The effect of using an online retail channel on consumer’s perceived luxury value of luxury brands

Master Thesis

The effect of using an online retail

channel on consumer’s perceived

luxury value of luxury brands

Annelou Lauwers

11126272

MSc. BUSINESS ADMINISTRATION:

Marketing

Supervisor: Frank Slisser

2015-2016

Statement of Originality

This document is written by Student Annelou Lauwers, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

In this thesis the author is often referred to as “we” for writing style purposes. However, the research was written by only one author, Annelou Lauwers.

A

Luxury brands wanting to maintain growth need to keep up and move into the

digital age. For luxury brand it is imperative to keep up their premium image.

However, the key characteristics of the Internet and luxury brands,

accessibility vs. exclusivity, seem to stand opposite each other. Therefore it is

important for managers to know whether and how selling luxury goods online

influences the perceived luxury value of luxury brands. This research uses an

experiment to examine this effect. Respondents are exposed to an offline or

online shopping experience of one of two existing luxury brands and

afterwards have to indicate the value they attach to a brand and how luxurious

they perceive the brand. The results show that because consumers

experience a significant lower uniqueness value when shopping online for

luxury goods, the conspicuousness and prestige value the consumers attach

to the brand also fall. This all leads to a lower perceived luxury value.

Managers should be aware of this effect and try to enhance the uniqueness

T

I. Introduction ... 5

II. Literature Review ... 7

Defining luxury ... 8

Consumers perception of luxury ... 9

Luxury marketing ... 14 The Internet ... 17 Multichannel strategy ... 18 Online retail ... 21 Literature Gap ... 23 Research Question ... 24 Contribution ... 24

III. Conceptual framework ... 25

IV. Methodology ... 30 Experimental design ... 31 Pre-test ... 31 The Experiment ... 33 Shopping experience ... 34 Data Sample ... 35 Analytical Strategy ... 36 V. Results ... 37 Hypothesis Testing ... 39 ANOVA ... 39

Serial Mediation of Uniqueness, Conspicuousness and Prestige ... 40

Hedonism as mediator ... 43

Correlation matrix ... 45

VI. Discussion & Conclusion ... 45

Managerial implications ... 48

Limitations & Further Research ... 48

REFERENCE LIST ... 51

APPENDICES ... 53

Appendix 1 – Analysis Pre-test ... 54

Appendix 2 – Luxury Shopping Stories ... 56

Appendix 3 – Experiment Survey ... 58

I. Introduction

The luxury industry is continuously growing (Bain & Co., 2014) and so is the

use of the Internet by consumers for shopping purposes (Statista, 2016).

Despite criticism, the luxury industry has grown fiercely over the past

decades. According to Bain & Company (2014) personal luxury – which is

commonly seen as the core of the entire luxury industry - has tripled over the

past twenty years. However, there has been a dip in luxury growth in 2008 as

a result of the financial crisis followed by a rebound (Bain & Co., 2014). Since

2013 the growth has been slowing down.

Branding is very important in the luxury industry. Although brand value had

also been increasing over the last decades, according to the BrandZTM Top 100 Brand Report of 2015 (Millward Brown, 2015), the brand value of luxury

brands has declined 6% in the year 2015. Millward Brown (2015) names a

post recession impact and the slower Chinese economy as two possible

causes of this decline in luxury brand value.

Globalization and growth in the luxury industry has led to structural changes in

types of sales and consumers of luxury goods. The luxury industry is shifting

focus from the “happy few” to the “happy many” (Chandon et al., 2015).

Luxury brands are using the Internet more and more for different purposes.

One of these purposes for many luxury brands is selling their products online.

When implementing a multichannel strategy and retail online, luxury brands

should weight the advantages and disadvantages. More and more consumers

multichannel strategy requires proper management structures and data

capabilities.

The characteristics of luxury and the Internet, and online retail, however,

seem to stand opposite each other. On the one hand, luxury is based on

principles such as tradition, uniqueness, exclusivity, etc. The marketing mix of

luxury brands should be based on these main characteristics. On the other

hand, the characteristics of the Internet, and online retail, are global selling

and exposure. Implementing an online retail channel can affect the main

principles on which the luxury industry is based and consequently can affect

the consumer’s perceived luxury value of a brand.

This research will examine the influence of an online retail channel on the

consumers’ perceived luxury value of luxury brands. We will make use of a

vignette experience to examine this. Participants will be divided in to three

random groups. Each group will be given one brand cue: neutral, physical

store experience or online store experience. After exposure to these cues,

participants will have to answer a survey that will measure their perceived

II. Literature Review

In this section an overview of the existing literature on luxury and online retail

is given. In the first part of this literature review, the concept of “luxury” will be

discussed. First, the definition and characteristics of luxury are given.

Furthermore it is important to understand that luxury is defined by the context

and the people concerned (Vigneron & Johnson, 2004). Hence, it is important

to understand how customers perceive and value luxury. We will discus two

frameworks for the perceived luxury value. First we will discuss the Brand

Luxury Index by Vigneron and Johnson (2004); second, we will discuss the framework of Wiedman et al (2007) that builds on the framework of Vigneron

& Johnson. Both models help to understand consumers’ motives and value

perceptions in relation to luxury consumption. Additionally, they provide a tool

to measure and compare the value consumers attach to luxury brands.

Next, luxury brands rely heavily on branding. They get their competitive

advantage from their name and image. Therefore it is important to understand

the specific characteristics of luxury marketing. We will discuss the defining

characteristics of luxury marketing and branding and name some critical

challenges for luxury brands these days.

One way for luxury brands to overcome some of these challenges is through

selling online. The second part of this literature review is focused on the use

of the Internet as an additional retail channel for luxury goods. The

characteristics of the Internet will be discussed. Consequently the advantages

In the last part of the literature review, the research question and the

contribution of this research will be discussed.

Defining luxury

Luxury is a very difficult concept to define. There are many possible

definitions for luxury to be found in the literature. The most up to date and

accurate definition of luxury is probably given by Kapferer and Bastien (2012):

“Luxury designates objects or services which are needlessly expensive: non

necessary – one can live without it – no functional argument can ever justify

their price, only the feeling of privilege made of rare quality, hedonistic

experience, symbolic elevation and conspicuousness”.

Most authors agree on the fact the luxury has two main components: “luxury

for oneself”, which focuses on the personal value of luxury, and “luxury for

others”, which focuses on the social value of luxury (Kapferer & Bastien,

2012). Other authors make a distinction between functional, individual and

social value when defining the concept “luxury” (Hanzaee et al., 2012;

Wiedman et al., 2007, 2009; Hennings et al., 2013). Accordingly, luxury can

have multiple benefits to consumers. The functional value of luxury stems

from superior quality and performance of luxury products (Wiedman et al.,

2009). Luxury products can satisfy individual needs on a materialistic or

hedonic level and they can create value through the impact on the self-identity

of the consumer (Wiedman et al., 2009). The social value comes from the

status, prestige and conspicuousness luxury products bring to the consumer

According to Vigneron and Johnson (2004), the definition of luxury is

dependent on the context and people concerned. As the context and attitudes

of people change, so does the perception of luxury. Luxury brands need to

take this into account when introducing new ways of communicating or selling.

