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Luxury consumption factors
Melika Husic Muris Cicic
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Luxury
Luxury consumption factors consumption
Melika Husic and Muris Cicic factors
School of Economics and Business, University of Sarajevo, Sarajevo,
Bosnia and Herzegovina
231
Abstract Received November 2007
Purpose The purpose of the paper is to analyse the luxury market and determine the factors that Revised May 2008
determine luxury consumption. Luxury consumption has been neglected, and yet many questions Accepted May 2008
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arise concerning the underlying dimensions of luxury shopping.

Design/methodology/approach Two scales were used: questions concerning luxury
consumption were used in order to determine the sample of luxury consumers, and a PRECON
scale was used to measure individual differences in consumers prestige shopping preferences. After
the scale validation process, factor analysis was conducted, along with regression analysis of all
PRECON factors.
Findings The results show that in this market consumers perceive quality as a brand determinant.
Further, strong patron status suggests a snob effect among respondents, who buy exclusive items in
an attempt to distinguish themselves. Hence, rare products indicate respect and prestige among the
respondents. Furthermore, this paper defines two sub-categories, namely old aristocracy and new
money, with the latter more ascendant in the case of a developing market. It also showed that luxury
consumers behave similarly worldwide, regardless of economic or social surroundings.
Research limitations/implications Luxury consumption should be put in the context of
psychological determinants, and perhaps tested according to lifestyle.
Originality/value This paper brings attention to luxury consumption, its motives and consumer
styles.
Keywords Consumption, Design, Consumer behaviour, Premium products, Bosnia and Herzegovina
Paper type Research paper

Luxury consumption
Definition of prestige and luxury
For centuries, people worldwide have satisfied themselves with the possession of
beautiful goods. As a result, luxury products have been the subject of intensive
discussion and debate. Today, consumers have at their disposal a larger discretionary
income than ever before. Income has increased throughout the hierarchy scale, but
most dramatically in the highest social classes. Current consumers are willing to offer
considerably higher amounts of money for luxury products.
Traditionally, luxury goods or status goods have been defined as goods for which
the mere use or display of a particular branded product brings prestige to the owner,
apart from any functional utility (Grossman and Sharpiro, 1988). Deeter-Schmelz et al.
(1995) defined prestige preference as an individuals preference for shopping in
clothing stores where the combination of patron status, store type and atmosphere,
merchandise price, quality, branding, and fashion combine to create a particular Journal of Fashion Marketing and
prestige level. Phau and Prendergast (2001) assume that luxury brands evoke Management
Vol. 13 No. 2, 2009
exclusivity, have a well known brand identity, enjoy high brand awareness and pp. 231-245
perceived quality, and retain sales levels and customer loyalty. Similarly, Beverland q Emerald Group Publishing Limited
1361-2026
(2004) created a luxury brand model with the following dimensions: DOI 10.1108/13612020910957734
 JFMM .
product integrity;
13,2 . value-driven emergence;
.
culture;
.
history;
.
marketing; and
232 .
endorsement.
Moore and Birtwistle (2005) are critical towards this model, and assert that other
details need to be incorporated in order to build a modern luxury brand. Currently,
study of the luxury market is taking a new direction. Because of the unprecedented
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demand coming from Asian countries, recent research focuses on the cross-cultural
comparison of attitudes toward the luxury concept (Dubois and Laurent, 1996; Dubois
and Paternault, 1997).
Vigneron and Johnson (1999) defined five values of prestige behaviour combined
with five relevant motivations, and from these identified five different categories of
prestige consumers. According to Vigneron and Johnsons (1999) categorisation of
luxury products, hedonists and perfectionists are more interested in pleasure derived
from the use of luxury products, and less interested in the price than quality, product
characteristics and performance. These consumers know what they want and use their
own judgment, while price exists only as proof of quality. The Veblen, snob and
bandwagon effects are evident with consumers who perceive price as the most
important factor, with a higher price indicating greater prestige. They usually buy rare
products and in this way emphasise their status. Vigneron and Johnson (1999) explain
luxury consumption according to the effects detailed below.
The Veblen effect perceived conspicuous value. Veblenian consumers attach
greater importance to price as an indicator of prestige, because their primary objective
is to impress others.
The snob effect perceived unique value. Snob consumers perceive price as an
indicator of exclusivity, and avoid using popular brands to experiment with
inner-directed consumption
The bandwagon effect perceived social value. Relative to snob consumers, bandwagon
consumers attach less importance to price as an indicator of prestige, but will place greater
emphasis on the effect they make on others while consuming prestige brands.
The hedonic effect perceived emotional value. Hedonist consumers are more
interested in their own thoughts and feelings, and thus will place less emphasis on
price as an indicator of prestige.
The perfectionism effect perceived quality value. Perfectionist consumers rely on their
own perception of the products quality, and may use price as further evidence of quality.

