Essay: A comparison of buying behaviour toward luxury goods in UK and China

A Comparison of Buying Behaviour toward Luxury Goods in UK and China

ABSTRACT

This thesis is a comparative research based on buying behaviour toward luxury goods in UK and China. Through analyze the current situation of luxury goods consumption and buying behaviour toward luxury goods in UK and China, it seeks to find out what motives lead to the buying behaviour toward luxury goods consumption.

Through detailedly referring to previous and current literatures on buying behaviour and luxury goods consumption, a questionnaire was designed to explore buying behaviour toward luxury goods in UK and China. Designed questions cover the motives leading to people’s purchase, expenditure and people’s consciousness in luxury goods consumption, etc.

Base on collected questionnaires from responders in China and the U.K., a detailed analysis was implemented according to the feedback. to disclose the possible characteristics of buying behaviour toward luxury goods in UK and China.

The results showed that, in luxury goods consumption, there were much differences on aspects of main consumer groups, motives, consumption consciousness in luxury goods consumption between UK and China. British consumers were found more rational than the Chinese. Its buying behaviour also represented a rational character. On basis of the analysis, the thesis revealed the deep reasons and background resulted in the status in luxury goods consumption in China and ultimately brought forward strategies for guiding luxury goods marketing in China.

Chapter 1: INTRODUCTION

1.1 The problem

The concept of luxury can be traced back to ancient Greek times, however, the luxury brand was more or less occurred in the mid-19th century. With the progress of industrialization and the development of globalization, the luxury goods industry flourished in 1970s and developed with a rapid growth in the past 10 to l5 years,. According to the estimation of Merrill Lynch, Asia will be the largest market for luxury goods consumption. In 2004, Japan retained its position as the world’s largest consumer of luxury goods (41%), China ranked third in the world (12%), which followed the United States-in the second place closely (17%). All in all, there are two trends change in the development of luxury market, in its geographical distribution, it has experienced four stages: the European market 100 years ago, the U.S. market after the Second World War, the Japanese market after the age of 70, and the rise of today’s new emerging markets such as China, India, Russia. The consumer groups also transferred from the originally traditional European high society to the general public and the emerging affluent consumer groups. According to the statistics of investment bank Goldman Sachs, China’s total sales of luxury goods (excluding aircraft and a private yacht) reached 60 billion U.S. dollars in 2004, which accounted for 12% of the total world’s luxury goods consumption, while the figure was only 1%five years ago. According to their findings, China has already been the world’s third largest consumer of luxury goods, the total consumption of luxury goods is only 41% lower than that of Japan and 17% of the United States; and other countries of Europe took 16%; other countries took 14%. Chinese consumer demand for luxury products will rise with an annual growth rate of 20%, in 2015, it will account for 29% of the world’s total sales of luxury goods and tie for first with Japan in the world. With China’s economic development, the purchasing power of consumers has improved, the share of the luxury consumption also grows, all of these show that China is a huge consumer market of luxury goods.

However, as a veteran developed country, U.K. has a long tradition of luxury consumption, in 2009, the consumption of luxury goods are expected to reach 4,500,000,000 pounds in U.K., which is 30% growth in 2004 (China Food Network, 2005).

Well, what the similarities and differences in the motive of luxury goods consumption between U.K. and China are, if the consumption motive of China, an emerging consumer market of luxury has followed patterns of developed countries’, if China’s luxury consumption has a unique pattern of consumer behavior? This thesis attempts to answer the above problems for providing developing countries as a reference and contributing to the orientation and subdivision of China’s luxury brand and market at the same time.

1.2 Context

However, there is no accepted definition for luxury goods in the academic field, different academicians attributed individual definitions to luxury goods. As early as 1776, Adam Smith (2003) described the definition of luxury goods in his classic work The Wealth of Nations. In this book, he divided consumable into two categories: necessities and luxuries. He gave the concept of necessities as which not only includes those commodities which are essential for keeping the pot boiling, but also those goods relate to decent custom and keep people’s lowest class, and then he ruled out those kinds of goods and defined those consumable which did not belong to the necessities for the luxury goods. Wemer Sombart considered that luxury the connotation of both the quantity and quality: the quantity of luxury refers to the waste of goods, the quality of luxury means the use of goods which is relatively good. Wolfgang Reitzle (2003)figured that, luxury is considered as an extravagant way of life in whole or in part by their own communities, which is mostly decided by the product or service. Hu Yijian (1996) pointed out in Tax Study, luxury means a kind of goods which the general public can not afford in a certain historical period, and only a small number of people can. Nueno and Quelch (1998) analyzed the 10 characteristics in traditional view of luxury goods and summed up that, luxury is an affordable enjoyment (such as Haagen-Dazs ice cream) and the mainstream merchandise with high quality and price. Through the variables and data analysis, Through analyzing three dimensions: functionalism, experientialism and symbolic interactionism, which are related to luxury goods, Jonathan S. Vickers and Franck (2003) argued that, the fundament of luxury is an identity and social status symbol.

