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Elite Brands and Their Counterfeits: A Study of Social Motives for Purchasing Status Goods Free essay! Download now

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Elite Brands and Their Counterfeits: A Study of Social Motives for Purchasing Status Goods

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Elite Brands and Their Counterfeits:
A Study of Social Motives for Purchasing Status Goods


Such companies provide buyers with what are conventionally called elite brands, defined by Silverstein and Fiske (2003) as those brands that possess higher levels of quality, taste and aspiration than other brands in the product category. These products are often justifiably priced higher than other brands in order to make their brand seem exclusive and more prestigious. For example, elite designers are able to transform a $10 t-shirt into a $100 sought after treasure (Chatpaiboon 2004). Recently, Hermes reported that customers were placed on a two-year waiting list for their most popular Birkin bag, which retails for $6000 (Branch 2004). On EBay, women engaged in bidding wars over a blue Birkin bag for which the winner ultimately paid over $13,000 (Rose 2003).
Many manufacturers have been successful in commanding a price premium for their brands. However, it seems that some designers and manufacturers have become victims of their own success. Once an elite brand has become so closely associated with status and prestige in the minds of consumers, it is only natural that other companies would want to imitate it.
The designer handbag is, in fact, all about the display of symbols, the little interlocking Gucci G’s the Chanel C’s, the offset LV of Louis Vuitton. It is the proof of taste, the proof of money, a silent “I am someone” message that only fellow label lovers know how to read” (Rose 2003).

Those who use brand imitating as a strategy to facilitate the adoption of their new product copy certain characteristics of the original brand (Kotler and Keller 2007). Previous research has shown that consumers often use their existing perceptions of a brand to evaluate new offerings such a product or line extensions (Aaker and Keller 1990). Because it appears similar to the original brand, consumers will then transfer attributes of the original brand to the brand imitator, thereby affecting evaluations and purchase decisions. These attributions include, but are not limited to, product quality, performance, reliability, and origin (d’Astrous and Gargouri 1999). Francesca Sterlacci, a fashion designer, who heads the fashion design department at New York’s Fashion Institute of Technology, says that copying is simply a way of life (Karr 2003). In a recent website interview Sterlacci admits that it is “expensive and risky to actually create new designs, and much cheaper and easier to simply knockoff a successful one” (Karr 2003).
Types of Brand Imitations
Some brand imitations are created to allow users to gain the status and prestige, as opposed to the functionality, associated with the original brand. These brand imitation occur along a spectrum that begins with “clones” or “knockoffs” and end with counterfeits.
According to Kotler and Keller (2007), companies that employ a cloning strategy often emulate the style, packaging, and designs of more expensive brands while offering such imitations at a lower price. These types of products are often referred to as “knockoffs” because their appearance closely resembles the elite designer handbag, to offer one example, but they are easily distinguishable from their elite counterpart (Cohen 2005). Once the Hermes Birkin bag became almost impossible to acquire, knockoff versions of the bag appeared on the streets of New York and in several retail stores. While the knockoff bags were made of plastic, as opposed to leather, they featured a buckle and clasp design similar to the original (Karr 2003).
While some products are simply “inspired” by the elite brands they imitate, e.g. displaying “Prego” instead of “Prada,” others are blatant violations of intellectual property laws and registered trademarks. These products, known as counterfeits, are identical in appearance to the authentic brand and fraudulently display the brand name being copied (Cohen 2005). The market for counterfeits has become pandemic, accounting for an estimated $456 billion, or 7 percent of global trade, in 2003, according to the World Trade Organization. Fashion apparel accounted for $51.7 million of that figure with watches and footwear accounting for $2.5 million and $2.3 million, respectively (Derby et al. 2005). In 2003 alone, the United States Customs intercepted over $100 million in counterfeit luxury products (Hegstrom 2004).
Counterfeits are often sold at a fraction of the price of the elite designer version—e.g. Luis Vuitton purse $1100 vs. counterfeit $115--thereby attracting many consumers unwilling or unable to pay the high prices associated with the elite brands being copied. Street vendors also encourage consumers to purchase counterfeits by offering to switch or alter brand labels at the time of purchase by sewing a “Prada” tag or similar elite brand identifier onto an otherwise plain handbag. This practice, although illegal, is almost always accepted by customers when offered by street vendors (Carducci 2005).
In summary, there are several categories of brand imitators. Our general program of study will be investigating antecedents of the purchase of luxury brands, and their imitations, including knockoffs and counterfeits. However some types of imitations, those including knockoffs, will be explored in future research. The focus of this dissertation will be to test a model of the antecedents of the selection and/or rejection of a smaller subset of brand imitations--counterfeit products. In the next section, I will review the literature regarding the different motives people may have for choosing or rejecting both knockoffs and counterfeit products.
Motivations for Purchasing Brand Imitations
Just as there are variations among brand imitations, there are very different reasons one may choose to purchase a brand imitation. For example, consumers who choose brand imitations may do because they are “value conscious.” Value Consciousness has been defined as “a concern for price paid relative to the quality received” (Lichenstein et al. 1993). In general, researchers view the concept of value consciousness as being related to the pleasure gained from acquiring a product which satisfies an inherent need of the particular consumer (Shoham 2004). Value conscious consumers take great pleasure when able to purchase items at lower prices because they feel like a “smart shopper” (Lichenstein et al. 1993). For example, consumers who are value conscious may choose to shop at outlet stores and/or purchase things on sale in order to get a better deal on desired product. These consumers have a strong desire to maximize the ratio of quality received to price paid--value consciousness--and a desire to pay low prices--price sensitivity--(Burton et al. 1998). To these consumers, brand imitations are a good alternative to the original because they are priced below the original brands.
Consumers who are value oriented may reject brand imitations in some product categories while choosing to purchase others. Brand imitations of luxury products may be perceived differently by value oriented consumers than are imitations of convenience goods. Convenience goods (i.e. shampoo, analgesics, etc.) are usually afforded by everyone; therefore value oriented consumers may see imitations of luxury products as a better deal than knockoffs of convenience goods (d’Astous and Gargouri 2001).
While some consumers purchase brand imitations because of value, others choose these products to signal they are a smart shopper. These consumers are described as “deal prone” and find satisfaction when the price they pay for a good is lower than their internal reference price (Rosch 1975; Thaler 1985; Burton et al. 1998). Some deal prone consumers may also choose some categories of brand imitations because these types of products signal their bargain-hunting skills.
Another possible motive for purchasing brand imitations is to enhance one’s social status. For counterfeits in particular, some consumers may purchase brand imitations to gain the prestige and status associated with the brand being copied without having to pay the price premium (Bloch et al. 1993). Many consumers who purchase brand imitations share the philosophy that it is acceptable to “fake it until you make it” (Gernauser 2005). This motive will be discussed in greater detail in subsequent chapters as this is the focus of this dissertation.
As illustrated above, the motivations for producing brand imitations are various and often differ according to the type of product and/or the category of brand imitation Additional factors may also influence when a brand imitation is chosen. For example, consumers may reject brand imitations when they perceive that the risk of making a wrong decision is high. For example, expensive brand imitations may not be as durable or functionally similar to their authentic counterparts, increasing the financial risk associated which such purchases. Also, individuals may experience embarrassment or other social consequences if caught wearing an imitation Rolex because others perceive them as misrepresenting their social status. The context in which a purchase is made may also influence whether an individual selects or rejects brand imitations. For example, consumers may be more willing to select a brand imitation when purchasing items for themselves as opposed to purchasing items to be given as gifts.
Given the complexity of this topic area, the present dissertation focuses on the factors that predict when consumers will either reject or accept elite brands, and their imitations, when purchasing conspicuously consumed products for the purpose of enhancing their social status. Because the focus of this dissertation is on visible elite branded products, as opposed to those which are consumed privately, there are status implications associated with such brand choices. For example, even when consumers do not deliberately purchase an elite brand for the sole purpose of enhancing their status, the prestige and status of the brand is still conveyed to others, thereby communicating information about the social status of the owner.
Therefore, the objective of the present study is to use sociological and psychological variables to explain the possible motivating factors behind choices among three options: 1) buying socially recognized authentic elite goods, 2) rejecting elite goods in favor of non-elite brands of goods, or 3) buying counterfeit brand imitations. More specifically, this dissertation identifies and explains the motivations of consumers who prefer counterfeit products over equivalently priced non-elite brands, as well as consumers who are able to afford elite branded products, but prefer other alternatives.