Current data on luxury consumption

During the last few years, the luxury market has sustained constant growth. In spite of
the September 11 attacks and other events disruptive to global trade, the luxury
market has grown from $20 billion in 1985 to $68 billion in 2000 (The Economist, 2002).
This large and important market is relatively neglected in the present research;
therefore authors have analyzed the factors that influence luxury consumption as
defined by Deeter-Schmelz et al. (2000). Possible factors include image, quality, fashion,
store atmosphere and patron status, and authors have set the objective of not only
 identifying these, but concluding which has the most relevant influence on luxury Luxury
consumption. Wealth is no longer measured in millions because the number of
millionaires in the world has grown greatly. In 2004 there were 8.3 million millionaires
consumption
(Merrill Lynch & Cap Gemini, 2005), out of which 7.5 million were households in the factors
USA, and over 425,000 were in Great Britain. The Market Research Report
(Datamonitor, 2002) predicted that in 2006, Europe will have over 27 million consumers
with more than e50,000 in discretionary income annually. These figures are evidence of 233
the importance of the luxury market and its strong tendency towards growth, even
though this amount today seems low.
Wealth is not equally distributed. Two per cent of the wealthiest people own more
than half of the worlds wealth, and it is concentrated in North America, Europe, Japan
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and Australia (Oslobodjenje, 2006). The wealthiest group includes 691 people from 45
countries around the world with a combined wealth of $2.2 trillion (Luxury Institute,
2005). In 2004, a total of 236,000 Chinese and 61,000 Indians became millionaires
(Merrill Lynch & Cap Gemini, 2005). As for luxury consumption, 37 per cent of luxury
goods are purchased in Asia, 35 per cent in Europe, 24 per cent in the USA and 4 per
cent in the rest of the world (Chadha and Husband, 2006).

Brand influence
Why do office ladies purchase Ferragamo shoes on instalment plans? Why do junior
executives happily shell out their entire months salary for a Gucci purse? The answer
lies in the old ways of denoting who you are and your place in society. From rigid social
orders defined by birth, caste, family position, or profession, suddenly how much
money your have is the key classifying criterion. Those Gucci bags and Ferragamo
shoes are not merely girlish indulgences, and neither are the Armani suits and Rolex
watches just male vanity; they are part of a new social protocol where your identity
and self-worth are determined by the visible brands on your body. Today, 94 per cent
of Tokyo women in their twenties own a Louis Vuitton piece, 92 per cent own Gucci, 57
per cent own Prada, 51 per cent own Chanel, and so the list goes on (Prasso and Brady,
2003). A new trend among luxury designers is merging and forming conglomerates.
Today, three major groups form the luxury scene in fashion clothing and accessories.
They are shown in Table I.
It is known that French designers hold a majority of the luxury market. The
approach they use is completely different from US designers, or Italian designers. US

