Segmenting Consumers Based on Luxury Value Perceptions

This study seeks to discover consumer segments by using a multidimensional concept of luxury by encompassing functional, individual and social components in the luxury market. Survey data was collected from 1097 consumers in Iran. Eight luxury factors were indentified through an exploratory factor analysis. These factors are used for segmenting these consumers with the K-means method. Cluster analysis of the data resulted in four different behavioral style segments namely: non-luxury consumers, rational consumers, social seeker consumers and materialistic consumers. Each segment shows the importance of luxury value dimensions differently. This study sheds light on the differences between consumers’ perception about luxury value, which helps marketers to choose their marketing strategies more consistently with the consumers’ viewpoint.


Segmenting Consumers Based on Luxury Value Perceptions
Kambiz Heidarzadeh Hanzaee, Bahar Teimourpour and Babak Teimourpour Over the past decades, luxury brands have flourished on both the market and on consumer behaviour regarding and established their reputation worldwide.The luxury luxury goods.market is vastly increasing and there have been It is important for luxury researchers to know why significant changes towards consumer behaviour.The consumers buy luxury, what they believe luxury is and consumption of luxury by the rich has received how their perceptions of luxury value affects their considerable attention ever since Veblen's [1] decision making process.Therefore it is essential for promulgation of the theory of conspicuous consumption.marketers to identify and profile consumer segments.The increased prominence of the luxury product sector With the understanding consumers' value perception to has seen increased interest in academic circles since the luxury products it is possible to cluster them into groups 1990 (e, g., Dubois and Lautrent, [2]; Dubois et al. [3]; for luxury market segmentation and apply suitable market s Vigneron and Johnson, [4]; Widemann et al. [5]).Despite strategies for each segment.This study concentrates on this interest, there is a dearth of research that empirically profiling consumers, based on their perceptions of luxury investigates what motives consumers to consume luxury value dimensions.By using a multidimensional concept of products.This is an important issue because consumers luxury encompassing functional, individual and social do not purchase luxury products per se, rather they components that were suggested by Widwmann et al. [5], purchase perceived motive satisfaction or problem our outcomes for segments on the market-based solutions.
perceived luxury value dimension are accessible.While many luxury products are the same in Asian and Western societies, consumers in different areas may Theoritical Background not buy products for similar reasons.There are many The Concept of Luxury: Luxury is an abstract concept as factors that influence consumers' perceived values, its meaning is determined by personal and interpersonal motivations and beliefs about products.In terms of motives and is therefore primarily built on consumer population size, the increasing consumers' tendency to perception [4].Dubois and Lautrent, [2] and Dubois, et al. luxury goods and the existence of affluent people, Iran as [3], found that consumers' attitude towards the concept a developing country in Middle East could be an of luxury vary considerably.Consumers simultaneously of the Iranian market for luxury products, research is scant display strong positive and negative feelings towards functional value is described by three elements: luxury.Individuals spontaneously associated the term uniqueness value, quality value and usability value.luxury with expressions such as upscale, quality, good taste and class, as well as flashiness and bad taste.It is Uniqueness Value: exclusivity offered by luxury brands apparent that luxury products fulfil one's needs, not only are often well used in marketing promotion and this functionally, but also psychological [3].Vigneron and concept is also well documented [9].Johnson [6] suggested the definition of luxury as the Product uniqueness is one of the critical features in highest level of prestigious brands encompassing several developing a brand's characteristics and the image being physical and psychological values.
sent to consumers.The rarer or more unique a brand is, Due to the fluidity of the concept, different people the more value it symbolizes, at least in consumer's define luxury in different ways.Most scholars agree that perception [10].Traditionally, luxury consumers expect the perception of luxury concept takes on different forms distinction and exclusivity from high-priced designer's and depends on two main subjects: the context and items.Therefore luxury brands usually try to control their people concerned [7].Therefore, luxury is often unique experience through high-end department stores, considered a subjective matter.
Luxury Value Dimensions: Weidman et al., [8], Quality Value: Consumers may associate luxury products developed a luxury value model consisting of four main with superior brand quality and reassurance so that they key dimensions of luxury value perception to distinguish perceive more value from them [12].In addition, high the relationship between value perceptions and luxury quality is seen as a fundamental characteristic of a luxury consumption in different consumers.The first dimension product in terms of a sine qua non [13]. is the financial dimension.It is related to monetary One of the reason consumers buy luxury brands is for aspects of luxury consumption and it addresses the actual the superior quality reflected in the brand name.This is price of these products.The second factor is functional congruent with the assumption in the field of perceived dimension.It focuses on the core benefits and basic quality, that luxury brands offer greater product quality unities of the product.This factor contains elements from and performance than non-luxury brands ([13]; [14]; [6]).the perceived uniqueness and the perceived quality dimensions described above.The third dimension is the Usability Value: The core benefit of a product or service individual dimension.It presents the aspects of the can be seen in its usability for satisfying consumer needs.consumers' personal point of reference towards luxury Hence, one must differentiate between objective and consumption as well as addressing personal value.The subjective judgment of usability, which depends on last dimension is the social dimension.It reflects the individual evaluation and the specific purpose of use [8].perceived value of consumers towards the luxury In this case we want to know from consumers' products within a certain social group, which might have perspective if luxury items have usable features and are a strong impact on the evaluation and inclination to necessary for life.consume luxury brands.The perceived conspicuousness and also the perceived extended self of a luxury brand fits Social Value: As a consequence, individuals are most into the last dimension.