While most consumers think of goods like jewelry and watches, cosmetics

and perfumes, leather goods, apparel, etc.; the luxury industry also includes

luxury goods such as luxury yachts, luxury cars, private airplanes, etc. and

luxury services such luxury hotels and luxury financial services. In this

research however, the focus will be on the classic luxury goods, meaning

brands that sell apparel, leather goods, cosmetics and jewelry and watches.

Consumers perception of luxury

It is important for brands and managers to understand what leads consumers

to see a brand as luxury or not. According to Vigneron and Johnson (2004),

luxury perceptions can change over time and with context. Vigneron and

Johnson (2004) developed the Brand Luxury Index, an instrument to measure

the perceived amount of luxury contained in a brand. Practitioners and

researchers can use the index to understand how consumers form their view

on luxury brands.

Vigneron and Johnson (2004) created a framework of perceived luxury based

on personal and non-personal - or inter-personal - perceptions (Figure 1).

Personal perceptions are based on how the consumption and use of luxury

brands will affect the consumer’s self. Inter-personal perceptions are based

relationships with others. Vigneron and Johnson (2004) demonstrate the

existence of three latent luxury dimensions reflecting inter-personal

perceptions: perceived conspicuousness, perceived uniqueness and

perceived quality. Research on perceived conspicuousness suggests that

consumers take into account their reference group and social status when

making decisions related to luxury consumption (Vigneron & Johnson, 2004).

Perceived uniqueness reflects the preference of consumers for products that

are scarce or in limited supply (Vigneron & Johnson, 2004). Consumers

expect luxury brands to offer products that are of superior quality, this is

reflected in the perceived quality dimension of the framework (Vigneron &

Johnson, 2004). In addition to the non-personal dimensions, Vigneron and

Johnson (2004) include two personal-oriented perceptions: perceived

extended-self and perceived hedonism. Consumers integrate the symbolic

meaning of luxury goods into their own identity. The extended-self value

reflects the ability of luxury goods to enhance the consumer’s self-concept

(Vigneron & Johnson, 2004). Perceived hedonism is concerned with the

pleasure consumers get from buying luxury goods.

Luxury Value Inter-personal perceptions Perceived conspicuousness Perceived uniqueness Perceived quality Personal perceptions Perceived extended-self Perceived hedonism

Wiedman et al. (2007) developed a similar framework. Their model extends

the Vigneron and Johnson five-dimension framework in order to enhance the

current understanding of consumer motives and value perception better in

relation to luxury consumption (Wiedman et al., 2007, 2009). Wiedman et al.

(2007) made a distinction between perceived financial, functional, individual

and social values (Figure 2). First, the financial value addresses the monetary

aspects of the product such as price, discount, etc. Second, the functional

value refers to the core benefits and basic utilities that drive the consumer

(Wiedman et al., 2007, 2009) and can be further divided into three

dimensions: usability, uniqueness and quality. Usability refers to the

satisfaction of consumers’ needs in usage situations. Luxury products are

expected to satisfy these needs better than alternatives. Luxury goods are

expected to have superior quality. This quality can stem from craftsmanship

but also from the use op exceptional materials. Uniqueness refers to the

exclusivity factor of luxury. Third, the individual value addresses the

consumer’s personal preference for luxury consumption (Wiedman et al.,

2007, 2009). Individual value can be divided into self-identity value, hedonic

value and materialistic value. Self-identity value originates from products that

match the consumer’s self-image and aspirations (Hanzaee et al, 2012).

Consumers use luxury goods to strengthen or extend their identity. Hedonic

value comes from the pleasure the consumer gets from using the luxury

product. Materialistic value is the value consumers get from “possessing” the

luxury good. Finally, the social value refers to the perceived utility the

consumers acquire by consuming products recognized by their social groups

decomposed into conspicuous value and prestige value. Conspicuous value

refers to the social value consumers may obtain from showing others they

own a luxury item. Finally, prestige value refers to the value consumers get

from owning a luxury product that serves as a symbolic sign of group

membership (Wiedman et al., 2007).

The model developed by Wiedman et al. (2007, 2009) is based upon the

brand luxury index of Vigneron and Johnson. However makes a more specific

distinction between functional, individual and social value instead of the

distinction between personal and inter-personal value the brand luxury index

makes. The model by Wiedman et al. also takes the financial value of a brand

into account when looking at the consumer’s perceived luxury value. This

model enhances the current understanding of consumer motives and value

perception better in relation to luxury consumption (Wiedman et al., 2007).

Figure 2: Consumers' Luxury Value Perception (Wiedman et al., 2009, p629)

Luxury value

Financial

value Price value

Functional Value Usability value Quality value Uniqueness value Individual value Self-identity value Hedonic value Materialistic value Social value Conspicuous value Prestige Value

Both models make it possible to identify the drivers of perceived luxury value.

However, these frameworks are just the first step. As previously stated, the

definition and value of luxury depends on the situation and the people

concerned (Vigneron & Johnson, 2004). This entails that the perception on

luxuriousness of a brand can change over time, with geographic location and

through marketing methods. These models make it possible to compare

perceived luxury values of consumers between brands as well as the values

of the same brand under different conditions or in different contexts.

The market conditions and context within which luxury brands operate are

changing – new technologies, shifting consumer cultures etc. (Keller, 2009;

Okonkwo, 2009). These changes will probably also influence the way

consumers think and feel about the brand. Luxury brands need to know about

these changes and react to them in an appropriate manner in order to

maintain their status and growth. However, so far no research has been

conducted on how the changes in the market, like the use of the Internet and

online shopping, affect the perceived brand luxury value of consumers.