LVMHa Richemont Gucci

Louis Vuitton Cartier Gucci

Christian Dior Dunhill Yves Saint Laurent
Fendi Mont Blanc Boucheron
Celine Van Cleef & Arpels Bottega Veneta
Loewe Piaget Sergio Rossi
Donna Karan Baume & Mercier Alexander McQueen
Kenzo Chloe Stella McCartney
Marc Jacobs Vancheron Constantin Balenciaga
Givency Table I.
The conglomerates
a
Note: Louis Vuitton Moet Hennessey behind major
Sources: Company websites, selected list only luxury brands
 JFMM designers grew in the 1970s (Calvin Klein and Ralph Lauren among them), defining a
more leisure-oriented casual elegance as the American style (Chadha and Husband,
13,2 2006). They added a completely new dimension to the fashion equation; it was not just
the design or product that was critical, it was the image and lifestyle that the brand
projected. Ralph Lauren created an empire through marketing a lifestyle. The era of
mass marketing of luxury had begun a force that would be adopted relentlessly by
234 the French in the 1990s as they set about targeting a wider consumer base. The
ingredients were always there: a tradition of fine craftsmanship with leather products
and tailored mens suits, an abundance of excellent-quality materials, modern
production technology, and most importantly, a passion for la dolce vita (Chadha and
Husband, 2006).
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While the Americans were master marketers, the Italians excelled at creating the
right kind of buzz, another powerful tool in spreading the luxe culture. It came
naturally to them, with flamboyant figures like Gianni Versace creating as much news
as his clientele of princesses, stars, and high-society women. Italy rose rapidly and
today Milan is as much a fashion centre as Paris (Chadha and Husband, 2006).

Luxury products as status symbols

Who buys luxury brands?. Individuals are especially concerned about the impression
they make on others. They are more concerned about physical appearance and fashion,
and are more likely to use different strategies to gain approval from others. By using
status goods as symbols, individuals communicate meaning about themselves to their
reference groups. Many consumers purchase luxury goods primarily to satisfy an
appetite for symbolic meanings. An important class of symbols involves association
with a prestigious group that represents excellence or distinction in an area related to
ones self-image (Wicklund and Gollwitzer, 1982). Prestige has always been
designated as constituting a basic symbol of ones social standing or status
(Eisenstadt, 1968). Prestige-sensitive individuals fear that others might perceive them
as cheap if they were seen redeeming coupons.
Products especially sensitive to social influence as a display of wealth are the most
visible, and include dress clothing, casual clothing, automobiles, stereos and
living-room furniture. The master move of the luxury industry is the logofictation of
the handbag, plastering instantly recognisable symbols in a continuous pattern all over
the bag (Chadha and Husband, 2006). The luxurification of clothing is fashion is the
process of how the label has gone from inside the collar or the waistband to outside,
across the chest, down the side, hidden in plain sight in logos, buttons, crests, initials,
etc. Today, you are not what you wear but who you wear (Twitchell, 2001).
On the other side, there is an example of Hugo Boss, where the more you pay, the
smaller the logo. And this references the historical conflict between discreet old money
and flashy new money. Consumers who refuse to serve as human billboards will have
to compensate the company for the attendant loss of publicity. Consumers are
motivated by a desire to impress others with their ability to pay particularly high
prices for prestigious products (Mason, 1981). Darian (1998) suggests that buying
luxury brands for children reflects favourably on the financial status of the parents.
Many producers of luxury goods tend to believe their clientele comes primarily from
the upper income classes. Indeed, the managerial practices of luxury goods companies
are based on this presupposition (Dubois and Duquesne, 1993). For example, their
media planning gives priority to up-market publications (e.g. Vogue), and their shops
 are situated in prime locations (Place Vendome in Paris, 5th Avenue in New York, the Luxury
Ginza in Tokyo, etc.).
Luxury items are becoming a necessity. As Coco Chanel said: Luxury is the
consumption
necessity that begins where necessity ends. As discretionary income increases, and as factors
the prevailing media culture promotes immediate self-indulgence and gratification, i.e.
the ego society, it may be the case that the wish to seek status and recognition,
whether to impress others or to impress oneself, becomes more important than the 235
ability to do so (Dubois and Duquesne, 1993).

