Why We Engage in Luxury Consumption?

Because you are worth it? Or…

The luxury market continues to grow substantially worldwide. Globally, the luxury market grew by 5% to an estimated $1.5 trillion in 2017. So, why do people engage in luxury consumption?

Scholars have noted several reasons why consumers engage in luxury consumption. There is a multitude of reasons, why consumers engage in luxury consumption. To put simply, luxury consumption entails several benefits, which include physical, psychological, and social. Below I elucidate FOUR reasons (which can be correlated too) that pretty much sums up the “why” of luxury consumption.

Financial Value of Luxury — it must be worth a lot some day!

The financial dimension of luxury value (i.e., crudely put as perception or benefit) refers to monetary aspects such as price, resale, or investment. It also represents what is given up or sacrificed to obtain a luxury product or service. In fact, several scholars have noted that one of the hallmarks of a luxury brand is its price. Consistently, “the concept of exclusive value principle” is proposed, which states that consumers who seek unique products are likely to use price cues as representative of uniqueness and prestige.

Functional Value of Luxury — it must be a high-quality product!

The functional dimension of luxury value refers to the luxury product’s or service’s benefits, which include perceived quality, usability, and uniqueness. Some luxury experts have used the term “utilitarian” value as a synonym, which refers to rational purposes related to the luxury product or service consumption. In other words, luxury products are considered to be of great quality, exclusive, and rare.

Individual Value of Luxury — I am worth it!

Social Value of Luxury — I aspire to belong to the rich!

Luxury consumption confers social value by creating a favorable social image and societal recognition. Furthermore, luxury products serve as social and symbolic markers of group membership. Thin about conspicuous consumption (i.e., spending on frivolous and wasteful goods to gain status and impress others).

SO WHY DO YOU ENGAGE IN LUXURY CONSUMPTION?

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