U.S. economists, Thorstein Veblen (1899) mentioned the concept “conspicuous consumption “in The Theory of the Leisure Class. He pointed out, the reason why people owned property was that it could prove that the property owner took a higher status than others. On basis of the psychological point of showing their own superiority and honor, the dominant class in financial terms would engage in conspicuous consumption.

Today’s universal concept of luxury is, it is an unique, rare goods which is beyond the scope of the needs of a people’s survival and development, it is intituled as non-necessities.

Observing the consumer groups of luxury goods, the main luxury buyers includes: affluent population, which is divided into “old money” (Aldrich 1988) and “nouveaux” (Lararbera, 1988 ). Traditionally, the classification of luxury goods market takes the level of wealth as an index, those who can not afford or do not interest in luxury goods are “exclusive” (Dubois and Laurent, 1995). For a long time, luxury goods is available to the rich of the richest class, however, with continual introduction of new brands and new product lines, the middle class has gradually been ranked as target groups. In today’s market, demand for luxury goods is mainly from the general public. Therefore, the segments of luxury market results in a new ethnic group, which is known as ” excursionists “(Dubois and Laurent, 1994,1995,1996). With the impact of globalization, in recent years, the rise of some developing countries (China, Russia), as well as countries of Third World created the new consumer groups of luxury goods. At the same time, along with stock, software and network innovation in recent years, an upstart group of wealthy people emerged, this group is different from the traditional rich upper class, they are relatively unfamiliar with luxury market, their awareness, knowledge and attitudes for luxury brand is limited. And their buying behaviour toward luxury goods are applied to their original accustomed model. For example: the price-oriented and functional importance, and so on. What’s more, their upbringing, education level, lifestyle are quite different from the traditional affluent class, such a phenomenon is known as Sudden Wealth Syndrome or Affluenza, which has brought a new impact on the original luxury market, and created a new culture of luxury consumption (Economist, 2001).

1.3 Specific Research Objective (SRO)

This thesis attempts to answer the following questions:

1. What are the similarities and differences in the motive of luxury goods consumption between U.K. and China?
2. Does the consumption motive of China, an emerging consumer market of luxury have followed patterns of developed countries’?
3. Does China’s luxury consumption have a unique pattern of consumer behaviour?

Chapter 2: LITERATURE REVIEW

This section first reviews the theory on behaviour in luxury consumption market in order to understand the general characteristics of behaviour in luxury consumption, followed by is a review on the theory of motive of luxury consumption, which lays a theoretical basis for this research..

2.1Theories on Behaviour

2.1.1 Demand Theory

Economics demand is defined as the amount which has the ability or would like to purchase certain goods. For the current Chinese consumer market, which is just entering a well-off level, its clearly strong phenomenon in the luxury goods market is not sufficient to be explained with demand theory. Because in accordance with the economic point of view, in terms of luxury goods, the majority of people do have the will to purchase but they do not have the capacity to pay for the goods, therefore, only the so-called rich class has a real demand for luxury goods. However, judging from the current situation in consumption of luxury goods, luxury is not entirely exclusive use of the rich, the pursuit of high-quality life of ordinary people especially the younger generation makes the level of their needs continue to increase. To meet the basic needs of life, this idea does not live with many consumers any more, taking inflation factors into account and basing Maslow’s theory of need levels, residents’ demand for luxury consumption will far exceed the demand defined in economic theory.

2.1.2 Elastic Theory

From a practical point of view, in many cases, the price of luxury goods (such as luxury villas, antiques, etc.) is much higher than its value, the main reason is that the speculation of luxury driving up the value of luxury goods. According to elastic theory, for different types of products (luxury goods and normal goods), the pricing strategy manufacturers have taken will also be different. For example, in normal circumstances, for goods (normal goods)which is lack of flexibility, because its price elasticity is less than l, manufacturers will raise prices to get greater benefit; for flexible goods (luxury goods), because its price elasticity is more than 1, manufacturers can lower prices to gain greater benefit.

