Journal of Business Research

Teen attitudes toward luxury fashion brands from a social identity perspective: A cross-cultural study of French and U.S. teenagers Elodie Gentina a, ⁎, L.J. Shrum b , Tina M. Lowrey b a SKEMA Business School, Université de Lille, MERCUR Research Center, France b HEC Paris, 1 Rue de la Libération, 78351 Jouy-en-Josas, France article info abstract Article history: Received 1 August 2015 Received in revised form 1 February 2016 Accepted 1 April 2016 Available online 7 June 2016 The global teen market has significant spending power and is an important factor in the world economy. However, little is known about the social motivations underlying attitudes toward luxury fashion brands during adolescence. This research investigates the social mechanisms underlying teenage attitudes toward luxury fashion brands in a cross-cultural context. In a study of 570 French and American adolescents, this research shows that both need for uniqueness and susceptibility to influence relate positively to attitudes toward luxury brands, and that fashion innovativeness mediates these relations. This research also shows that culture moderates these relations. Specifically, the mediated relations between need for uniqueness and luxury brand attitudes are stronger for American adolescents than for French adolescents. In contrast, the mediated relations between susceptibility to influence and luxury brand attitudes are stronger for French adolescents than for American adolescents. The results have implications for strategies luxury retailers develop for appealing to adolescents in different cultures. © 2016 Elsevier Inc. All rights reserved. Keywords: Adolescence Luxury retailing Cross-cultural consumer behavior Fashion innovativeness Need for uniqueness Susceptibility to peer influence 1. Introduction Teens are a very important market, both because of their current consumer spending power and their future spending as adults. U.S. teenagers alone earn over $80 billion in income, spent over $220 billion in 2012, and spend an average of $100 per week on clothing, their biggest single expenditure (Parker, Hermans, & Schaefer, 2008). European teens generally spend less (e.g., $60 per week on clothing in France), but still represent a sizable market (Moses, 2000). These findings may explain why companies design luxury fashion specifically for teens (e.g., Louboutin high tops for $700; Burberry bags for $300–400). Despite the apparent significance of this market, attitudes toward luxury fashion brands during adolescence remains under-represented in cross-cultural consumer research. Given the emergence of a global teen market, it is important to understand adolescent attitudes toward luxury fashion brands from a cross-cultural perspective. Global teens are thought to be similar in terms of their consumption habits, in particular with respect to fashion (Kjeldgaard & Askegaard, 2006). This presumed uniformity of teens, however, may be inaccurate. Recent research suggests that adolescent consumers adapt global consumption practices and meanings to fit local contexts (Gentina, Butori, Rose, & Bakir, 2014). Although the vast majority of research on attitudes toward luxury brands among young people has focused on the U.S. (Beaudoin, Lachance, & Robitaille, 2003), research in other cultures is emerging, including Brazil (Gil, Kwon, Good, & Johnson, 2012), Australia (Phau & Leng, 2008), and China (Zhan & He, 2012). Research has described the individual and social mechanisms underlying attitudes toward luxury brands (Zhan & He, 2012) but has not explored how these mechanisms combine in a crosscultural context. Thus, much remains unknown about cultural differences in teenage attitudes toward luxury fashion brands and the motivations that underlie these differences. Insights into the motives that affect teens' attitudes toward luxury fashion brands can provide retailers with information they can use to reach this attractive segment more effectively. The research presented here evaluates two social identity mechanisms underlying teenage attitudes toward luxury fashion brands in a cross-cultural context: the individual mechanism (through the need for uniqueness) and the social mechanism (through susceptibility to peer influence). More specifically, it examines the identity processes that determine teenage attitudes toward luxury fashion brands in two cultures with distinctive historical, cultural, and social settings: the U.S. and France. To specify and clarify the social identity motives underlying attitudes toward luxury brands, we focus on clothing, an area particularly relevant to teens. Because adolescence is a crucial period in the Journal of Business Research 69 (2016) 5785–5792 ⁎ Corresponding author at: SKEMA Business School, Université de Lille, MERCUR Research Center, Avenue Will Brandt, 59777 Euralille, France. E-mail addresses: [email protected] (E. Gentina), [email protected] (L.J. Shrum), [email protected] (T.M. Lowrey). http://dx.doi.org/10.1016/j.jbusres.2016.04.175 0148-2963/© 2016 Elsevier Inc. All rights reserved. Contents lists available at ScienceDirect Journal of Business Research

identity development process, clothing symbolizes teens' connections with their ideal peer groups, as well as the singularity and subjectivity of individual tastes (Muzinich, Pecotich, & Putrevu, 2003). This research shows that cultural differences play a key role in shaping the way teenagers develop attitudes toward luxury brands. In particular, the research shows that both need for uniqueness and susceptibility to influence positively relate to attitudes toward luxury brands, and that fashion innovativeness mediates these relations. However, the research also shows that the nature of these relations differs by culture, such that the mediated relations between need for uniqueness and luxury brand attitudes are stronger for American than for French adolescents. In contrast, the mediated relations between susceptibility to influence are stronger for French than for American adolescents. These findings extend existing research on attitudes toward luxury brands during adolescence to include cultural differences, and provide guidelines for marketing strategies to appeal to teens. 2. Theoretical background and hypotheses 2.1. The development of teens' social and personal identities Forming a strong, coherent sense of identity is the primary task associated with transitioning from adolescence to adulthood (Erikson, 1968). This search for identity evolves as teens break away from parental influence. Personal identity takes the form of independent thinking and actions that develop during adolescence. Personal identity is distinct from social identity, but also related individuation balances social affiliation as teens become adults, in part by becoming independent thinkers, and in part by meshing with peer groups (Brewer, 1991). To assess how social identity plays a role in the development of fashion innovativeness and in the adoption of attitudes toward luxury brands, we focus on teens, who due to the many changes in their lives, have emerging selves that are heavily influenced by peers. We also focus on luxury fashion brands because it is intimately tied to an individual's social and personal identity (Shrum et al., 2013; Vigneron & Johnson, 2004; Wilcox, Kim, & Sen, 2009). One key feature of our model is that because some cultures focus more on interdependence and cooperation (e.g., France), whereas others focus more on independence and competition (e.g., the U.S.), susceptibility to peer influence should be greater in some cultures (the former), whereas need for uniqueness should be greater in others (the latter; Gentina et al., 2014). We expect susceptibility to peer influence to contribute more to the development of fashion innovativeness and positive attitudes toward luxury fashion brands in France, but need for uniqueness to contribute more to the development of fashion innovativeness and positive attitudes toward luxury fashion brands in the U.S. 2.2. Need for uniqueness, susceptibility to influence, and attitudes toward luxury fashion brands We use consumer need for uniqueness to operationalize the need for individuation, which refers to the tendency to use consumption to convey an individual identity that distinguishes oneself from others (Tian, Bearden, & Hunter, 2001). People high in need for uniqueness express their uniqueness publicly with observable behaviors that establish their differences (Workman & Kidd, 2000). Luxury goods accomplish this signaling objective because a luxury brand's scarcity enables people to express their uniqueness (Bian & Forsythe, 2012). The need to construct personal identity, separate from parents, is particularly important among teens, who use luxury fashion brands to establish a unique personal identity (Gil et al., 2012). Here, we are interested in the extent to which teen fashion innovativeness mediates the relation between need for uniqueness and attitudes toward luxury fashion brands. Consumer behavior literature proposes several different conceptualizations of consumer innovativeness. Im, Bayus and Mason (2003, p. 62) define consumer innovativeness as “the predisposition to buy new and different products and brands rather than remain with previous choices and consumption patterns.” Rogers (1995, p. 22) defines innovativeness as “the degree to which an individual is relatively earlier in adopting new ideas than other members of his/her social system.” According to Goldsmith and Hofacker (1991), consumer innovativeness does not reflect only buying behavior, but also the tendency to learn about and adopt innovations within specific domains of interest (Midgley & Dowling, 1978).We refer to Goldsmith and Hofacker's (1991) definition of innovativeness as domain-specific, which means that consumers tend to be innovators for a specific product or product category. Fashion is particularly important in the diffusion of innovation, and the frequent introduction of new styles makes the fashion market a highly desirable area for diffusion studies focusing on innovativeness (Goldsmith, D'Hauteville, & Flynn, 1998; Jordaan & Simpson, 2006). Given the evidence that innovativeness is domain-specific, we focus on fashion as the domain of interest for this study. Because adolescence is a time when individuals are particularly concerned with their appearance (they need to incorporate the changes that their bodies undergo into their self-views; Piacentini, 2010), this research examines innovativeness in the context of fashion. Research indicates that innovators have certain important characteristics. For example, innovators score higher on need for uniqueness than do imitators (Workman & Kidd, 2000). People with high need for uniqueness are predisposed to initiate new behaviors that are different from the norms of the group, and are more likely to adopt new products. Thus, we expect the willingness to publicly individuate oneself to be a critical trait of innovativeness during adolescence. By innovating, teens with high need for uniqueness signal a sense of their personal identity and are more likely to be admired. Innovative teens may place more importance on luxury brands which are perceived as rarer than non-luxury brands (Vigneron & Johnson, 2004). Thus, they should be more likely to develop positive attitudes toward luxury fashion brands. Thus, the study here predicts and tests H1. H1. Fashion innovativeness mediates the relation between need for uniqueness and attitudes toward luxury fashion brands. Although teens seek to individuate, they are also motivated to comply with the expectations of their friends by behaving in ways that allow them to balance their needs for individuation and their needs for social affiliation (Gentina, Butori, & Heath, 2013). Susceptibility to influence has two dimensions: susceptibility to informative influence and susceptibility to normative influence. Susceptibility to informative influence is the tendency to observe peers and seek information from them (Bearden, Netemeyer, & Teel, 1989). In order to be credible, innovators must gain a certain level of expertise in their field of influence. Thus, they need to actively search for information (Clark & Goldsmith, 2006). Fashion innovators are high on information-seeking of developments in fashion apparel (Muzinich et al., 2003). Information can be gathered from different sources, but during adolescence, peers constitute an important influence, increasing with age as parental influence fades (Gentina et al., 2013). Because friends provide moral support for consumption decisions, a primary motivation of consumption with friends is the need for assistance. Friends also help reduce perceptions of risk and uncertainty by providing information that helps teens make wiser purchase decisions. Thus, we predict that teen fashion innovators are more likely to seek information from their friends, which in turn encourages them to develop positive attitudes toward luxury fashion brands in order to express their levels of expertise and credibility. Thus, the study here predicts and tests H2a. H2a. Fashion innovativeness mediates the relation between susceptibility to informative influence and attitudes toward luxury fashion brands. Another type of influence is normative influence, which is the desire to conform to the expectations of others (Bearden et al., 1989). This tendency is contrary to the nature of consumer innovativeness, which is 5786 E. Gentina et al. / Journal of Business Research 69 (2016) 5785–5792

the extent to which decision making is independent (Midgley & Dowling, 1978), and studies have found a negative relation between susceptibility to normative influence and consumer innovativeness (Clark & Goldsmith, 2006). However, these studies focus on adults, not teens. Because teens depend on peers, we expect a positive relation between susceptibility to normative influence and fashion innovativeness. Endorsing norms and values of friends helps teens develop strong social identities. Thus, high susceptibility to normative influence contributes to the development of desirable identities, enabling teens to be confident about publicly expressing their fashion innovativeness. Consistent with this reasoning, recent research shows positive relations between the need for social belonging, susceptibility to normative influence, and opinion leadership during adolescence (Gentina et al., 2013; Xie & Singh, 2007). In other words, it is difficult for teenagers to be opinion leaders if their opinions derive from the opinions of others, and if they do not have a central strategic position within the peer group. Therefore, it is reasonable to expect a positive relationship between the susceptibility to normative influence and fashion innovativeness during adolescence. Consequently, innovator teens may place more importance on brands that signal high status to their peer group and develop positive attitudes toward luxury fashion brands to achieve recognition from others. Thus, the study here predicts and tests H2b. H2b. Fashion innovativeness mediates the relation between susceptibility to normative influence and attitudes toward luxury fashion brands. 2.3. Cross-cultural differences underlying attitudes toward luxury fashion brands Although identity formation is a universal psychological need that characterizes adolescence, the way identities are shaped varies across cultures (Kim, Yang, & Lee, 2009). Socialization is an inherently cultural process. Parental socialization practices contribute decisively to the formation of teens' personal and social identities. Cultures, as well as parents, differ dramatically in whether they emphasize group identification versus individual assertiveness (Rose, 1999). For example, American parents emphasize individual initiative and autonomy, which may strengthen teens' need for uniqueness. In contrast, French parents are protective and seek to maintain a dependent adult–child relationship. Americans are more likely to be motivated by their own preferences, needs, and rights, give priority to their personal goals, and emphasize their uniqueness, whereas the French promote interdependent selves and encourage close relationships (Gentina et al., 2014). Because of these differences, France and the U.S. provide a useful context for exploring cultural differences in social mechanisms underlying attitudes toward luxury fashion brands. Consumer innovativeness involves initiating new behaviors, independently of others (Goldsmith & Hofacker, 1991). Consumer innovativeness is higher in individualistic cultures than in collectivistic cultures (Midgley & Dowling, 1978; Steenkamp, Ter Hofstede, & Wedel, 1999). People from individualistic cultures have more positive attitudes toward brands that set them apart as individuals, whereas people from collectivistic cultures have more positive attitudes toward brands that demonstrate their connection to others (Aaker & Schmitt, 2001). Thus, the study includes and tests H3. H3. Culture moderates the strength of the indirect relation by which need for uniqueness impacts attitudes toward luxury fashion brands through fashion innovativeness, such that the mediated relation is stronger for U.S teens than for French teens. The manner in which consumers consider others' view of themselves is influenced by consumers' cultural characteristics. For example, people from more collectivistic cultures are more likely to be susceptible to normative influence than those from individualistic cultures (Lee & Kacen, 2008), and thus use luxury brands in order to be more socially acceptable to others (Yim, Sauer, Williams, Lee, & Macrury, 2014). Because France is a more interdependent culture, French teens should see themselves as integral parts of collectives, such as family and friends (Hofstede, 2001). French teens are more likely to feel pressure to conform and to seek information from their friends than are their U.S. counterparts (Gentina et al., 2014). Thus, the study predicts and tests H4a and H4b. H4a. Culture moderates the strength of the indirect relation by which susceptibility to informative influence impacts attitudes toward luxury fashion brands through fashion innovativeness, such that the mediated relation is stronger for French teens than for U.S. teens. H4b. Culture moderates the strength of the indirect relation by which susceptibility to normative influence impacts attitudes toward luxury fashion brands through fashion innovativeness, such that the mediated relation is stronger for French teens than for U.S. teens. 3. Method A total of 297 French and 273 U.S. teens participated in the study. The survey was administered in participants' native language during school hours by a research assistant working in cooperation with school authorities. Sampling equivalence was achieved by holding age and sex constant across samples. The mean age was 14.7 years for French and 14.5 for U.S. teens (range 14–17 years). The French and U.S. samples had 51.8% and 50.9% teenage girls, respectively. There were no significant differences in gender (χ2 (1) = 0.03, p = 0.87) or age (t = 1.87, p = 0.16) across cultures, indicating sampling equivalence. Sampling occurred in two phases. The first phase validated the measurement scales, and the second phase provided the sample for testing the proposed model. The first sample consisted of 160 teens (90 from France, 70 from the U.S). The second sample consisted of 410 teens (207 from France, 203 from the U.S.). Bearden et al.'s (1989) 12-item scale was used to measure susceptibility to interpersonal influence from friends. Need for uniqueness was measured using the avoidance of similarity dimension of the Tian et al.'s (2001) need for uniqueness scale. This scale dimension measures people's tendency to avoid buying and consuming commonly used brands in order to preserve their differentiation. Attitudes toward luxury brands were measured with Dubois and Laurent's (1994) scale. Finally, the domain-specific Goldsmith and Hofacker (1991) scale was used to measure fashion innovativeness. Researchers translated the original English survey questionnaires to French, using translation and backtranslation procedures to ensure the idiomatic equivalence. Structural equation modeling (AMOS) was used to test both the measurement and structural models. Conditional indirect effects (moderated mediation effects) were incorporated to explicate how culture moderates the strength of the indirect relation between the three predictor variables (need for uniqueness, susceptibility to normative influence, and susceptibility to informative influence) and attitudes toward luxury brands through fashion innovativeness. To test both the predicted mediation and the moderated mediation relations, we used Preacher, Rucker, and Hayes's (2007) procedure (model 8 [3]) and computed bias-corrected bootstrap confidence intervals. Using Hayes (2013) SPSS macro, we computed regression equations and estimated the mediator and moderator variable models, using culture (France vs. U.S.) as the moderator and fashion innovativeness as the mediator, enabling us to estimate conditional indirect effects by bootstrapping methods. 4. Results 4.1. Construct validity of measurement First, we conducted exploratory factor analyses on all indicators for the concepts for each group (French teens = 90, U.S. teens = 70). E. Gentina et al. / Journal of Business Research 69 (2016) 5785–5792 5787