Chapter 2
Products as Signals
Literature on the symbolic function of products has a century-old history, documenting how consumers use products to communicate to others information about themselves such as social status or group membership (Veblen 1899; Bourdieu 1984; Belk 1988; Corrigan 1997). For example, in eighteenth century England, a family’s status was not determined by monetary standards but rather the ability of the family to own the appropriate material objects such as furniture, cutlery, buildings, etc. (McCracken 1988, 32). Furthermore, when these items showed signs of age (termed patina) a family’s claim of social status gained legitimacy because patina indicated that the family was from “old money” and therefore belonged to the upper class (McCracken 1988; Corrigan 1997).
In modern society, the concept of patina to communicate status has been replaced with fashion and the ownership of other luxury items (McCracken 1988). Luxury products, and more specifically status brands, are often used to create one’s individual identity (Belk 1985) as well as communicate one’s achievement and social standing to others (Goffman 1959; O’Shaughnessy 1992; Scitovsky 1992). Similarly, fashion theorists have posited that consumers rely on clothing to make judgments about others, including judgments about their social status and profession (O’Cass and Frost 2002, O’Cass and McEwen 2004). Therefore, consumers choosing to
purchase high status fashion brands may do so to provide a visible signal of their social status (See Appendix A for an advertisement that emphasizes status).
When most people think of status indicators, certain product categories, such as luxury items, clothing and/or fashion accessories immediately come to mind. In a recent interview, a woman describes how she uses status symbols to hide her lower class background: “Who’s got money, who doesn’t, it’s always going on in my head. So, I put on my armor. I have the [hand]bag. I have the shirt. I know people can’t tell my background by looking” (New York Times 2005, p A19).
However, as illustrated in the following vignettes, consumers may choose to purchase status in a vast variety of product categories and by selecting very different products. A synthesis of the literature presented here would suggest that consumers may purchase status in one of three ways: 1) by purchasing elite brands, 2) selecting counterfeits of elite brands, or 3) brands that are clearly neither.
A young bachelor, who had recently graduated from college, was telling me about the first items he had purchased when he began his first full time job. In addition to the normal upgrading of the automobile and moving to a nicer apartment, he recalled with joy when he realized he could afford to buy Tide laundry detergent. When asked why Tide was so important, he replied that he couldn’t wait to show off his new status to the regular customers at the laundromat. For him, the “right” brand of laundry detergent indicated that he could afford the best.

In contrast, the next passage indicates how some consumers abstain from purchasing what they perceive to be status brands:
While shopping for laundry detergent in a local grocery store, I came across a mother and daughter discussing what to buy for the daughter’s upcoming move into a dorm. When the mother picked up a bottle of Tide, the daughter said, “Mom, I can’t show up with Tide!” When the mother asked why not, the daughter replied, “They’ll think I am a snob or trying to kissass.” To the daughter, and the people she was trying to conform to, buying the most expensive was an obvious faux pas.