This research believes that the emergence of these conclusions are based on the income level of consumers and the convergence conditions of consumer’s preferences. When consumer groups can be subdivided effectively according to income levels or consumer’s preferences, the above conclusions are not fully established. This is mainly because even for the same goods, as income levels and consumer’s preferences is different, consumers’ price elasticity for commodity price will also be different. In addition, dues to driving by comparing psychology, when prices of luxury goods rises, it will make consumer demand increase, when prices is in a lower level, no one is interested. Thus, in a luxury market, luxury goods are often defined as goods which is lack of flexibility, it is necessary to raise prices to get more revenue.

2.2 Theories on Motive

Viblen (1899) put forward concepts of conspicuous consumption, he defined conspicuous consumption as the waste of money and/or resources by people to display a higher status than others Then Leibenstein (1950) pointed out three types of motivations: mass psychology, uniqueness and exclusiveness. People who hold mass psychology is eager for identification of the majority of people in order to obtain the social value in groups; to be specific, the people wants to be different from others so as to obtain a unique value; to be exclusive is for the purpose of showing off their wealth and social status for value of vanity. These three points show the social orientation of luxury motive. Mason (1992, 1993) also emphasized the importance that the social status and social role play in the motivation of purchasing luxury goods.

Dubois and Laurent (1994) later developed a 34 item scale for empirical research, in addition to social-oriented motive, he put forward the purchasing motivation of “hedonism” and “perfectionism”. Hedonist seeks for a self-realization to obtain a pleasant value in emotion; perfectionist searches for a high-quality assurance for the value of quality. The finding of these two consumer motivation has first contributed to the motivation of personal orientation. Based on previous research, Vigneron and Johnson (1999) brought forward the conceptual framework of ” consumer behaviour toward luxury,” which integrates the above five purchase motivations, there are exclusiveness, uniqueness, mass psychology, hedonism and perfectionism, they combined personal-oriented motivation with social-oriented motivation in luxury purchase and insisted that the five motivations exist in luxury consumption synchronously. In addition, it is found in the research which takes the UK consumers as investigation objects that, there are three motives in purchasing luxury goods, , namely functionalism, experientialist and symbolism. At the same time, the researchers implemented empirical comparison with the three motivatations in the non-luxury and luxury products and found that, symbolism performs significantly in the motivation of luxury purchase (Vicker and Renand, 2003).

In allusion to motivation of personal orientation, Taiwan scholar (Tsai Shupei, 2005) investigated 945 respondents all over the world, including Asia-Pacific region (Hong Kong, Singapore and Japan), Western Europe (Germany, France and Britain), as well as North America (United States And Canada), he found that, in the personal-oriented motivation of luxury purchase, there are four dimensions, namely self-pleasing, self-gifting, internal consistency and quality assurance. This finding puts forward a new dimension for personal -oriented motives in luxury purchase.

Danziger (2005) took the U. S. rich class as object of a luxury investigation, he classified luxury purchasers as four groups: the butterfly-shaped purchasers, the isolated purchasers, the purchasers who pursuit of fame and status, the luxury-loving purchasers. Butterfly-shaped purchasers took luxury purchase as the way to trace a new meaning in the life, they did not think that conspicuous consumption was their goal; the isolated purchasers took luxury goods as a way of self-identification, what they had was very important for self-identification; the purchasers who pursuit of fame and status did not pursue feeling or experience, instead, they looked on luxury goods as a symbol to express their identity; the luxury-loving purchasers put all their energy and money in a world of luxury goods and indulged.

To observe of the buying motive toward luxury in developed countries it can be found that, the consumers of developed countries have transferred their motives from the former mass psychology, uniqueness and exclusiveness these social-oriented motive to the more personal- oriented motive, such as self-pleasing, self-gifting, internal consistency and quality assurance, This article will through the comparison of consumption motive toward luxury in China and U.K. to explore if the process of consumption motive of China, the emerging luxury market follows the patterns of luxury consumption of developed countries, whether China’s luxury consumption has its unique characteristics, if has, what are they, how we should guide China’s luxury goods consumption and formulate the marketing strategies through taking advantage of these characteristics? These will be the content of this research.

2.3 A Comparison of Luxury Consumption in China and the U. K.

Luxury goods is still a relatively new industry in China, its growth rate is higher than that of the United Kingdom and other mature markets. At present, China has been the world’s third largest luxury goods consumer country, the Chinese luxury goods consumption reached 6.0 billion U.S. dollars as a big rate of increase amplitude of 70 percent in 2004, which far exceeds the global average increase of 15 percent. China is expected to reach an increase amplitude of about 40% in luxury consumption in 2009, which would reach 8.4 billion U.S. dollars. In 2009, luxury consumption is expected to reach 8.1 billion U.S. dollars in Britain, up 30 percent of the growth in 2004 (as show in Figure 1). Compare with the more mature markets such as Britain, the most significant difference in China’s market lies in luxury consumption patterns.

