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Kaufmann DV Manakova Luxury Russian Consumer-libre

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Russia becomes the prime mover of the luxury world market. Whereas most of the studies on luxury consumption focus on the context of Western countries, studies of the topic in Eastern European transition countries are still rare. This paper increases understanding as to the factors that explain luxury consumption of Russian consumers. As in transition countries, the identity of consumers is generally accepted to be in a state of flux, the research question refers to the extent Russian identity influences consumption of luxury. This paper applies a mixed quantitative and qualitative methodology approach and reveals that Russian luxury consumption differs from that of Western societies. Positive relationships between identity, status consumption, perceived quality, symbolic/status consumption and uniqueness were found and identity turned out to have a significant bearing on consumption of luxury goods in Russia.
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     European J. Cross-Cultural Competence and Management, Vol. 2, Nos. 3/4, 2012 209  Copyright © 2012 Inderscience Enterprises Ltd. Perception of luxury: idiosyncratic Russian consumer culture and identity Hans Ruediger Kaufmann*, Demetris Vrontis and Yulia Manakova School of Business, University of Nicosia, 46, Makedonitissas Ave, 1700 Nicosia, Cyprus E-mail: Kaufmann.r@unic.ac.cy E-mail: Vrontis.d@unic.ac.cy E-mail: Yuliettka@gmail.com *Corresponding author Abstract:  Russia becomes the prime mover of the luxury world market. Whereas most of the studies on luxury consumption focus on the context of Western countries, studies of the topic in Eastern European transition countries are still rare. This paper increases understanding as to the factors that explain luxury consumption of Russian consumers. As in transition countries, the identity of consumers is generally accepted to be in a state of flux, the research question refers to the extent Russian identity influences consumption of luxury. This paper applies a mixed quantitative and qualitative methodology approach and reveals that Russian luxury consumption differs from that of Western societies. Positive relationships between identity, status consumption, perceived quality, symbolic/status consumption and uniqueness were found and identity turned out to have a significant bearing on consumption of luxury goods in Russia. Keywords:  luxury; consumer behaviour; symbolic consumption; Russia; identity. Reference  to this paper should be made as follows: Kaufmann, H.R., Vrontis, D. and Manakova, Y. (2012) ‘Perception of luxury: idiosyncratic Russian consumer culture and identity’,  European J. Cross-Cultural Competence and Management  , Vol. 2, Nos. 3/4, pp.209–235. Biographical notes:  Hans Ruediger Kaufmann, after extensive experience in German Bank Management, worked in various academic and consulting functions for Manchester Metropolitan University/UK and several European academic institutions in Budapest and Liechtenstein. Since October 2006, he is an Associate Professor at the University of Nicosia/Cyprus, was a launching member and President (2007 to 2009) of CIRCLE and Vice-President of the EuroMed Research Business Institute, two research networks on consumer  behaviour and management, respectively. He is Associate Editor of the World  Review of Entrepreneurship, Management and Sustainable Development  . Demetris Vrontis is a Professor of Marketing and the Dean of the School of Business, at the University of Nicosia in Cyprus (EU). He is the Editor-in-Chief of the  EuroMed Journal of Business  (  EMJB ) and the President of the EuroMed Research Business Institute (EMRBI). His prime research interests are in strategic marketing planning, branding and marketing communications; areas in which he has widely published in over 70 refereed journals and 16 books and   210  H.R. Kaufmann et al. gave numerous presentations in conferences around the globe. He is a Fellow Member and certified Chartered Marketer of the Chartered Institute of Marketing and a Chartered Business and Chartered Marketing Consultant certified by the Chartered Association of Business Administrators. He also serves as a Consultant and member of Board of Directors to a number of international companies. Yulia Manakova received her Tourism and Hospitality Management at the State University of Management Moscow in 2007. During this time period, she also received her BA in Tourism and Hospitality Management at the College of Tourism and Hotel Management in Nicosia, Cyprus. At 2007, she started an MBA of the University of Nicosia focusing on marketing and graduated in 2010. Currently, she is working for a company that provides consulting services in the field of corporate and tax planning. 