One conclusion that can be drawn from these examples is that individuals may choose different buying strategies to increase their social status. For example, some people choose to increase their status through “upscale” consumption. However, others who pursue status in other ways, such as their occupational field (Greenberg and Ornstein 1983), may communicate their preference for doing so by the status symbols they reject. Therefore, marketers face an unavoidable challenge when attempting to position their products in the minds of consumers. What makes a brand more appealing to some customers may make it less appealing to others.
That fact has serious consequences. As seen by the narratives above, manufacturers of designer handbags or sunglasses often rely on high prices to signal the status of their brands to appeal to certain types of consumers. It appears, though, that increasing the price and/or status of a brand may result in a loss of customers in two ways. First, if the price of an offering becomes too high some consumers may opt to purchase a cheaper, counterfeit imitation of the product. In addition, other consumers may choose to avoid the elite brand, or any imitation of it, altogether so as not to be confused with the “status seekers.” What differentiates these groups is the focus of this dissertation.
A key construct that appears useful in that differentiating process is a dimension of materialism. As discussed previously, some consumers may be more likely use material possessions to convey status than others are. In other words, some consumers may place a greater importance on material possessions than others do. Materialism has been defined by researchers as “a set of centrally held beliefs about the importance of possessions in one’s life” (Richins and Dawson 1992, p. 308). After a qualitative study, these researchers determined that individuals with high levels of materialism often placed greater importance on acquiring material possessions and were more likely to associate the ownership of certain products with achieving major life goals than those with low levels of materialism (Richins and Dawson 1992; Richins 2004). As a result, materialism is considered to be a chosen way of life that influences how individuals make decisions across a vast variety of social domains which includes, but is not limited to, consumption (Belk 1985; Richins and Dawson 1992; Richins 2004).
While most research focuses on materialism in general, the construct has actually been found to be comprised of three underlying dimensions: Possession-defined Success, Acquisition Centrality and Acquisition Happiness (Richins and Dawson 1992). This dissertation is focused on the social factors that influence brand choice; therefore two dimensions of materialism, Acquisition Centrality and Acquisition Happiness, are beyond the scope of this paper. The third dimension, Possession-defined success, and its relation to one’s chosen method of purchasing status, will be discussed in greater detail in chapter 6.
To reiterate--this dissertation tests the overall idea that consumers engage in status consumption in not only different but opposed ways. In predicting whether they will do so by purchasing elite brands, imitations of elite brands--or brands clearly in neither of those categories--we test a theoretical model which suggests that the means of status-seeking for an individual will depend on the following social factors 1) cultural level 2) materialism and 3) status insecurity. If this overall idea is supported, there are implications for market segmentation and targeting for products as mundane as laundry soap.
This paper will continue in the following manner: Chapters 3 and 4 will review the existing literature on status seeking, both in general and specifically in the marketplace. In chapter 5, I discuss the three categories of consumers. In chapter 6, the independent variables of interest will be discussed. Chapter 7 will discuss the overall theoretical model of product choice. Chapter 8 will describe the study design and research methods. The final chapter will offer a discussion of results and suggestions for further research.
Chapter 3
Literature Review on Status Seeking
Before discussing how consumers use brand imitations to enhance their social status, it is first useful to discuss why people seek status in the first place. Status seeking is universal and is considered to be rational behavior among social scientists and economists. However, although there are many different ways in which people seek status, the specific behaviors an individual will engage in may differ according to the social opportunities that are available at any given time.
Before reviewing the existing literature, I will first define what is meant by status seeking. According to Scitovsky (1993), status seeking refers to the desire to “rank within society, and seek acceptance or distinction within a certain social class or narrower group of colleagues, co-professionals or neighbors” (p. 115). In other words, status seeking can be thought of as behavior which gains or maintains acceptance and membership with a social group. Using this definition, I will now review sociological and social psychological theories justifying the ubiquitous nature of status seeking.
Reasons for Seeking Status
The sociological and social psychological literature discusses status seeking behavior in terms of both between (group level) and within (individual level) social groups. I will begin my review with the literature involving behavior between social
groups. Scitovsky (1992) states that people have an innate biological need to belong, or to gain membership into significant social groups. Once membership is obtained, an individual often behaves differently towards individuals in the group he or she belongs to, the in-group, than towards individuals in other groups (the out-group).
The bias towards in-group members is especially evident when a status differential exists between the groups. One explanation for in-group bias is that individuals experience greater self-esteem from being able to differentiate themselves from others, especially when the differentiation results in a more positive evaluation of their own social group (Turner 1978; Abrams and Hogg 1988). By increasing the status of their social group, members are able to legitimize their own superiority. This legitimization, in turn, causes a feeling of entitlement to better outcomes for members of their own group versus others (Turner and Brown 1978). Commins and Lockwood (1979) demonstrated that even though subjects were not directly rewarded, members of higher status groups tended to reward other in-group members more than out-group members. In other words, social groups seek status because it not only benefits the group as a whole, but also indirectly allows members to increase their rewards individually.
Two ideas have been offered to explain status seeking at an individual level. Research in the social sciences has primarily viewed status as a means for achieving future resources via a higher position in society (Lin 1990, 1994). Another perspective, suggests that people pursue status to satisfy an intrinsic component of their utility function (Emerson 1962; Frank 1988). I will begin with a review of the social science literature, followed by a discussion of the economic literature.