Before the effect of changing market conditions on the luxury industry and on

the consumer’s perceived luxury value can be measured, the distinct

characteristics of luxury marketing need to be explained. The following section

will discuss the defining characteristics of luxury marketing. It will also discuss

Luxury marketing

Vickers and Renand (2003) argue that luxury goods can be defined as a mix

of three dimensions: functionalism, experientialism and symbolic

interactionism. The functional dimension motivates consumers to find

products that solve current problems and satisfy utilitarian performance needs

(Vickers & Renand, 2003). The experiential dimension needs to fulfill

internally generated needs in terms of pleasure, variety and stimulation

(Vickers & Renand, 2003). Symbolic interactionism describes the desire to

fulfill internally generated needs for self-enhancement, group membership,

ego-identification or role position (Vickers & Renand, 2003). Non-luxury goods

can also be defined using these three dimensions. The fundamental

difference between luxury and non-luxury goods according to Vickers and

Renand (2003), however, is in the specific mix of these measures. They found

that symbolic interactionism is the most important factor in luxury

consumption. The second most important factor for luxury consumption is

experientialism, followed by functionalism, which for luxury goods account for

the smallest part of the variance. For non-luxury goods the mix of dimensions

that cause variance is different. Vickers and Renand conclude that: “the

primary value of luxury goods products is psychological, and that their

consumption is dependent upon a distinctive mix of social and individual cues”

(Vickers & Renand, 2003, p473). The symbols exhibited in marketing

campaigns of luxury goods have a major impact on the choice of one product

over another (Vickers & Renand, 2003). Companies can use these

managing the marketing communication mix carefully and addressing the

specific dimensions (Vickers & Renand, 2003).

Luxury brands rely heavily on branding to be successful in the marketplace

since they derive great value and competitive advantage from their name and

image (Keller, 2009). Keller (2009) proposes ten defining characteristics of

luxury brands and their branding practices that provide a basic foundation as

to how luxury brands can be marketed (Table 1).

Table 1: 10 defining characteristics of luxury branding (Keller, 2009, p291)

1 Maintaining a premium image for luxury brands is crucial; controlling that image is thus a priority.

2 Luxury branding typically involves the creation of many intangible brand associations and an aspirational image. 3 All aspects of the marketing program for luxury brands

must be aligned to ensure quality products and services and pleasurable purchase and consumption experiences. 4 Brand elements besides brand names – logos, symbols,

packaging, signage and so on – can be important drivers of brand equity for luxury brands.

5 Secondary associations from linked personalities, events, countries and other entities can be important drivers of brand equity for luxury brands.

6 Luxury brands must carefully control distribution via a selective channel strategy.

7 Luxury brands must employ a premium pricing strategy with strong quality cues and few discounts and markdowns. 8 Brand architecture for luxury brands must be managed very

carefully.

9 Competition for luxury brands must be defined broadly as they often compete with other luxury brands from other categories for discretionary consumer dollars.

10 Luxury brands must legally protect all trademarks and aggressively combat counterfeits.

Since branding is so important to luxury marketers, they must take changing

serious consideration. These changes pose continuous challenges for

marketers (Keller, 2009; Okonkwo, 2009). Keller (2009) identifies three

challenging trade-offs luxury marketers face. The first challenge Keller (2009)

defines is exclusivity vs accessibility. According to Keller (2009), luxury

brands need to stand out, be special and maintain their exclusive image, but,

at the same time, they need to expand their customer base to maintain growth

over time. Second, luxury marketers have to make a trade-off between classic

vs contemporary images (Keller, 2009). Luxury brand have to keep up with contemporary business practices, like the use of the Internet, while staying

true to their heritage and history (Okonkwo, 2009). A lot of luxury branding is

related to history, heritage and experience, but this might not be so relevant to

the younger prospective customers (Keller, 2009). The third challenge luxury

marketers face is acquisition vs retention. Marketers have to make a trade-off

between allocating marketing resources and effort to existing customers in the

short run and prospective customers in the long run (Keller, 2009). New

markets – Asia and the Middle East - have emerged for luxury brands over

the past few years. Since luxury brand serve different markets at the same

time, marketers have to find the balance among the different requirements of

the different markets. The choices marketers make related to these

challenges can affect the way consumers feel about the brand. Managers

want to grow their luxury businesses, but they have to take into account that

selling to a broader audience can entail an adverse effect on consumers’

One approach of growing the business and selling to a broader audience is

through the use of the Internet and in particular through online selling. In the

next section the Internet will be discussed. First, the Internet will be discussed

as a marketing innovation. Second, the reasons why luxury brands were

relatively slow in adaption to the digital context will be considered.

The Internet

As previously stated, recent marketing innovations, such as social media,

e-commerce, multi-channeling etc. have also found their way into the luxury

industry. This may lead to a contradiction since luxury is mostly related to

tradition and innovation is related to novelty and modernization. However,

luxury brands are not immune to the changes in technology and the resulting

changes in consumer’s buying behavior brought on by adoption of the Internet

as an information, communication and shopping tool (Seringhaus, 2005).

Overall, there has been a slow adaptation of luxury brands in the digital

context over the past few years. Okonkwo (2009) dedicates this slow

adaptation to the fact that luxury brands usually have a unique relationship

with their customers and that the Internet is incompatible to this relationship.

Okonkwo (2009) argues that the central features of the Internet are opposite

those of luxury brands. On the one hand, luxury brands want to create and

retain desire and exclusivity and they want to retain the perception of limited

supply. On the other hand, luxury brands want to enhance their brand equity

on the Internet, which leads to increased sales and over exposure.

Internet seems unsuitable for luxury goods (Okonkwo, 2009); which leads to

paradoxes in the use of the Internet for luxury brands.

Nonetheless, according to Okonkwo (2009), the Internet can form the basis

for the further evolution of luxury, both in creative aspects as in

communications and business. Luxury brands however still face some

important challenges online (Okonkwo, 2009). A major challenge of luxury

brands is to acknowledge that the Internet has created an imperative need for

change and a need to rethink their existing practices and principles. Luxury

brands have to acknowledge the importance of the Internet and new

technologies in their strategies. Okonkwo (2009) argues that the Internet is

not just a channel to serve some purpose. He claims that the Internet is a

multi-dimensional channels that can serve multiple purposes including

communications, branding, customer services, design, retailing, consumer

analysis, client networks or congregation, marketing, customization and

product development, as well as managing logistics, supply chain and

operations. But luxury brands have to find the right manner of using the

Internet in a way that does not affect their luxuriousness. In this research the

focus will be on the use of the Internet for online retailing.

Multichannel strategy

Most, if not all, luxury brands (mainly) sell their products in physical stores.

Nevertheless, as stated above, more and more luxury brands are now also

implementing an online retail channel to keep up with the digital age. The

Internet makes it possible for traditional store-based retailers to offer

customer and enhance the benefits provided to the customer (Zhang et al.,

2010). Zhang et al. define multichannel retailing as “the set of activities

involved in selling merchandise or services to consumers through more than

one channel” (Zhang et al, 2010, p168).