Five factors emerged. The first factor explained 35.60% of the variance (which was significantly less than 50%). The remaining four factors accounted for 12.87%, 7.68%, 7.61%, and 7.28% of the variance, respectively, for both samples. The Cronbach's alpha coefficients of the scales ranged from 0.80 to 0.88. Next, we ran a standard multi-group confirmatory factor analytic model (model 1) simultaneously across the two samples (French teens = 207; U.S. teens = 203). We used the following criteria to assess fit indicators (Vandenberg & Lance, 2000): 1) Chi-square and degrees of freedom (χ2 /df b 5); 2) Goodness of Fit Index (GFI N 0.90); 3) Tucker– Table 1 Results of the four-factor CFA model (Study 2, n2-French = 207). Discriminant validity Construct Item Completely standardized factor loading t Reliability (Jöreskog rhô) Convergent validity (Rhô VC) SNI SII NFU Attitude toward luxury fashion brands Fashion innovativeness Fashion innovativeness y1 0.78 a 0.88 0.56 X y2 0.77 13.45 y3 0.70 13.82 y4 0.83 13.82 y5 0.73 13.86 y6 0.69 14.69 Attitude toward luxury fashion brands y7 0.76 a 0.81 0.52 X 0.51b (0.72)c y8 0.81 11.35 y9 0.51 5.68 y10 0.79 11.16 NFU x1 0.79 a 0.84 0.64 X 0.01 (0.10) 0.03 x2 0.76 10.85 (0.19) x3 0.85 11.47 SII x4 0.84 a 0.85 0.59 X 0.00 (−0.07) 0.14 (0.38) 0.20 x5 0.69 12.70 (0.45) x6 0.66 10.27 x7 0.87 14.62 SNI x8 0.68 a 0.84 0.58 X 0.33 (0.58) 0.03 (−0.19) 0.29 (0.54) 0.16 x9 0.76 9.67 (0.41) x10 0.75 9.48 x11 0.85 10.42 Goodness-of-fit indices for confirmatory factor analysis Χ2 (ddl) GFI NFI RMSEA CFI TLI SRMR χ2 /ddl 627.97 (98) 0.90 0.90 0.04 0.94 0.93 0.05 1.74 Results of the four-factor CFA model (Study 2, n2-American = 203) Discriminant validity Construct Item Completely standardized factor loading t Reliability (Jöreskog rhô) Convergent validity (Rhô VC) SNI SII NFU Attitude toward luxury fashion brands Fashion innovativeness Fashion innovativeness y1 0.84 a 0.91 0.63 X y2 0.87 15.98 y3 0.55 8.44 y4 0.88 16.27 y5 0.80 14.06 y6 0.81 14.31 Attitude toward luxury fashion brands y7 0.82 a 0.86 0.62 X 0.49b (0.70)c y8 0.86 13.85 y9 0.80 13.85 y10 0.67 12.62 NFU x1 0.64 a 0.87 0.70 X 0.32 (0.57) 0.37 x2 0.92 10.70 (0.62) x3 0.92 10.71 SII x4 0.85 a 0.83 0.56 X 0.01 (0.14) 0.02 (0.16) 0.05 x5 0.81 13.58 (0.23) x6 0.65 12.84 x7 0.69 11.62 SNI x8 0.53 a 0.82 0.57 X 0.21 (0.46) 0.03 (0.07) 0.00 (0.28) 0.02 x9 0.82 7.56 (0.17) x10 0.78 7.42 x11 0.85 7.68 Goodness-of-fit indices for confirmatory factor analysis Χ2 (ddl) GFI NFI RMSEA CFI TLI SRMR χ2 /ddl 627.97 (98) 0.90 0.90 0.04 0.94 0.93 0.05 1.74 Note. SNI = susceptibility to normative influence; SII = susceptibility to informative influence. a Used to provide the scale for the related construct. b Shared variance among trait factors. c Correlations among trait factors. 5788 E. Gentina et al. / Journal of Business Research 69 (2016) 5785–5792

Lewis Index (TLI N 0.90); 4) comparative fit index (CFI N 0.90); 5) root mean square error of approximation (RMSEA b 0.10); 6) Standardized RMR (SRMR b 0.10); and 7) Normed Fit Index (NFI N 0.90). The fivefactor model fit the data reasonably well (χ2 = 627.97, df = 359, p b 0.0001, RMSEA = 0.04, GFI = 0.90, CFI = 0.94, TLI = 0.93; NFI = 0.90; SRMR = 0.05; adjusted χ2 = 1.74). The composite reliability (Jöreskog rhô) exceeded 0.81, and convergent validity (rhôvc greater than 0.50) received support. To assess discriminant validity, we verified that each latent construct extracted more variance from its indicators (ρvc) than it shared with all other constructs (Fornell & Larcker, 1981). Table 1 presents the results of the confirmatory factor analyses of the four scales for both French and U.S. samples. Finally, we, set all the factor loadings to be the same across cultures (model 2) in a constrained multi-group analysis (χ2 = 682.25, df = 374, p b 0.0001, RMSEA = 0.04, GFI = 0.89, CFI = 0.94, TLI = 0.93; NFI = 0.89; SRMR = 0.06; adjusted χ2 = 1.82). We obtain non-significant differences between models 1 and 2 (ΔCFI/ΔRMSEA b 0.01), indicating metric invariance for all scales across culture. 4.2. Hypotheses testing 4.2.1. General model (H1, H2a, H2b) We tested the baseline model in Fig. 1 on the total sample of 410 French and U.S. teens using maximum likelihood estimation and the observed covariance matrix. This model assesses the expected structural relationships for the total sample, with no moderator. The conceptual model also fit the data reasonably well (χ2 = 409.25, df = 181, p b 0.0001; RMSEA = 0.06; GFI = 0.91; CFI = 0.95; TLI = 0.95; NFI = 0.92; SRMR = 0.05; adjusted χ2 = 2.26). As expected, susceptibility to normative influence related significantly and positively to attitudes toward luxury fashion brands (γ1 = 0.26, p b 0.001). In addition, the direct relation between susceptibility to normative influence and attitudes toward luxury brands (γ1 = 0.26) was stronger than the indirect path through fashion innovativeness (β1 × β4 = 0.31 × 0.47 = 0.15). Thus, the indirect effect represents 36% (0.15/0.40) of the total effect (Preacher et al., 2007). To estimate the standard error of the fashion innovativeness mediator in the relation between SNI and attitudes toward luxury brands, we computed bias-corrected bootstrap confidence intervals (Preacher et al., 2007). The indirect effect was significant, and the 95% confidence interval did not include zero (lower bound = 0.05; upper bound = 0.23, p b 0.001), which indicates that fashion innovativeness is a partial mediator of the relation between susceptibility to normative influence and attitudes toward luxury brands, supporting H2b. Our data revealed insignificant direct relations between both need for uniqueness and susceptibility to informative influence, and attitudes toward luxury fashion brands (γ2 = 0.12, p = 0.06 for need for uniqueness; γ3 = 0.03, p = 0.53 for susceptibility to informative influence). Bootstrapping results indicated that the 95% confidence interval around the indirect effects did not contain 0 for the mediated relations between need for uniqueness, fashion innovativeness, and attitudes toward luxury brands (β2 × β4 = 0.61 × 0.47 = 0.29 [0.21; 0.40]), and between susceptibility to informative influence, fashion innovativeness, and attitudes toward luxury brands (β3 × β4 = 0.25 × 0.47 = 0.12 [0.05; 0.09]), supporting H1 and H2a. The results indicate full mediation. 4.2.2. Test of moderated mediation (H3, H4a, H4b) We tested H3, H4a, and H4b using moderated mediation models in which culture moderated indirect effects (Preacher et al., 2007). A bootstrap analysis with 5000 resamples showed significant conditional indirect effects of need for uniqueness (95% bias corrected, confidence interval [0.41; 0.66]), susceptibility to normative influence (95% bias corrected, confidence interval [−0.23; −0.11]), and susceptibility to informative influence (95% bias corrected, confidence interval [0.12; 0.28]) on attitudes toward luxury brands. Table 2 shows the results of these analyses. As predicted, need for uniqueness related positively to attitudes toward luxury fashion brands through fashion innovativeness, and this relation was stronger for U.S. teens (effect = 0.62; [0.50; 0.72]) than for French teens (effect = 0.09; [0.10; 0.18]). The interactions indicate that culture moderated both parts of the model: need for uniqueness X culture → innovativeness (b = 0.97, t = 11.59, p b 0.001) and need for uniqueness X culture → attitudes toward luxury brands (b = −0.20, t = −2.10, p b 0.05), supporting H3. The indirect effects of susceptibility to normative influence and susceptibility to informative influence on attitudes toward luxury brands via fashion innovativeness differed depending on culture, supporting H4a and H4b. Both normative influence and informative influence related significantly and positively to attitudes toward luxury brands, through fashion innovativeness, and these effects were significant for French, but not for U.S. teens (U.S., normative influence [−0.05; 0.12]; informative influence [−0.01; 0.20]); French, normative influence [0.08; 0.22]; informative influence [0.03; 0.15]). The interactions indicate that culture moderated only the first part of the model: informative influence/normative influence X culture → innovativeness (p b 0.05), but not the second part: informative influence/normative influence X culture → attitudes toward luxury brands (p N 0.05), supporting H4a and H4b. Table 3 summarizes the results of the hypothesis tests. 5. Discussion 5.1. Theoretical implications Although the topic of fashion innovativeness is important to consumer researchers, little empirical research has addressed fashion innovativeness during adolescence. Research on adolescent consumers is important because they are different from consumers in other age groups, both in the value they attach to their peer groups (assimilation) Fig. 1. Hypothesized mediated model and moderated mediation model. and their need to emerge as unique individuals (individuation). The E. Gentina et al. / Journal of Business Research 69 (2016) 5785–5792 5789

findings presented here highlight that susceptibility to others' opinions is critical for teen fashion innovators, who apparently need to cultivate credibility by exerting their influence. Indeed, our findings show a positive relation between susceptibility to both normative and informational influence and fashion innovativeness, which is contrary to extant research with adults (cf. Clark & Goldsmith, 2006; Midgley & Dowling, 1978). These findings suggest that adolescents have a strong need to affiliate to others, to seek information from their peer group, to comply with the expectations of their friends, and to consistently demonstrate preferences that distinguish them from other groups (Gentina et al., 2013). Thus, adolescent fashion innovators exhibit both a need for assimilation typical of adolescent years and a tendency to deviate from norms. By behaving and dressing in accordance with personal standards, adolescents demonstrate the robustness of their personal identities, which increases the likelihood that others admire them (Gentina et al., 2013). Such assimilation interacts with the more commonly assumed individuation to empower consumer influence, which then predicts attitude toward luxury fashion brands. Marketing research on luxury brands has focused on individual processes (Dubois & Paternault, 1995), often ignoring social influence processes. For instance, the luxury market relies on the scarcity principle, which postulates that brand desirability decreases as the brand becomes more popular, because prestige is attributable to ownership exclusivity. Research suggests that need for uniqueness is a key variable for this principle, at least for western adult consumers (Drolet, 2002; Dubois & Paternault, 1995; Vigneron & Johnson, 2004). However, more research should investigate the degree to which assimilation (susceptibility to peer influence) and individuation (need for uniqueness) motives exist across different cultural contexts (Zhan & He, 2012), as well as how they combine to drive fashion innovativeness during adolescence. The research presented here adopts an integrative perspective and examines cultural differences in how two variables associated with Table 2 Results of mediation and moderated mediation analyses. W (Culture) Mediator (M) (Fashion innovativeness) Dependent variable (Y) (Attitude toward luxury brands) Bt Bt UNIQUENESS (X) × Culture (W) 0.97 11.58** −0.20 −2.09* SNI (X) × Culture (W) −0.25 −2.24* 0.02 0.29 SII (X) × Culture (W) −0.25 −2.50* 0.03 0.42 Indirect conditional effect depending on national culture: need for uniqueness → innovativeness → attitude toward luxury brands (H3) Culture Effect Confidence interval Low level Upper level France 0.09 0.09 0.18 U.S. 0.61 0.49 0.72 Moderated mediation index 0.52 0.40 0.65 Indirect conditional effect depending on national culture: susceptibility to normative influence → innovativeness → attitude toward luxury brands (H4a) Culture Effect Confidence interval Low level Upper level France 0.14 0.08 0.21 U.S. 0.03 −0.04 0.11 Moderated mediation index −0.11 −0.22 −0.10 Indirect conditional effect depending on national culture: susceptibility to informational influence → innovativeness → attitude toward luxury brands (H4b) Culture Effect Confidence interval Low level Upper level France 0.12 0.02 0.15 U.S. 0.09 −0.01 0.19 Moderated mediation index 0.17 0.11 0.23 * p inferior to 0.05. ** p inferior to 0.01. Table 3 Hypotheses test results. Research hypotheses Mediator Results H1: Fashion innovativeness mediates the relation between need for uniqueness and attitudes toward luxury fashion brands Full mediation Supported H2a: Fashion innovativeness mediates the relation between susceptibility to informational influence and attitudes toward luxury fashion brands Full mediation Supported H2b: Fashion innovativeness mediates the relation between susceptibility to normative influence and attitudes toward luxury fashion brands Partial mediation Supported H3: Culture moderates the strength of the indirect relation by which need for uniqueness impacts attitudes toward luxury fashion brands through fashion innovativeness, such that the mediated relation is stronger among U.S teens than among French teens Moderated mediation Supported H4a: Culture moderates the strength of the indirect relation by which SII impacts attitudes toward luxury fashion brands through fashion innovativeness, such that the mediated relation is stronger among French teens than among U.S. teens Moderated mediation Supported H4b: Culture moderates the strength of the indirect relation by which susceptibility to normative influence impacts attitudes toward luxury fashion brands through fashion innovativeness, such that the mediated relation is stronger among French teens than among U.S. teens Moderated mediation Supported 5790 E. Gentina et al. / Journal of Business Research 69 (2016) 5785–5792