Status Value Theory
In the social sciences, status is used to describe one’s standing in a social hierarchy as determined by respect, deference or social influence (Ridgeway and Walker 1995). Within a social hierarchy, individuals may seek status in order to increase the value of their existing or future resources. Status value theory says that status characteristics are often used as a basis for the distribution of power in exchange relationships (Thye 2000). In such exchange relationships, high status actors will occupy more powerful positions than low status individuals, thereby obtaining a greater amount of resources and increasing their exchange opportunities. In addition the resources owned by high status actors become more valuable to others because they convey status value. Status value refers to the worth, self-esteem, or honor associated with possessing an object (money) or characteristic (ex. race or gender). Over time, status value will “spread from people to exchangeable goods, and the objects held by high status individuals will become more valuable than if they had not been” (Thye 2000, p. 412).
Therefore, individuals seek status, consciously or unconsciously, in order to gain greater amounts of resources as well as increase the valuations of their existing resources. In an empirical test of status value theory (Thye 2000), subjects were asked to negotiate with both high and low status individuals. In both experiments, subjects indicated that they exerted more effort to obtain the resources associated with the high status actor, and would prefer or attached greater value to the resources owned by the high status actor. Similarly, Lovaglia (1994, 1997) showed that by improving their status, individuals were able to increase their power and influence in exchange relationships.
Status Construction Theory
Higher status individuals have also been shown to be more influential in social interactions. For example, researchers of status construction theory (Ridgeway and Walker 1995; Ridgeway, Boyle, Kuipers and Robinson 1998; and Ridgeway and Erikson 2000) have demonstrated that in encounters between subjects, who differ in status, low status subjects were willing to adopt beliefs that favored high status subjects and such beliefs could be spread to a larger population through social interactions. Therefore, by definition, individuals may seek status in order to become more influential in their current social relationships.
Theory of Status Characteristics and Expectation States Theory
In addition to using status to gain future resources, researchers have also found that people often rely on an individual’s status “to provide information (which may or may not be accurate) about the individual to others and thus to condition the behavior of others to the individual” (Ball and Eckel 1996, p. 384). Status characteristics theory and expectation states theory (Berger et al. 1977,1980) describe why people are status conscious during social interactions and how status beliefs influence future social behavior. The basic premise of status characteristics theory is that within a social group, whose members are differentiated by some valued status characteristics (ex. race, sex, social class, age, etc.) individuals form conceptions of another’s capabilities. Individuals are more likely to form such conceptions when there is a consensual evaluation of such traits in the larger society (Driskell and Mullen 1990). These performance expectations (expectation states) are used to determine the power and prestige of the group members within a group, thereby constructing the group hierarchy. Status characteristics are then used as indicators of an individual’s performance capability that subsequently influence how he or she is treated in future interactions.
For example, Gerber (1996) found that in an experimental setting high status actors were credited with more favorable personality traits than low status actors by their co-subjects. This theory has also been supported by Friedkin and Johnsen (2002), who found that high status individuals were more persuasive and influential in their social networks than low status individuals. The repeatedly observed preference for high status individuals and groups can be explained by the just world theory (Lerner 1980). According to the theory, people believe that in a just world people often get what they deserve and deserve the rewards and resources they get.
Social Comparison Theory
Social comparison theory (Festinger 1954) offers an alternative explanation for status seeking behavior. According to this theory, individuals have a desire to determine their own ability and competence by comparing themselves to others (Wood 1989). When upward comparisons are made, to an individual of higher status, a negative mood state may result. In other words, people are pleased when they deem themselves similar to other members of their social group and are displeased when they are dissimilar. In an effort to reduce the resulting negative mood state, people may be driven to invest their resources in behaviors which improve certain attributes of themselves because they desire to increase their rank within their social group, not because they directly value the attribute.
In summary, status seeking is viewed by the social sciences as rational behavior, because it is a means to achieve greater future resources such as power, influence and higher ranks in society as a whole. High status individuals have been shown to be evaluated more favorably, become more influential, gain leadership roles and receive more social opportunities than low status individuals. Thus, one reason that status is sought is because it is socially useful.
In some cases, however, status is pursued even when it is not useful. Some researchers propose that people can pursue status as an end state in itself as opposed to using status to achieve future goals (Frank 1985; Loch, Stout and Huberman 2000). From this perspective, achieving high social status causes individuals to experience positive emotions which then satisfy a component of that individual’s utility function. Kemper (1991) found that awarding status to experimental subjects resulted in more positive emotions during negotiations, while negative emotions were experienced when subjects were demoted or when status was awarded to another subject. In a cross-cultural study of status seeking behavior, Huberman, Loch and Onculer (2004) found that subjects valued status independent of a monetary reward and were willing to trade material gain in order to achieve status. However, the degree to which individuals valued status was found to be positively related to the Hofstede’s measure of power distance for their country of origin. For example, subjects from Hong Kong did not value individual status as greatly as did subjects from the United States and were less willing to trade their monetary rewards for an increase in individual status.

Factors Influencing Status Seeking Behavior
Social Identity Theory
While status seeking is universal, previous research has shown that attaining status is more difficult for some individuals than others. Status seeking, as previously defined, refers to efforts aimed at gaining membership and distinction within an individual’s social group. Once group membership is obtained, individuals often employ strategies to improve their own status as well as improve the overall status of group. Social identity theory (Tajfel and Turner 1979) describes intergroup relations and possible strategies that members of low status groups may use to increase their status both individually and collectively. According to this theory, people get self esteem from social groups and will pursue goals which increase or maintain a positive self-identity. In order to achieve a positive social identity, individuals in a low status group may engage in several possible strategies for seeking higher status.
Status Seeking Strategies
First, people may individually/collectively engage in normative behaviors (approved actions within a social system) to increase their status. For example, individuals often demonstrate an in-group bias, or evaluate in-group members more favorably than out-group members. Favoring in-group members satisfies an individual’s need for positive self-esteem while simultaneously creating a positive social identity for the group as a whole (Tajfel and Turner 1979). By systematically favoring in-group members, individuals are able to redistribute resources during negotiations (Ball and Eckel 1988, 1996) so that the perceived status of the in-group increases relative to the out-group. In other words, people may engage in status seeking behaviors that exclude members of an out-group so that the perceived status of the in-group, and its members, increases. Second, people may also choose to engage, either individually or collectively, in nonnormative behaviors (such as protesting or signing petitions) to challenge their status position within a social hierarchy. Finally, low status individuals may choose to simply accept their status position and behave accordingly (Boen and Vanbeselaere 2002).
Chapter 4
Status Seeking in the Marketplace
From the material presented in the previous section, it can be inferred that there are many reasons why people may choose to seek status. In this section, the discussion changes from why status seeking occurs to how these behaviors occur. Although many methods of status attainment exist, (ex. obtaining higher education, career advancement, etc.), the present study focuses on status seeking behaviors in the marketplace because such behaviors provide one explanation for the purchase or rejection of brand-imitating goods.
Although status seeking is universal, not all consumers choose to pursue status through the purchase of elite brands or their imitations. Status consumption, as defined by Eastman, Goldsmith and Flynn (1999), is “the motivational process by which individuals strive to improve their social standing through the conspicuous consumption of consumer products that confer and symbolize status both for the individual and surrounding significant others” (p.42). Using this definition, we are interested in the purchase or rejection of elite status goods, both original and imitations. Elite status goods, or imitations of such goods, that are privately consumed (i.e. bed linens, home furnishings, or electronics) are therefore beyond the scope of the present study.

