Determinants of Luxury Purchase Intentions in a Recessionary Environment: An Abstract

Abstract

Luxury brands have the characteristic of rarity (Berthon et al. 2009) and differ from non-luxury brands at three levels: functionalism, experientialism, and symbolic interactionism (Buchanan-Oliver et al. 2008) and reasons to buy them have been examined for many years (Boisvert and Ashill 2010; Jelinek 2018; Veg-Sala and Roux 2014). Recently reports suggest that the luxury market is changing (Chandon et al. 2016; Wilson et al. 2015), primarily because of the environmental conditions related to issues such as changes in the customers’ income levels. These development influence customer perceptions towards luxury brands, and the change in overall luxury purchase behavior (Chandon et al. 2016; Kapferer and Valette-Florence 2016). Consumers though seem to try to balance pleasure and guilt when they make the decision to consume luxury products (Han et al. 2017; Ki et al. 2017) and difficult economic conditions can make this internal conflict even more profound, but still allowing individuals to purchase luxury items. This paper sought to address the gap in understanding the socio-cognitive and external factors affecting luxury purchase intentions during economic downturns and examine the role of intrinsic and environmental factors influence consumers’ luxury purchase intentions. It focuses on four socio-cognitive factors (escape, impulsiveness, self-expression, and social status), one marketing factor (promotions), and one overarching environmental factor (recession effect on society). Greece was chosen as the context of the study because of its severe economic recession (O’Brien 2018). An online self-administered questionnaire was used to collect the data. Out of 258 responses, 231 were used for the analysis, with 53% male, 39.8% 21–30 old, 51.5% with a High School qualification, 57.1% full-time employed, 63.2% with a household income €20,000 and €40,000 and 43.7% spending 11–20% of their annual income in luxury products. A significant positive relationship between escape and luxury purchase intentions (β = 0.10, p < 0.05) and luxury purchase intentions, but sales promotions are not moderating the links between impulsiveness, social status, and luxury purchase intentions. Recession effect on society augments the link between self-expression and luxury purchase intentions (β = 0.122, p < 0.05) and the link between social status and luxury purchase intentions is (β = 0.097, p < 0.05), but not the society and impulsiveness on luxury purchase intentions link. These results indicate that there is a need for global luxury brands to clearly understand the differences in the economic conditions of the countries they are operating in.