the needs for assimilation and individuation—susceptibility to peer influence and need for uniqueness—influence attitudes toward fashion luxury brands through fashion innovativeness during adolescence. Individuation affects teen fashion innovativeness in a more individualistic country (U.S.), whereas social affiliation affects teen fashion innovativeness in a more interdependent country (France), which in turn leads to more positive attitudes toward luxury brands. To conclude, our finding of a moderated mediation effect of culture shows that fashion innovativeness is an identity process that is enacted at the individual level as well as at a cultural level. 5.2. Practical implications Questions about how positive attitudes toward luxury fashion brands develop in adolescence are important to both consumer researchers and fashion retailers. Fashion retailers should take into account the fact that the development of attitudes toward luxury brands can arise from very different personal and social profiles, depending on culture. For example, French luxury retailers can convey feelings of social acceptance and deliver a social experience by offering more spacious changing rooms with effects that generate an enjoyable, fun experience with the brand. In contrast, in the U.S., retailers should make efforts to satisfy teens' need for uniqueness, such as emphasizing exclusivity. The present research also suggests that marketers hoping to leverage a two-stage communication model that begins by influencing teen fashion innovators should carefully consider how fashion innovator profiles differ across cultures and tailor their messages accordingly. French fashion innovators, for example, should respond more favorably to messages that depict social ties and the sharing influence, whereas U.S. innovators should respond more favorably to messages that depict differentiation from others. Therefore, luxury brands in France should highlight the social meanings of their products and communicate how their products can contribute to connect teens with desirable peer groups. In contrast, luxury brands in the U.S. should communicate self-expression and uniqueness by showing how luxury products contribute to constructing a distinctive image, or by incorporating customization into product design so that teen consumers develop their individuality. 5.3. Limitations and future research This research focused on a limited set of variables related to social influence and distinctiveness. Other personality characteristics such as self-identity value (Wiedmann, Hennigs, & Siebels, 2009), conspicuousness value (Gil et al., 2012), and independent vs. interdependent self-construal (Alvandi, Fazli, & Najafi, 2013) may provide additional information on the constructs underlying fashion innovativeness and luxury brand attitudes. The present research also focused on luxury brand attitudes; additional research may include purchase intentions (Zhan & He, 2012). This research also focused only on fashion and a single product (clothing). Although clothing is particularly relevant to the study of teenagers because of the value teens attach to appearance, additional research should assess other product categories to improve the generalizability of the findings. Finally, this research focused on two specific cultures, France and the U.S., both Western countries. 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Staging luxury experiences for understanding sustainable fashion consumption: A balance theory application Jinghe Han c , Yuri Seo b , Eunju Ko a, ⁎ a Fashion Marketing, Department of Clothing & Textiles, Yonsei University, 50 Yonsei-ro, Seodaemoon-gu, Seoul 120749, Republic of Korea b Department of Marketing, Business School, The University of Auckland, Owen G Glenn Building, 12 Grafton Road, Auckland, Private Bag 92019, Auckland 1142, New Zealand c Department of Clothing & Textiles, Yonsei University, 50 Yonsei-ro, Seodaemoon-gu, Seoul, Republic of Korea article info abstract Article history: Received 1 August 2016 Received in revised form 1 October 2016 Accepted 1 October 2016 Available online 24 December 2016 Increasingly, sustainable fashion products consumption (SFPC) receives attention from both academic scholars and practitioners. While fashion consumers profess concerns about sustainability issues, the extant literature demonstrates a gap between such concerns and actual consumption decisions and behaviors. This study illustrates how marketers can encourage contemporary consumers to become strongly oriented toward sustainable fashion product consumption (SFPC). Heider's balance theory and consumer luxury brand experiences explain and reveal how a state of psychological imbalance causes the attitude–behavior gap between sustainable fashion and SFPC behaviors. This report includes new propositions explaining SFPC that receive support via focus group interviews and direct observations and post-behavior interviews of staged shopping trips— each participant was given money (approx. USD $180) to spend in the two eco-fashion stores. Developing and staging memorable consumer-centered experiences that orient consumers toward SFPC encourages the consumers achieving desired balance states. © 2016 Published by Elsevier Inc. Keywords: Balance theory Eco-fashion Luxury experiences Sustainable fashion 1. Introduction For decades, fashion companies have been criticized for unsustainable conduct that negatively impacts environmental quality and human well-being by producing high levels of carbon emissions, poor labor conditions, excessive waste, and chemical usage (Luz, 2007). To address these concerns, some fashion companies are developing sustainable products and business practices (Jang, Ko, Chun, & Lee, 2012), a sustainable or eco-fashion movement (Gwilt & Rissanen, 2011). Sustainable fashion lacks a single definition; however, the concept broadly refers to a range of corporate undertakings to “correct a variety of perceived wrongs in the fashion industry including animal cruelty, environmental damage, and worker exploitation” (Lundblad & Davies, 2015, p. 149). Sustainable fashion's major challenge remains that “fashion customers are hungry for goods…Low prices, good design, good quality fashion clothing items, coupled with an exciting shopping leisure experience on the cheap, mean an increase in purchases, which is difficult to reconcile with the idea of looming environmental Armageddon” (Gwilt & Rissanen, 2011, p.21). Although fashion consumers profess sustainability concerns, their actual consumption behaviors poorly reflect such responsibility (Chan & Wong, 2012; Joy, Sherry, Venkatesh, Wang, & Chan, 2012; McNeill & Moore, 2015). Consequently, this study offers a novel perspective to show how marketers might educate contemporary consumers to become more strongly oriented toward sustainable fashion products consumption (SFPC). Specifically, informed by recent applications of Heider's balance theory (e.g., Hsu, Dehuang, & Woodside, 2009; Martin & Woodside, 2011) and luxury brand experiences in marketing (Atwal & Williams, 2009; Pine & Gilmore, 1998), a participatory action investigation (Ozanne & Saatcioglu, 2008) investigates young fashion consumers in South Korea regarding their SFPC attitudes and practices. Results support the proposition that consumers are in constant state of psychological imbalance, an attitude–behavior gap, between their sustainability concerns and their own SFPC. Developing and staging memorable consumer-centered experiences allows marketers to encourage more positive SFPC orientations and help achieve a balanced state (Pine & Gilmore, 1998). This study makes three major contributions relevant to sustainable fashion products. First, this study applies Heider's (1958) balance theory to explain the gap between consumers' ethical attitudes and purchasing behaviors. Second, the results help to develop a novel perspective to reduce the imbalance by staging memorable experiences. Third, this study reports an emic (i.e., first-person) perspective on how fashion consumers may interpret the staged fashion experiences and how they experience immediate and long-term impacts on their SFPC engagement. Journal of Business Research 74 (2017) 162–167 ⁎ Corresponding author. E-mail addresses: [email protected] (J. Han), [email protected] (Y. Seo), [email protected] (E. Ko). http://dx.doi.org/10.1016/j.jbusres.2016.10.029 0148-2963/© 2016 Published by Elsevier Inc. Contents lists available at ScienceDirect Journal of Business Research

2. Conceptual background 2.1. Sustainable fashion paradox Increasingly, academics and practitioners are turning attention to ethics, environmental concerns, and sustainability issues relating to affordable, trend-sensitive, and fast-fashion (Chan & Wong, 2012; Joy et al., 2012; Sun, Kim, & Kim, 2014). They strive to determine how fashion consumers form evaluative judgments and make purchasing decisions about products positioned as eco-friendly or sustainable. On one hand, strong evidence suggests a growing consumer concern about sustainability issues (Kim et al., 2015; Maloney et al., 2014). For instance, a 2014 Nielsen survey of 30,000 people in 60 countries reveals that 55% are “willing to pay more for products and services provided from companies that are committed to positive social and environmental impact” (Johnstone & Tan, 2015). Further, evidence suggests growing consumer awareness that “individual consumption fosters organizational production, creating an ongoing cycle of appetite, simultaneously voracious and insatiable” (Joy et al., 2012, p. 277). Recognizing these trends, the sustainable fashion industry seeks to convert fashion consumers' positive environmental concerns into actual purchases. Recent reports indicate that consumers appear reluctant to adopt sustainable fashion. Many consumers demonstrate inconsistent prosustainability attitudes and SFPC behaviors. McKinsey and Company's 2014 global fashion market study finds that fashion consumers are becoming more environmentally conscious, but surprisingly few of these consumers are willing to pay more for eco-friendly products (Keller, Magnus, Saskia, Nava, & Tochtermann, 2014). Thus consumers sometimes fail to “walk their talk” (Carrington, Neville, & Whitwell, 2010; Chan & Wong, 2012; Johnstone & Tan, 2015; McNeill & Moore, 2015), creating a “sustainable fashion paradox.” In other words, consumers share sustainability concerns and expect fashion companies to show social commitment; however, they do not exhibit SFPC behaviors themselves. Sustainable fashion scholarship postulates various explanations for this consumption paradox. One research stream argues that product-related (e.g., product design and quality) and store-related (e.g., store design, environment, and convenience) attributes affect SFPC adoption (Chan & Wong, 2012). Results imply that fashion consumers perceive sustainable products as inferior to fast-fashion in terms of product and store attributes (Kim et al., 2014). As a result, consumers are reluctant to engage in SFPC. Other research suggests that fashion's very nature is to display consumer identity (Thompson & Haytko, 1997) and fulfill the “insatiable demand for newness” (Barnes & Lea-Greenwood, 2006, p. 269). These intrinsic drives to be “fashionable” outweigh needs to be socially responsible (McNeill & Moore, 2015). Finally, young consumers may perceive sustainability and fashion as two separate constructs within their cognitive schemas (Kong et al., 2016). They may support sustainability, but consumers categorically separate this value from their purchases of fashion products (Joy et al., 2012). Despite the various explanations regarding attitude–behavior discrepancy in SFPC, a compelling theoretical underpinning is lacking. Nevertheless, the emerging research concedes that fashion consumers are aware of sustainability issues, but they experience various sociological, perceptual, and motivational barriers that prevent them from participating in SFPC. Therefore, both practitioners and researchers need a deeper understanding of the consumer-centric processes and mechanisms for overcoming barriers. 2.2. Sustainable fashion paradox and Heider's balance theory Heider's (1958) balance theory postulates that individuals generally seek to maintain internal harmony and order among their attitudes, values, and behaviors (Dalakas & Levin, 2005; Levin, Davis, & Levin, 1996; Woodside, 2004; Woodside, Cruickshank, & Dehuang, 2007). Accordingly, if elements are imbalanced, consumers are likely to change their attitudes and/or behaviors to appropriately restore the equilibrium. Indeed, statements such as “my friends' enemies are my enemies” and “my enemies' enemies are my friends” illustrate balance theory's key premise (Dalakas and Levin, 2005, p. 91). More specifically, Heider (1958) (cited in Woodside, 2004) explains that individuals perceive separate entities (e.g., persons, activities, or objects) as having unit and sentiment relationships. Unit relationship occurs if a perception that two entities belong together exists. Entities with positive or negative associations have a sentiment relationship. If entities have a balanced state: the relations among the entities fit together harmoniously; there is no stress toward change. A basic assumption is that sentiment relations and unit relations tend toward a balanced state. This means that sentiments are not entirely independent of the perceptions of unit connections between entities and that the latter, in turn, are not entirely independent of sentiments. Sentiments and unit relations are mutually interdependent. It also means that if a balanced state does not exist, then forces toward this state will arise. If a change is not possible, the state of imbalance will produce tension (Heider, 1958, p. 201). Furthermore, units are grounded in cognition and sentiments are grounded in affection, representing independent theoretical constructs (Woodside, 2004). When imbalance occurs, individuals try to eliminate the tension and resolve their psychological state of imbalance by changing their beliefs, attitudes, and behaviors (Martin, 2010; Woodside & Chebat, 2001). Heider's theory helps to understand the sustainable fashion paradox and SFPC behaviors. Specifically, fashion consumers are the individuals of interest. The two separate entities are their general attitudes toward sustainability issues (entity 1) and SFPC (entity 2). Informed by previous studies (Joy et al., 2012, is a notable exception), these two entities form a unit relationship. Fashion consumers perceive that sustainability issues and eco-fashion consumption belong together (Chan & Wong, 2012; McNeill & Moore, 2015). Moreover, the two units display conflicting sentiments. Specifically, fashion consumers have positive sentiments toward entity 1 as evident from previous research documenting growing sustainability issue concerns (e.g., Joy et al., 2012; Keller et al., 2014). However, fashion consumers simultaneously have negative sentiments toward entity 2 due to their lack of engagement in SFPC behaviors (Chan & Wong, 2012; McNeill & Moore, 2015). Thus, the sustainable fashion consumption paradox reflects a state of psychological imbalance for fashion consumers. Proposition 1: Sustainable fashion's attitude–behavior gap is a state of psychological imbalance. Assuming the sustainable fashion paradox is a state of psychological imbalance, how should marketers to resolve this paradox? Heider (1958) suggests that consumers choose from three distinct paths to restore balance. The first alternative is developing negative sentiments toward sustainability issues. When consumers perceive sustainability and SFPC as representing the unit, and they both are unfavorable entities, sentiments are no longer in conflict. In the second scenario, the unit relationship between sustainability and SFPC is broken (Joy et al., 2012). Although the sentiments for both entities are in conflict, they are separate, avoiding imbalance. Third, developing a more positive orientation toward SFPC and maintaining the unit relationship between SFPC and sustainability achieves balance. In this last scenario, both the unit and sentiment relationships fit together positively and harmoniously, reducing or eliminating stress relating change. Among the three options, marketers should work toward the third alternative. Reminding fashion consumers that sustainability and SFPC behaviors are interconnected leads to the best outcome. Proposition 2: To resolve the sustainability fashion paradox, marketers helps consumers to develop more positive SFPC orientations and reinforces the perceived interconnectedness between sustainability issues and SFPC behaviors. J. Han et al. / Journal of Business Research 74 (2017) 162–167 163