Motivations of Status Consumers
Although many psychologists view status consumption as an individual psychological construct, marketing and economic researchers have examined status consumption at a group level. Vigneron and Johnson (1999) developed a conceptual framework that describes the motivations/types of status seeking consumers and their respective expected benefits of status consumption. Under this framework, prestige or status brands differ from their non-prestige counterparts in that consumers perceive status products as having the following five types of value: 1) conspicuous value, 2) unique value, 3) social value, 4) hedonic value, and 5) increased quality. Because we focus on social motives for choosing brand imitations, only the first three types of value will be discussed.
Perceived Conspicuous Value
Veblen’s (1899) Theory of the Leisure Class is based on the premise that individuals often consume highly conspicuous goods and services to advertise their wealth in order to increase their social status within a group’s hierarchy,
“So as soon as the possession of property becomes the basis of popular esteem, therefore, it becomes also a requisite to that complacency which we call self-respect. In any community where goods are held in severalty it is necessary, in order to insure his own peace of mind, that an individual should possess as large a portion of goods as others with whom he is accustomed to class himself; and it is extremely gratifying to possess something more than others “ (1899, pp 38-39).

Consumers purchasing status products for their perceived conspicuous value evaluate these products on the ability to signal status and wealth to others. As a result, the price of status goods, which are expensive by normal standards, acts to enhance the integrity of the signal (Vigneron and Johnson 1999). The increase in price, often referred to as a status premium, reflects the additional amount of money consumers are willing to pay above any quality premium (Chao and Schor 1998).
While some consumers may purchase goods to signal membership in a higher status group, other consumers may conspicuously consume goods to avoid the appearance of being low-class. Status insecurity (Wyatt et al. 2008; Wu 2001) refers to the degree to which an individual is concerned with appearing low-class or experiences a feeling of uncertainty about his or her social standing. According to Eastman et al. (1999), the more an individual seeks status, the more he or she will engage in behaviors to increase status. It is logical, therefore, that status insecurity may influence one’s behavior in the marketplace. For example, previous research has shown that individuals who are insecure about their social status are likely to compensate by purchasing products/brands which convey prestige to others (Wyatt et al. 2008). In other words, those individuals who are insecure about their social status are likely to avoid brands which may lead to being perceived as second-class and purchase those that convey the opposite signal.
Previous research on conspicuous consumption has shown that prestige products are much more likely to be publicly consumed than are non-prestige products (Bearden and Etzel 1982). Therefore, among conspicuous consumers, the utility of status products may be to publicly advertise an individual’s social standing, and such consumers would prefer highly visible status products over those that are privately consumed. For example, a study of women’s cosmetics revealed that consumers were more willing to pay a status premium for highly visible products (e.g. lipstick) as compared to less visible products (e.g. facial cleansers) even though there were no discernable differences in quality across the brands being compared (Chao and Schor 1998). Additionally, an analysis of product categories showed that the percentage of women purchasing expensive brands (top 3) increased with the visibility of the product category. For example, status brands account for 10.9% of sales in the facial cleanser category as compared to 18% of sales in the lipstick category (Chao and Schor 1998).
Perceived Unique Value
While some consumers purchase prestige products for their conspicuous nature, others prefer status products that are unique in nature. To these consumers, scarce products are valued more than those readily available to the public. According to optimal distinctiveness theory (Brewer 1991; Brewer, Manzi and Shaw 1993), individuals have two types of identities. First, individuals have a personal identity that is drawn upon during social situations in order to differentiate themselves from others within a given social context. Second, individuals also possess social identities that are categorizations of the self into a more inclusive social group (e.g. mother, father, student, Caucasian) (Brewer 1991; Brewer et al. 1993). Optimal distinctiveness theory states that our social identity, or the categories of people we choose to associate with, is created to resolve the fundamental tension between needs for validation and similarity to others and a countervailing need for uniqueness and individuation (Brewer 1991). Similarly, uniqueness theory (Snyder and Fromkin 1980) says that people find high levels of both dissimilarity and similarity unpleasant and therefore strive to be moderately dissimilar from others. Although striving for uniqueness is universal, individuals may differ in the degree to which uniqueness is weighted against social approval; some individuals have a higher need for uniqueness than others (Snyder 1992).
Pursuing uniqueness satisfies an individual’s need but also has implications for how people seek status through elite brands. For example, marketing researchers have recognized that consumers often equate uniqueness with high status because, by definition, if virtually everyone owned a brand or product it would not be perceived as elite (Vigneron and Johnson 1999). Therefore, it can be concluded that some individuals purchase scarce products to satisfy their need for uniqueness while gaining the status associated with owning a rare product/brand. Empirical studies have shown that individuals often place a higher economic value on rare or scarce products (Lynn 1991) and perceive scarce products as conferring higher status than products which are readily available (Solomon 1994; Verhallen and Robben 1994). These arguments are consistent with the economics literature that has examined diffusion patterns across populations. Leibenstein (1950) found that a portion of the population preferred exclusive or scarce goods and avoided using mainstream products or brands. This effect, named the snob effect, was found under the following two conditions. First, when an elite product is first introduced into the marketplace snobs tend to adopt at the beginning of the diffusion cycle in order to capitalize on the exclusivity of being one the first owners (Leibenstein 1950). Second, the snob effect is also evident when “status sensitive consumers come to reject a particular product as and when it is seen to be consumed by the general mass of people” (Mason 1981, p. 128). In addition to placing importance on scarcity, consumers purchasing elite branded products may also perceive high prices as indicators of exclusivity and therefore choose high priced goods over lower priced ones (Vigneron and Johnson 1999). In a recent experiment, Amaldoss and Jain (2005) showed that snob consumers had an upward sloping demand curve: a greater number of snobs chose to purchase the product when it was offered at a higher price than when the price was reduced.
Perceived Social Value
In addition to satisfying an individual need for uniqueness, people often purchase elite brands for their symbolic value in order to express membership in a particular social group. Leibenstein (1950) called the effect that describes how consumers purchase elite brands to conform to a group standard the “bandwagon effect.” Consumers who engage in status consumption after the initial release of a product often do so in order to fit in with their current social group or to differentiate themselves from lower-status social groups (Solomon 1983, 1999; Sirgy 1987; McCracken 1986).
“Even though snobs and followers buy luxury products for apparently opposite reasons, their basic motivation is really the same; whether through differentiation or group affiliation, they want to enhance their self-concept” (Dubois and Duquesne 1993).