There are multiple motivations and constraint involved in the multichannel

retail environment. The first motivation of implementing a multichannel retail

strategy could be access to new markets (Zhang et al., 2010). Additionally to

expanding the company’s markets, without building additional stores, Neslin

and Shankar (2009) also found that multichannel customers spend more on

average. Second, by using a combination of channels, retailer can better

satisfy customers’ needs by exploiting the benefits of each channel and

overcoming the flaws of the other (Zhang et al, 2010). A third motivation could

be that multichannel retailing develops resources that are difficult to detect or

duplicate by competitors (Zhang et al., 2010). By implementing multiple

channels, companies can acquire propriety customer information, build

customer loyalty and reduce costs. This could create a strategic advantage for

the company.

However, there are some constraints for expanding to multichannel. These

include customers’ access to broadband Internet; operational difficulties and

costs of multichannel offering. When constructing a multichannel retail

strategy, there are some challenges companies have to overcome. They have

to create the appropriate organizational structure. They have to build an

integrated information technology structure, in order to gather and analyze all

purchase behavior in increasingly multichannel (Kushawa & Shankar, 2007),

so companies have to use customer analytics to better understand their

decisions processes, experiences, satisfaction and loyalty (Rangaswamy &

van Bruggen, 2005; Zhang et al., 2010). Finally, they have to implement

formal evaluation and performance metrics (Zhang et al, 2010).

According to Berman & Thelen (2004) there are multiple advantages for

retailers that undertake a multi-channel approach to their overall business.

These advantages include “enabling a retailer to select among multiple

channels based on their unique strengths, opportunities to leverage assets,

and opportunities for increased sales and profit- making opportunities through

appealing to multi-channel consumers” (Berman & Thelen, 2004, p148). A

multi-channel retail approach can offer synergies, through cross-channel

promotion, communication, information sharing, digitalization, and sharing of

common assets (Zhang et al., 2010).

For the average company these consequences are definite benefits.

However, because of the specific characteristics of the luxury industry, the

consequences of implementing a multi-channel retail format could have

contradictory effects on luxury brands. Applying a multi-channel retail format,

by using an online retail channel, could possible hurt the image of luxury

brands. Online retail makes the luxury products more accessible, but this

could jeopardize the exclusive image of the brand. By using an online retail

format, the brands can keep up with the contemporary business practices and

stay true to their history and heritage. By acquiring new customers through

the online channel, they could loose some of their existing customers.

As Keller (2009) argued, luxury marketers have to make trade-offs. But they

have to be aware that the choices they make can affect the way consumers

feel about their brand. Luxury marketers have to take into account that selling

to a broader audience can entail an adverse effect on consumers’ luxury

perception of the brand (Chandon et al., 2015).

Online retail

Online retail is the practice of selling goods or services online. No personal

contact is involved, triggering a lot of worries with consumers concerning trust.

Torkzadeh and Dhillon (2002) identified factors that are critical in the success

of e-commerce, and thus also online retailing. Trust is one of the major

concerns of consumers when buying online. Especially for luxury brands it is

important that consumers trust that the goods they buy online are genuine.

Chen and Dhillon (2003) examined the dimensions of consumer trust in

e-commerce and argued that consumer trust can be built by focusing on

competence, integrity and benevolence.

Even though there are concerns about the fit between online retail and luxury,

more and more luxury brands are using the Internet as a sales channel these

days. Although the adaptation has been rather slow, luxury brands now

realize that they cannot stay behind. As can be seen in Table 2, seven of the

top ten luxury brands - in brand value (Millward Brown, 2015) - are using

the brands need to decide whether they will offer the whole collection online

or only a selection. When making this decision, they have to take into account

the different geographical regions they want to reach. Second, brands have to

consider how they will sell their luxury goods. They have to design their

website and online store carefully and try to re-create the perfect luxury

atmosphere and present the collection in such a way that the clients are

immersed in the brand universe and get a memorable experience (Okonkwo,

2009).

Table 2: Use of online retail by top luxury brands

Brand Online Retail Louis Vuitton Yes

Hermès Yes Gucci Yes Chanel No Rolex No Cartier No Prada Yes Burberry Yes

Michael Kors Yes

Literature Gap

Most of the value of luxury brands is based on their image and exclusivity.

However, market conditions are changing and luxury brands have to keep up

with these changing conditions of the digital age. Most of the luxury brands

are now starting to move into the digital age by using the Internet to market

their products. One way of adapting to the changing market conditions is by

adding an online retail channel. Nevertheless, when making the decision of

whether or not to sell online, luxury marketers have to take into account the

effect it could have on their image and brand value.

There has been a lot of research on how consumers perceive the

luxuriousness of brands and how to measure this perceived luxury value.

However, there has not been any research so far on whether and how these

perceived luxury values change when brands implement an online retail

channel. Online retail can be an opportunity for brands to enlarge their

customer base, connect with younger, digital consumers and make their

products more accessible. Implementing such an additional retail channel,

however, can also be a threat to luxury companies, by jeopardizing the

exclusivity of brands and therefore probably the perceived luxury value of

consumers.

To make the right choices and implement the right channel strategy, luxury

marketers have to know whether and how the use of an online retail channel

affects the perceived luxury brand value of consumers. This research will try

value of the online retail channel is for the consumer’s perceived luxury value

of brands.

Research Question

This research will attempt to measure whether and how the value consumers

attach to luxury brands changes with the use of an online retail channel in

comparison with traditional retail methods and how these values influence the

perceived luxury value. The research question will be:

“Whether and how does the use of an online retail channel by luxury brands influence the consumer’s perceived luxury value of the brand?”

It will be examined whether there is a difference in perceived luxury value

when using an online retail channel in comparison to when using a traditional

retail channel and if so, where this difference comes from. We will examine

which of the perceived values that influence the perceived luxury value

mediate this relationship between retail channel and perceived luxury value of

consumers.

Contribution

Luxury brands cannot stay behind and have to move into the digital age. Over

the last couple of years, a lot of luxury brands have done so by making use of

the Internet to market their products. Seven out of the top ten luxury brands

(Millward Brown, 2015) have implemented an online retail channel. However,

no research that analyses the relationship between perceived luxury value

and the use of online retail for luxury brands has been conducted so far. To

need to know whether and how the use of online retail influences the

consumer’s perceived luxury value; and how the channel influences the other

values consumer’s attach to luxury brand. Since most of the brand value of

luxury brands is based on their image, changes in consumer’s valuation of the

brand and perceived exclusivity could have a big impact on brands and their

brand value.

This study will try to give preliminary results for luxury brands in general. It will

give an idea of how much the perceived luxury value actually changes when

an online retail channel is implemented. It will also give an idea of which other

perceived values are affected mostly by the implementation of an online retail

channel and mediate the relationship between retail channel and perceived

luxury value. Conclusions found in this research could help luxury marketers

to possibly adapt their (online) retail channel strategy. It could also help them

to focus on the enhancement of mediating values in order to enhance the

perceived luxury value of the brand. Since this is one of the key value creators

for luxury brands.