2.3. Sustainable fashion and luxury experiences A focal practice of luxury branding is to foster cult-like unique brand cultures by staging memorable consumer experiences (Atwal & Williams, 2009; Seo, Buchanan-Oliver, & Cruz, 2015). Beyond superior functional features, luxury brands deliver sensory experiences to create social mystique and aura (Berthon, Pitt, Parent, & Berthon, 2009). Staging experiences to teach consumers about the social value of luxury goods, inspire taste and appreciation (Brun & Castelli, 2013). The events cultivate a sense of escapism and personal relevance, and develop intimate consumer/brand relationships (Kim & Ko, 2012). Thus, luxury companies design and stage memorable consumer experiences to create superior customer-perceived value (Wiedmann & Hennings, 2013; Ko, Phau, & Aiello, 2016). Recent studies draw parallels between sustainable fashion and luxury brands. In particular, growing research indicates that sustainability issues and luxury branding have complex co-influence interrelationships (Joy et al., 2012; Beckham & Voyer, 2014). Although sustainability concerns remain nascent, they shape consumer perceptions about luxury brands and perceived value (Kapferer & Michaut, 2015). On the other hand, luxury branding with “concomitant respect for artisans and the environment” fosters stronger pro-sustainability values among young fashion consumers (Joy et al., 2012). Luxury branding techniques and elements can apply to sustainable fashion marketing and vice-versa. Interconnectedness between sustainable fashion and luxury branding suggest that staging memorable experiences for fashion consumers strengthens perceptions of the unit relationship between sustainability issues and SFPC, and develops a stronger SFPC orientation. Given that staged experiences offer proactive learning and consumer engagement (Brodie, Hollebeek, Juric, & Ilic, 2011), sustainable fashion companies should consider staging memorable experiences associating with sustainable fashion to strengthen consumer orientation toward SFPC. Proposition 3: Staging memorable sustainable fashion experiences fosters a more positive orientation toward SFPC, while reinforcing the perceived interconnectedness between sustainability issues and SFPC behaviors. 3. Methods The sustainable fashion literature is nascent—not rich enough yet to provide a sound conceptual foundation for investigating how staged experiences help overcome the sustainable fashion paradox. To investigate the three propositions, an exploratory study was conducted. Specifically, the study employed a multi-method participatory action research (PAR) investigation (Ozanne & Saatcioglu, 2008) involving focus group interviews (FGIs), participant observations, and in-depth interviews with South Korean fashion consumers. PAR, a methodological paradigm within consumer welfare research, is “a participatory, democratic process concerned with developing practical knowing in the pursuit of worthwhile human purposes” (Reason & Bradbury, 2001, p.1). The main purpose of such research is to develop knowledge for social action. PAR is an appropriate method for several reasons. First, action research is particularly useful for improving consumer welfare (Ozanne & Saatcioglu, 2008). Thus, encouraging fashion consumers to behave more sustainably is consistent with the study's pursuits. Second, unlike other research traditions, PAR involves consumers throughout the research process (Ozanne & Saatcioglu, 2008). The sustainable fashion paradox is a consumer-centric problem requiring an emic (i.e. first-person) understanding of how consumers think, feel and behave (Gwilt & Rissanen, 2011). Moreover, despite emerging interest over the last few years, sustainable fashion research remains nascent. Accordingly, collaborating with fashion consumers throughout the research process offers novel insights into SFPC. Finally, action researchers seek to develop knowledge that can be applied to cultivate “change across individuals, group, and national behaviors and develop solutions in collaboration with consumers that are also sensitive to their needs and desires” (Ozanne & Saatcioglu, 2008, p.424). Fashion consumers are aware of sustainability concerns, but they encounter various barriers that prevent them from SFPC behaviors. Thus, consumers participating in this action research project may learn to overcome such barriers. 3.1. Research design This study focuses on young adult consumers of fashion products in Seoul, South Korea. Young consumers tend to be highly involved in fashion, attracted to trends, and drawn to unique differentiating products (Belleau, Summers, Xu, & Pinel, 2007). Furthermore, they tend to be the key purchasers of fast-fashion products, a major concern for sustainability (Joy et al., 2012). The research team was particularly interested in developing a deeper understanding of how young consumers perceive sustainable fashion, and how they can be encouraged to be more engaged with SFPC. Study participants were recruited from a large private university in Seoul, South Korea. The sample included 12 men and 12 women ranging from 23 to 30 years old, self-identifying themselves as interested in and knowledgeable about current fashion trends, and reporting at least some familiarity with sustainable fashion. They were not required to have prior experience in purchasing sustainable fashion products. These criteria reflect the researchers' interest in issues relating to barriers preventing SFPC behaviors. Consistent with the PAR approach, participants were informed that the research project's purpose was to study how consumers can be encouraged to purchase sustainable fashion products. Participants were told that their participation would help to develop novel solutions for sustainable fashion consumption practices (Ko et al., 2013). Table 1 shows brief participant profiles. A two-stage iterative analysis was adopted to uncover and explore the three propositions concerning sustainable fashion consumption. At the first stage, twenty-four participants were assigned to four focus groups of six people each. Focus groups were interviewed once from October to November 2015. During the focus group interviews (FGIs), broad guidance questions were used to open and facilitate discussion. For example, “What do you think about eco-friendly fashion products and brands?” These questions were aimed at deriving themes related to perceptions about sustainability issues and SFPC, possibly indicating a state of psychological imbalance (Proposition 1). Preliminary findings indicate that participants perceived sustainability to be an important Table 1 Participant profiles. Participant Age Gender Education Monthly fashion spending (USD equiv.) PAR observation 1 30 M Postgraduate $100–$300 NO 2 30 M Postgraduate $400–$500 NO 3 30 M Postgraduate N$100 YES 4 32 M Postgraduate $100–$300 NO 5 26 F Undergraduate $100–$300 YES 6 25 F Undergraduate $100–$300 YES 7 30 F Postgraduate $100–$300 NO 8 31 F Postgraduate $100–$300 NO 9 28 F Postgraduate $300–$500 NO 10 23 M Undergraduate $300–$500 NO 11 35 F Postgraduate $100–$300 NO 12 30 M Postgraduate $500–$700 YES 13 29 F Postgraduate $100–$300 NO 14 26 F Postgraduate $300–$500 NO 15 25 F Postgraduate N$100 YES 16 26 M Postgraduate $100–$300 NO 17 30 F Postgraduate $100–$300 NO 18 25 F Undergraduate $100–$300 YES 19 26 M Undergraduate N$100 NO 20 26 M Undergraduate N$100 NO 21 26 F Postgraduate $300–$500 YES 22 25 M Postgraduate $500–$700 YES 23 23 M Undergraduate $500–$700 NO 24 30 M Postgraduate $300–$500 NO 164 J. Han et al. / Journal of Business Research 74 (2017) 162–167

issue in fashion, but they had mixed opinions and feelings about whether or not they wanted to engage in SFPC behaviors. Thus, the FGIs offered initial supporting evidence that the attitude–behavior gap in sustainable fashion is a state of psychological imbalance. The next section provides a more detailed discussion of the emergent themes. The second stage, explored how staged experiences may restore psychological imbalances by fostering more positive SFPC orientations, while reinforcing the perceived interconnectedness between sustainability issues and SFPC behaviors (Propositions 2 and 3). Several PAR observations were conducted with eight participants from the initial sample (Participants 3, 5, 6, 12, 16, 18, 21, and 22), and staged individualized sustainable fashion consumption experiences. More specifically, two eco-fashion brand stores in Seoul permitted participants to partake in an exclusive shopping experience at the stores between January and May 2016. Ozanne and Saatcioglu (2008) suggest that research participants become valuable co-contributors if their goals aligned with the research objectives (i.e., to create positive social change). Prior to the staged visits, participants were informed that the researchers' goal was to learn how personal shopping experiences foster deeper considerations about sustainable fashion consumption. Next, each participant was given money (approx. USD $180) to spend in the two eco-fashion stores. One author accompanied participants and closely observed their comparison of alternatives and purchase behaviors. After the shopping, each person participated in a semi-structured long interview to question them about their experiences (McCracken, 1988). Stage two participants were interviewed twice—immediately after visiting each store. The final analysis combined results to determine whether and how the staged experiences may develop more positive SFPC orientations. During this process, several procedures were undertaken to ensure consistency and accuracy in interpretations. First, multiple methods of data collection were used to compare interpretations, including FGIs, PAR observations, and semi-structured interviews. Second, each researcher reviewed the data independently (inter-rater agreement was about 75–80%). Disparities were settled by iterative discussion and achieving a general consensus on the final themes. 4. Results 4.1. Sustainability in fashion and SFPC Findings from the FGIs support the proposition that fashion consumers may experience a state of psychological imbalance regarding SFPC issues (P1). Specifically, respondents recognize the importance of sustainability considerations, but they have reservations about purchasing sustainable fashion products. 4.1.1. Attitudes toward sustainability in fashion Consistent with prior studies (e.g., Joy et al., 2012; McNeill & Moore, 2015), results show that young consumers perceive sustainability as an important issue in the fashion industry. They also recognize their own ability to make a difference through their consumption choices. For instance, one participant notes that fashion companies are shifting their purely profit-driven strategy toward considering sustainability issues because changing consumer preferences are putting pressure on the industry. Sustainable fashion was not popular at one time, but environmental and social issues show growth possibilities…In the past, companies thought only about profits, but now they need sustainability for the brand's image and to fulfill consumer preferences (Participant 21). Participants noted that they engage in pro-sustainable practices; however, they do not necessarily purchased sustainable fashion products. For instance, Participant 3 considers purchasing fashion products from a second-hand shop to be more sustainable than buying eco-fashion products: I think consumers of used goods contribute to sustainability and ecofriendliness. Even eco-friendly and sustainable products are new. Recycling unsold items is popular: it's all about the second-hand market. There are many second-hand markets like the one on NAVER (Korean website). Buying from the second-hand market is to practice sustainability and seems better to me. Thus, a key theme emerging from the FGIs is that young consumers tend to be aware of sustainability concerns in fashion and they proactively act to address their concerns. Although informants describe various pro-sustainable consumption practices (e.g., purchasing secondhand clothing), they do not necessarily include SFPC behaviors. 4.1.2. Unwillingness to purchase sustainable fashion products Consumers have various reasons for avoiding SFPC behaviors (Chan & Wong, 2012; McNeill & Moore, 2015), but prior research offers little about their emic (i.e., first-person) perspectives. Study FGIs identify three distinct but interrelated themes describing why consumers are unwilling to purchase sustainable fashion products: (1) negative quality perceptions; (2) the lack of justification for paying a premium price; and (3) the lack of social awareness about the value of eco-fashion products. First, participants reveal that they perceive sustainable fashion to be inferior in terms of product design and quality characteristics. Specifically, many associate eco-friendly products with unattractive appeals and limited selections: “I do not purchase sustainable fashion products because of their unattractive designs” (Participant 11, aged 35). “If their design, quality, and variety improve, I would be willing to purchase sustainable fashion products” (Participant 21, aged 26). Furthermore, established preconceptions that eco-fashion products lack quality dissuade consumers from justifying the price premiums. “Price is the most important. I will never buy eco-fashion products if they are ridiculously expensive” (Participant 1, aged 30). “I do not feel the need to buy eco-fashion products. In the case of X brand, sustainability intentions are a good principle, but the products are costly and aesthetically unappealing” (Participant 2, aged 30). Crucially, FGIs reveal that the nexus of overpriced and poor quality perceptions may come from lack of awareness and social capital surrounding knowledge about eco-fashion rather than actual product performance. Specifically, participants note that they have few opportunities to learn about sustainable fashion through media and/or consumption experiences. This lacuna negatively impacts their personal perceptions of eco-fashion products. “Sustainable fashion brands do not organize fashion shows and or advertise to any extent” (Participant 2, aged 30). As clothing purchase decisions are a tactile experience, looking at new products likely is not enough to sway many consumers. “Advertisements alone will not encourage sustainability: people must use and experience products before they will feel familiar enough to buy them” (Participant 15, aged 25). In conclusion, the emergent themes support P1. Results demonstrate an attitude–behavior gap exists in sustainable fashion that creates a state of psychological imbalance. Specifically, fashion consumers express concern about fashion sustainability issues, but they are unwilling to engage in SFPC due to established negative perceptions about ecofashion products. While sustainability and SFPC issues form a unit relationship, consumers display conflicting sentiments toward sustainable fashion and SFPC. 4.2. Staged experiences and consumer orientation toward SFPC To explore how staged sustainable fashion experiences may help consumers overcome their psychological imbalance, results from structured PAR observations show that such experiences can reinforce the link between sustainability issues and SFPC and foster a more positive J. Han et al. / Journal of Business Research 74 (2017) 162–167 165

consumer orientation toward SFPC, supporting P2 and P3. Specifically, the consumers who underwent staged experiences: (1) extended their practical knowledge about sustainable fashion products; (2) became more open to adopting SFPC behaviors; and (3) developed personalized competencies that encourage future SFPC behaviors. First, the staged experiences taught study participants about sustainable fashion products and demystified some of their previous misconceptions about SFPC. For instance, they previously assumed that ecofashion products have design and selection limitations. Shopping visits to eco-fashion stores changed their opinions. Study participants viewing, touching, and wearing the eco-friendly garments have a more favorable impression. “I used to think sustainable products are only about reforming or eco-friendliness. But sustainable product categories are wide-ranging. Especially in the first store, I gained new insight into the classiness of sustainable products” (Participant 18, aged 25). “Before, I thought that so-called sustainable or eco-friendly fashion implied lower quality and less attractive design. But the store visit showed me that the brand has design, workmanship, and quality, beyond just eco-friendliness” (Participant 21, aged 26). As participants gained more practical knowledge about eco-fashion products, they express a willingness and intention to learn more about sustainable fashion and even to engage in future SFPC behaviors. I learned from the stores that sustainable fashion considers social initiatives such as animal protection and fair labor. Some leather products in the second store came from animals that died naturally rather than being killed, which gains my sympathy as I keep a pet. This should be encouraged more. Also, I learned that the store has lots of practical and usable products and diverse product categories (Participant 21, aged 26). I had no expectations, but now I think the design is unique, and the material is not bad. I would shop here again. Also, I thought the products would be ugly, but after hearing that they collaborated with a designer, I saw the products as different and pretty. The biggest change was that I liked the peculiar design (Participant 5, aged 26). Finally, the staged experiences encouraged fashion consumers to develop unique competencies allowing them to draw on their previous knowledge to make more effective choices and decisions about SFPC. In particular, many participants now have evaluative criteria regarding attributes that could make a sustainable fashion brand more attractive. Being eco-friendly requires quality and durability. Recycled or ecofriendly materials are not sustainable if they forgo quality. The second store has mediocre design and quality: I saw a very poor-quality small wallet, regardless of the hand or machine sewing. The bags were poorly finished and only halfway done… The first store, run by a large enterprise, is classy and refined, just like a real high-profile brand store (Participant 3, aged 30). I prefer the second sustainable fashion brand which provides information such as country of origin, raw materials, profile of product makers, and meanings related to the products. In contrast, the first sustainable fashion brand's products fail to give detailed product information. The second sustainable fashion brand is warmer. The store is good at transmitting the meaning of sustainable issues (Participant 21, aged 26). Participant 3 states that sustainable products should have superior quality and durability because poor quality products must be replaced more frequently. Consequently, his most important consideration for purchasing eco-fashion products is brand reputation that signals quality. Participant 21 notes that sustainable fashion brands should provide more details positioning themselves as valuing sustainability. Thus, staged experiences promote consumer learning about SFPC and encourage consumers to develop personalized criteria for differentiating between various SFPC alternatives. 5. Conclusion and implications This study demonstrates that fashion consumers' limited awareness and knowledge about sustainable fashion products may promote negative sentiments toward SFPC. However, the findings demonstrate that fashion marketers can overcome negative sentiments by staging personalized experiences. Specifically, the staged experiences enable fashion consumers to acquire practical knowledge about sustainable fashion and thus become more open to adopting SFPC behaviors. Traditional communication tools, such as advertising and public relations, encounter difficulty in trying to foster sustainable fashion consumer literacy. Thus, staged consumption experiences are an essential platform to conveying design and quality. Furthermore, staged experiences develop individualized competencies that may guide SFPC decisions and choices. Understanding how consumers acquire competencies and evaluate sustainable fashion, provides marketers with important insights for effective eco-fashion brand positioning strategies. This study demonstrates another application of Heider's (1958) balance theory and staged brand experiences in marketing. Participatory action investigation of SFPC in South Korea demonstrates that developing and staging consumer-centered experiences help balance the psychological imbalance occurring in the attitude–behavior gap between sustainability concerns and SFPC behaviors. Results suggest participants likely will adopt more positive SFPC orientations (Pine & Gilmore, 1998). Such experiences reinforce the connection between sustainability concerns and SFPC, heighten the personal relevance of SFPC behaviors, convey practical knowledge about SFPC, encourage openness to SFPC, and develop consumer competencies for performing SFPC behaviors. Although this study offers several novel insights, all studies have limitations that serve as opportunities for future inquiry. First, this study was conducted using a student sample; albeit we recruited more mature students (seniors and postgraduate students). Further study that includes a sample which is not affiliated with the university will provide external validation. Second, behavior change is a longterm process. The present study could be extended to provide a more complete understanding of the longitudinal process necessary to overcome psychological imbalances. 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Fashion marketing of luxury brands: Recent research issues and contributions Eunju Ko a, ⁎, Carol M. Megehee b a Yonsei University, Department of Clothing and Textiles, College of Human Ecology, 262 Seongsanno, Seodaemun-gu, Samsung Hall 318, Seoul 120-749, Republic of Korea b Coastal Carolina University, E. Craig Wall Sr. College of Business Administration, P. O. Box 261954, Conway, SC 29528-6054, United States article info abstract Article history: Received 1 August 2011 Received in revised form 1 September 2011 Accepted 1 September 2011 Available online 8 November 2011 Keywords: Brand Brand management Consumer behavior Counterfeiting Fashion Luxury Status Value This introduction briefly summarizes each of the fifteen articles included in this special issue on fashion marketing of luxury brands and provides a rationale for the inclusion of each article. The articles are grouped by topic—luxury status/values, luxury consumer behavior, luxury brand management, and luxury brand counterfeiting—even though many of the articles include information relevant to at least one other topic. With authors representing thirteen different countries (and probably more if country of origin were to be considered), this issue on marketing of luxury brands is truly international in scope. © 2011 Elsevier Inc. All rights reserved. This JBR special issue on fashion marketing strategies of luxury brands comprises selected papers from research reports presented at the 2010 Global Marketing Conference that took place in Hotel Okura Tokyo (Tokyo), Japan. The objective of this special issue is to bring together international scholars from different disciplines and different countries working to advance knowledge on the fashion marketing and consumption of luxury brands. The variety in country-oforigin of the authors in this special issue indicates that this truly is an international sample of scholars. Authors from Australia (3), Belgium (6), China (7), France (2), India (2), Italy (2), Japan (1), Korea (7), Russia (1), Singapore (1), Thailand (1), the United Kingdom (3), and the United States (13) contributed to this issue. The luxury industry is relatively small in terms of the number of companies, but punches far above its weight both in terms of sales and more importantly, influence. The best design, the best materials, the best merchandising, and the best packaging occur in the luxury industry, and hence luxury brands frequently lead the way for the rest of the marketing world. The role of fashion marketing of luxury brands is an area in need of new developments, theories, and knowledge in light of the trends toward global luxury and fashion markets. To that end, this selection of papers serves to increase the reader's understanding of the strategies needed to effectively market to the luxury brand sector. Certainly, the reader may wish to view these articles as a starting point in understanding theory and research in the fashion marketing of luxury brands, and go on to investigate additional references in the subject matter. Fig. 1 describes the research scope of papers included in this special issue. What follows is a brief summary of each article and the place it occupies in Fig. 1. 1. Luxury status/values 1.1. Between the mass and the class: antecedents of the “bandwagon” luxury consumption behavior Minas N. Kastanakis and George Balabanis (Kastanakis and Balabanis, 2012-this issue) examine the impact of a number of psychological factors on consumers' propensity to engage in the “bandwagon” type of luxury consumption. (The bandwagon effect refers to the extent to which demand for a product increases because others are consuming the product. This tendency may be driven by the need to be associated with, and to be identified as being, fashionable or stylish. Consumers jump on the bandwagon so they won't be left behind!) Through development and empirically confirming a conceptual model of bandwagon consumption of luxury products, the authors show that a consumer's interdependent self-concept underlies bandwagon luxury consumption. The relationship between interdependent self-concept and bandwagon consumption is mediated by the level of a consumer's status-seeking predispositions, susceptibility to normative influence, and need for uniqueness. A primary contribution of this research demonstrates that psychological constructs explain a large part of bandwagon luxury consumption and can be used as inputs in the development of marketing strategies. Journal of Business Research 65 (2012) 1395–1398 ⁎ Corresponding author. Tel.: +82 2 2123 3109; fax: +82 2 312 8554. E-mail addresses: [email protected] (E. Ko), [email protected] (C.M. Megehee). 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.10.004 Contents lists available at SciVerse ScienceDirect Journal of Business Research