Social comparison theory (Festinger 1954) also supports the notion that individuals may purchase elite brands to conform to a prestigious group in order to ultimately increase their self-esteem. As mentioned in the previous chapter, social comparison theory says that people have an innate desire to compare themselves to others in order to assess their individual status and/or competence. If individuals continue to compare themselves to others of higher status, feelings of inadequacy may result. In order to resolve these feelings of inadequacy, consumers are motivated to emulate the purchasing patterns of the higher status others to whom they compare themselves (Festinger 1954; Wood 1989).
Recent research on the relationship between television viewing and status consumption lends empirical support to social comparison theory. For example, O’Guinn and Shrum (1997) found that people often rely on television to learn about affluent lifestyles and to construct social reality. More specifically, individuals were more likely to purchase products and engage in activities associated with affluent lifestyles as their level of television exposure increased. Additionally, Hirschman (1988) found that television shows that depict affluent lifestyles like “Dallas” and “Dynasty” influence viewers’ preferences and orientation towards elite brands. Researchers concluded from both of these studies that individuals often compare themselves and their lifestyles to the images being portrayed on television and are motivated to make those comparisons more favorable by purchasing brands that confer more higher status (Hirshman 1988; Dittmar 1994; O’Guinn and Shrum 1997). In conclusion, bandwagon consumers or followers purchase elite brands in order to capitalize on their social value or the impact these brands have on others.
Until this point, the discussion has focused primarily on the selection of elite brands; however, some consumers may choose to abstain from selecting socially recognized elite brands. I will now review literature that offers insight as to why some consumers may find elite brands undesirable.
Theory of Cultural Capital
According to Bourdieu (1984), social life can be described as an ongoing game in which individuals compete for social status (symbolic capital) in several areas of life (i.e. work, religion, education, etc.) by utilizing three types of resources--economic, cultural and social capital. The term economic capital refers to one’s level of financial resources, while social capital is used to describe an individual’s social networks or organizational affiliations.
Cultural capital, also referred to as cultural level, can best be thought of as “institutionalized, i.e. widely shared, high status cultural signals (attitudes, preferences, formal knowledge, behaviors, goals, and credentials) used for social and cultural exclusion” (Lamont and Laureau 1988, p. 156). It is the exclusionary property of cultural capital that makes it so highly coveted and yet so difficult for others to obtain. Cultural capital is distinct from other forms of capital because although it can be converted into both economic and social capital, it is the only type of capital which is determined and belongs solely to the culturally elite (Kingston 2001). According to Bourdieu (1984) the socially elite and their offspring succeed because it is their signals that are valued by those in power. In the field of consumption, cultural capital influences one’s preferences and tastes for particular product categories and/or brands. Therefore, status boundaries are reinforced simply by expressing one’s preferences and tastes, referred to as one’s “habitus” (Bourdieu 1984). Consumption, along with other social domains becomes a method by which our social hierarchies are reproduced and reinforced across generations.
Education is also significant in increasing options for seeking status. According to Bourdieu (1984) educational institutions play a vital role in perpetuating the importance of cultural capital. Schools, and specifically educators, are believed to reward children with high cultural capital because they have already acquired the appropriate signals and dispositions that match those of the institution. Researchers believe that this preferential treatment of children with high cultural capital results in greater academic success and hence, greater success in their chosen careers (Kingston 2001). For instance, high status individuals (those with high cultural capital) are more likely to attend universities, attain prestigious careers, and subsequently learn to achieve status in a greater number of domains than are low status individuals (Bourdieu 1984).
Milner’s (2004) Theory of Status Relations
Similar to the work of Bourdieu (1984), Milner’s (2004) theory of status relations also emphasizes the importance of non-material resources and their role in determining one’s social position. The theory was designed to explain why status groups have the particular characteristics that make them different from other stratified groups (Milner 2004, p. 182). More specifically, it analyzes the importance of status symbols and conformity to group norms when status and power cannot simply be reduced to economic power.
According to Milner (2004), there are status-markers and bases of status. Living in an expensive neighborhood, or driving an expensive car are considered bases of status; you can be admired and adored by those who place a great value on such items because they symbolize wealth--which, in most capitalistic societies, is a basis for status itself. However, our society also has status-markers that are insignias for less visible bases of status. For example, academics often write the letters “Ph.D.” after their names on business cards to convey the educational level they have achieved. In that case, the “Ph.D.” letters are a status-marker, while the educational level is a basis for status. Therefore, status symbols can either be material or symbolic.
The importance or weight of a status symbol depends on the ease with which that status-marker is obtained along with the degree of inalienability (Milner 2004, p.207). For example, it is much more feasible for some to purchase an expensive item of clothing than to complete a graduate school program. Being able to appreciate a fashionable brand of shoes is much easier than being able to distinguish works of art. Therefore, it appears plausible that individuals with bases for status that are harder to achieve (i.e. high cultural levels) would avoid easily attained status markers (i.e. elite branded goods) in order to avoid confusion with those who rely solely on those markers for status.
In conclusion, some individuals with high cultural levels may choose to abstain from consuming elite brands in order to distinguish themselves from individuals who are forced to “purchase” their social status. In contrast, individuals purchasing elite brands may do so because they do not perceive other viable alternatives to increase or maintain their social status.
The research described here builds upon this literature in a number of ways. First, categories of status consumers are identified and used to predict brand choice. Second, although previous research on status consumption focuses exclusively on the purchase of authentic elite brands while ignoring the role of counterfeit goods, counterfeits are the focus of this study. Third, previous brand choice literature ignores the social value that owners gain from selecting certain types of brands, and by employing a brand choice framework, the two approaches can be merged.
Therefore, this dissertation extends the existing research on status consumption by integrating three previous research streams to test a more complete model of status consumption, one that predicts the acceptance or rejection of elite brands and brand imitations based on socio-economic predictors and includes counterfeit products as a brand category. In addition, the data gathered for this dissertation are analyzed using a discrete choice model. To date, none of the literature on counterfeits or status consumption has included this type of data analysis.
Chapter 5
Categories of Status Consumers
The preceding chapters have discussed the motivations for seeking status and the methods by which individuals may choose to seek status. This chapter will extend that preceding material by describing three categories of status consumers.
“In the world of designer handbags, there are three camps: You get it (and you pay for it), you don’t get it or you get it but you can’t afford it, which of course is the largest by far” (Rose 2003).
Status Seekers
Status seekers are consumers who engage in status increasing consumption behaviors in order to fulfill their needs for self-respect and social approval (Eastman et al. 1999). Eastman et al. (1999) developed a scale that measures an individual’s propensity to purchase goods and/or services for the status or social prestige they confer on their owner. Individuals who score higher on the status consumption scale were more likely to engage in status increasing consumption behaviors in order to fulfill their needs for self-respect and social approval (Eastman et al. 1999), hereby referred to as the “status seekers.”
In a cross cultural study of students in the United States, Mexico and China, Eastman et al. (1997) found that an individual’s propensity to engage in status consumption was highly correlated to his or her level of materialism. In other words,
people who seek status through the consumption of products are likely to place greater importance on the material goods they acquire than are individuals who do not consume status products. In general, researchers found that there were no significant differences in the overall level of status consumption or the interest in purchasing products for status across the three countries. Although some demographic variables were significant predictors of status consumption, the relationships were not consistent across all three samples. For example, in the sample from the United States, single people reported significantly higher levels of status consumption, but this relationship was not found in either the Mexican or Chinese samples. Gender differences were not found in the United States or Mexico but in the Chinese sample men were more likely to consume status products than were women. Finally, younger individuals reported a significantly higher propensity to engage in status consumption than did older individuals in the Mexican sample, but no significant differences based on age were found in the United States or China (Eastman et al. 1997). Researchers concluded that there was no consistent pattern in the relationships between demographic variables and status consumption (Eastman et al. 1997). Therefore, in order to understand status consumption one needs to look beyond demographic information alone for more subtle underlying factors.
Status Avoiders
These people cannot be millionaires! They don’t look like millionaires, they don’t dress like millionaires--they don’t eat like millionaires, they don’t act like millionaires-they don’t even have millionaire names. Where are the millionaires who look like millionaires? (Stanley and Danko 1996, p. 109)