likely to use products that are socially consumed, when The question of what really adds luxury value to the desire to portray status is the dominant motive for consumer's perception is defined in this paper through purchase and use [15].We describe social value by two the existence of three latent dimensions: social, functional value dimensions: conspicuousness and prestige values.and individual [8].In this study we focus on three luxury value dimensions.The price value in financial dimension Conspicuousness Value: Bearden and Etezel [16] showed is described with regard to prestige, quality and that when a high level of reference group influence is conspicuousness values.These value dimensions are present, it is more likely to those public luxuries will be described below.
consumed, the assumption being that the consumer Functional Value: Individuals may consume luxury items others.Veblen's [1] theory of conspicuous consumption simply because they are perceived to be functionally is also premised on the notion that when individuals better than their less luxurious counterparts.In this paper consume luxury goods and services conspicuously they wishes to send a positive signal about their status to are sending a signal to others about their relative status limitation, appearance and characteristics, including one's in society.Mason [17] views satisfaction resulting from own personality [22].Consumer's self-concept affects conspicuous consumption as a being consequence of purchasing behaviour in a self-image or product imaged audience reaction to the wealth displayed by purchase congruity model [18].Puntoni [23] confirmed the and not from the actual qualities of the good or service.
significant impact of self-congruity on luxury brand Prestige Value: The pursuit of status through luxury items to integrate symbolic meaning into their own consumption appears to be a phenomenon that is identity [6].common to human society, across time and cultures.People's desire to possess luxury products will serve as Materialistic Value: Richins [24] sees materialism as a a symbolic sign of group membership.This bandwagon system of personal values.He divides materialism into effect influences individuals to conform to affluent three parts: centrality, happiness and success.Centrality lifestyles [18].
is the materialists' attachment to the general importance Status consumption and conspicuous consumption possessions and the idea that possessions play a central are frequently identified in the literature as being role in their lives.Happiness is the belief that owning the essentially the same concept.O'Cass and McEwen [19] right possessions leads to well-being and that one would argue that such as definition that defines one concept in be if one had happier more or better materialist things.terms of another is incorrect.This proposition was Finally, Richins defines materialists as people who believe supported by a factor analysis which found that item success can be judged by the things people own.In measuring status consumption and items measuring materialistic view point, luxury items become more conspicuous consumption loaded better on a two factor valuable.solution than a one factor solution.
Individual Value: This dimension represents the aspect of defining characteristics such as comfort, beauty [25] and consumer's personal point of reference towards luxury pleasure [26].By Extension, this suggests that some consumption as well as addressing personal value [20].
consumers may be attracted to luxury products because Self-identity, materialistic and hedonic values can be of a positive emotional experience, which they may associated with this dimension.
perceive will result from the consumption experience.
Self-Identity Value: Self-concept can be defined as a research on the semiotics of luxury.These include totality of an individual's thought and feelings having aesthetic beauty, enjoyment and sensory pleasure [5].reference to him as an object [21].It is an individual's Figure 1 shows the theoretical model for luxury value subjective perception and beliefs of one's own ability, dimensions.Cluster Analysis: To identify different groups of (more than 10%) 103 questionnaires were unusable and luxury consumers, the factor scores for each respondent data were analyzed from 1,097 questionnaires of the were saved and subsequently used in stage two to cluster respondents.
them into market segments.The focus of cluster analysis In summery our study conducts a two-stage in this study was on the luxury value dimensions that procedure.In the first part, the major purpose is to based on exploratory factor analysis are summarized determine the basis for classifying consumers' into eight factors.Choosing the best method of perceptions of luxury value.For this purpose, initial factor clustering and the best number of clusters are highly analysis is performed on a 63 item questionnaire.In the important challenges.Although K-means clustering is one second part cluster analysis was used to classify of the most popular partitioning methods, it requires respondents.
the analyst to specify the number of clusters to extract.
This research uses an Iran as the site of empirical investigation.The study sample was defined as male or female respondents, aged 18 years and older.The sampling procedure used for the study was simple random sampling technique.Respondents were asked to express their agreement/disagreement with statements on a fivepoint Likert type scale with anchors ranging from "1=strongly disagree" and "5= strongly agree".Demographic characteristics of the respondents are presented as frequencies and percentages in table 1.