1.2. Interpersonal effects on fashion consciousness and status consumption moderated by materialism in metropolitan men Despite dramatic changes in male fashion consumption over the last two decades, consumer research has largely ignored the issue of status consumption, especially in the male market. Aurathai Lertwannawit and Rujirutana Mandhachitara (2012-this issue) study the direct and indirect effects (i.e., by way of fashion consciousness) of self-monitoring and susceptibility to interpersonal influence have on status consumption. Interesting findings of path analysis provide insights into interpersonal effects on status consumption. Materialism values moderate the relationship between self-monitoring and/or susceptibility to interpersonal influence on status consumption: for high-materialism consumers, susceptibility to interpersonal influence alone has an indirect effect on status consumption by way of fashion consciousness; for low-materialism consumers, selfmonitoring is an additional antecedent of status consumption. Marketers attempting to penetrate the male metropolitan market can use these results to identify appropriate communication channels and message content for high- and low-materialism customers. 1.3. Comparing the importance of luxury value perceptions in cross-national contexts Paurav Shukla and Keyoor Purani (2012-this issue) provide empirical support to the often conceptualized but not-yet-tested framework of luxury value perceptions in a cross-national context. The study compares the luxury value perceptions (i.e., self-directed symbolic/expressive, other-directed symbolic/expressive, experiential/hedonic, utilitarian/ functional, and cost/sacrifice) among British and Indian consumers, providing a rich comparative context between collectivist and individualistic markets. The results support the notion that several luxury value perceptions may be highly influential among all cultures and countries, but their degree of influence may differ dramatically. The findings suggest that consumers in collectivist markets use simpler selection criteria for measuring the value of a luxury brand than consumers in individualistic markets. These results can be used by luxury brand managers to develop a coherent and integrated long-term global strategy that takes into account country-specific requirements. 1.4. Impact of self on attitudes toward luxury brands among teens In this research, Luciana DeAraujo Gil, Kyoung-Nan Kwon, Linda Good, and Lester W. Johnson (2012-this issue) investigate how social consumption motivations affect teenagers' attitudes toward luxury brands, how teens' self concepts can influence social consumption motivations, and whether peer pressure affects this relationship. The authors also look at materialism's influence on teenagers' social consumption motivations and attitudes toward luxury brands. Key contributions of this research include the demonstration that materialistic orientation is a powerful force in developing more positive attitudes towards luxury brands among teenagers. Also, even though the desire for wealth and material ownership is positively associated with social incentives to consume (i.e., social consumption motivation), teenagers with clear self-beliefs have a stronger tendency to resist social motivations to consume; the clearer they are about themselves, the less they attend to external sources and stimuli. This paper segues to the next section as it fits in both the luxury status/ value and the luxury consumer behavior categories. 2. Luxury consumer behavior 2.1. Consumer enactments of archetypes using luxury brands Carol M. Megehee and Deborah F. Spake (2012-this issue) explore the meaning of luxury brands through the use of visual narrative art created from consumer blogs. The article describes how to use creation of visual narrative art as a qualitative research tool. Mapping contexts and stories that blog entries describe reveals the nature of the brand, the blogger (i.e., the consumer of the luxury brand in the blog), and interpretations by the visual narrative artists. This study extends the consumer storytelling literature that follows from creating visual narrative art and its use for deepening understanding of consumer reports of their enactments of brand myths. 2.2. Purchase intention for luxury brands: a cross-cultural comparison Qin Bian and Sandra Forsythe (2012-this issue) examine the effects of individual characteristics (i.e., consumers' need for uniqueness and self-monitoring) and brand-associated variables (i.e., social function attitudes toward luxury brands and affective attitude) on U.S. and Chinese consumers' purchase intention for luxury brands. (Social function attitudes, as they relate to luxury brands, involve consumers' self-expression and self-presentation to express their individuality (e.g., need for uniqueness) and exhibit their social standing (e.g., self monitoring). Affective attitudes are a powerful predictor of behavior because they involve consumers' feelings or emotions. In addition to the social function of self-expression and self-presentation attitudes, consumers choose luxury brands because they provide hedonic rewards and sensory fulfillment.) In this crosscultural study, self-monitoring positively influences social function attitudes toward luxury brands. Social function attitudes toward luxury brands positively influence consumers' purchase intention through affective attitude. Affective attitude plays an important mediating role between social function attitudes toward luxury brands and purchase intentions. 2.3. Understanding luxury consumption in China: consumer perceptions of best-known brands Lingjing Zhan and Yanqun He (2012-this issue) investigate the underlying motivations for luxury consumption among Chinese middleclass consumers by testing the relationships between psychological traits (i.e., value consciousness, susceptibility to normative influence, and the need for uniqueness) and attitudes towards best-known luxury brands. Findings suggest that as consumers become more value conscious, they evaluate the best-known brands more favorably. Consumers with high susceptibility to normative influences exhibit more positive brand attitudes, suggesting that social influence is an important driver for luxury consumption. The relationship between the need for uniqueness and brand attitudes depends on consumer knowledge; as consumers learn more about different luxury brands, they evaluate the best-known brands more negatively as uniqueness-seeking becomes a more important goal. Findings offer a unique insight into consumer perceptions of luxury brands and Luxury Status/Value Luxury Brand Management Luxury Consumer Behavior Luxury Brand Counterfeiting Fig. 1. Fashion marketing and consumption of luxury brands. 1396 E. Ko, C.M. Megehee / Journal of Business Research 65 (2012) 1395–1398

provide managerial implications for marketers to build sustainable luxury businesses in China. 2.4. Brand and country-of-origin effect on consumers' decision to purchase luxury products Bruno Godey, Daniele Pederzoli, Gaetano Aiello, Raffaele Donvito, Priscilla Chan, Hyunjoo Oh, Rahul Singh, Irina Ivanovna Skorobogatykh, Junji Tsuchiya, and Bart Weitz (2012-this issue) consider the combined effects of brand and country-of-origin on consumer purchases of luxury (versus non-luxury) goods. The intercultural analysis includes data from seven countries (China, France, India, Italy, Japan, Russia, and the United States). Consumers in different countries have different perceptions of what constitutes a luxury product and use different criteria (i.e., price, guarantee, design, and/or advertising) in making purchase decisions. The impact of country-of-origin on purchase decisions appears to be weaker than the influence of brand. This paper segues from luxury consumer behavior to luxury brand management. 3. Luxury brand management 3.1. Contributing clarity by examining brand luxury in the fashion market The creation and development of luxury brands is a growing area of research interest, but earlier research lacks clarity regarding the definition, operationalization, and measurement of brand luxury. Karen W. Miller and Michael K. Mills (2012-this issue) address this issue within the pre-eminent luxury fashion brands category by carefully examining brand luxury and the dimensions and relationships underlying the luxury fashion brand. The authors develop and test their conceptual model—the brand luxury model—which makes important contributions by clarifying the confusion evident in earlier brand luxury research, by supplying evidence about the importance of brand leadership, and by helping brand managers and academics through the creation of a useful framework to depict the luxury fashion brand. 3.2. Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand Interest in the use of social media marketing—especially in the marketing of luxury fashion brands—is rapidly growing. In this research, Angella Jiyoung Kim and Eunju Ko (2012-this issue) identify attributes of social media marketing activities and examine the relationships among those perceived activities, value equity, relationship equity, brand equity, customer equity, and purchase intention. (The five perceived social media marketing activities are entertainment, interaction, trendiness, customization, and word of mouth.) The effects of social media marketing activities positively affect value equity, relationship equity, and brand equity; brand equity negatively affects customer equity; value equity positively affects purchase intention; and purchase intention positively affects customer equity. Findings of this study can be used to forecast purchasing behavior of customers of luxury brands and provide a guide to managing assets and marketing activities. 3.3. From Armani to Zara: impression formation based on fashion store patronage Fine fashion and fast fashion are ever more converging with “Zarafication” (i.e., commoditization) and “massclusivity” of luxury fashions. Just as consumers buy luxury fashion brands to express or enhance their self-image, they can also patronize retailers with a self-congruent personality positioning. Kim Willems, Wim Janssens, Gilbert Swinnen, Malaika Brengman, Sandra Streukens, and Mark Vancauteren (2012-this issue) address the research question, “Do people use store personality traits to infer store patron personality traits?” in two studies using the continuum model of impression formation as a theoretical foundation. Findings support a “yes” answer to this question. Study 1, a consumer survey, indicates that people do associate particular stereotypes with a store's patrons. Study 2, an experiment, demonstrates that the impression formed of others may substantially differ depending on the shopping bag (i.e., external cue of store patronage) the other carries. The authors conclude that consumers may not only wear certain fashion brands but shop at specific stores to impress others. Retailers can benefit from store personality as a unique selling proposition—a trend, the authors say, luxury brand managers should to attend to. 3.4. How to increase the customer equity of luxury fashion brands through nurturing consumer attitude Kyung Hoon Kim, Eunju Ko, Bing Xu and Yoosun Hann (2012-this issue) provide a study to fill the gap in research on consumer attitudes toward luxury brands. The study investigates the relationship among attitude toward luxury brands, customer equity, and customer lifetime value from a sample of undergraduate and graduate female students at two private women's universities in Seoul, Korea. Consumption for experience and fashion involvement positively influence attitude toward luxury brand; attitude toward luxury brand positively affects value equity and brand equity; and value equity negatively influences customer lifetime value while both relationship equity and brand equity positively affect customer lifetime value. From a managerial standpoint, this study provides several implications to luxury practitioners. 4. Luxury brand counterfeiting 4.1. Exploring the Robin Hood effect: moral profiteering motives for purchasing counterfeit products Amit Poddar, Jeff Foreman, Sy Banerjee, and Pam Ellen (2012-this issue) investigate one of the biggest problems facing luxury fashion brands today—counterfeiting. They found that when the legitimate brand is perceived as being high in corporate citizenship (high PCC), the size of the price differential between the legitimate brand and the counterfeit does not affect consumers' purchase intentions toward the counterfeit. However, when the legitimate brand has a negative image (low PCC), higher price differentials trigger significantly greater intentions to purchase the counterfeit product. “Moral profiteering,” as the authors label this effect, is more likely to take place when consumers of counterfeits have both economic and moral justifications for engaging in this unethical behavior. That is, a large enough price difference between the legitimate product and the counterfeit, coupled with a negative corporate citizenship image (low PCC) of the legitimate brand, provides greater incentive and justification for the consumer to purchase the counterfeit. The implication of this finding is that efforts directed toward improving PCC may reduce sales of counterfeit goods. 4.2. Asymmetrical effects of past experiences with genuine fashion luxury brands and their counterfeits on purchase intention of each Boonghee Yoo and Seung-Hee Lee (2012-this issue) examine the effects of past experiences with counterfeit (genuine) luxury brands on the purchase intention for genuine (counterfeit) luxury brands in two studies. Based on survey data from five designer fashion product categories (designer handbags, shoes, apparel, sunglasses, and jewelry), Study 1 produced an asymmetrical effect: past experiences with genuine luxury brands relate negatively to purchase intentions of counterfeit luxury brands but past experiences with counterfeit luxury brands are not related to purchase intentions of genuine luxury E. Ko, C.M. Megehee / Journal of Business Research 65 (2012) 1395–1398 1397