In China, the objects of luxury goods consumption is still products mostly, that is, consumers seek the latest series or products. And in mature British markets, consumer prefer worshipful experience, such as luxury holiday or time-saving services such as door-to-door delivery services.

In the United Kingdom and other mature markets, luxury goods can be seen everywhere. In supermarkets, people even can buy the top of foods there.While in China, the purchase of luxury goods is on behalf of the wealth and social status. Unlike China, in the United Kingdom and other developed countries, it is difficult to judge the wealth a person has according to his acts in the purchase of luxury goods, because almost everyone has the ability to purchase some luxury goods.

Another important point is that, there is big difference of people’s concept of consumption, consumption levels, consumption patterns toward luxury goods between China and developed countries such as the U.K.. In Europe, consumption of luxury goods has become a habit, but the premise is that people has the part of disposable wealth for luxury goods, it is natural to buy some relatively expensive clothing, evening dress, accessories, etc., while takes it as something for showing off. In China, the purchase of luxury goods are mostly young people under 40 years of age, while in U.K. and other developed countries, this market is dominated by 40-70 year-old middle-aged and the elderly. In the form of consumption, for Chinese people, the majority of luxury goods are concentrated in bags, perfume, watches and other personal articles, but in the U.K., housing, cars, family travel are people aspire to.

Chinese luxury consumption has caused more and more attentions seriously by scholars in the industry. by comparing characteristics in the field of luxury goods consumption between China and U.K., it would get more information on China’s luxury goods industry in order to facilitate carrying out the business in China, but the current studies are more theory, less original data, the thesis hopes to obtain first-hand raw data through survey methods to reflect the status quo of luxury goods consumption in China and the United Kingdom to provide more research material for more deep-level theoretical research.

Chapter 3: METHODOLOGY

The section includes three parts. The first part introduces adopted methods in this research and more details in designing questionnaire. The second section shows the process of data collection and the third section explains ethic problems involved in the research.

3.1 Research Design and Method

This research is a comparative analysis, structured questionnaires are adopted in this research for understanding people’s (from all walks of life) attitudes toward luxury goods. All analysis will base on the collecting results of questionnaires. Male and female consumers, ages of 18-50 are taken as objects of the survey.

This thesis will use a combination of quantitative and qualitative methods to implement research, the method it takes is a questionnaire, because questionnaires not only can get answers it needs in a relatively short time, but also has a strong maneuverability, for example: savings research costs. The most important thing is that it can enjoy the convenience of carrying out a investigation in a vast scope which will help understand the tendency of group thinking.

A questionnaire will be developed with questions based on the differences of consumption motive toward luxury between Chinese and British people. The questionnaire will consist of common questions and two pathways: one is for British people and another is for Chinese ones. This method will help to meet the first research objective.

For the needs of the research, a number of important raw data is needed to be quoted in this paper it will also cite some data and information from several authoritative organizations, magazines and Web sites, which includes the world’s luxury consumption, China’s consumption situation toward luxury goods as well as the share it takes in world luxury consumption, and so on, these data will give a strong support for the implementation of the research.

In order to answer the research objects in Section 1.3, a combination of Chi-square and t-tests will be used to analyze and compare the motive of buying behaviour toward luxury goods between China and U.K.. MS Excel 2007 and SPSS v1.6. will also adopted for analyzing collected data.

3.2 Data Collection

As mentioned in section 3.1, the questionnaire was designed based on previous research work on the topic.

The questionnaire was divided into three sections:

• Background information of the respondents
• Respondents’ situation of luxury goods consumption
• Respondents’ motive toward luxury goods consumption

The questionnaire included twelve questions which were based on the above topics. The questions were combined of multiple choice questions, five open-ended questions were included to get special feedback.

During Christmas, 2008, took 18 to 50 years old Chinese and British citizens as objects, generally in line with the proportion of one-quarter to select samples. For U.K. the data collection adopted method of field distribution to distribute questionnaires. 50 questionnaires were distributed for people shopping in London while the other 50 were collected through an online survey for which invitations were sent out to only those who were known to be Chinese. More details about questionnaires can be found in Appendix A.

3.3 Ethical Concerns

Before implementing questionnaire, I will connect with any related units for permission. Every respondent will be informed about the nature, aim of the study being conducted and given a choice of either participation or non-participation. Any respondent’s privacy will also be protected during the study. The researcher will report the findings in a complete and honest fashion, without misrepresenting or compromising the outcome of the study.