Factors which influence luxury consumption

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Luxury objects do not exist as they used to because real luxury used to be for the
happy few (Twitchell, 2001). Today, everyone can have a luxury item, so is it still
considered to be a luxury? How did the luxury brand culture spread from Europes elite
to everyone throughout the world? Fickle as fashion is, its business history contains
enduring lessons for all marketers, explaining the strategies that changed small family
businesses into highly profitable global empires. Importantly, it sheds light on
something every marketer dreams of the apparent paradox of charging high prices
based on exclusivity while selling your product to everyone. The luxury brand
industry has managed to do just that (Chadha and Husband, 2006).
How do they create the luxury cult?. Luxury is by definition exclusive; a cult by
definition has a large following (Chadha and Husband, 2006). How does one balance
these opposing forces? Vuittons key principle is this: pump up the status, pump out to
the mass market, both done simultaneously. LV has exclusive programs for VIP
customers that it will never talk about publicly, while simultaneously bombarding mass
media through high-decibel advertising and PR campaigns. It hosts parties that are
nothing short of spectacular, inviting a citys whos who. Vuitton knows how to create
exclusivity at the top, while simultaneously delivering luxury to the population at large.
Higher quality products, fancy packaging, exclusive store locations, higher retail
margins, expensive promotions, advertising campaigns, and brand names all
contribute to the higher prices of luxury goods. In fact, if luxury products are not
priced high, they lose their rarity and exclusivity characteristics (Dubois and
Duquesne, 1993). In some ways, a higher price makes consumers feel superior, one of
the rare elite who can afford these products (Garfein, 1989). Some consumers are
motivated by a desire to impress others. With the ability to pay high prices, this form
of consumption of luxury goods becomes a pure display of wealth.
When a person endorses a specific brand, that person is communicating a desire to
be associated with the kind of people s/he perceives to consume that brand. Consumers
with preferences for high prestige should favour brands that reinforce their own actual
or desired prestigious self-image, and communicate this self-image to other individuals
seen as sharing this image (Deeter-Schmelz et al., 2000).
Deeter-Schmelz et al. (1995) took into account all previously mentioned factors and
defined prestige preference as an individuals preference for shopping in clothing
stores where the combination of patron status, store type and atmosphere, merchandise
price, quality, branding, and fashion combine to create a particular prestige level.
These factors were developed by the authors into a PRECON scale, which is used in
this paper, and is one of the most detailed descriptions of motives for luxury
consumption.
 JFMM Methodology
Research for this paper was conducted in Sarajevo, Bosnia and Herzegovina. Sarajevo
13,2 is the capital of Bosnia and Herzegovina, a Southeastern European country. In
1992-1995 Bosnia and Herzegovina experienced severe war and aggression by
neighbouring countries. Its economy is post-socialist, which influences its market
orientation and standard of living. The survey (see the Appendix) was distributed at
236 the Mercator and WISA shopping malls, and in different luxury stores, such as Natuzzi
(international high-quality furniture originally from Italy), Baldinini (Italian luxury
shoe brand), Villeroy Boch (exclusive tableware and silverware), Bruno Magli (luxury
shoes and accessories), Max Mara (luxury Italian designer) and others. Only
respondents who satisfied the eliminatory criteria or proved themselves to be luxury
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consumers were interviewed and used in this study. A total of 300 respondents were
approached, of which 198 satisfied the set criteria and proved to be luxury consumers
as defined by Dubois and Duquesne (1993). The acquisition of luxury goods was
measured over 14 products, classified into two groups, i.e. accessible and exceptional.
As defined by Dubois and Duquesne (1993), a luxury consumer is a person who had
acquired at least three accessible products in the last two years and at least three
exceptional products in the last three years.
The total sample was 198 respondents, and of that number, 70.3 per cent were
women. The average age of the sample was 37.85 years, with a standard deviation of
12.044. Among the respondents, 45.7 per cent held a university degree. The income
distribution is shown in Table II.
The research instrument was a structured questionnaire composed of two parts:
(1) Questions concerning luxury consumption These were eliminatory questions
which determined whether respondents fitted our sample, whether they were
luxury consumers, and the intensity of their consumption (Dubois and
Duquesne, 1993). For the purpose of this research, minor adjustments for Bosnia
and Herzegovina were necessary. The currency was converted from US dollars
to euros, while considering that purchasing power in Bosnia and Herzegovina is
significantly lower than that in Western Europe (Great Britain, France,
Germany, Italy and Spain) where the research was conducted by Dubois and
Duquesne (1993).
(2) A PRECON scale for measuring individual differences in consumers prestige
shopping preferences The scale is based on five factors (i.e. quality, fashion,