brands. Based on an experiment using two luxury brand handbags with realistic price information, Study 2 confirmed the results found in Study 1. (In these studies, counterfeit consumers were defined as those who were not deceived by counterfeiters but still knowingly purchase/consume counterfeit luxury brands.) The primary contribution of this research is that while past behavior related to genuine (counterfeit) luxury brands is a strong predictor of future behavior towards genuine (counterfeit) luxury brands, sales of counterfeit luxury brands may not cannibalize sales of genuine luxury brands because purchasing counterfeit luxury brands does not appear to affect future purchases of genuine luxury brands. 4.3. Luxury fashion brand consumers in China: perceived value, fashion lifestyle, and willingness to pay Gaining a better understanding of the behavior of Chinese consumers of luxury fashion brand should benefit the fashion industry by improving customer relationships in this potentially largest consumer market. To this end, Guoxin Li, Guofeng Li, Fenfen Xiang, and Zephaniah Kambele (2012-this issue) examine Chinese consumers' willingness to pay for luxury fashion brands related to their fashion lifestyle and perceived brand value. Information lifestyle, brand prestige lifestyle, perceived social/emotional value, and perceived utilitarian value influence the willingness of Chinese consumers to pay for luxury fashion brands. This research also examines the moderating effect of previous purchasing experiences of genuine and counterfeit luxury fashion brands on fashion lifestyles and perceived brand value. Only personality fashion lifestyle led to differences based on genuine and counterfeit purchasing experiences. This research makes two broad contributions: 1) it broadens the theoretical (academic) research pertaining to fashion lifestyles proposed by Ko et al. (2007) by exploring the Chinese context, and 2) results provide suggestions for competitive marketing (practitioner) strategies for luxury fashion companies in the Chinese market. This paper brings us full circle by linking Luxury Status/Values and Luxury Brand Counterfeiting! 5. A note of appreciation to the contributors The co-editors of this special issue thank the reviewers for their time, expertise, and insights in the evaluation and selection of papers: Seigyoung Auh, Thunderbird School of Global Management; David J. Burns, Xavier University; Leslie Burns, Oregon State University; Michael L. Capella, Villanova University; Jinsook Erin Cho, Parsons School of Design, New School University; Sunmee Choi, Yonsei University; Young Kyun Choi, Dongguk University; Hojung Choo, Seoul National University; Lascu Dana, University of Richmond; Barbara Frazier, Western Michigan University; Ronald Goldsmith, Florida State University; David A. Griffith, Michigan State University; Sejin Ha, Purdue University; Sang-Lin Han, Hayang University; Rhea Ingram, Auburn University-Montgomery; Kim K. P. Johnson, University of Minnesota; Minjeong Kang, California State University; Christian (Hyeong Min) Kim, The Johns Hopkins Carey Business School; HyeYoung Kim, University of Minnesota; Jae-Eun Kim, Auckland University of Technology; Jihyun Kim,Virginia Polytechnic Institute and State University; Jiyoung Kim, University of North Texas; Kyunghoon Kim, Changwon National University; Sookhyun Kim, Johnson and Wales University; Youn-Kyung Kim, University of Tennessee-Knoxville; Maria Kniazeva, University of San Diego; Dee K. Knight, University of North Texas; Hyunhwa Lee, University of Texas-Austin; Jaeil Lee, Seatttle Pacific University; Jong-Ho Lee, Korea University; Seung Hee Lee, Ewha Womans University; Yoon-Jung Lee, Korea University; Yuri Lee, Seoul National University; Roger Marshall, Auckland University of Technology; Nancy J. Miller, University of Nebraska; Heegang Moon, Pai Chai University; Linda S. Niehm, Iowa State University; Shintaro Okazaki, Autonomous University of Madrid; Cara Lee Okleshen, Winthrop University; Kyungae Park, Yeungnam University; Siqing Peng, Peking University; Ian Phau, Curtin University; Kathleen Rees, Texas A&M University-Kingsville; Diego Rinallo, Bocconi University; Aric Rindfleicsh, University of Wisconsin-Madison; Marko Sarstedt, Ludwig-Maximilians-University of Munich; Ralf Schellhase, University of Applied Sciences Darmstadt; Eric Shih, Sungkyunkwan University; Dong Young Shin, Yonsei University; Nancy Stanforth, Kent State University; Leslie Stoel, The Ohio State University; Yong-Gu Suh, Sookmyung Women's University; Charles R. Taylor, Villanova University; Jane Boyd Thomas, Winthrop University; Gillian H. Wright, Manchester Metropolitan University, Ge Xiao, Wilkes University; Jeong-ju Yoo, Baylor University; Won Sang Yoo, Korea University; and Sungjoon Yoon, Kyonggi University. The invitation from Arch G. Woodside, Editor-in-Chief, Journal of Business Research, to serve as co-editors of a special issue on fashion marketing of luxury brands was proceleusmatic. This issue is dedicated to Arch Woodside's relentless work ethic, his unselfish mentoring of colleagues and students at all levels of academic development, and his dedication to contributing substantive advances to theory and research across multiple disciplines. References Bian Q, Forsythe S. Purchase intention for luxury brands: a cross cultural comparison. J Bus Res 2012;65(10):1443–51 (this issue). Gil LA, Kwon K, Good L, Johnson WL. Impact of self on attitudes toward luxury brands among teens. J Bus Res 2012;65(10):1425–33 (this issue). Godey B, Pederzoli D, Aiello G, Donvito R, Chan P, Oh H, Singh R, Skorobogatykh II, Tsuchiya J, Weitz B. Brand and country-of-origin effect on consumers' decision to purchase luxury products. J Bus Res. 2012;65(10):1461–70 (this issue). Kastanakis MN, Balabanis G. Between the mass and the class: antecedents of the “bandwagon” luxury consumption behavior. J Bus Res. 2012;65(10):1399–407 (this issue). Kim AJ, Ko E. Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand. J Bus Res. 2012;65(10):1480–6 (this issue). Kim KH, Ko E, Bing X, Hann Y. Increasing customer equity of luxury fashion brands through nurturing consumer attitude. J Bus Res. 2012;65(10):1495–9 (this issue). Ko E, Kim E, Taylor C, Kim K, Kang I. Cross-National Market Segmentation in the Fashion Industry: A Study of European, Korean, and U.S. Consumers. Int Mark Rev 2007;24(5):629–51. Lertwannawit A, Mandhachitara R. Interpersonal effects on fashion consciousness and status consumption moderated by materialism in metropolitan men. J Bus Res. 2012;65(10):1408–16 (this issue). Li G, Li G, Kambele Z. Luxury fashion brand consumers in China: perceived value, fashion lifestyle, and willingness to pay. J Bus Res. 2012;65(10):1516–22 (this issue). Megehee CM, Spake DF. Consumer enactments of archetypes using luxury brands. J Bus Res. 2012;65(10):1434–42. Miller KW, Mills MK. Contributing clarity by examining brand luxury in the fashion market. J Bus Res. 2012;65(10):1471–9 (this issue). Poddar A, Foreman J, Banerjee S, Scholder EP. Exploring the Robin Hood effect: moral profiteering motives for purchasing counterfeit products. J Bus Res. 2012;65(10): 1500–6 (this issue). Shukla P, Purani K. Comparing the importance of luxury value perceptions in crossnational contexts. J Bus Res. 2012;65(10):1417–24 (this issue). Willems K, Janssens W, Swinnen G, Brengman M, Streukens S, Vancauteren M. From Armani to Zara: impression formation based on fashion store patronage. J Bus Res. 2012;65(10):1487–94 (this issue). Yoo B, Lee S. Asymmetrical effects of past experiences with genuine fashion luxury brands and their counterfeits on purchase intention of each. J Bus Res. 2012;65(10):1507–15 (this issue). Zhan L, He Y. Understanding luxury consumption in China: consumer perceptions of best-known brands. J Bus Res. 2012;65(10):1452–60 (this issue). 1398 E. Ko, C.M. Megehee / Journal of Business Research 65 (2012) 1395–1398

Contributing clarity by examining brand luxury in the fashion market Karen W. Miller a, ⁎, Michael K. Mills b,1 a University of Southern Queensland, T241, School of Management and Marketing, Faculty of Business, University of Southern Queensland, Toowoomba Queensland 4350, Australia b Faculty of Business, University of Southern Queensland, Springfield Campus, Queensland 4300, Australia article info abstract Article history: Received 1 December 2010 Received in revised form 1 April 2011 Accepted 1 July 2011 Available online 27 October 2011 Keywords: Brand luxury Brand leadership Brand value Generation Y Fashion brands Research relevant to the creation and development of luxury brands is a growing area in the literature. Offering insight, previous research also contributes evidence of a lack of clarity regarding a definition, operationalization, and measurement of brand luxury. This study focuses specifically on this issue within the pre-eminent luxury fashion brands category. Carefully examining brand luxury and the dimensions and relationships underlying the luxury fashion brand, this study develops a conceptual model. Testing across three specific fashion categories the Brand Luxury Model makes important contributions, by clarifying the confusion evident in earlier brand luxury research, supplying evidence about the importance of brand leadership, and helping brand managers and academics by creating a useful framework to depict the luxury fashion brand. © 2011 Elsevier Inc. All rights reserved. 1. Introduction Researchers are attracted to the luxury brands market for a number of reasons including the complexity, diverseness, size, status, and the rapidness and constant evolvement of the luxury brands market (Atwal & Williams, 2009; Chadha & Husband, 2006; Christodoulides, Michaelidou, & Li, 2009; Fionda & Moore, 2009). Luxury brands outpace that of other consumer categories and are responsible for the development of a $220 billion global industry (Keller, 2009). Brand luxury, often used synonymously with prestige, holds considerable intangible worth, has an enduring positive brand image and is at the forefront of design, quality, status and fashion (Juggessur & Cohen, 2009; Phau & Prendergast, 2000a). Despite the significant insights the luxury sector provides to contemporary business, brand luxury is underrepresented in the academic literature (Berthon, Pitt, Parent, & Berthon, 2009; Fionda & Moore, 2009). The definition, operationalization, and measurement of brand luxury are highly subjective and remain inconclusive in the literature (Godey, Lagier, & Pederzoli, 2009; Kapferer & Bastien, 2009). An increasing number of luxury categories of which luxury fashion brands (couture, ready to wear and accessories) account for the largest proportion of luxury goods sales, as well as the strongest product growth (Fionda & Moore, 2009) suggest this category's prominence for research. Luxury brands have marketing costs and complexities that exceed those of other fashion categories (Chevalier & Mazzalovo, 2008; Jackson & Shaw, 2004; Kapferer & Bastien, 2009; Moore & Birtwistle, 2004), because of the speed of change and short life of fashion merchandise, the result of more competitors, easier entry into the industry, and the considerable scale and breadth of fashion items under a single brand entity (Juggessur & Cohen, 2009; Moore & Birtwistle, 2004; Okonkwo, 2007; Tynan, McKechnie, & Chhuon, 2010; Vigneron & Johnson, 1999). Despite the complexities and costs, in the fashion industry, luxury brands are the most profitable and fastest growing brand segment. However, luxury brands are also the most poorly understood and under investigated (Berthon et al., 2009 p 45). While the literature relevant to branding of consumer goods is growing substantially, researchers do not pay enough attention to the application of consumer brands in the fashion luxury goods sector. Recent studies focus on delineating the form and function of consumer brands, yet very few empirical studies seek to identify and understand the processes that support the creation, and maintenance of the luxury fashion brand (Fionda & Moore, 2009). While some research addresses the dimensions of luxury branding, how those dimensions connect, and to what extent is unclear (Fionda & Moore, 2009). This lack of clarity is possibly because very few studies actually focus on defining, operationalizing and measuring brand luxury. To address this gap, this study seeks to contribute clarity by examining brand luxury in the fashion market. To accomplish this, the paper first discusses the relevant brand luxury literature, before addressing some of the dimensions and relationships regarding fashion brand luxury, and then developing hypotheses. The study discusses the results next, providing new information on fashion brand luxury, placing parameters around brand luxury, separating brand luxury from a Journal of Business Research 65 (2012) 1471–1479 ⁎ Corresponding author. Tel.: +61 7 4631 1264; fax: +61 7 4631 5597. E-mail addresses: [email protected] (K.W. Miller), [email protected] (M.K. Mills). 1 Tel.: +61 7 3470 4515; fax: +61 7 3470 4501. 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.10.013 Contents lists available at SciVerse ScienceDirect Journal of Business Research