Chapter 4: Research Findings and Results

The questionnaire was conducted in December 2008, which has been distributed a total of 100 questionnaires, 94 were recovered. Removed which did not meet the requirements of research, a total of 86 valid questionnaires were acquired. Results of feedback as following:

4.1 Genders of Responders

Figure 2 Gender

Figure 2 shows the genders of responders. Chinese responders include 23 males and 18 females. British responders include 24 males and 21 females.

4.2 Age of Responders

As showed in Figure 3, in Chinese responders, 2 responders are 18-21years old; 18 responders are 22-30years old; 9 responders are 31-40years old; 9 responders are 41-50 years old; 3 responders are more than 50 years old. In British responders, 12 responders are 18-21years old; 8 responders are 22-30years old; 13 responders are 31-40years old; 8 responders are 41-50years old; 4 responders are more than 50 years old.

4.3 Monthly Income of Responders’

Detailed information about monthly income as showed in Figure 4. About Chinese responders, there are 11 responders whose income per month is less than5000 yuan (RMB); 4 responders’ is 5001-8000 yuan (RMB); 23 responders’ is 8001-10000 yuan (RMB); 3 responders’ is more than 10000 yuan (RMB). In British responders, 3 responders’ is less than 5000 yuan (RMB); 7 responders’ is 5001-8000 yuan (RMB); 28 responders’ is 8001-10000 yuan (RMB); 7 responders’ is more than 10000 yuan (RMB).

4.4 Occupations of Responders’

Occupations of responders’ cover civil servant, worker, manager, entrepreneur, housewife, unemployed person, teacher, office clerk, professional technician, student, retire, soldier and other, Chinese responders each account for 7% (3 responders), 2% (1 responders), 20% (8 responders), 28% (11 responders), 2%(1 responders), 5%(2 responders), 0, 15% (6 responders), 7% (3 responders), 5% (2 responders), 2% (1 responders), 0, 7% (3responders); British responders include cover civil servant, worker, manager, entrepreneur, housewife, professional technician and other, each account for 22% (10 responders), 2% (1 responders), 40% (18 responders), 9%(4 responders), 4% (2 responders), 16% (7 responders), 7% (3 responders).

4.5 Do you currently possess any luxury goods?

In 41 respondents in China, there are 15 people who declared that they recently purchased luxury, 26 declared they haven’t. While the results of British respondents show that, only eight claimed they recently owned luxury, and 37 denied (As showed in Figure 6).

4.6 How do you obtain the information about luxury goods?

When invested the approaches of acquiring information of luxury goods, among 41 responders in China, 8 of them chose magazines, 10 were through television, 15 were through the network and 5 were through newspapers, three were from other means. The results of 45 U. K. responders’ show that, there were 12 who were through the magazines, 14 through television, 8 through the network, 4 through newspapers and 7 were by other means.

4.7 Currently, what is luxury for you?

Among 41 Chinese responders, 8 of them believed that luxury goods for them mean perfume, clothing, accessories etc; 10 held that it means vehicles or villa, 3 held that it means other luxury goods; And among 45 British responders, 5 believed that it means perfume, clothing, accessories etc; 2 believed it means tour; 17 mentioned that it means vehicles or villa, 7 chose others.

Figure 9 Expenditure for luxury goods

As showed in Figure 9, among 45 Chinese responders, 5 declared that they spent less than one-third of their income on luxury goods yearly; 12 declared one-second; 17 declared two-thirds; 5 declared whole and 2 declared ‘more than’; while among British responders, 27 responders said that they spent less than one-third of their income, 17 chose one-second; 1 chose two-thirds; no one chose ‘whole’ and ‘more than’;

4.9 Have you ever regretted after purchasing luxury goods?

After purchasing luxury goods, 12 Chinese responders said they felt regret frequently, 16 chose ‘occasionally’, 13 chose ‘never’; 5 British responders declared ‘frequently’, 7 said ‘occasionally’, 33 chose ‘never’.

4.10 How many people around you, who live difficult lives while consuming luxury goods? Or considered as luxury addicted people?

When asked ‘How many people around you, who live difficult lives while consuming luxury goods? Or considered as luxury addicted people?’, among 41 Chinese responders, 23 chose ‘less than 10%’; 12 chose 10%-30%; 6 chose 30%-50%; For British responders, 26 responders chose less than 10%; 19 responders chose 10%-30%.

4.11 The following statements might be your reasons for purchasing luxury goods. Please check chose the box to indicate your extent of agreement or disagreement.