III. Conceptual framework

This research will examine whether and how the retail channel affects the

perceived luxury value of consumers. The independent variable is the type of

retail channel – physical or online store. We only distinguish between physical

store and online shopping, and not a combination of both. This makes the

study more generalizable as differences can be attributed solely to the use of

between the independent and dependent variable; and why this relationship

exists (through mediating variables). In this section, we will first discuss the

hypotheses and afterwards a conceptual framework will be presented.

According to the framework by Wiedman et al. (2007, 2009) the perceived

luxury value of consumers is based on the different values consumers attach

to the luxury products: financial value; functional value; individual value; and

social value. Each of these values can be built up out of a range of different

values (Figure 2). Keller (2009) defines ten key characteristics of luxury

branding (Table 1). When using an online retail channel, these characteristics

could be influenced. In turn, this can influence the value consumers attach to

the luxury goods.

Since the definitions and characteristics of luxury brands and the Internet

stand opposite each other and seem incompatible, the perceived luxury value

of brands in likely to be affected when luxury brands sell online.

Hypothesis 1: The total perceived luxury value of the brand is lower when shopping online than when shopping in a physical store.

Using an online retail channel – independent of whether the company also

sells in brick-and-mortar stores – makes the luxury brand available to

practically anyone who has access to the Internet. Keller (2009) states that

luxury brands should carefully control distribution. When everyone who has

access to the Internet has access to the luxury brand, customers might

perceive the brand as less exclusive and unique. According to Vickers and

symbolic. So if the symbolic value of the luxury brand diminished, so does the

luxury value. The (online) sales channel, consequently, could influence the

uniqueness value customers attach to the luxury good. Since Wiedman et al.

(2007) argue that uniqueness value influences the perceived luxury value; the

uniqueness value is a mediator in the relationship between the independent

and dependent variable.

Hypothesis 2: Consumers attach a lower uniqueness value to a brand when shopping online than when shopping in a physical store; and this mediates the relationship between shopping channel and perceived luxury value.

One of Keller’s (2009) ten key characteristics for luxury brands is maintaining

a premium image. When consumers have the feeling the luxury good is less

exclusive, this could affect the premium image of the brand. It could also

influence the perceived social value consumers attach to the luxury brand.

When luxury goods become available to more consumers they become less

conspicuous and could loose prestige. Since the symbolic interactionalism

term in luxury products is very important (Vickers & Renand, 2003), this could

lower the total luxury value. Thus, selling online could influence the

conspicuousness value and the prestige value consumers attach to the brand.

Since Wiedman et al. (2007) argue that conspicuousness and prestige value,

together social value, influence the perceived luxury value; the

conspicuousness and prestige value are mediators in the relationship

between the independent and dependent variable. These mediators are

multiple mediation of Uniqueness, Conspicuousness and Prestige between

the independent and dependent.

Hypothesis 3: Consumers attach a lower conspicuousness value to a brand when shopping online than when shopping in a physical store because the brand will be seen as less unique; and this mediates the relationship between shopping channel and perceived luxury value.

Hypothesis 4: Consumers attach a lower prestige value to a brand when shopping online than when shopping in a physical store because the brand will be seen as less unique; and this mediates the relationship between shopping channel and perceived luxury value.

Hypothesis 5: The relationship between sales channel and perceived luxury value is mediated by Uniqueness, Conspicuousness and Prestige is serial.

According to Keller (2009) the pleasure of purchase is also an important

characteristic of luxury brands. Vickers and Renand (2003) argue that

experientialism is the second most important factor in the marketing mix of

luxury goods. It might be difficult to mimic the same experience one has in a

luxury shop in an online environment. The online experience lacks personal

contact. According to Okonkwo (2009) this lack of personal contact in

unsuitable for luxury brands. Therefore the pleasure of buying the luxury good

could be influenced and the perceived hedonic value could change. Wiedman

et al. (2007) state hedonism as an influential on the perceived luxury value.

as a mediator in the relationship between the dependent and independent

variable. This mediation stands parallel to the other mediators.

Hypothesis 6: Consumers attach a lower hedonic value to a brand when shopping online than when shopping in a physical store; and this mediates the relationship between shopping channel and perceived luxury value.

There is no direct reason believe that remaining drivers of the PLV will be

influenced by the choice of retail channel. So we argue that these will remain

the same over the different retail channel and will not have an effect on the

relationship between the retail channel and the perceived luxury value. The

price of luxury goods is usually the same online as in store; therefore the retail

channel should not influence the consumer’s Price value of a luxury brand.

The Usability and Quality of the brand’s product also stay equal, independent

of which retail channel is used. The Self-identity value comes from products

and brands that match the consumer’s self-image and aspirations and this

should not change with a different choice retail channel. Finally, Materialism is

the value consumer’s get from possessing the product or brand, independent

Figure 3: Conceptual Framework

IV. Methodology

The previously stated research question and hypotheses will be examined

using an experiment. The type of experiment used in this research is a

vignette study and will be conducted through the Internet with the use of the

Qualtrics software. A vignette study combines the high external validity of traditional surveys with the high internal validity of classical experiments.

(Atzmüller & Steiner, 2010). In this study, the vignette will be a short

description of the shopping situation – physical store or online store – of one

of two brands. It will be a 2x2 experiment (2 shopping situations x 2 brands).

Participants will be exposed to only one vignette in order to elicit judgments

about the particular situation. The participants then will be asked to answer a

survey that will measure the values they attach to the luxury brand and their

perceived luxury value of the brand. By using a vignette experiment it is easy

and easy to measure the dependent variable, the perceived luxury value,

through the survey questions.

In the survey, the respondents will be presented with statements. They will

have to indicate how much they agree with these statements on a 7-point

scale, ranging from “strongly disagree” to “strongly agree”. The

Likert-scale is used because it is the most commonly used psychometric Likert-scale in

social sciences (Matell & Jacoby, 1971) and a common rating scale for

surveys (Allen & Seaman, 2007). With the use of Likert-scales ordinal data

can be analyzed as interval data (Allen & Seaman, 2007), which makes it

easier to analyze, to interpret and to draw solid conclusions. Additionally, it

has been shown that the Likert-scale with 7 points reaches the highest values

of scale reliability (Allen & Seaman, 2007). The respondents, then, will be

asked to indicate the perceived luxury value they attach to the brand on a

scale of 0-100. Finally some demographic questions are asked, to collect

some control variables.

Experimental design

Before the experiment was conducted, a pre-test was completed to ensure

the validity of the experiment. The pre-test helps to find the right luxury brands

to use in the experiment. Participants of the pre-test were confronted with four

brands. They had to indicate whether or not they are familiar with the brand

and whether or not they define the brand as luxurious. For the pre-test four

Co. The former two of are fashion brands and the latter two are jewelry and/or

watch brands.