number of specific concepts, and contributing empirical evidence for the beginning of a fashion brand luxury nomological network. 2. Brand luxury Brand luxury management generates interest in both academic and business circles, because the brand is integral: the reason why consumers associate themselves with a luxury company (Okonkwo, 2007). Much of the previous research attempts to uncover tenets of luxury brands (Atwal & Williams, 2009; Berthon et al., 2009; Fionda & Moore, 2009; Keller, 2009; Nueno & Quelch, 1998; Truong, McColl, & Kitchen, 2009; Tynan et al., 2010; Wetlaufer, 2004). Some research seeks to identify motivations for purchasing luxury goods (Husic & Cicic, 2009; Kim, Kim, & Sohn, 2009; Park, Rabolt, & Sook, 2008; Prendergast & Wong, 2003) or fashion (Sung & Jeon, 2009). Other researchers tend to focus on luxury brand development (Christodoulides et al., 2009; Moore & Birtwistle, 2004; Nobbs, Birtwistle, & Fiorito, 2008; Silverstein, Fiske, & Butman, 2005; Truong, Simmons, McColl, & Kitchen, 2008; Vigneron & Johnson, 2004), purchase (Park et al., 2008), parental influence (Prendergast & Wong, 2003), protection (Clarke & Owens, 2000; Elsmore, 2000; Juggessur & Cohen, 2009; McDonald & Roberts, 1990; Phau & Min, 2009), the Internet (Nyeck, 2004; Okonkwo, 2009; Sung & Jeon, 2009) and brand extensions (Chen & Liu, 2004; Dias & Ryals, 2002; Glynn & Brodie, 1998; Hagtvedt & Patrick, 2009). Paradoxically previous studies improve knowledge and increase brand luxury confusion. This is because of the variability in approaches, definitions and correspondingly different names, types and numbers of dimensions in brand luxury typologies. One of the areas of agreement in the brand luxury literature is the lack of agreement regarding what is a luxury brand (Atwal & Williams, 2009; Berthon et al., 2009; Christodoulides et al., 2009; Fionda & Moore, 2009). The brand luxury literature (see Table 1 for a summary of a number of these studies) takes different approaches. For example, Atwal and Williams (2009) paper views luxury as experiential and varied in levels of customer participation and connection. Tynan et al. (2010) argue that luxury is at one end of a continuum with ordinary, so where ordinary ends and luxury starts is a matter of degree that a consumer judges. Alternatively, Nueno and Quelch (1998) utilize an economics perspective to define luxury brands, whereas Vickers and Renand (2003) propose a more psychological model, finding the primary value of luxury versus non-luxury is psychological. The lack of congruity is not a result of an evolving definition of brand luxury. Table 1 shows the terms of the actual dimensional measures and the number of dimensions researchers use are disparate. This disparity is unresolved and continues in very recent literature. Keller (2009), for example, argues that luxury brands have ten characteristics. Alternatively, Atwal and Williams (2009) include four dimensions of luxury, Berthon et al. (2009) argue luxury has three dimensions, Fionda and Moore (2009) believe that brand luxury has nine components and Kapferer and Bastien (2009) argue that brand luxury has two facets. These two facets are indulging in one's pleasures (luxury for one's self) and a demonstration of success (luxury for others). The lack of congruity is an indication that the underlying structure and relationships making up a fashion luxury brand remain unclear. Further evidence of this uncertainty occurs in Christodoulides et al. (2009) study. They could not support the underlying structure of Vigneron and Johnson's (1999) Brand Luxury Index (BLI) scale, finding a number of cross loadings and no evidence of discriminant validity. The results of Christodoulides et al. (2009) study add to the evidence regarding the conceptual confusion of brand luxury. As is evident from Table 1 and the literature cited, approaches to brand luxury and dimensions of brand luxury vary. Many of these studies have no empirical support for their claims, and arguments of what brand luxury might be or contain remain confusing. The need for clarity is pressing. To develop clarity requires researchers to explore brand luxury studies more carefully, to look for convergence, carefully examine the underlying dimensionality of the brand luxury, to unpack their relationships in terms of antecedent and consequences, and to build toward a nomological framework. Developing clarity should constitute a better understanding of brand luxury in the fashion context. 2.1. Brand luxury framework development Even though the evidence regarding brand luxury is inconclusive, some areas of agreement exist. Areas of agreement in the literature include the notion that brand luxury is an assessment associated with intangible elements of the brand. Intangible elements include a history of success, or the brand's corporate identity, culture and spirit, or the brand's reputation, or how visionary, trendy and up-to-date the brand is and/or the brand's careful management (Alleres, 2003; Atwal & Williams, 2009; Beverland, 2004; Dubois & Paternault, 1995; Fionda & Moore, 2009; Kapferer & Bastien, 2009; Keller, 2009; Nueno & Quelch, 1998; Wetlaufer, 2004). These are all elements associated with the brand as a leader, a remarkably resilient brand (Beverland, 2004) and one which demonstrates success (Kapferer & Bastien, 2009). While these elements are associated with luxury brands, the elements are not specific to luxury brands. Beverland (2004) points out these attributes are part of any successful brand and the above attributes are therefore more likely to be contributing factors to assessments of luxury rather than being a specific element of brand luxury. In all probability, an individual consumer may perceive a brand to be successful and the extent to which an individual perceives a brand to be successful or as a leader is likely to affect the degree, to which the individual perceives the brand as luxurious. As such, the hypothesis is: H1. Brand leadership directly affects brand luxury. Another area of agreement among brand authors associates brand luxury with originality, creative excellence, uniqueness, creative imagination, innovative design and creative quality, which links with the symbols, logos and package design (Alleres, 2003; Dubois & Paternault, 1995; Kapferer & Bastien, 2009; Keller, 2009; Vigneron & Johnson, 1999, 2004; Wetlaufer, 2004). Innovation is associated with originality (scarcity), uniqueness, creativity, and slight imperfections in handmade goods (Dubois et al., 2001; Nueno & Quelch, 1998). Some authors (for example, Dubois & Paternault, 1995; Vigneron & Johnson, 1999) in their discussions link brand luxury with innovative elements. Innovation (and perceptions of innovation and elements of innovation) is conceptually quite different to brand luxury. The extent to which a consumer perceives a brand to be innovative is likely to affect the degree to which a consumer perceives a brand as luxurious. Also likely is that brand innovation contributes to and affects perceptions of brand leadership. The more innovative, creative and unique a brand, the more likely an individual consumer perceives the brand as leading the way, a market leader or possibly as luxurious. Accordingly, the following hypotheses are: H2. Brand innovation directly affects brand leadership. H3. Brand innovation directly affects brand luxury. The branding literature suggests brands that are leaders are likely to be more valuable than those that follow. In Hoeffler and Keller's (2003) article on strong brands, they argue that strong brands are more likely to be market leaders and are more likely to be more valuable in the customer's minds-eye. Therefore, the hypothesis is: H4. Brand leadership directly affects brand value. Another likely influencer of brand value is brand luxury. Richins (2004) argues the value of a brand stems partly from the perception 1472 K.W. Miller, M.K. 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of status by luxury consumers. Status is an expression of evaluative judgment that conveys high or low prestige, regard or esteem (Donnenwerth & Foal, 1974 p. 786). Evidence shows that the status of a brand has a positive effect on brand value (Miller, 2007a) and that value is idiosyncratic (Miller, 2007b). Seemingly, consumers are more likely to assess symbolic/expressive value than economic value when assessing the overall worth of a luxury brand (Tynan et al., 2010). Individual consumers have idiosyncratic reasons for valuing a luxury brand. Therefore, the hypothesis is: H5. Brand luxury directly affects brand value. Some brand luxury authors discuss the extended self, the image and the status of the luxury of the brand associating with the selfconcept (e.g. Okonkwo, 2007; Phau & Min, 2009; Vickers & Renand, 2003; Vigneron & Johnson, 1999) as a reason why consumers desire luxury (e.g. Berthon et al., 2009; Jackson, 2004; Kapferer & Bastien, 2009). Sirgy et al. (1997) liken this to a consumer's desire to enhance the ideal social self, which is a consequence of owning a luxury brand. As such, the hypothesis is: H6. Brand luxury directly affects brand-user-imagery fit. Also associated with brand luxury is a willingness to pay a premium (Dubois & Duquesne, 1993; Dubois & Paternault, 1995; Dubois et al., 2005; Jackson, 2004; Keller, 2009). Willingness to pay a premium is not an element of luxury but, rather, a consequence of luxury. Prestige, the high levels of quality, price and a brand's ability to act as a Table 1 Examining brand luxury. Authors Brand luxury Atwal and Williams (2009) Luxury has moved beyond the traditional to be experiential and experiential luxury marketing includes the dimensions of entertainment, education, escapist and esthetic, which will vary in levels of consumer participation and connection with the brand. Berthon et al. (2009) Luxury is a conspicuous possession that is esthetically pleasing that offers status to the individual and that may be enjoyed inconspicuously or conspicuously and has some degree of exclusivity or rarity and a social mystique and encapsulates what a brand does (functional) and what a brand means to the individual (experiential) and to the collective (symbolic). Fionda and Moore (2009) Brand luxury has nine components: (1) clear brand identity, (2) luxury communications strategy, (3) product integrity, (4) brand signature, (5) prestige price, (6) exclusivity, (7) history or a story, (8) globally controlled distribution and (9) a luxury organizational culture. Godey et al. (2009) Luxury goods are synonymous with selectivity if not exclusivity and that the definition and measurement of luxury are highly subjective. Husic and Cicic (2009) Significant positive influences of brand luxury are the brand image itself and quality. Juggessur and Cohen (2009) High-fashion brand is a term often synonymously used with prestige and luxury brands as being brands that hold considerable intangible worth and have enduring positive brand images deemed as being at the forefront of design, quality, status and fashion Kapferer and Bastien (2009) Brand luxury has two facets; indulging in one's pleasures (luxury for one's self) and demonstration of success (luxury for others) and that when it comes to luxury, being unique is what counts Keller (2009) Brand luxury has ten characteristics: (1) maintaining a premium image, (2) creation of intangible brand associations, (3) aligned with quality, (4) tangible elements like logos, symbols and packaging design, (5) secondary associations with linked personalities or endorsers, (6) controlled distribution, (7) premium pricing, (8) careful management, (9) broad definition and (10) legal protection of trademarks. Kim et al. (2009) The luxury brand is the highest level of prestige brands encompassing several physical and psychological values, such as perceived conspicuous value, unique value, social value, hedonic value and quality value. Tynan et al. (2010) Luxury is a one end of a continuum with ordinary, so where ordinary ends and luxury starts is a matter of degree as judged by consumers. Truong et al. (2008) The new luxury differs from the traditional luxury by being more affordable, more assessable and by targeting new consumers. Dumoulin (2007) The expression of today's luxury is about a celebration of personal creativity, expressiveness, intelligence, fluidity and above all meaning. Okonkwo (2007) Luxury brands are highly visible, have a distinct identity, a global reputation, emotional appeal, are innovative, creative, unique and appealing and constantly deliver premium quality, premium price with a tightly controlled distribution Beverland (2005) Attributes of authenticity such as heritage and pedigree, stylistic consistency, quality commitments, relationship to place, method of production and downplaying commercial considerations may be transferred to luxury brands Moore and Birtwistle (2004) Luxury fashion brands have iconic product and design with integrity, where the manufacturer has tight control over the product, endorsement, distribution and premium pricing. Jackson (2004) A luxury fashion brand is characterized by exclusivity, premium prices, image and status, which combine to make them desirable for reasons other than function. Vigneron and Johnson (2004) and Vigneron and Johnson (1999) A luxury brand is a form of a prestige brand as prestige brands have three levels: up-market, premium and luxury and that the degree of luxury contain can be measured by conspicuousness, uniqueness, quality, hedonism and extended self. Wetlaufer (2004) The significance of corporate identity, culture and spirit, as well as creative excellence is necessary in luxury brand development. Alleres (2003) The luxury brand has six elements: the creators of the brand, the locations, the creations, recognition symbols, history and the brand name. Prendergast and Wong (2003) Good quality and design are associated with luxury Silverstein and Fiske (2005) Luxury has evolved to refer to products and services that possess higher levels of quality, taste and aspiration than other goods in the category but are not so expensive as to be out of reach. Vickers and Renand (2003) Luxury brands with primary functional dimensions are designed to solve extrinsic consumption needs that are related to the physical product. Experientialism is associated with a consumer's desire to consume products that provide sensory pleasure. Luxury goods scoring high on symbolic interactionism are designed to associate the owner with a desired group, role or self-image. Dubois et al. (2001) and Dubois and Paternault (1995) Luxury has six elements of (1) excellent quality (2) high price (3) scarcity and uniqueness (4) esthetics and polysensuality (5) ancestral heritage and personal history (6) superfluousness Gutsatz (2001) Luxury includes two levels of representation. The first is material, it includes/understands the product and the brand (its history, identity, unique know how, talent). The second level is psychological and covers representations, which are influenced by our social environmental and brand values. Phau and Prendergast (2000b) Luxury brands evoke exclusivity, have a well-known brand identity, enjoy a high brand awareness and perceived quality and retain sales levels and customer loyalty. Nueno and Quelch (1998) A luxury product is a work of art designed for an exclusive market and is derived from the Latin word luxus, which means indulgence of the senses regardless of cost and differs to luxury brands, which are those brands whose ratio of functional utility to price is low while the ratio of intangible and situational utility to price is high. Kapferer (1997) Luxury brands include the attributes of quality, beauty, sensuality, exclusivity, history, high price and uniqueness Dubois and Duquesne (1993) Luxury involves a desire to impress others, with the ability to pay particularly high prices and an ostentatious display of wealth K.W. Miller, M.K. Mills / Journal of Business Research 65 (2012) 1471–1479 1473

status symbol are contributing factors influencing an individual consumer's willingness to pay a premium (O'Cass & Choy, 2008). Consumers seem to be more willing to pay a premium price for a luxury brand. Therefore, the hypothesis is: H7. Brand luxury directly affects willingness to pay a premium. The link between the self-concept relating to value and purchase is the subject of considerable research, with perhaps important implications for developing clarity regarding fashion brand luxury. Miller's (2007a) research examines the relationship between brand status and brand fit, finding a reasonably strong relationship. Furthermore, Miller's (2007a,b) research results demonstrate brand fit positively influences brand value and the impact of brand status on brand value varies depending on product category. The variability of brand status warrants additional research into this area. According to Sirgy et al. (1997) and Miller (2007a,b), the more a consumer assesses one's self to be similar to (or match) the typical brand-user, the more likely the individual consumer assesses the brand to be of value and or is willing to pay a premium for the brand. Therefore, the hypotheses are: H8. Brand-user imagery fit directly affects brand value. H9. Brand-user imagery fit directly affects willingness to pay a premium. Keller (2009) and others argue that the assessed value of the brand is likely to influence whether a consumer is willing to pay a premium; therefore, the hypothesis is: H10. Brand value directly affects willingness to pay a premium. 3. Research design 3.1. Sample design Given the growing agreement that luxury customers are substantially younger, more affluent (Okonkwo, 2007; Truong et al., 2009), making their money sooner than previous generations, and are more fickle with their choices (Twitchell, 2002), generation Y is an obvious choice as the homogeneous group appropriate for sample selection. Generation Y is the second largest generational cohort (behind the baby boomers) and differs to other generational cohorts, growing up in a world infused with brands (Martin & Turley, 2004; Vahie & Paswan, 2006). By choosing a more homogeneous, rather than heterogeneous, group of consumers, the expectation is that this will reduce confounding variables that might introduce differences between groups and dilute the effects of one brand luxury construct on another (Noble & Schewe, 2003). 3.2. Determining fashion category and brands to study Fashion is the context to examine brand luxury. Imperative to the integrity of the study is that the luxury fashion categories and brands are relevant to generation Y. Luxury is in the mind of the consumer and in a position of superiority with respect to the client (Kapferer & Bastien, 2009 p 314). To select the product categories and brands for this study, the researchers assembled a convenience group of 41 volunteer generation-Y university students and asked them to write down popular fashion product categories. Within the popular fashion categories, the researchers asked the generation Y participants to list luxurious brands. Compiling the results, the findings confirm the most popular fashion categories are fashion sport shoe wear, fashion surf wear and cell phones (considered a fashion accessory). Within those fashion categories, the generation y participants report the most luxurious brands are Nike, Tiger Asics, Nokia, Samsung, Billabong and Mambo. These fashion categories and brands form the basis of the survey, using Nike (or Tiger Asics) with the words fashion sport shoe wear and Billabong (or Mambo) with the words fashion surf wear. The surveys were identical except for the name of the brand (and the fashion category). 3.3. Designing the survey Designing the survey using Netemeyer, Bearden, and Sharma's (2003) four-step procedure involved defining the constructs (step one), with Table 2 showing these definitions. Step two involves generating a list of items from the literature to match the definitions, then comparing and judging the items on their psychometric properties, reliability, validity and the accuracy with which they reflect the constructs (Bagozzi, 1994). The third step involves refining the scale items: determining which items to retain by using a panel of five expert judges to evaluate the items on the representativeness and matching of the definitions. To decide which items to retain, the researchers used the sum-score approach (Hardesty & Bearden, 2004). The sum-score approach involves the expert judges assigning a numerical value for each potential survey item and then the researchers summing the judge's scores to give each survey item a summated score. Using an 80% level of agreement, 25 items scored 12/15 or more. Eighty percent is above the 75% benchmark (Hardesty & Bearden, 2004; Obermiller & Spangenberg, 1998). To measure the 25 survey items, the researchers selected a seven-point scale because a seven-point scale sufficiently captures the similarities and differences meaningful to the participants (Viswanathan, Sudman, & Johnson, 2004). The researchers constructed the survey using seven points on a Likert scale to measure the constructs of brand luxury, brand-user imagery fit, brand value and willingness to pay a premium, and a seven-point lexical scale to measure brand leadership and brand innovativeness. The fourth step in survey development involves finalizing the scale, and then conducting a pilot test on a sample similar to those participants in the final analysis (Churchill, 1979). To pilot test the survey, the researchers placed several signs around campus asking generation Y volunteers to evaluate a branding survey. The pilot test participants then joined one of six focus groups. After completing the survey, the pilot-test sample discussed their understanding of what the survey was asking them, the ease in completing the survey, their opinions on the survey length, the survey's wording and layout. For 93% of the participants, the layout and the format of the survey were acceptable. Table 2 Brand Luxury Model constructs and their definitions. Construct Definition Brand luxury A consumer assessment that a brand symbolizes prestige, lavishness and opulence Brand leadership A consumer assessment that a brand is successful, visionary, and is up-to-date with the latest trends Brand innovation A consumer assessment that through creativeness, expressiveness, imagination, originality and uniqueness a brand will develop and communicate new ideas to the marketplace Brand-user-imagery fit A consumer's overall assessment of the compatibility or match between themselves and users of the brand (based on Sirgy et al., 1997) Brand value A consumer's overall assessment of worth, based on what the consumer is prepared to relinquish relative to the benefits expected to be received (based on Netemeyer et al., 2003). Willingness to pay a premium A consumer's willingness to pay a higher price for a brand than for other brands they perceive as reasonably comparable (Based on Netemeyer et al., 2003). 1474 K.W. Miller, M.K. 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Using the data from the pilot test (n= 51), measures of dispersion and central tendency, such as mean, standard deviation, skew and kurtosis were checked, these were within acceptable bounds. The internal consistency of the scales using inter-item correlations and scale reliabilities were also within acceptable range (Bagozzi, 1994; Netemeyer et al., 2003), ranging from .89 to .96. Because of the sample size, a factor analysis was not appropriate (Flynn & Pearcy, 2001). All 25 items were retained. 3.4. Developing the data collection procedures To administer the survey, the researchers employed a group administered approach using Wolburg and Pokrywczynski's (2001) probabilistic sampling technique. This involved administering the survey on the same day and at the same time. This method ensured sampling without replacement. The survey participants were 18–25 year olds from ten Australian Universities spanning three Eastern Australian states. Gaining access involved attaining ethical clearance from each of the ten universities, determining a suitable day and time to access the generation Y participants, randomly selecting lecture theaters, then obtaining permission from the lecturer to access potential participants before gaining consent from the 18–25 year olds themselves to participate in the survey. The main disadvantage for group administration surveys is the potential for a lack of completed surveys. As this potential disadvantage may also be the case with other survey administration methods, this disadvantage was not sufficient to affect the choice of administration. After gaining access, the researchers invited the 18–25 year olds to participate anonymously in a 15-minute brand survey. The researchers informed the survey participants the importance of their individual opinions, and asked the participants not to discuss the survey with those around them. To ensure anonymity and comply with voluntary participation ethical considerations, the participants place their complete or incomplete surveys in the same brightly colored box. 4. Results The researchers distributed nine hundred surveys (300 per fashion product category), of these, 644 were usable as returned (a response rate of 72%). Slightly more females (n=367; 57%) than males (n=277; 43%) responded, and most were aged 18–21(n=483; 75%). The researchers noted similar response rates for each of the three fashion product categories with 212 participating in ready-to-wear fashion sport shoe wear, 218 in ready-to-wear fashion surf wear and 214 in the cell phone fashion accessory category. The preliminary results indicate the suitability of the data for further analysis. Table 3 shows the means, standard deviations, factor loadings and their respective t-values, which are all within acceptable bounds. Partial Least Squares (PLS) is an appropriate data analysis technique suitable for hypotheses testing. PLS consists of two models, the measurement model (which relates to the constructs and their measures), and the structural model (which relates the constructs to each other; see Jarvis, Mackenzie, & Podsakoff, 2003). At the measurement level, PLS generates the estimations of individual item loadings in the context of a theoretically specified model, rather than in isolation (Fornell & Bookstein, 1982). At the structural level, PLS considers all of the path coefficients simultaneously, which allows Table 3 Brand luxury: the measurement model (n= 644). Constructs and items Mean SD Loading t-value Brand luxury CRE= .93; AVE= .86 Brand X is a symbol of prestige 3.8 1.4 .94 129.2 Brand X is a symbol of luxury 3.6 1.4 .92 87.4 Brand leadership CRE= .89; AVE= .67 Successful 4.7 1.8 .80 41.4 Trendy 4.3 1.6 .83 53.1 Up-to-date 4.4 1.7 .85 50.3 Visionary 4.0 1.8 .79 46.6 Brand innovativeness CRE= .89; AVE.63 Creative 4.4 1.6 .83 58.3 Expressive 3.9 1.7 .74 30.1 Imaginative 4.2 1.7 .81 43.3 Original 4.3 1.7 .78 35.4 Unique 3.9 1.8 .81 47.4 Brand-user fit CRE= .96; AVE= .83 People think brand X's image is more like my image than other brands 2.8 1.3 .90 71.5 I am very much like the typical person who prefers brand X, rather than other brands 2.8 1.4 .92 97.7 I identify with people who prefer brand X 2.9 1.4 .91 90.1 I am very much like the typical wearer/user of band X 2.9 1.4 .94 152.3 I am similar to people who wear/use brand X 3.0 1.4 .89 67.7 Brand value CRE= .95; AVE= .77 Brand X is worth it because it gives me more than other brands 3.8 1.2 .88 65.2 I am willing to spend time finding brand X because brand X is worth the effort 3.5 1.4 .87 74.4 Brand X is of value because its benefits outweigh the costs 3.7 1.3 .90 66.5 All things considered, brand X is a good buy 4.1 1.3 .90 81.1 Brand X is good value for money 3.9 1.3 .87 73.3 Brand X is better value for money than other brands 3.7 1.3 .88 72.00 Willingness to pay a premium CRE+ .96; AVE= .89 I am willing to pay a higher price for brand X than for other brands of product Y 3.2 1.3 .92 70.9 Even if the other brands are priced lower, I will still buy brand X 3.1 1.4 .95 159.7 Even though brand X seems comparable to other brands I am willing to pay more 3.1 1.4 .95 126.1 CRE = Composite Reliability Estimates and AVE = Average Variance Extracted. 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analysis of all direct, indirect and spurious paths to be assessed together (Chin, 1998). 4.1. Measurement model Table 3 shows the measures exceed standard conventions (Brown & Chin, 2004). The standard convention for composite reliability estimates (CRE) and factor loadings is .70 (Johnson, Herrmann, & Huber, 2006; White, Varadarajan, & Dacin, 2003). When the CRE measure is above .70 this provides evidence of internal consistency (White et al., 2003), suggesting that sharing with the construct is at least half of the variance in the item (Johnson et al., 2006). Table 3 shows the CRE measures range from .89 (brand leadership) to .96 (willingness to pay a premium; brand-user-imagery fit) and the factor loadings range from .74 (expressive) to .95(willingness to pay a premium). The factor loadings are significant as the bootstrap critical ratios range from 41.43 to 159.73, these are well above the benchmark of 1.96 (O'Cass & Pecotich, 2005). Another important measure is average variance extracted (AVE), as when the AVE measure is above .50 this reveals that the shared variance in a construct exceeds the measurement error variance (Dillon & Goldstein, 1984), the AVEs range from.63 (brand innovativeness) to .89 (willingness to pay a premium). The results in Tables 3 and 4 show the AVEs are above .50, providing sufficient evidence of convergent validity (Fornell & Larcker's, 1981). Table 4 provides support for discriminant validity as the AVEs are greater than the squared multiple correlations. Discriminant validity suggests that the constructs each have more internal (extracted) variance, than shared variance between the constructs (Fornell & Larcker's, 1981). The squared multiple correlations range from .09 (brand innovation and brand user-imagery fit) to .44 (brand value and willingness to pay a premium). Harman's one factor test assesses the likelihood of common method variance (Podsakoff, Mackenzie, Lee, & Podsakoff, 2003). Common method variance may occur because of the method of data collection, particularly in the case of single-source data collection methods (Campbell & Fiske, 1959). The Harman's one factor test determines whether the constructs have sufficient variance. Evidence of common method variance can inflate or attenuate the results (Podsakoff & Organ, 1986). The finding of six factors using Harman's one factor test, suggests no evidence of common method variance and that any differences in variance are due to the constructs and their effects in the model. 4.2. Structural model To obtain the results of the structural model, the researchers employed a bootstrapping process of 500 runs (White et al., 2003) to assess the ten (10) hypotheses. The results of the ten hypotheses are in Table 5 and Fig. 1. Reading Table 5 from left to right, the exogenous constructs (column 1), the endogenous constructs (column 2), the hypothesis number (column 3), the beta weights (path coefficients - column 4), variance due to path (column 5), R2 (column 6), and the bootstrap critical t ratios (column 7) all exceed 1.96 and statistically support the ten hypotheses. Of importance in examining brand luxury is variance explained due to the path (column 5), which is the absolute value of the product of the path coefficient and the appropriate correlation coefficient (Weeawardena, O'Cass, & Julian, 2006). Importantly, column 5 (Table 5) shows the individual contribution each construct path adds to the endogenous construct, providing information on extent and size of the construct's impact (Johnson et al., 2006). Looking at the hypotheses, the results show statistical support for the antecedents of brand luxury. The weakest path is H1, which shows any variation in brand innovation may explain 5% of the variation in brand luxury. The antecedent of brand leadership (H2) has a much stronger effect, explaining 23% of the variance in brand luxury. The strongest path in the model is H3, showing that any variation in brand innovation explains about 38% of the variation in brand leadership. Brand innovation, which includes uniqueness, creativeness, originality, expressiveness and imagination, seems to affect brand luxury in one of two ways. The first is direct, having a small but direct effect on brand luxury (H1). The second, and possibly the most likely, is a larger indirect effect through brand leadership (H2 × H3) explaining 27% of the variation in brand luxury. The hypotheses results demonstrate the importance of brand leadership on perceptions of brand luxury. Brand leadership has a reasonably strong direct effect on brand luxury assessments. Brand leadership also acts as a mediator between brand innovation and brand luxury. Once a consumer perceives a brand as luxurious, the results indicate that brand user-imagery fit (H6; 22%; t= 13.02), followed by brand value (H5; 11%; t= 5.68) and willingness to pay a premium (H7; 6%; t= 3.15) are significant consequences of brand luxury perceptions. This result suggests that a person is willing to pay a premium for a luxury brand if the current users of the luxury brand fit the Table 5 Brand luxury: the structural model (n= 644). 1 2 34 5 67 Exogenous constructs Endogenous constructs Hyp Path coefficients Variance due to path R2 t-ratio Brand innovation Brand luxury H1 .12 .05 .28 2.32 Brand leadership H2 .44 .23 8.78 Brand innovation Brand leadership H3 .62 .38 .38 21.28 Brand leadership Brand value H4 .13 .05 .39 3.48 Brand luxury H5 .22 .11 5.68 Brand fit H8 .42 .23 5.68 Brand luxury Brand fit H6 .47 .22 .22 13.02 Brand luxury H7 .12 .06 3.15 Brand fit Willing to pay a premium H9 .27 .16 .52 6.90 Brand value H10 .46 .30 12.58 Average variance accounted for (AVA) .36* Table 4 Examining discriminate and convergent validity using squared correlations and average variance extracted (AVE). Brand luxury Brand leadrshp Brand innovatn Brand u-fit Brand value W pay prem Brand leadrshp .27 Brand innovatn .16 .38 Brand u-fit .22 .14 .09 Brand value .23 .16 .12 .32 W pay prem .21 .11 .10 .34 .44 AVE .86 .67 .63 .83 .77 .89 1476 K.W. Miller, M.K. Mills / Journal of Business Research 65 (2012) 1471–1479