Although status symbols have long been used to make inferences about one’s social status, not all consumers choose to purchase such symbols. Recently, it has been noted that some consumers avoid purchasing elite status brands or products altogether. For this group of consumers, seeking status involves eschewing status goods so as not to be confused with the “seekers” (Holt 1998). These types of consumers are likely to shy away from mass produced elite brands and their imitations because the images associated with such brands are incongruent with their both their self concept and social image (Stanley and Danko 1996).
In The Millionaire Next Door, the authors interview several individuals who have chosen to abstain from purchasing status goods because these goods do not represent who they are. In the following passage, W.W. Allan describes why he refused a Rolls-Royce as a gift,
“There’s nothing a Rolls-Royce represents that’s important in my life. Nor would I want to have to change my life to go along with [owning] the Rolls…With a Rolls I can’t go to the crummy restaurants I enjoy going to…Can’t drive up in a Rolls. So, no, thank you” (Stanley and Danko 1996, p. 111-112).

From this quote it can be inferred that for some consumers, some elite brands and/or products are undesirable because of the social alienation these consumers would feel from others within their social group. Therefore, this group of consumers is likely to reject elite brand or elite brand imitations in favor of non-elite brands.
Status Imitators
While some consumers reject elite status brands, others select counterfeit imitations of such brands. Previous research on the demand side of counterfeit products, although sparse, has produced interesting results regarding the motivational factors involved in purchasing counterfeit products. For example, Wee et al. (1995) showed that psychographic (perceived brand status, and attitude towards counterfeiting) variables, demographic variables, and product-attribute variables were all significant predictors of counterfeit product purchase intentions. However, the importance of each of these variables differed when analyzing different kinds of counterfeit products. For example, educational level was positively related to purchase intentions for functional products, e.g. software, but negatively related for fashion products, e.g. wallets or purses (Wee et al. 1995). The present study builds on this research by adding sociological variables of interest in order to place the consumption of counterfeits in a larger social framework.
By contrast, research by Cordell et al. (1996) investigated the motives associated with purchasing two types of counterfeits: functional and prestige. Functional counterfeits are those that are purchased for their utility (i.e. electronics, software, etc.) while prestige counterfeits are those purchased for their ability to confer status (i.e. clothing, accessories, etc.). Researchers found that brand image and perceived prestige served as the greatest predicting variables when purchasing prestige counterfeits, followed by expected performance and price. When purchasing a functional counterfeit camera, expected performance and price were the greatest predicting variables. As shown by these studies, the motivational forces behind purchasing counterfeits may vary depending on whether the product being copied is a prestige or functional counterfeit.
Additionally, Bloch et al. (1993) asked subjects to choose between three cotton shirts: a designer label shirt priced at $45, a counterfeit version of the shirt for $18, and a shirt without a label for $18. Although all three shirts were identical, subjects who chose the counterfeit shirt rated it highest on being a good value and equal to the designer label, and higher than the shirt without a label, in terms of prestige. In addition, subjects who purchased the counterfeit shirt over the designer label rated themselves as being less successful, less confident and of lower status than subjects who chose both the designer and no-label shirts (Bloch et al. 1993). Subjects also rated the counterfeit good as being lower in prestige than the product bearing the original logo. Therefore, while individuals who consume counterfeits are indeed seeking status, they also recognize that the status gained by counterfeit purchases is less than the status gained by purchasing the authentic brand.
In addition to status, some consumers prefer counterfeits over authentic elite products because they are perceived to be a better value for the money. Value consciousness has been defined as “a concern for price paid relative to the quality received” (Lichenstein et al. 1990). Although the physical quality of counterfeits may be inferior to their authentic counterparts, the quality of the brand’s prestige and status remains intact. Therefore, value conscious consumers may view counterfeits as a less risky trial of or simply as a less expensive alternative to the more expensive originals (Gentry et al. 2000). In other words, some consumers may view counterfeits as offering “more product for your buck” because counterfeits allow the owner to enjoy the benefits associated with owning elite brands without having to pay for them (Gentry 2000).
Chapter 6
Independent Variables
In chapter 2, I discussed how products are used in social interactions to convey information to others about the owner. Chapters 4 and 5 described how sociological and psychological factors influence the degree to which consumers seek status by abstaining from, or displaying elite brands. In this section, I will review the literature pertaining to each of the independent variables of interest for the present study. The current paper extends the existing literature by applying a discrete choice model of the selection of brand-types--authentic elite brands, counterfeits of those brands, or brands clearly in neither of those categories.