We analyzed whether the respondents were familiar with the brands and

whether they saw the brands as luxury brands. The analysis can be found in

Appendix 1. The means and standard deviations for familiarity and luxury

perception for each brand can be found in Table 3.

Familiarity Luxury

Mean Std. Dev. Mean Std. Dev. Louis Vuitton 6,1111 1,30074 6,4 1,03133 Chanel 6,3721 0,69087 6,5349 0,50468

Rolex 6,3023 1,0359 6,6512 0,65041

Tiffany's 4,7857 2,1924 5,4286 1,10747

Table 3: Means of Familiarity and Luxury Perception

We found that Tiffany’s differed significantly form the other three brands in

terms of familiarity and luxury perception (p<0,001). This means that Tiffany &

Co. is a significantly less familiar brand and the respondents see it as a

significantly less familiar brand. So Tiffany & Co. is not an ideal brand to

include in this study.

Between the other three brands - Louis Vuitton, Chanel and Rolex - no

significant difference in familiarity and luxury perception was found. These

brands are all seen as luxury brands and people are familiar with the brands.

This can be deducted from the means (Table 3) and from the fact that these

variables were significantly negative skewed. Meaning that the answers of

respondents on the questions “I am familiar with brand X” and “Brand X is a

The two brands selected from the pre-test are Louis Vuitton and Rolex. For

the fashion brands there was no significant difference in familiarity and luxury

between the two brands. We chose to work with Louis Vuitton in this research

because this brand, opposite to Chanel, carries products for both males and

females. This will increase the external validity of the experiment. For the

watch and jewelry brands Rolex was selected. Rolex was significantly more

familiar and seen as more luxurious than Tiffany’s & Co.

The Experiment

The experiment will use four vignette treatments (Table 4) There will be two

brands, Louis Vuitton and Rolex, of two different luxury categories and for

each brand there will be two treatments concerning the shopping experience:

physical store shopping and online store shopping. This makes it a 2x2

experiment with four vignette treatments. The participants will be unaware of

the other treatments and will be allocated to a specific treatment in a

randomized manner.

Physical Store Online store

Independent Variable: Perceived Luxury Value Fashion Louis Vuitton Treatment A Treatment B Watches & Jewelry Rolex Treatment C Treatment D

After being exposed to a specific vignette treatment, participants will all have

to fill out the same list of survey questions measuring their perceived luxury

value and it’s drivers (Price value, Usability value, Uniqueness value, Quality

value, Self-.identity value, Materialistic value, Hedonic value, Conspicuous

value and Prestige value).

The shopping experience treatments will consist of a carefully constructed

description of the shopping situation, both representing a systematic

combination of characteristics. These descriptions will only vary on those

characteristics that define whether the shopping experience occurs online or

in store. How these shopping experiences were composed is discussed in the

next section.

Shopping experience

To give an accurate representation of both online and offline shopping

experiences, the shopping experience treatments will consist of a carefully

constructed description of the shopping situation, both representing a

systematic combination of characteristics found in the literature (Table 5).

These descriptions will only vary on those characteristics that define whether

the shopping experience occurs online or in store. The composed luxury

shopping experiences can be found in Appendix 2.

Physical store

luxury Online store luxury References

Personal contact

Personal contact or service. Salespeople welcome you into the store and give you ad hoc product

No personal contact. Generic welcome message, all product information available, advice and questions

Wolfinbarger & Gilly, 2001

personal advice. You might feel pressure to buy. services Anonymity. Accessibility Accessible in exclusive stores in high-end locations. Accessible from everywhere to

everyone with Internet access. “Anytime, anywhere” Wolfinbarger & Gilly, 2001 Shopping Environment Luxurious interior experienced in real-life. Luxurious web-design experienced through (small) screen

Menon & Kahn, 2000

Motives More experiential More goal-oriented Wolfinbarger & Gilly, 2001

Delivery In store, immediately

Delivered at home within a couple of days.

Table 5 : Differences off- and online luxury shopping

Data Sample

The data used for this experiment were collected with the use of the web

survey software Qualtrics. Participants were recruited through social media.

Participants were invited to complete the survey and were randomly assigned

to one of the four treatments, without being aware of the other treatments.

A total of 206 responses were collected. Of the 206 responses, 51 (24,8%)

were subject to the treatment of shopping for Louis Vuitton in a physical store;

48 (23,3%) to shopping for Rolex in a physical store; 57 (27,7%) to shopping

for Louis Vuitton online; and 50 (24,3%) respondents were subject to the

Figure 4: Distribution of Treatments

Of all respondents, 96 (46,6%) were male and 110 (53,6%) were female; 82%

of the respondents were aged between 18 and 34 years old and 75,8% had a

bachelor degree or higher. Most respondents’ country of origin was Belgium

(38,3%), the U.K. (19,4%) or the U.S. (9,7%).

A list of variables and all the questions asked in the survey can be found in

Appendix 3.

Analytical Strategy

The collected data will be analyzed in several steps. First we will check all

data for missing or errorous items. Next, the reliability of scales will be tested,

using the Cronbach’s alpha. If these scales are found reliable, the scale

means will be computed and there distribution will be analyzed. Then we will

use an ANOVA-test to check whether there are significant differences in PLV

between the different treatments. For the remaining hypotheses we will use

V. Results

The first step of the analysis was to check the data for errors and

counter-indicative items. No missing values or data errors were found. One item,

rF_Use4 was found to be counter-indicative and was recoded into the variable

F_Use4.

The next step of the analysis was to check for the reliability of the scales for

usefulness, uniqueness, quality, self-identity, materialism, hedonism,

conspicuousness and prestige. We found that Usability, Self-identity,

Materialism, Hedonism, Conspicuousness and Prestige are reliable scales.

These scales all have a Cronbach’s alpha of higher than 0,7 (Table 6) – 0,7 is

generally accepted cut-off point for the Cronbach’s α (Field, 2009). This means that the data collection of these scales through the use of the different

items (resp. F_Use1, F_Use2, F_Use3 and F_Use4; I_Self1, I_Self2, I_Self3

and I_Self4; etc.) yield consistent findings and all items in the scale have a

good correlation with the total score of the scale. The Cronbach’s α of Uniqueness and Quality, however, are below 0,7 (Table 6). For the

Uniqueness scale, the Cronbach’s α is 0,677. The corrected item-total correlation of F_Uni5 (0,293) is below 0,3, which means this is not a good

item for the scale. Therefore item F_Uni5 (“People who buy brand X products,

try to differentiate themselves from others”)was deleted from the uniqueness

scale. This leads to an increase in the Cronbach’s α for this scale to 0,683. Although this is still below the threshold value of 0,7, all items now have a corrected item-total correlation of higher than 0,3. Also, the Cronbach’s α of 0,683 is close to 0,7; so we decided to compose the uniqueness construct

with four items (F_Uni1, F_Uni2, F_Uni3 and F_Uni4). For Quality, the

Cronbach’s α is 0,069. All corrected item-total correlations are above 0,3, so we decided to keep all four items in the Quality scale.