{SD-Strongly Disagree, D-Disagree, N-Neither, A-Agree, SA-Strongly Agree}

Figure 12-1 Reasons for purchasing luxury goods (Chinese responders)

	SD	D	N	A	SA
High quality	/	15	/	13	13
Design or aesthetic	/	14	/	15	12
Brand culture	/	6	14	18	3
A symbol of social class	/	4	/	19	18
Follow the trend	/	/	5	15	21
Pursue certain lifestyle or life quality	15	6	15	5	0
For interpersonal relationship	1	3	2	18	17
Work or occasion need	3	3	/	21	14
Show off	4	4	4	21	8
Gift	5	5	/	18	13

Figure 12-2 Reasons for purchasing luxury goods (British responders)

	SD	D	N	A	SA
High quality	/	4	/	13	28
Design or aesthetic	4	5	5	15	16
Brand culture	4	3	6	15	17
A symbol of social class	13	10	17	2	3
Follow the trend	7	8	5	12	13
Pursue certain lifestyle or life quality	3	3	4	20	15
For interpersonal relationship	19	10	8	7	1
Work or occasion need	8	8	14	10	5
Show off	15	20	6	1	3
Gift	20	10	8	6	1

When asked the responders’ intention for purchasing luxury goods, it provides 10 choices: high quality, design or aesthetic, brand culture, a symbol of social class, follow the trend, pursue certain lifestyle or life quality, for interpersonal relationship, work or occasion need, show off, gift, it also provides 6 levels of answers: SD-Strongly Disagree, D-Disagree, N-Neither, A-Agree, SA-Strongly and A- Agree. Detailed answers as showed above.

4.12 Have you ever brought luxury goods abroad?

When asked ‘Have you ever brought luxury goods abroad?, 37 Chinese responders answered ‘yes’, while 4 answered ‘no’; 39 British responders chose ‘no’ and the rest of them chose ‘yes’.

Chapter 5: RECOMMENDATION

5.1 Tendency of Purchasing Motivation of Chinese Consumers

First of all, in the survey, monthly income of 65%of Chinese of respondents’ were higher than 8,000 yuan (RMB), monthly income of 78% of the U. K. samples’ were higher than 8000 pounds. Therefore, the research has been done in this article aims at more affluent crowd in China and U.K.. Studies have shown that, in the questionnaire of Chinese responders’, 34 percent of Chinese consumers bought luxury goods as a business gift or for interpersonal exchanges, but only 4% of British consumers bought luxury goods as a business gift or personal communication, it may indicate that the purchasing of luxury goods as gifts of business is a quite common phenomenon in China. It has shown that, in China, using luxury goods as a means of sociability is already a common phenomenon. At the same time, the feedback of questionnaire shows that the community-oriented motivation of Chinese consumers’ purchasing of luxury goods tends to conspicuous consumption (in the questionnaire, 20% of Chinese responders buy luxury goods is to show off, and responders of the United Kingdom was 7%). This means that Chinese responders in the questionnaire who purchased luxury goods as gift of business uses, their purchase motivation lead to conspicuous consumption. It can be inferred that those who use luxury goods gift of business uses include: affluent class in China, whose purchase motivation tends to conspicuous consumption.Then when marketing personnel develop marketing programs, it is needed to pay special attention to this unique phenomenon and customer groups in China. For example, when make choices of products, they should choose the products which have more obvious LOGO. Packaging should be special design specifications for gifts. Customer Relationship Management (CRM) should be particularly targeted at the most well-heeled businessmen, media selection, ads should be consistent with the image of the well-off class at the same time. The project of sponsorship of events and activities should also be considered and highlighted the social status of target customers’, such as wine tastings, the elites’ wind-surfing.

5.2 Tendency of Purchasing Motivation of British Consumers

Compared with Chinese consumers, British consumers’ personal guidance in purchase of luxury goods is more strong (In the questionnaire, purpose of purchasing luxury goods is for (luxury goods’) high quality, design or aesthetic purpose, brand culture, the sum is added up to 50%, while that of Chinese consumers’ is only 10%). That is to say, tendency of purchase motivation of U.K. customers’ is partial to personal gifts, personal image symbolizes and the pursuit of quality. When they buy luxury goods, they consider more for if it is in line with their inner self-awareness, if it can represent their individual personality and identity, at the same time, high-quality which is represented by luxury goods also attracts them. What’s more, British consumers will take buying luxury goods as a reward for their gifts, or dues to the celebration of a special moment to buy luxury goods for himself as a souvenir. In addition, it is found that the British consumers’ personal guidance of buying luxury goods has a positive relations with non-commercial buying behavior (According to results of questionnaire, only 4% of British consumers bought luxury goods as a business gift or personal communication). That is to say that the U. K. consumers are generally willing to purchase luxury goods as gifts to present relatives and friends to share their happiness. Therefore, when formulate the image of advertising, marketing personnel should start from the perspective of emotional motivation. At the same time they should stress the high quality of products, for example, they can review the history of brands which have been done manually in advertising. In aspects of choosing spokesmen, they should also choose those have obvious personality traits and clearly in line with the brand style. Sales staff training should also be specifically for the above mentioned purchase motivation to develop sales skills training.