Income Frequency Percentage Cumulative percentage

Below e5,000 4 2.0 2.0

e5,000 to e9,999 31 15.7 17.7
e10,000 to e14.999 32 16.2 33.8
e15,000 to e19,999 31 15.7 49.5
e20,000 to e24,999 33 16.7 66.2
e25,000 to e34,999 33 16.7 82.8
e35,000 to e49,999 22 11.1 93.9
Above e50,000 12 6.1 100.0
Table II. Total 198 100.0
Annual household
income Source: Research data analysis
 branding, store atmosphere and patron status), all of which influence luxury Luxury
consumption (Deeter-Schmelz et al., 2000).
consumption
The study concerned identification and explanation of the factors which influence factors
luxury consumption. Deeter-Schmelz et al. (2000) defined five factors:
(1) image;
(2) quality; 237
(3) fashion;
(4) store atmosphere; and
(5) patron status.
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To explain these factors, two hypotheses were developed.

H1. Luxury consumption is influenced by the following factors: image, quality,
fashion, store atmosphere and patron status.
It was assumed that, as in the USA where the initial research was conducted, in Bosnia
and Herzegovina factors/criteria would be grouped according to the same categories.
High-class consumers use similar products and have similar buying habits, regardless
of their country. Their income is similar in the USA, China, New Zealand, France or
Bosnia and Herzegovina.
For additional explanation, it was assumed that the most influential factor would be
patron status. Luxury consumers, especially those from the lower classes, use luxury
products because of the special feeling it gives them, and the perceived power they then
feel they have in society. Therefore, we developed H2:
H2. Patron status has the most relevant influence on luxury consumption.
To understand the actual motives for luxury consumption, factor analysis was
conducted in order to determine the validity of the PRECON scale and the
aforementioned factors in the examined market. This analysis shows which of the
present factors explains the most variability, or which factor has the highest influence
on luxury consumption. Furthermore, regression analysis of all PRECON factors was
conducted on luxury consumption as a dependent variable.

Analysis
This study uses a reliability assessment which determines the consistency of
respondents answers and reveals what proportion of variance in the data is true
variance. The Cronbachs a is 0.95, which suggests high, almost perfect reliability.

Luxury consumption
First an analysis was made regarding the level of luxury consumption among
consumers with different incomes. As shown in Table III, luxury consumption differs
greatly in various income categories.
Since there are high differences in standard deviation, an ANOVA analysis and post
hoc tests were used. All post hoc tests show that there is a significant difference
between the group of consumers with income above e35,000 and all other groups. This
means that all income categories use luxury products, but respondents with an annual
income above e35,000 annually spend the highest amount on luxury. This statement is
 JFMM logical because those respondents that come from a wealthier category, with a higher
discretionary income, can more easily afford luxury goods.
13,2
Luxury consumption factors
In order to conduct factor analysis, it is necessary first to examine any inter-correlation
between variables. Kaiser (1974) suggests KMO (Kaiser-Meyer-Olkin measure of
238 sampling adequacy) values above 0.5 to be acceptable. In this case, the KMO value is
0.91, an excellent result. A Bartlett test showed significance (p , 0:001), allowing the
conclusion that factor analysis is suitable for the given data. The analysis reveals the
solution of four factors.
As mentioned previously, Deeter-Schmelz et al. (2000) developed the PRECON scale,
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used in this research, and identified five factors which motivate luxury consumption:
(1) image;
(2) quality;
(3) fashion;
(4) store atmosphere; and
(5) patron status.
Table IV shows the results reached in this research, which revealed the organisation of
four factors in this market.
As shown in Table IV, statements concerning brand image and quality are perfectly
represented in one factor. This solution is suggested by Deeter-Schmelz et al. (1995),
but in their further work, Deeter-Schmelz et al. (2000) divided this category into two
factors. Possibly, consumers use a brand as quality assurance; therefore those two
factors correlate.
H1 is partially correct. Given factors do influence luxury consumption. In this
situation, however, rather than five categories, they are grouped into four categories:
(1) brand image and quality;
(2) fashion;
(3) store atmosphere; and
(4) patron status.
In order to test the second hypothesis, this study uses a regression analysis (see
Table V). This reveals that the given four factors explain only 12.3 per cent of the