1 Introduction By a study of Bain & Company, in 2011, the luxury world market is predicted to grow  by 8% to 124 billion euro (http://www.bain.com/about/press/bain-news/2011/world-luxurymarket-to-grow-8-study.aspx). According to Reuters (2011), the share of global shares of the Russian luxury market is 3%. Today, the concentration of millionaires in Moscow is considerably higher than, for example, in Paris. As portrayed by magazines such as Forbes or Fortune, Businessmen from Russia and their companies take high rankings in the list of the richest people and the most successful corporations of the world. In the previous Soviet societies, the aspiration to luxury and moneymaking was officially condemned. Luxury was considered to be bourgeois redundancy, therefore, it was restricted to public architectural monuments such us palaces, museums and pieces of art. Only the emerging soviet elite could access luxury goods. The products offered to the ordinary Soviet citizen were primarily intended to meeting functional needs. With the collapse of the Soviet Union the changing trading system made a considerable amount of luxury products accessible to the Russian market and also appeal to the emotional, experiential and symbolic (status) needs. To delineate the luxury market in terms of product categories or price range is quite difficult, as the definition of ‘luxury’ is related to the respective market segment. For a millionaire, a car costing $90,000 might just be a routine consumption whereas for the manager of a major company such a car represents luxury. However, both segments are targeted for luxury products without any conspicuous difference. Luxury products typically refer to tangible product categories such as transportation, real estate, household items, artwork, clothing accessories, food, healthcare products as well as intangible services such as a private club membership, sports leisure projects, or professional services. An interesting aspect of consumer behaviour has always been to investigate the factors that drive people to spend a considerably high amount of money for luxury goods, and the topic is well researched. However, most of the studies on luxury consumption focus on the context of Western countries. In-depth studies on the motivation and  perception of consumers in Eastern European transition countries such as Russia still are     Perception of luxury 211 rare. However, researching the theme of luxury consumption in Russia is necessitated by the changing social processes which occurred in Russia in recent years. In modern Russian society, exponentially increasing wealth of certain social groups and, in its wave, rapidly increasing luxury consumption became the most salient social phenomenon. Also, the subject of this study is fascinating due to the seemingly paradox development of a  booming marketplace of luxury in spite of a still ongoing national and global economic crisis. A higher level of social stratification can be observed with an expanding middle and upper class causing an explosion in consumerism (Belton, 2002). By this paper, the authors try to further understanding as to the factors that constitute a luxury product in the perception of a Russian consumer and the motives to purchase luxury goods and services. As in transition countries, the identity of consumers is generally accepted to be in a state of flux, the research question as to what extent Russian identity influences consumption of luxury seemed to be most intriguing. Secondly, Russia was under the Communist regime for a longer period of time than other countries, and as a result, a centrally-planned economy was deeply entrenched in the society which might have far ranging implications on consumer behaviour. The topic might also prove very interesting for international, global or Multi National Companies intending to export to Russia being one of the international. This paper is organised as follows: In the first section, the authors define the concept of luxury with the objective to elicit luxury scale measurements. Also, a concise discussion of the theories concerning motivation of consuming luxury goods is presented referring to symbolic consumption as well as to consumers’ brand and quality  perceptions. Based on selected theories of identity and culture hypothetical assumptions are derived on how Russian identity and perception of luxury impacts their buying  behaviour. In the following sections, these assumptions are validated by a blend of qualitative and quantitative research methods and techniques. The findings of an SPSS analysis (factor, correlation and regression analysis) of questionnaires in Russian language distributed in the research setting of Moscow to consumers in shopping malls and boutiques are presented. In addition, the results of a content analysis of interview findings with experts perceived to be able to comment on Russian luxury consumer  behaviour are presented to cross-validate the quantitative findings. Finally, conclusions, managerial implications, research limitations and suggestions for further research are  provided. 