5.3 Phenomenon of Buying Luxury Goods When Travel Abroad

Nowadays, Chinese consumers travel abroad to buy luxury goods at a very high proportion. Results of
feedback show that 90% of Chinese consumers buy luxury goods at the airport duty-free shop when travel abroad, while in the United Kingdom, it was only 13%. In recent years, China’s accession to the WTO has significantly increased the business opportunities and sightseeing abroad, which makes the Chinese white-collar group become the main population of this trend, and they also become the main customers who purchase luxury goods in foreign countries. Therefore, marketing personnel of luxury goods should focus on the marketing channels, such as the airport duty-free shops and duty-free goods on board. When the make the choice of media for advertising, they could consider investing in aviation magazines or advertising billboards and outdoor advertising at airport. Customer Relationship Management may be considered the establishment of the middle class tourism database to develop communication plan of customerization.

Chapter 6: CONCLUSION

Over the past decade, with China’s rapid economic development, a large number of people got rich first, followed by luxury consumption. Consumption is one of the dynamic concept which is the most able to represent the times, every age, every society has its advocated basic consumption concept, no matter however powerful the strength of social integration is, as long as the social stratification eternally exists, buying behavior have different characteristics

6.1 Cultural identity.

Cultural influences are everywhere. Chinese people is known as the virtues of thrift. Consumption of luxury goods have always been belittled. In luxury goods consumption, the stress the consumption according to its capability. But for most Chinese, consumption of luxury goods is more a symbol for the successful performance. In traditional Chinese culture. People’s understanding of success is: after the success of a person, it is mostly to conduct extravagant consumption to show off their own success to receive social recognition and status. After several thousand years of cultural development, the characteristics of this culture is still clearly reflected in the social life. In today’s economic globalization, China’s new rich class has such a deep cultural stigma, which is represented as today’s BMW, Armani, diamonds these luxury goods. Such conspicuous consumption is not principally to meet the real demand. Such consumption motive is to seek some kind of social status. Conspicuous consumption is good for increasing its own wealth. With symbols expressed in conspicuous consumption, it is easy to recognize the target that they are willing to contact. China’s new rich: on the one hand, it is through luxury consumption to show their economic strength and social status; on the other hand, it is through conspicuous consumption to maintain and create their network of relationships for personal survival and development.

6.2 Social characteristics.

Before reform and opening up, China has not the rich, the rich is all produced from the poor with China’s economic growth and development. In the process of constantly accepts western culture, luxury consumption also developed. First, some first rich went abroad and saw western countries’ luxury consumption. They made use of the opportunity to experience the luxury consumption. When they came back, they became the leaders of luxury consumption in China. Followed is the stars of entertainment industry and various celebrities. They want to agree with the trend of performing arts through imitating the consumption of international stars. And this kind of stars always are always imitated by the public. In China, the leaders of consumption influence enormously on the market. The groups include government officials, business people other public figures who have extensive influence. Their values, consumer habits greatly affect the middle class. They have strong spending power of luxury goods. They often keep a low profile. They are extremely focus on the quality of luxury goods. They also have relatively high brand loyalty. When the use of luxury goods has become a way of life, the luxury consumption environment has been a trend.

6.3 Personality characteristics.

According to estimate of Chinese Brand Strategy Association, luxury consumers in mainland China now accounts for 13 percent of the total population, about 1.6 million people, most of them aged 25 ~ 50-year-old white-collar workers, private owners, celebrities. Among them, 1 000 million to 1 300 million people are active buyers of luxury goods, ;luxury goods they purchase include watches, handbags, cosmetics, fashion and jewelry and other personal ornaments. Of these, at least 30 million people is those rich whose private property is more than 10 million yuan. Luxury often has its special characteristics to create its own top of the pops. “Mercedes-Benz” pursues a top quality, “Ferrari” pursues the speed of movement, and “Cadillac” pursues a luxurious and comfortable feeling. It is precisely because of luxury goods’ individuation, people create a reason to buy them. People’s consumption behavior is their way of life and an expression to display personality and themselves to the community. Chinese people’s consumption and enjoyment of life and is increasingly being replaced by self-development type. Luxury consumers often use individuality of luxury goods to represent their personality, tastes and pursuits. Therefore the pursuit of fashion and image, showing individuality and self-development is becoming the desire and demand of a new generation of consumer’, which shows that the Chinese luxury consumers are gradually mature.