n Minimum Maximum Mean SD

Below e5,000 4 708 4,133 1,840 1,552

e5,000 to e9,999 31 542 5,500 1,614 1,005
e10,000 to e14,999 32 303 3,548 1,286 716
e15,000 to e19,999 31 450 4,825 1,604 934
e20,000 to e24,999 33 350 4,465 1,413 903
e25,000 to e34,999 33 487 3,923 1,718 852
Table III. e35,000 to e49,999 22 698 9,342 3,044 2,552
Annual luxury Above e50,000 12 515 1,5217 3,990 4,025
consumption (e) by
household income Source: Research data analysis
 Luxury
Factor
Brand and Store Patron consumption
Items quality atmosphere status Fashion factors
I consider the brand name when purchasing
clothing for myself 0.56
I consider the brand name when purchasing 239
clothing for others 0.39
I will pay a higher price for clothing that is made
by a popular designer or manufacturer 0.76
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I like to wear brand name clothing 0.56 0.38

I look my best when wearing brand name clothing 0.58 0.30
When purchasing clothing for myself, I prefer
clothes with bold, recognisable logos 0.47 0.31
Clothing made by a well-known designer or
manufacturer is worth more money 0.61
I prefer to shop at stores that carry high-quality
merchandise 0.79
I usually buy high quality clothing 0.84
I like to be seen wearing high quality clothes 0.50 0.36
When I buy clothes for others or as a gift, I buy
clothes of superior quality 0.57
Wearing high-quality designer clothing makes me
feel special 0.46
Giving high-quality clothing gifts makes me feel
special 0.37 0.32
It is important to shop in the same clothing stores
as my friends 0.65
Sometimes I would like to know where important
people buy their clothes 0.82
I like to shop in the same clothing stores as people
I admire 0.88
I like to shop for clothing at stores where wealthy
people shop 0.71
I often ask friends where they buy their clothes 0.56
Planning and selecting my wardrobe can be
included among my favourite activities 0.69
Clothing is so attractive to me that I am tempted to
spend more money than I should 0.80
I enjoy clothes like some people do such things as
books, records and movies 0.59
If I were to suddenly receive more money than I
have now, I would spend it on clothes 0.71 Table IV.
I like to shop for clothes 0.38 0.61 Rotated factor matrix:
(continued) four-factor solution
 JFMM Factor
13,2 Brand and Store Patron
Items quality atmosphere status Fashion

It is important to me that a clothing store has a

warm, inviting atmosphere 0.62
240 It is important to me that a clothing store I shop in
has great service 0.70
I shop in clothing stores where the clerks are
well-dressed 0.55
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I shop at stores that have artistic-looking displays 0.33 0.39

Personal service is important to me when buying
clothes 0.76
When buying clothes, I require the individual
attention of at least one salesperson 0.62
I prefer to shop in classy stores 0.57
I like to shop in clothing stores that present a
high-class image 0.51
Notes: Extraction method: principal axis factoring; rotation method: Oblimin with Kaiser
normalisation. Rotation converged in nine iterations.
Table IV. Source: Research data analysis

Model R R2 Adjusted R 2 Standard error of the estimate

1 0.350 0.12 0.10 1,312.37

Table V. Note: Predictors: (constant), FAC4_1, FAC2_1, FAC3_1, FAC1_1
Model summary Source: Research data analysis

variance, while the rest is unexplained variability, or the luxury consumers are further
influenced by hedonism, lifestyle or other psychographic characteristics.
Table VI gives the results of variance analysis (ANOVA), with an F-ratio of 6.538,
with (p , 0:001).
In this model (see Table VII), FAC2_1 (store atmosphere) and FAC4_1 (fashion) do
not demonstrate the necessary level of significance (p . 0:05) and therefore do not
have a significant influence on consumption, while FAC1_1 (brand image and quality)

Model Sum of squares df Mean square F Sig.