Scale Number of _items Cronbach's _Alpha

Usability 4 0,774 Uniqueness 5 0,677 (without F_Uni5) 4 0,683 Quality 4 0,69 Self-identity 4 0,767 Materialism 3 0,725 Hedonism 5 0,872 Conspicuousness 4 0,818 Prestige 2 0,785

Table 6: Scale Reliability - Cronbach's Alpha

Third, for all scales mentioned above constructs were computed as the means

of the scale items. The third step of the analysis was to examine whether the

scale means are normally distributed. Price and UniTOT are both moderately

negative skewed with a skewness of resp. -0,652 and -0,59. The PLV is significantly negative skewed, with a skewness of -1,493. All other variables know a normal distribution. A solution for this abnormal distribution is to

bootstrap (Field, 2009). Bootstrapping is a technique that treats the data as a

population from which repeated smaller samples are taken. These samples

are used to estimate the distribution of a statistic (Field, 2009). This technique

can be used within ANOVA and the process mediation model (Hayes, 2012),

Hypothesis Testing

Fourth, we tested the first hypothesis – The total perceived luxury value of the

brand is lower when shopping online than when shopping in a physical store.

First, we analyzed the mean PLV of the different treatments. Table 7

demonstrates that the mean PLV of Louis Vuitton is higher when selling online

(76,46) than when selling in a brick-and-mortar store. For Rolex, the opposite

is true. The mean PLV of Rolex is higher when selling in a physical store

(80,2) than when selling online (78,16).

Treatment Mean PLV Std. Dev.

Louis Vuitton physical store 74,78 16,15

online store 76,46 15,68

Rolex physical store 80,20 16,29

online store 78,16 18,26

Table 7: Mean PLV per Treatment

To test whether there is a significant difference in perceived luxury value

between the different treatments, ANOVA was used. We used bootstrapping,

with 1000 samples, to get around the problem on non-normal distribution of

PLV by estimating by estimating the properties of the sampling distribution

from the sample data (Field, 2009). The ANOVA-test found that there is no

significant difference in consumers’ perceived luxury value between the

different treatments (p=0,14).

The next step of the analysis is to test the mediation model. To test the

mediation hypothesis, the SPSS Process macro by Hayes (2012) was used.

parallel with another mediator. Therefore, we will analyze both models

separately. First the serial multiple mediation of Uniqueness,

Conspicuousness and Prestige on the relationship between independent and

dependent variable will be tested. Afterwards, we will examine the relationship

between Channel and Perceived Luxury Value through mediation of

Hedonism. As control variables, we include age and gender into the mediation

models.

Serial Mediation of Uniqueness, Conspicuousness and Prestige

Hypothesis 2, 3, 4 and 5 suggest multiple mediation of Uniqueness,

Conspicuousness and Prestige on the relationship between sales channel

and Perceived Luxury Value. Hayes’ macro will estimate the total and direct

effect of Sales Channel on PLV, as well as the indirect effects of Sales

Channel on PLV through the mediation of Uniqueness, Conspicuousness and

Prestige. The macro computes 95%-confidence intervals for the direct and

indirect effects. Since the sample size of 206 respondents is relatively large, a

bootstrap sample of 1000 will suffice (Field, 2009). The results of the test of

the mediation model can be found in Table 8 and Table 9.

The direct effect of Channel on PLV is not significant (c1’ = 1,89; p = 0,33).

The Sales Channel (online or offline) is not directly related to the consumer’s

Perceived Luxury Value. The mediation analysis uncovers that the sales

channel does have a significant relationship with the perceived uniqueness

value (a1=-0,34 with p<0,05). This indicates that consumers shopping online

channel on PLV through uniqueness can be interpreted as significantly

negative because the bootstrap interval is entirely below zero (indirect effect =

-2,42; SE=1,18; CI: -4,99 to -0,21).

The second indirect effect examined is the effect of channel of PLV through

Uniqueness and Conspicuousness in serial. We found that Uniqueness is

significantly positively related to Conspicousness (a4=0,26 with p<0,001). So

selling online leads to a lower uniqueness value, which in turn leads to lower

conspicuous value. However, we did not find a significant relationship

between channel and conspicuousness (a2=0,25; p=0,15). Neither did we find

a significant relationship between Conspicuousness and PLV (b2=0,40;

p=0,66). So the indirect effect of channel on PLV through serial mediation of

Uniqueness and Conspicuousness is not significant, because the bootstrap

interval includes zero (CI: -0,33 to 0,13); and neither is the indirect effect of

channel on PLV through mediation of conspicuousness (CI: -0,36 to 1,09).

Next, we examined the effect of Prestige as a mediator. First we found that

there is no significant relationship between Channel and Prestige (a3=0,21;

p=0,26). Second, Uniqueness is positively related to Prestige (a6=0,32;

p<0,001); and so is Conspicuousness (a5=0,67; p<0,001). So if a consumer’s

perceived uniqueness value and/or his/her perceived conspicuousness value

is higher, so is his/her Prestige Value. Third, we found that Prestige is

significantly positively related to PLV (b3=2,29 with p<0,01). So a higher

Prestige value is related to a higher PLV of the brand. The indirect effect of

Channel on PLV, through serial mediation on Uniqueness and Prestige can

entirely below zero (indirect effect= -0,25; SE=0,18 and CI:-0,82 to -0,04). The

indirect effect of channel on PLV, through mediation of Uniqueness,

Conspicuousness and Prestige in serial, is significantly negative (indirect

effect=-0,14; SE=0,11; CI: -0,49 to -0,01). However, the effect of Channel on

PLV through mediation of Prestige, independent of Uniqueness value is not

significant (CI: -0,21 to 1,74); and neither is the effect of Channel on PLV

through serial mediation of Conspicuousness and Prestige, independent of

Uniqueness value (CI: -0,05 to 1,28).