6.4 Psychological characteristics.

Chinese people hope for success, success means money or power. With power or money, it is not enough, they still need something to prove or show up to let people know. Thus, luxury is the best evidence and explanations. Compared with U. K., those which stresses the enjoyment of taste-style consumption is less, extravagant consumption is mainly done for showing off. Luxury goods consumption of part of Chinese consumers’ dues to their psychological uncertainty in owning property after becoming rich, while in the UK, luxury goods consumption also leads the lower class’ positive attitude to make efforts

However, with the sound and rising development of China’s economic system, the middle class has gradually become the main force of luxury goods consumption, China’s tastes and the flow of luxury goods consumption is also quietly changing. Therefore luxury goods companies which are interested in the Chinese market should grasp the current characteristics of China’s luxury goods consumption after.

BIBLIOGRAGHY

1. Adam Smith, LL.D. (2003) An Inquiry into the Nature and Causes of the Wealth on Nations. Changsha (China): Central South University Press.
2. Aldrich jr., Nelson W. (1988) Old Money:The Mythology of America’s Upper Class.New York:Alfred A. Knopf,1988:11.
3. Danziger, Pamela N. (2005) Let Them Eat Cake: Marketing Luxury to the Masses-As Well As the Classes. Dearborn Trade Publishing, 75~78.
4. Dubois Bernard and Giles Laurent. (1994) Attitudes toward the Concept of Luxury: An Exploratory Analysis. Asia Pacific Advances in Consumer Research. Leong, S. M. and Cotc, J. A. , (2) 273~278.
5. Dubois Bernard and Giles Laurent. (1995) The Functions of Luxury: A Situational Approach to Excursionism. Advances in Consumer Research, (23): 470-447.
6. Dubois Bernard and Paula Tidwel1. (1996) A Cross-cultural Comparison of Attitudes Toward the Luxury Concept in Australia and France. Aisa Pacific Advances in Consumer Research, (12): 31-35.
7. Hu Yijian. (1996) Tax School. Shanghai: Shanghai University of Finance and Economics Press.
8. Jonathan S, Vickers and Franck Renand. (2003) The Marketing of Luxury good: An Exploratory Study-three

   Conceptual Dimensions. The Marketing Review.

9. LaBarbera, Priscilla A. (1988)The Nouveaux Riches: Conspicuous Consumption and the Issue of Self-fulfilmen. in Elisabeth C. Hirschman, Ed., Research in Consumer Behavior, Greenwhich CT: JAI Press, 1988: 179-210.
10. Leibenstein. (1950) H. Bandwagon, Snob, and Veblen Efects in the Theory of Consumers Demand. Quality Journal of Economics, 5 (64):183-207.
11. Mason, Roger. (1992) Modelling the Demand for Status Goods, Working Paper. Department of Business and Management Studies, University of Salford, UK. 1992: 3~6.
12. Mason, Roger. (1993) Cross-cultural Influences on the Demands for Status Good. European Advances in Consumer Research, (1):46~51.
13. Nueno, Quelch. (1998) The Mass Marketing of Luxury. Business Horizons.
14. Thorstein B Veble. (1899) The Theory of the Leisure Class 2001. The Commercial Press.
15. Tsai Shupei. (2005) Impact of Personal Orientation on Luxury-brand Purchase Value-An International Investigation. International Journal of Marketing Research, (47): 429~454.
16. Viblen T. (1899) The Theory of the Leisure Class. Vanguard Press, New York, 57~59.
17. Vickers Jonathan S, and Renand F. (2003) The Marketing of Luxury Goods: An Exploratory Study-Three Conceptual Dimensions. The Marketing Review, 2003(3): 459~478.
18. Vigneron, F. and Johnson, L. W.. (1993) A review and a Conceptual Framework of Prestige-Seeking Consumer Behaviour. Academy of Marketing Science Review, (3): 237~261.
19. Wang Weiwei and Zhang Luqing. (2008) Exploration on Reasons and Development of Chinese Luxury Market. Economic Relations and Trade, p. 51.
20. Wemer Sombart. (2001) Luxus und Kapitalismus. Shanghai: Shanghai People’s Publishing House.
21. Wolfgang. (2003) Luxury Generates Wealth. Beijing: CITIC Publishing House.