1 Regression 45,040,755 4 11,260,189 6.5 0.0

Residual 322,070,755 187 1,722,304
Total 367,111,510 191
Table VI. Notes: Predictors: (constant), FAC4_1, FAC2_1, FAC3_1, FAC1_1. Dependent variable: POTR3
ANOVA analysis Source: Research data analysis
 Luxury
Unstandardised coefficients Standardised coefficients
Model B SE b T Sig. consumption
1 (Constant) 1,873.9 114.8 16.3 0.0
factors
FAC1_1 575.8 157.8 0.3 3.6 0.0
FAC2_1 199.1 139.8 0.1 1.4 0.2
FAC3_1
FAC4_1
2516.2
2113.8
137.9
146.4
20.3
20.1
2 3.7
2 0.8
0.0
0.4
241
Note: Dependent variable: POTR3 Table VII.
Source: Research data analysis Coefficients REG
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(standardized b 0:33) has a greater influence. Further, the authors conclude that if
this factor increases for one standard deviation, luxury consumption will increase for
0.48 standard deviations. Furthermore, factor FAC3_1 (patron status) has a negative
influence on consumption, (b 20:294), which suggests the presence of a snob
effect.
The following is an overview of the findings of this study on luxury consumption
factors:
(1) Brand image and quality: influence significant and positive.
(2) Store atmosphere: no significant influence on luxury consumption.
(3) Patron status: influence significant and negative.
(4) Fashion: no significant influence on luxury consumption.
According to these findings and those of previous studies, H2 can be accepted as
partially correct. To conclude, the four different factors vary in their influence on
luxury consumption, and among these only two, i.e. brand image and quality and
patron status, have a statistically significant influence on consumption. Furthermore,
brand image and quality have the strongest influence on luxury consumption, while
patron status is significant, but negative, suggesting a snob effect, as this factor
deals with the issue of influence by other individuals behaviours and the imitation of
widely admired individuals.
From the results of the second part of this study, the following may be stressed:
.
H1 can be partially accepted, as luxury consumption is influenced by four out of
the five given factors; and
.
H2 can be partially accepted, as both patron status and brand image and quality
have a strong influence on luxury consumption.