Data Analysis:
As an initial step, the collected data was analyzed using EFA (Exploratory Factor Analysis) method via SPSS (Statistical package for the social science) software.The various luxury dimensions were discovered by EFA, using the principal component method with varimax rotation.The analysis produced an eight factor structure with a Kaiser-Meyer-Oklin measure of 0.967, higher than the minimum acceptable value of 0.5,indicating that the sample size is large enough to factor analyze variables.The Chi-square value or the Bartlett's Test of Sphericity, is significant at the level 0.00.Thus the sample size and the nature of the data are both fit for the analysis.According to the factor analysis results demonstrated in Table 2, an eight-factor solution  We calculated Silhouette Width, using R software to to all luxury value dimensions.The highest negative obtain the number of clusters and seed points for a rating is for usability value followed by hedonic value, k-means cluster analysis.The Silhouette validation materialistic value, prestige value, quality value, technique calculates the silhouette width for each sample.
conspicuousness value, uniqueness value and self-The average silhouette width could be applied for identity value.These consumer groups believe that luxury clustering validation and also could be used to decide items are just swanky and are not necessary for life.There how good the number of selected clusters is.The is no enjoyment in consuming luxury and they don't think Silhouette value ranges from-1 to +1; If the silhouette that money brings happiness.They also don't believe value is close to 1, it means that sample is "well-clustered" that luxury can be a sign of social class and members of and it was assigned to a very appropriate cluster; If the this group don't pay attention to other's opinions.silhouette value is about zero, it means that that sample Consumers of this cluster don't think that the quality in could be assigned to another closest cluster as well and luxury goods is higher that non luxury goods or luxury the sample lies equally far away from both clusters [31].
can be a sign of differentiations.Such consumers don't According to local maximum of Silhouette value, the buy luxury for their own sake or to impress others.In results suggested the presence of four clusters; these summary the most negative attitude toward luxury objects four clusters were used as an input into non-hierarchical can be seen in this group.Maybe this cluster is not the k-means clustering.
target of the luxury market, but the fact is that these kinds In addition, the F value in ANOVA test computed to of perceptions exist in a society.identify the significant level between-clusters differences for eight luxury value factors; it also shows that all factors Cluster 2: Rational Consumers: Comprising 33% of have significant differentiating values.These findings the sample, this was the largest of all the clusters.confirm the validity of cluster analysis.
Its member showed the highest mean ratings of all Overall, following the typical criteria for effective groups for self-identity value, followed by quality segments of consumers with homogeneous needs, value.There is a positive but not very important attitude attitudes and response to marketing variables, the four to hedonic, usability and materialistic values.Uniqueness, clusters were distinct from one another, were large conspicuousness and prestige values were rather enough to be useful and provided operational data that unimportant in this cluster due to their negative mean was practical, usable and readily translation into strategy.
ratings.This four cluster solution produced interpretable and Members of this group are closely attached to selfstable results.The results point out that the perceived identity value items and show high ratings for statements luxury value variables appeared to make considerable such as "luxury products should match with my personal contribution in characterizing clusters.
ideas" and "I buy luxury goods for my own sake not to Luxury value segments based on k-means results are impress others".This indicates that these consumers' shown in table 3.
buying behaviour of luxury brands is affected by personal Cluster 1: Non-Luxury Consumers: The smallest cluster or "impress others".Quality value is also important for represented 17% of the sample.Compared to all the this group, it indicates that they think luxuries have high clusters, member of this group showed negative attitude quality and one of the reasons that luxury is important for factors instead of societal factors such as "gain respect" them is the quality of the luxury items.In contrast, they They also perceive luxury goods as unique and they tend did not perceive the social dimension of luxury consumption as being important; this means they don't buy luxury based on other's opinions or tend to show off with luxuries.They also don't believe that luxury goods are unique and there is no tendency to differentiate themselves from others with purchasing luxury goods.
Cluster 3: Social Value Seeker Consumers: The third cluster made up 19% of the sample.This cluster attaches a high level of importance to nearly all luxury values, especially social value.Members of this cluster are more likely than those of other groups to take the social value aspects of luxury consumption into account, as evidenced by the highest ratings for conspicuousness value followed by prestige value with a negligible difference.The uniqueness, usability, quality and hedonic values are perceived as important for this group and these luxury dimensions have the highest ratings in this cluster when comparing to other clusters.Although there is a positive view to materialistic value, it is not such an important factor when compared to other factors.The lowest importance level is observed in self-identity value with negative rating.It indicates that personal values or buying luxury items just for own sake become meaningless in this cluster.Social seeker consumers do strongly perceive social aspects as the most important factor for the perception of luxury value.They tend to show off with luxuries, their decision makings are based on other's opinions rather than their own opinions and they also seem to consider luxuries as a signal of status.It should be mention that the role of reference group has an important role in this cluster.
Cluster 4: Materialistic Consumers: This cluster comprised 31% of the sample.The most significant issue characterizing this consumer group is the fact that they attach at higher level of importance to materialistic value among all four clusters.This shows that being rich is important for this group, their happiness depends on buying everything that they want and they evaluate people by their financial status.The other prominent values are hedonic, conspicuousness, usability, prestige and uniqueness values respectively.Members of this group perceive luxuries as a way to change their moods and luxury items can be a sign of wealth and social class for them.In this cluster, consumers believe that luxuries are necessary for life and when considering the purchase of a product, they place emphasis on others' opinions.
to have rare items.However, there is somehow a negative attitude towards quality and self-identity values.In summary they don't think the high prices of luxuries are because of their high quality, they can't make a decision just based on their own values and they believe that luxuries can make them feel more self-confidence.
It is true when people are more materialistic their selfconfidence is more depend on their possessions.

