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A sitting poodle and a blue alien sticker on your Louis Vuitton bag, along with your initials, can be purchased on Louis Vuitton’s online store. You may also select from many other stickers and choose the location of the stickers on the bag. Louis Vuitton is not the only luxury brand that allows consumers to “Design-It-Yourself” and create a unique bag. Customization has been embraced by many other luxury brands such as Prada, Gucci, and Burberry. Why are luxury brands offering customization of their products? The main reason lies in the evolution of the modern luxury consumer. There has been a generational shift from Baby Boomers to Generation Xers and Millennials. Also, the bulk of luxury consumers are now from the middle class. To appeal to more consumers and their changing values, these luxury brands are using their online store platforms and technology to offer consumers a custom experience. But is there a limit to how much customization a brand should employ? New research by Moreau, Prandelli, Schreier, and Hieke addresses this question and provides findings from their experiments.
Before thinking about how product customization affects luxury brands, the authors first explore the reasons behind consumers’ purchase of luxury brands. Some reasons are to show their status, wealth, power, taste, and accomplishments to others and themselves and indicate that they’re part of a particular group. These brands can also give consumers psychological benefits such as increased self-esteem and aspirations of a better life. But as luxury brands become more prevalent among consumers, the traits of exclusivity and uniqueness become more significant for consumers. The growth of social media such as Instagram and TikTok has only spurred on this trend as more influencers showcase luxury brands to millions of potential consumers.
How Does Customization of Luxury Products Affect Consumers’ Purchase Intentions?
Customization of luxury products may be able to address the consumer’s focus on rarity. When consumers can control the design of the luxury product, the consumers gain a product that is unique to them. If a luxury brand includes more items in the customization process, consumers have a higher likelihood that their product is truly one of a kind and best fits their preferences. However, the authors note that luxury products’ customization reduces its design equity, which is the luxury brand’s quality and craftsmanship, which is influenced by a designer’s expertise. Thus, there is a certain level of tension that customization introduces to luxury brands. To study the effect that customization on consumers’ purchase intentions, Moreau and colleagues propose four hypotheses. The first hypothesis is that in the luxury market, if there is too much customization or design freedom, consumers may view the luxury product as having lower design equity, which lowers consumers’ willingness to purchase the luxury product. In contrast, past studies have shown that higher design freedom increases consumers’ purchase intentions for mainstream products.
To delve into this further, the authors consider the fashion-conscious customer segment who value prestige, self-confidence, and the luxury brand’s image. The second hypothesis is that if a significant amount of design freedom is offered for a luxury product to fashion-conscious consumers, this should lower the consumers’ willingness to purchase the luxury product. Fashion-conscious consumers want to keep the luxury product’s design equity and its ability to signal value to others and themselves. For mainstream products, the brand’s image is less important, so fashion-conscious consumers may want to incorporate more of their style into the product and want more customization, which will increase their purchase intentions towards the product.
Moreau and colleagues also look at the factors that might affect consumers’ preferences for the extent of design freedom. The logo of a brand is one way to signal a product’s brand identity. Therefore, for the third hypothesis, when a brand logo is clearly shown on a luxury product, this gives consumers more incentive to customize the product because it becomes more difficult to mask the brand identity and value. For mainstream products, consumers place less value on the brand, and they are less concerned that customization will hide the brand identity and value. So, whether a brand logo is displayed on a mainstream product will not affect the consumers’ preference for the amount of design freedom.
When the brand is less pronounced on the luxury product, such as a brand signature, the brand identity and value are more subtle. The fourth hypothesis states that if there’s a brand signature on luxury products, consumers will want less design freedom to reduce the likelihood that the customization hides the brand identity. But for mainstream products, consumers do not rate brand identity highly, so whether or not a brand signature is displayed on a mainstream product will not affect their preference for the amount of design freedom.
The authors test their hypotheses by running four separate experiments involving mainstream and luxury brands. The first study respondents were students attending a major European university and involved a mainstream sneaker, Adidas, and a luxury sneaker, Hermes.
Different levels of customization were allowed depending on what group the students were put in. For instance, students in the high customization group were told they could choose the laces’ color and put their initials on the tongue. In contrast, students in the “no design freedom” group could not do any customization. All the respondents were asked to indicate how much they “liked” the products, as well as the likelihood that they would purchase the items over the next two weather-related seasons.
The second study followed a similar design path, but the respondents were only women, who were recruited while shopping in a high fashion district of Milan. The mainstream and luxury products were Zara and Chanel bags, respectively. Interestingly, this study did not include a “no customization” design condition. Intuitively, this makes sense, as these individuals were most likely people with high fashion consciousness levels, so one would expect their likelihood to purchase to vary from the first study.
The final two studies explored the impact that brand identity symbols, such as logos and brand signatures, have on the levels of customization consumers crave for mainstream vs. luxury products.
Findings for Luxury Brands
Moreau, Prandelli, Schreier, and Hieke’s research reveals that consumers appreciate luxury brands because of their rarity and quality, which are heavily influenced by expert designers. The experiments show that when customization is offered for luxury products, consumers try to balance out these luxury brand dimensions with their own desire to be unique. Consumers put less value on luxury products that offer a significant amount of design freedom because too much customization reduces the brand identity and the value that it signals. A higher level of design freedom is more detrimental for consumers who are more fashion-conscious because they value prestige and brand identity. But luxury brands can increase the design freedom offered by openly putting their brand logo on the luxury product instead of a brand signature. The brand logo ensures that the brand identity will less likely be hidden by customization.
Authors’ Thoughts on the Future of Luxury Brands
Many trends may affect luxury brands, such as the interaction effect of augmented reality, sustainability concerns of luxury consumers, and the effect of customizing luxury products in emerging markets. Augmented reality is becoming more accessible and prominent in department stores and on smartphones. The authors expect that there will be no potential negative interaction between augmented reality diffusion and customization needs in luxury. Augmented reality enhances the experience across the customer journey to impact different dimensions of the luxury customer experience. Also, the experiments in this study focus on developed markets where many consumers are more individualistic. In emerging markets such as China and India, the consumers are more collectivistic and view luxury brands’ role as “luxury for others.” The authors believe that the findings obtained in their experiments can provide product customization strategies in these emerging markets by reassuring customers with well-recognized logos and recognizable product design. Lastly, sustainability is an essential factor in millennials’ purchase decisions. The authors expect that a millennial who is much concerned about environmental and social sustainability and a customized item can offer a guarantee of authenticity and controlled manufacturing processes.
COVID-19 has altered the consumer landscape for luxury brands. The authors acknowledge that luxury consumers’ expectations and behaviors have been deeply impacted by emphasizing the role of sustainability and a stronger emphasis on the relevance of authenticity. The authors believe that the pandemic could enhance preferences for customization. For example, luxury customers are changing their focus from quantity to quality, from over-consumption to smart consumption, and luxury brands that “provide consumers with the ability to imprint their products with some degree of consumer essence” may be perceived to be timeless investments.
Read the full article:
C. Page Moreau, Emanuela Prandelli, Martin Schreier, and Silke Hieke (2020), “Customization in Luxury Brands: Can Valentino Get Personal?” Journal of Marketing Research, 57(5), 937–47.