Insight: Research on status signaling by Han, Nunes and Drèze (2010) shows the conspicuousness of a brand’s mark or logo on a luxury good matters in terms how the brand is used by consumers to signal status. Wealthy consumers who do not crave status pay a premium for products with inconspicuous branding to associate themselves with other like-minded wealthy consumers who can recognize their discreet signals. Wealthy consumers who crave status use conspicuously branded products to disassociate themselves from less affluent consumers who only recognize loud signals. Consumers who crave status, but cannot afford true luxury, use conspicuously branded counterfeits to emulate those they recognize to be wealthy – those who signal loudly. Counterfeiters recognize this and in response disproportionately produce and sell conspicuously branded knockoffs.
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Classroom Code(s): Brand Management; Consumer Behavior; Marketing Strategy
Complete citation: Han, Young Jee, Joseph C. Nunes, and Xavier Drèze (2010), “Signaling Status with Luxury Goods: The Role of Brand Prominence,” Journal of Marketing, 74 (4), 15-30
Abstract: This research introduces “brand prominence,” a construct reflecting the conspicuousness of a brand’s mark or logo on a product. The authors propose a taxonomy that assigns consumers to one of four groups according to their wealth and need for status, and they demonstrate how each group’s preference for conspicuously or inconspicuously branded luxury goods corresponds predictably with their desire to associate or dissociate with members of their own and other groups. Wealthy consumers low in need for status want to associate with their own kind and pay a premium for quiet goods only they can recognize. Wealthy consumers high in need for status use loud luxury goods to signal to the less affluent that they are not one of them. Those who are high in need for status but cannot afford true luxury use loud counterfeits to emulate those they recognize to be wealthy. Field experiments along with analysis of market data (including counterfeits) support the proposed model of status signaling using brand prominence.
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