CONCLUSIONS AND RECOMMENDATIONS
The major purpose of this study is to understand the different luxury value perceptions among consumers.To reach our goal, factor analysis was first performed on the provided questionnaire and its output was condensed to eight major factors.Then the consumer market for luxury goods was segmented with a behavioural approach and the differences between clusters with respect to the issues of eight luxury value dimensions.
Findings revealed four behaviourally distinct segments.In one of the clusters named the Non-luxury consumers, there were no positive perceptions about luxury items, so they may not be considered as target consumers in the luxury market although it depends on market targeting strategies.Three other clusters can be more valuable as luxury market segments and marketers can apply suitable strategies based on functional, social and individual value dimensions in each group.In cluster two named as the rational consumers, self-identity and quality value found as the most important factors.Consumers in cluster three perceived conspicuousness and prestige with high level of importance values, we called them social seeker consumers.Members of cluster four as is understood by its name (materialistic consumers) focuses strongly on materialistic value.
Knowledge of all relevant aspects of consumer perceptions of luxury can be useful for managerial practice.From the market segmentation view, this study suggests that the luxury market is no longer homogenous.It is suggested that according to perceived values in luxury brands, different sets of luxury products and different types of advertising strategies can be applied with focus on the more important values for each group.In summary, luxury brands should encompass consumer values.Even if consumers buy the same luxury goods, their perceptions about luxury values can differ, so the luxury market is heterogeneous and the role of product characteristics plays an important role.Thus it is the marketer's duty to consider individual differences in 9. Pantaliz, I., 1995.Exclusivity strategies in pricing and evaluating luxury values and transition consumers from brand extension.unpublished doctoral dissertation.less profitable to more profitable groups.
University of Arizona.This research is not free from limitations.First, we did 10.Sun, M.W., 2011.Consumption of luxury fashion not specify a product and only the overall perceptions brands: The motives of generation Y consumers in about luxury value have been tested.It

1 1 2 INTRODUCTION
extremely attractive marketplace.Despite the importance Fig. 1: The theoretical model for luxury value dimensions

Table 1 :
Demographic profile of respondents Reliability of the scales is measured by The first version of the questionnaires, consisting of computing the Cronbach alpha.For all the eight factors 68 items was content validated by 15 marketing experts used in this research, the reliability values ranged and face-validated by 65 respondents in identifying the between 0.75 and 0.85, which exceed the minimum vague items and reducing the total number.At last a acceptable value of 0.7 suggested by Nunnally [30].questionnaire consisting of 63 items were responded to by 1200 respondents.Due to the number of missing items

Table 2 :
Luxury value factors

Table 3 :
Luxury value segments based on k-means results is proposed to China.Doctoral dissertation.Auckland University of apply similar analysis for a specified luxury product or Technology.service.11.Lipps, V., 2009.The reciprocal effect of luxury brand Second, all participants in our research encompassed extensions n perceived brand luxury and on parent all type of consumers to reach an overall view of luxury; brand attitude.MA.Maastricht University.It would be interesting for further research to focus on 12. Aaker, D.A., 1991.Managing Brand Equity, New luxury consumers that have more experience in luxuries.York Press.Third, further research can segment consumers based on 13.Quelch, J.A., 1987.Marketing the premium product.demographic characteristics or lifestyles.Business Horizons, 30: 38-45.Last but not least, this study is limited to one 14.O'Cass, A. and H. Frost, 2002.Status brands: country; consumers in different parts of the world with Examining the effects of non-product brand different cultures may buy, or wish to buy, luxury associations on status and conspicuous products for apparently varied reasons.consumption.Journal of Product and Brand