We propose that each individual’s chosen method of purchasing status will be influenced by the following individual factors: 1) cultural level--Chapter 4, 2) the degree to which he or she associates material possessions with success--Chapter 2, 3) status insecurity--Chapter 4, and 4) value consciousness--Chapters 1 & 5 in conjunction with product characteristics such as 5) price and 6) authenticity.
Cultural Level (CLi)
In terms of consumption, a person’s cultural level may influence his or her choice of elite brands by 1) dictating the reference groups one aspires to belong to and 2) determining which alternative status seeking strategies are available and/or effective. Therefore, if a consumer desires to gain or maintain membership in a group
in which the consumption of elite brands is looked down upon he or she would gain social status by eschewing elite brands as opposed to purchasing them. Although status seeking is universal, the domain in which one chooses to improve his or her social standing depends on the options available and the effectiveness of those options. For example, high status individuals have more extensive social networks, belong to a larger number of social groups, and are more influential in social interactions than low status individuals (Thye 2000), thereby providing more alternatives for seeking status.
Specifically in consumption, individuals with high cultural levels tend to place a great importance on acquiring certain skills and knowledge about products which separate them from individuals with low cultural level. For example, consumers with high cultural levels are more likely to purchase goods that are authentic or offer unique life experiences (e.g. travel) as opposed to elite brands that are mass produced. In the area of dining preferences, for example, individuals with low cultural level preferred to eat at well-known expensive restaurants while individuals with high cultural level preferred restaurants with unique atmospheres (Holt 1998). Furthermore, in a qualitative study of consumers, Holt (1998) found that individuals with high cultural levels were less likely to purchase material goods than were individuals with low cultural levels.
Such reasoning supports the following hypotheses:
H1a: As cultural capital increases, the likelihood that an authentic elite brand will be chosen decreases.
H1b: As cultural capital increases, the likelihood that a non-elite brand will be chosen increases.
H1c: As cultural capital increases, the likelihood that an counterfeit elite brand will be chosen decreases.
Status Insecurity (SIi)
Status insecurity, as discussed previously, can be thought of as an overall concern about appearing low-class or a desire to distinguish oneself from lower status groups (Wyatt et al. 2008). In terms of fashion, elite brands are those that have the highest perceived quality, luxury and prestige (Shermach 1997). In addition, elite brands are often priced much higher than non-elite brands, thereby signaling the owner’s wealth and position in society. Therefore, individuals who are insecure about their social status are likely to choose elite brands in order to distinguish themselves from those who are unable to obtain such brands.
H2a: As status insecurity increases, the likelihood that an authentic elite brand will be chosen increases.
H2b: As status insecurity decreases, the likelihood that a non-elite brand will be chosen increases.
H2c: As status insecurity increases, the likelihood that a counterfeit will be chosen increases.
Possession-Defined Success Dimension of Materialism (Mi)
The Possession-defined Success dimension of materialism refers to the degree to which an individual associates the number and quality of material possessions with achieving and evaluating his or her own success along with the success of others. Individuals scoring highly on this dimension value possessions which confer status and project a desired self-image (Roberts 2000). In addition, individuals scoring high on this dimension of materialism are also more likely to engage in status consumption than less materialistic subjects (O’Cass and McEwen 2002).
Researchers have found that, when evaluating products and/or brands, materialists place a greater importance on their social utility, appearance, and ability to convey status than do non-materialists (O’Cass and McEwen 2002). It is not surprising then, that previous studies have shown that materialistic consumers were found to purchase more luxury and elite brands (Belk 1985) and were more likely to purchase goods that could be worn conspicuously (Richins 1994) than were non-materialistic consumers.
H3a: As the success dimension of materialism increases, the likelihood that an authentic elite brand will be chosen increases.
H3b: As the success dimension of materialism increases, the likelihood that non-elite brand will be chosen decreases.
H3c: As the success dimension of materialism increases, the likelihood that a counterfeit will be chosen increases.
Cultural Level and Possession-Defined Success (CLi * Mi)
According to Bourdieu (1984), individuals with low levels of cultural capital are often raised in materially constrained environments. Therefore, the ideal life is often portrayed in terms of being able to own an abundance of certain socially recognized material possessions (Bourdieu 1984, p.177). Individuals with low cultural capital learn to develop materialistic tastes and preferences for items such as houses, cars and vacations. For example, Holt (1998) found that individuals with low levels of cultural capital preferred brands which symbolize wealth and abundance, such as BMW and Mercedes automobiles. To these consumers, the idea of “making it” or becoming successful was directly as

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