Essay About Intentional Buying Of Luxury Goods And Psychological Processes

Which Psychological Processes Are Involved in Intentional Buying of Luxury Goods and How Rational Is the Buyer?
Which psychological processes are involved in intentional buying of luxury goods and how rational is the buyer?Dr. Dimitrios TsivrikosMsc Industrial/Organisational and Business Psychology PSYCGBO4Word Count : 2886 Semester One 6th February 2017  Which psychological processes are involved in intentional buying of luxury goods and how rational is the buyer? The luxury goods industry is one of the few areas of business that seem to be impervious to economic downturn. During the recession, though marginally affected by the crisis, luxury powerhouses such as LVMH, Richemont, & PPR reported increases in annual growth in the years after 2009, despite austerity measures and a dwindling European economy (Neate, 2013). Though this at first seems counterintuitive, market research suggests that though economic hardship reduces spending power of ‘middle income’ earners (who tend to purchase luxury infrequently), those who value luxury consumption still engage in purchasing (Neate, 2013).  The psychological processes behind luxury consumption has been an area of growing interest to researchers and luxury companies, as understanding the ‘essence’ of what drives individuals to intentionally purchase luxury goods greatly affects how the products are marketed and the demographic to which it is presented. Companies carefully straddle the line between expanding their audience without devaluing the intangible assets that are associated with a luxury good. Similarly, researchers attempt to justify and understand the intrinsic motivations of consumers when purchasing functionally ‘unnecessary’ goods, especially during times of economic hardship.

Therefore, this essay will argue that traditional models of consumer decision such as the Engel Kobatt Blackwood (EKB) model (Solomon, 2012) cannot be used to fully assess purchase behaviour of luxury goods due to the subjective nature of the value of ‘luxury’. The EKB model can be used as a loose framework, however due to the highly emotional and consequently seemingly ‘irrational’ nature of luxury goods, the interpretation of certain steps in the model must be altered to accommodate for the complexities of luxury good purchasing. This will be assessed by evaluating the intrinsic and extrinsic motivations of the individual to purchase luxury goods, as well how luxury goods industries use targeted marketing techniques during the decision-making process. Firstly, I will evaluate the concept of luxury goods and address how bounded rationality and dual-process systems theories are more appropriate choice frameworks to operate in rather than traditional economic models of rationality in the case of luxury good decision making. Secondly, I will assess the psychological processes directing individuals purchase during the initiation of the purchase intention. Finally I will briefly address the evaluation, the purchasing and post-purchasing behaviour process, however this will be limited due to a lack of resources into the field. Parallelly throughout, I will address the psychological factors that are used by the industry to influence consumers purchase decisions and to sustain the luxury.