Discussion
Analysing the luxury market, with its constant and extreme growth, we come across
different unanswered questions and more dilemmas are raised. Conducting research on
prestige consumption in troubled, post-war, post-socialist economy is a challenge per
se. It is surprising to find how popular luxury consumption is in a market where
average per capita income is e3,600 annually.
Nevertheless, this is one of the major issues of this paper. Luxury consumers are not
average by any means. Luxury consumers in Bosnia and Herzegovina do not differ
from those in France or Russia or Australia. They use the same brands, they have
 JFMM similar discretionary incomes, and they wish to fulfil the same needs with luxury
products. And the main purpose of luxury products is to impress others and position
13,2 the owner in one specific group to which he/she wishes to belong.
Why do consumers try to fit in certain group by consuming specific goods? Why
isnt education or family background sufficient? Why do they always aim to be
accepted by the wealthier and mightier group? Perhaps the answers are not to be found
242 in sociological studies, but psychological. Prestige-sensitive consumers feel protected
and safe when wearing well-known and recognised brands. This is what gives them
confidence, or perhaps they just want to enjoy it.
Throughout the study, it is clear that luxury consumers come from different social
classes and have different incomes. Prestige consumption is used by individuals who
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are concerned about the impression they make on others. By using status goods as
symbols, individuals communicate meaning about themselves to their reference
groups. This is not determinant only for the highest social status, but for the total
hierarchy scale. However, income or money is a necessity for luxury consumption. The
results show that wealthiest group is the heaviest consumer of luxury goods, which is
expected. Those consumers are used to having prestige products in every aspect of
their lives, and they can afford it. On the other side, there are less wealthy consumers
who treat themselves with a few luxury products a year, in order to either enjoy them
or to be accepted by the rich.
Mainly, this study concerns factors which influence luxury consumption. In this
sample, factors are grouped into four categories:
.
brand image and quality;
.
fashion;
. store atmosphere; and
.
patron status.
Unlike the results reached by Deeter-Schmelz et al. (2000), which were the model for
this research, the findings of this study group two factors into one: brand image and
quality are combined into one category. Consumers use brand as a quality indicator,
and therefore the two are mutually influential. There could be another issue here as
well. Since this is a troubled market, consumers are extremely concerned about the
quality of the product they are purchasing, and probably its durability too. As a
post-socialist country, consumers perceive image only through good quality and they
are very loyal to the idea that every well known brand has to be of good quality.
However, there is a lot of unexplained variance left in this research, which indicates
hedonistic behaviour. Consumers try to treat themselves with a luxury product and to
enjoy it for own sake, not to impress anyone.
Other interesting results are reached by regression analysis of the single influence
of each factor. It is significant that patron status has a negative influence on
consumption, which suggests the presence of a snob effect in this sample. Consumers
wish to have unique luxury products, since they pointed out that they do not like to
shop in the same stores as their friends, or people they admire. This directly implies
snobbishness, or consumers desiring products that are in limited supply and therefore
have a high value, while those readily available are seen as less desirable. Products
have an even greater effect on demand if people also perceive the product to be unique,
popular and expensive. Still, as mentioned above, everyone can have and afford luxury
now. So, if everyone can have it, is it still prestige? And what will be the driving force
 for exclusive snobs at this point? It will be interesting to follow future trends, where Luxury
snob consumers will probably try to find other means of exclusivity, as it is known that
purses made of endangered albino alligator skin exist on the market, and they are by
consumption
definition exclusive and unique. factors
However, when one chooses a brand, one communicates the desire to be associated
with the group who regularly use that brand. Therefore, the authors assume that
respondents can also be divided into either snobs or aristocracy and bandwagon 243
consumers or new money. Bandwagon consumers may be conceptualised as the
antecedent of the snob effect. Even though snobs and followers buy luxury products
for apparently opposite reasons, their basic motivation is essentially the same: whether
through differentiation or group affiliation, they want to enhance their self-image. Only
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they are doing it differently; the new flashy money will use LV bags full of logos, while
snobs will a pay higher amount for a Hugo Boss hidden brand label. What is their
future? Will they try to find new role model, not just a wealthier group, but
intellectually, emotionally, or in any other way superior? Probably not. Money seems to
be a reflection of power and happiness, and money is shown by visible luxury goods.
This behaviour illuminates the present situation on the luxury market. On one side
there are consumers who wish to differ from others in order to suggest their power and
success, with the courage to be trend setters, while on the other are those who can be
described as new money, who imitate the first group in everything, including their
aspiration to distinguish themselves from others. Nevertheless, one can always say
Nouveau riche is better than no rich at all.
To conclude, factors of luxury consumption can be well grouped into four
categories:
(1) brand image and quality;
(2) fashion;
(3) store atmosphere; and
(4) patron status.
However, there are areas not covered by those factors, and they reflect hedonism and
other psychographic characteristics. The intensity of the factors influence varies, with
the most important being patron status, which revealed a strong snob effect among
respondents. Luxury consumers want to be different, so they use products to which
others have limited access, no matter what the price. Still, two subgroups were defined:
the old aristocracy, or real snobs, and new money, their followers, which accords
with the situation of a developing market and society.
The main limitation of this research was the uneven distribution of respondents
according to income. Lower incomes were not represented due to the presence of
eliminatory questions in the questionnaire, which left only luxury consumers in the
sample. The uppermost social class was not present, since those respondents are rare
and difficult to reach. Therefore, this study had a homogeneous sample and its
analyses and tests can only be applied to the present luxury consumers.
Furthermore, in the questionnaire, income was shown as total household income,
which does not give a clear idea of the discretionary income used to finance luxury
consumption. However, this is difficult to measure, as respondents often strain to
provide complete and honest answers.
In the further research, other factors of luxury consumption should be analysed,
such as lifestyle and hedonic behavioural factor. Lifestyle involves different
 JFMM psychographic characteristics among consumers, including hedonism, and would
provide a better vantage for the examination of luxury consumption.
13,2
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Appendix

Figure A1.
Luxury consumption

Corresponding author
Melika Husic can be contacted at: melika.husic@efsa.unsa.ba

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