Consequent Ancedent UniTOTn ConTOT coeff SE p coeff SE p Channel (X) a1 -0,3423 0,1544 0,0278 a2 0,2483 0,1719 0,1503 UniTOT (M1) - - - a4 0,2611 0,0774 0,0009 ConTOT (M2) - - - - - - PreTOT (M3) - - - - - - Constant iM1 4,6821 0,2816 0 iM2 3,1891 0,4768 0 R2= 0,0262 R2= 0,0776 F = 1,813 F= 4,2266 p = 0,146 p=0,0026 PreTOT PLV coeff SE p coeff SE p Channel (X) a3 0,2126 0,1872 0,2574 c1' 1,8905 1,938 0,3305 UniTOT (M1) a6 0,3158 0,0862 0,0003 b1 7,0573 0,9188 0 ConTOT (M2) a5 0,6672 0,0764 0 b2 0,4016 0,9267 0,6652 PreTOT (M3) - - - b3 2,2964 0,7298 0,0019 Constant iM3 -0,4367 0,571 0,4452 iY 39,0005 5,9015 0 R2= 0,3671 R2= 0,356 F = 23,2041 F = 18,3358 p < 0,001 p < 0,001

Indirect effect Effect Boot SE BootLLCI BootULCI

CH  Uni  PLV -2,4156 1,1757 -4,9943 -0,2085 CH  Uni  Con  PLV -0,0359 0,1121 -0,3304 0,1303 CH  Uni  Pre  PLV -0,2483 0,1776 -0,8152 -0,0364 CH  Uni  Con  Pre  PLV -0,1369 0,1059 -0,4921 -0,0138 CH  Con  PLV 0,0997 0,3237 -0,3554 1,0903 CH  Con  Pre  PLV 0,3804 0,314 -0,0464 1,2753 Ch  Pre  PLV 0,4882 0,4636 -0,2091 1,7354

Total -1,8683 1,4943 -4,7538 1,1112

Table 9: Indirect effects

The relationships between dependent, independent and mediation variables

can be seem in Figure 5. The full blue lines indicate a significant relationship;

the dotted red lines indicate the relationships that are found not significant.

Figure 5: Serial Mediation Model

Hedonism as mediator

Next, we separately analyzed the relationship between sales channel and

perceived luxury value through the mediation of hedonism. The output of the

model can be found in Table 10 and Table 11. We found that the relationship

between Channel and Hedonism is not significant (a=0,06; p=0,77). The

(b=3,35; p<0,001). This means that if a consumer’s hedonism value augments

by one unit, the PLV will also rise with 3,35 units. However, we found that the

indirect effect of sales channel on PLV through Hedonism is not significant

(c’= -0,18; p=0,94) because the 95% bootstrap confidence interval (CI: -1,15

to 1,58) contains zero. The direct effect of Channel on PLV is also

insignificant (c=-0,18; p=0,94). This means, as found in the previous model,

that there is no significant relationship between the independent variable,

sales channel, and the dependent variable, perceived luxury value.

Consequent Ancedent HedTOT PLV coeff SE p coeff SE p Channel (X) a 0,0597 0,2014 0,7671 c' -0,1778 2,2464 0,937 HedTOT (M) - - - b 3,3475 0,7847 0 Constant i1 3,9527 0,3673 0 i2 69,7361 5,1381 0 R2=0,0012 R2= 0,09 F =0,0817 F= 4,9692 p =0,9699 p=0,0008

Table 10: Hedonism as Mediator

Indirect effect Effect Boot SE BootLLCI BootULCI

CH  Hed  PLV 0,1999 0,6767 -1,1468 1,5833

Table 11: Indirect effect of Hedonism

Figure 6 shows the relationships between dependent, independent and

Figure 6: Mediation Model - Hedonism

Correlation matrix

Finally, we analyze the relationship of the other values not included in the

mediation model, such as Price, Usability, Quality, Self-identity, and

Materialim, to sales channel and perceived luxury value. This is done to check

whether these values are influenced by the sales channel and whether they,

in turn, influence the consumer’s PLV. This could be useful information for

future research. The correlationmatrix used for this analysis can be found in

Appendix 4. We found that sales channel does not correlate with any of the

variables Price, Usability, Quality, Self-identity or Materialism. However, all

these values do have a significant positive relationship with PLV. Meaning,

the higher the Pri, UseTOT, QuaTOT, SelfTOT, or MatTOT; the higher the

PLV will be. We also found that these variables are all significantly positively

correlated to each other.

VI. Discussion & Conclusion

On the basis of the experiment conducted in this research, it can be

concluded that shopping online decreases consumers’ perceived luxury value

We found no significant difference in the perceived luxury value for the

different treatments in the ANOVA-test. The mediation models confirmed this.

In both mediation models the direct relationship between dependent (sales

channel) and independent (PLV) were found insignificant. This means that

hypothesis 1 is rejected. Implementing an online retail channel will not have a

significant direct effect on the consumers’ perceived luxury value. So, it

seems that luxury brands are the Internet are not as incompatible as

previously thought (Okonkwo, 2009).

Nevertheless, through the mediation of uniqueness we did identify a

significant negative relationship between selling online and the consumer’s

perceived luxury value. Selling online results in a lower perceived luxury

value, because it results in a reduced uniqueness value, which in turn leads to

a lower perceived luxury value for consumers. Because no direct relationship

was found between dependent and independent, we call this full mediation

(Zhao et al, 2010; Baron & Kenny, 1986). This confirms what we found in the

literature and hypothesis 2. Luxury brand needs to make a trade-off between

accessibility and exclusiveness (Keller, 2009). When making the brand

accessible to more consumers, through selling online, the brand will be seen

as less unique or exclusive and consequently the luxury brand will be

perceived as less luxurious.

We also found that if uniqueness falls, so does the conspicuousness

consumers attach to the brand. However, this conspicuousness does not

affect the perceived luxury value. Therefore, hypothesis 3 is rejected. Prestige

conspicuousness. Furthermore, prestige is positively related to the perceived

luxury value. Meaning that, if uniqueness is reduced as a result of selling

online, so is conspicuousness and prestige and this makes the consumer’s

perceived luxury value decline. Hence, hypothesis 4 and 5 accepted. This is

in line with our expectations from the literature. According to Keller (2009) it is

imperative for luxury brands to maintain their premium image. When selling

online the brand is seen as less unique, because everyone has access to it.

When a brand is seen as less unique or exclusive the brand will be less

conspicuous and looses prestige. And this, in turn, will lead to a lower

perceived luxuriousness of the brand. This also confirms Vickers and

Renand’s view (2003) that symbolic interactionalism is an important factor in

luxury branding.

The second mediation model, with hedonic value as a mediator, is not

significant. Although hedonism is positively related to the PLV, no significant

relationship of hedonism to sale channel is found. Hence, hypothesis 6 is

rejected. Implementing an online sales channel does not influence pleasure of

buying consumers attach to the luxury brand. This is in contradiction with

Okonkwo’s belief (2009) that the Internet is unsuitable for luxury brands to

maintain the unique relationship with their customers. This research found

that consumers do not make a difference in the pleasure of buying luxury

goods between buying them in physical stores, with personal help and contact

and a luxurious interior, and buying them online, without personal contact and