1.1 Defining the luxury brand The label ‘luxury good’ has a dichotomous meaning: What is luxurious for some people might be ordinary for others; while some brands are qualified as ‘luxury brands’ by one half of the public opinion, the other half simply considers it as ‘major brands’. Not all luxury goods possess the same degree of distinctiveness and exclusivity. “For instance, a Cadillac and a Rolls-Royce may be both perceived as luxury cars, but one compared with the other would be considered more luxurious” [Vigneron and Johnson, (2004), p.485]. Furthermore, while luxury products have traditionally included items such as expensive homes, cars, vacations and jewellery, many consumers might now classify lower priced consumer goods such as shower heads, lipsticks, kitchen appliances or foodstuffs as luxury items. Thus, as a result of the democratisation of luxury, nearly any product can   212  H.R. Kaufmann et al. transform into a luxury one depending on the mood, experience, culture and location of the individual consumer (Vickers and Renand, 2003). The concept of ‘luxury’ is the main factor that distinguishes a brand in a product category (Kapferer, 1997) and is regarded a central driver of consumer preference and usage (Dubois and Duquesne, 1993). Definitions connote luxury brands with high levels of quality or excellence, popularity, recognition, exclusivity, awareness, customer  patronage, price (Phau and Prendergast, 2001; Dubois and Czellar, 2002; Dubois and Laurent, 2003, in Tartaglia and Marinozzi, 2007), psychological and prestigious (symbolic and hedonic) rather than economical or functional value (Nueno and Quelch, 1998; Vigneron and Johnson, 1999; Dubois and Laurent, 2003, in Tartaglia and Marinozzi, 2007), international reputation, elements of fantasy and desire (Kapferer, 2001). Based on early influential writers in the field (Mason, 1981; Leibenstein, 1950, in Vigneron and Johnson, 1999; Veblen, 1899, in Rozmarinskiy and Holodilin, 2006), Vigneron and Johnson (1999) combine five values of prestige with the five value and motivations for prestige seeking behaviour (Table 1). ‘Veblen’s ‘Snob’ and ‘Bandwagon’ factors applied by Mason (1981) to the business discipline are non-functional, and rely on external effects for utility (Leibenstein, 1950 in Vigneron and Johnson, 1999). Snob  buyers are motivated to buy luxury products because their high costs and relative rarity make luxury products inaccessible to the average consumer, hence, allowing them to feel superior and unique. ‘Bandwagon’, on the other hand, refers to a pattern according to which consumers buy luxury products in order to be accepted or belong to a certain social group. ‘Bandwagons’ are followers of ‘snobs’, which are the trendsetters, whilst ‘snobs’ abandon trends that become mass-adopted by ‘bandwagons’ (Mason, 1981, 1995; Leibenstein, 1950, in Vigneron and Johnson, 1999; Heinemann, 2008). The concepts of ‘Veblen’, ‘Snob’ and ‘Bandwagon’ were developed further by Vigneron and Johnson (1999) believing that there are motivations and behaviours of an alternative ‘personal’ nature, from within the consumer. Thus, ‘hedonic’ and ‘perfectionist’ luxury purchase motivations were proposed: ‘hedonic’, where a consumer is motivated to purchase a luxury product because it produces positive emotions and ‘perfectionist’ where the consumer is motivated for the safety a luxury product will bring in its quality or design (Vigneron and Johnson, 1999). Table 1  Prestige values and motivations of prestige-seeking behaviour Values Motivations Conspicuous Veblen Unique Snob Social Bandwagon Emotional Hedonic Quality Perfectionist Source:  Vigneron and Johnson (1999) Although not being considered as exhaustive (Moore and Birtwistle, 2005), Beverland (2004, in Moore and Birtwistle, 2005) interrelates six of previously mentioned dimensions consisting of brand heritage (history – culture), product quality, credibility and excellence (product integrity), personality and consumer group support (endorsements) as well as brand image investments (marketing).
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