Limestone floors, gallery-like

feel to store and

architectural display cases

Table 3: Comparison of the Retail Environment of Gucci, Louis Vuitton and Vertu

(www.louisvuitton.com ; Jobber, 2009)

4.0 Motivation and Self-Concepts

Abraham Maslow stated that an individual is motivated to achieve certain needs. Hence,

when one need is achieved, such individual seeks to fulfil the next one, and so on (Maslow,

1943). Maslow posited that human needs can be prioritized into five levels comprising:

physiological needs, safety needs, social needs, ego/esteem needs, and the last being the

self-actualization need. Taking the case of luxury brands like Gucci, Louis Vuitton and Vertu,

consumers are mostly interested because it can satisfy their self-actualization needs. The

concept of self-actualization (what I hereinafter called the self-concept) has to do with how

consumers perceive themselves. The self-concept can further be categorised into the real

self, the ideal self, other self and the ideal other. While the real self explains what an

individual is in the areas of interest, appearance, worth, etc., the ideal self describes what an

individual is always striving to be. For instance, a Louis Vuitton or a Gucci bag is a branded

luxury product which indicates prestige and luxury for its owner. This bag indicates reality to

the consumer because of the information and knowledge the consumer has about the

product. Thus consumers of these luxury brands try to live up the image the brand portrays.

5.0 Cultural Inf luences

Beyond the influence of self-perception, peers, needs recognition, celebrity endorsements

among other factors, national culture has also been recognised as one of the principal

drivers that directly and indirectly influences the behaviour of consumers in luxury fashion

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purchase (Rajagopal, 2011). Culture plays a significant role in consumers’ purchase

behaviours across different nations. It is the unique concept that differentiate an individual

from another individual (Hofstede, 2001). Cultural influence in luxury fashion can take the

form of an individualistic cultural orientation or the collectivistic cultural orientation

(Lindringde and Dibb, 2003). Hence, reasons behind the acquisition of luxury products varies

across cultures. For instance in Asia, consumers strive to fit into the collectivistic cultural

orientation (Lindringde and Dibb, 2003) in that they want to belong into a class in the society

where they can publicly showcase their brand and be publicly admired. This is in contrast to

the individualistic perspective, as in Western countries, where consumers’ preference

revolves around accompanying feeling of achievement and power (Schutte and Ciarante,

1998) over public meanings.

6.0 Conclusion

This analysis has demonstrated that beyond a consumer’s income and purchasing power,

certain factors such as national or emotional motives, status or esteem can influence the

choice of consumers. This has been further illustrated by drawing on the cases of three

luxury brands - Gucci, Louis Vuitton and Vertu. Although these brands adopt different

promotional strategies, their unique and excellent products alongside the prestigious pricing,

their selective distribution channels, an experiential marketing strategy through their

exclusive retail environments and exceptional service experiences, have been able to offer

extra values to consumers.

Further, the analysis has also demonstrated the need for marketers to take into cognizance

the purchase behaviour of luxury fashion consumers as it relates to motivation, self-concepts

and cultural influences. Beyond utilitarian appeals that often characterize products and

services, luxury giants like Louis Vuitton and Gucci have built themselves value-expressive

appeals and this kind of appeal has become a fulcrum for their target customers. Most of

whom often buy luxury fashion brands for symbolic purposes (be it individualistic or

collectivistic-oriented), as against functional purposes.

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Websites

www.altair.com

www.gucci.com

www.louisvuitton.com

www.vertu.com

www.wwd.com/fashion-news

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Appendix A

Showing Vertu Homepage (Screenshot)

Showing Louis Vuitton Web Page (Screenshot)

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Showing Gucci Homepage (Screenshot)

Appendix B

Showing Vertu Boutique Redesigned Retail Environment that “affirms and refines Vertu’s core design codes through the use of strong angles, an interplay of light and technology as

well as seductive contrast of texture, material and colour” (http://www.glamshops.ro)

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Showing Gucci’s immersive retail experience in Milan – a pioneering technology

implemented in Gucci’s flagship stores over a two year period around the world (Pavarini,

2011).