image of the individual consumer (H8; H9), and/or the individual consumer assesses the brand to provide overall value (H10). Fig. 1 shows the strongest path in the Brand Luxury Model is innovation→leadership→brand luxury→user-imagery fit→value →willingness to pay a premium. This finding indicates that if a consumer perceives the brand to be unique and a leader, then possibly the consumer will perceive the brand as luxurious. Additionally, if individuals similar to the consumer use the luxurious brand, and if the consumer perceives the luxury brand to be of value, then very likely the consumer will pay a premium price for the luxury brand. Looking at Table 5 (and Fig. 1), another important statistical assessment is the R2 value. The R2 value indicates the proportion of the total variation of endogenous construct explained by the structural equation (Fornell & Bookstein, 1982). The R2 values range from .22 (brand-user-imagery fit) to .52(willingness to pay a premium) indicating the model is explaining a moderate to high percentage of a consumer's willingness to pay a premium for luxury fashion brands. The results show that contributing to the R2 value of .52 (willingness to pay a premium) are brand luxury (6%), brand-user-imagery fit (16%) and brand value (30%). The high contribution of brand value to willingness to pay a premium, which is twice as much as brand luxury, warrants evaluation of the contributing factors to brand value's R2 (.39). Table 5 shows contributing to brand value are brand leadership (5%), brand luxury (11%) and brand-user-imagery fit (23%). These results suggest as perceptions of brand leadership increase, so will perceptions that the brand is luxurious, and if the individual consumer perceives a match between the self and the brand's users, as this increases so will perceptions that the brand is of value. An increase in perceptions of brand value is likely to lead to an increase in an individual's willingness to pay a premium. Looking at Fig. 1, these results show that brand luxury can affect willingness to pay a premium directly (6%) or indirectly (10%) through brand value. The average R2 value or average variance accounted for (AVA) (Fornell & Bookstein, 1982) is on the bottom row of Table 5 and shows an average of 36% variance in the model, which is four times the minimum requirement of .10 (Falk and Miller, 1992). The AVA result (=.36) is above .30 providing evidence of the soundness of the model and evidence of a high predictive value (Fornell & Bookstein, 1982). Evaluating the structural and measurement results together is another way to assess the soundness of the model (Stan & Saporta, 2005). Using the formula developed by Amato, Vinzi, and Tenenhaus (2004; AVE ffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi P
AVA p ), the findings indicate the square root of .78 (mean AVE) × .36 (mean AVA)=.53, exceed the benchmark of .42 and add further statistical evidence that the Brand Luxury Model is of sound quality. 5. General discussion 5.1. Conclusion Despite Kapferer and Bastien's (2009) assertion regarding luxury, which suggests being unique is what counts, the results of the Brand Luxury Model show perceptions of brand leadership are actually more important than uniqueness. This result, though unexpected, is not entirely surprising when one looks again at past literature. Some authors suggest the management of luxury brands is somewhat different to other brands (Kapferer & Bastien, 2009; Nueno & Quelch, 1998). Luxury brand managers need to be more proficient at brand building, demonstrating management expertise in distribution, image management, product quality selection and the services that go with luxury products (e.g. Berthon et al., 2009; Kapferer & Bastien, 2009), which are all tenets often associated with successful brand leadership. Many of the rudiments in previous brand luxury typologies (see Table 1: e.g. Beverland, 2005; Fionda & Moore, 2009; Keller, 2009; Moore & Birtwistle, 2004) form aspects of brand leadership strategies, which the results show have an effect on perceptions of brand luxury and are an antecedent to brand luxury. Importantly, these facets of brand leadership are not part of brand luxury. They are separate, yet contributing factors to brand luxury. This finding suggests, possibly, a reason for much of the confusion in the brand luxury literature is that many of the typologies (see Table 1) are really looking at brand leadership and/or brand innovation in the luxury market. Leadership and innovation are managerial strategies and contributing factors to brand luxury, not to be confused with the term brand luxury. The results contribute evidence signifying successful brands or brands that are trendy, up-to-date, or visionary are likely to be more luxurious than brands that are unique, original, creative, expressive, or imaginative. This finding updates the current thinking on brand luxury, has implications for luxury brand managers, and contributes to the brand luxury literature. The results demonstrate firstly, that uniqueness is a separate construct to brand luxury, which is different to what others claim (e.g., Beverland, 2005; Dubois et al., 2005; Kapferer & Bastien, 2009; Keller, 2009; Vigneron & Johnson, Fig. 1. The Brand Luxury Model (n= 644). K.W. Miller, M.K. Mills / Journal of Business Research 65 (2012) 1471–1479 1477

1999). Secondly, that uniqueness is an antecedent to brand luxury and uniqueness is a much smaller antecedent to brand luxury than thought (e.g. Nueno & Quelch, 1998) contributing only 5% of the variance on brand luxury. Uniqueness in business is often associated with branding as a differentiating factor, unique selling propositions, positioning strategies and sustainable competitive advantages. Possibly, this idea of a unique identity is actually a product or branding strategy and not something exclusive to luxury brands. Generally, the product has the rare ingredients, or is a one-off, or hard to obtain, or difficult to find, or has handcrafted slight imperfections making the product, and not the brand, unique (Dubois & Paternault, 1995; Dubois et al., 2005; Juggessur & Cohen, 2009; Nueno & Quelch, 1998). Importantly, this finding helps luxury brand managers, academics and marketing practitioners understand the drivers, driver directionality, and the extent to which the drivers of luxury affect brand luxury perceptions. Another area in which the Brand Luxury Model updates current thinking in the brand luxury literature is in relation to value. The empirical results support Tynan et al. (2010) claim that symbolic/expressive value appears to be more important than economic value in the luxury brand domain. The Brand Luxury Model (BLM) results have important implications for brand luxury managers. The BLM results show when consumers perceive a match between themselves and the users of the luxury brand associated with symbolic value and experiential consumption value, consumers do not mind paying more. 5.2. Implications This study has implications for luxury brand managers. Luxury fashion brands are at the forefront of design, quality and status (Juggessur & Cohen, 2009). To remain at the forefront requires continued exceptional leadership skills. The BLM shows the importance of brand leadership, along with the act of developing one-off fashion pieces or unique fashion items are important contributing factors to brand leadership perceptions, and not to brand luxury. The study shows what makes a brand appear more luxurious are the vision and leadership of the brand in the market, and how up-to-date and successful the brand is, as these factors more strongly influence perceptions of luxury. This is an important finding for brand luxury managers, providing direction and contributing to the clarity of brand luxury in the fashion market. 5.3. Limitations While this research begins to address gaps in relation to brand luxury, and provides some clarity regarding the definition, operation and measurement of brand luxury, the study is by no means free of limitations. The probabilistic sample of Australian generation Y students, product categories, brands and survey methodology, while chosen for compelling reasons, may limit generalization to the broader population and warrant caution and further research. However, despite the limitations, this study does contribute to the brand luxury literature in examining fashion brand luxury more comprehensively than previous studies and by providing empirical support. After delineating brand luxury from similar concepts, future research may want to test the Brand Luxury Model in different luxury markets, or with different luxury consumers to see if the results are similar. Future research may also want to look at adding additional drivers, such as desire and dreams and/or more fully exploring the notion of value and how various different types of value fit into the brand luxury nomological network. 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Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand☆ Angella J. Kim a,1 , Eunju Ko b, ⁎ a University of Minnesota, College of Design Department of Design, Housing, and Apparel, 346 McNeal Hall, 1985 Buford Avenue St. Paul, MN 55108, USA b University, College of Human Ecology Department of Clothing and Textiles, 262 Seongsanno, Seodaemun-gu, Samsung Hall 318, Seoul 120-749, Republic of Korea article info abstract Article history: Received 1 December 2010 Received in revised form 1 June 2011 Accepted 1 August 2011 Available online 28 October 2011 Keywords: Luxury brands Perceived social media marketing (SMM) activities Value equity Relationship equity Brand equity Customer equity Purchase intention In light of a growing interest in the use of social media marketing (SMM) among luxury fashion brands, this study set out to identify attributes of SMM activities and examine the relationships among those perceived activities, value equity, relationship equity, brand equity, customer equity, and purchase intention through a structural equation model. Five constructs of perceived SSM activities of luxury fashion brands are entertainment, interaction, trendiness, customization, and word of mouth. Their effects on value equity, relationship equity, and brand equity are significantly positive. For the relationship between customer equity drivers and customer equity, brand equity has significant negative effect on customer equity while value equity and relationship equity show no significant effect. As for purchase intention, value equity and relationship equity had significant positive effects, while relationship equity had no significant influence. Finally, the relationship between purchase intention and customer equity has significance. The findings of this study can enable luxury brands to forecast the future purchasing behavior of their customers more accurately and provide a guide to managing their assets and marketing activities as well. © 2011 Elsevier Inc. All rights reserved. 1. Introduction The luxury market has attained maturity, along with the gradual expansion of the scope of its market and a rapid growth in the number of customers. Luxury market is a high value-added industry basing on high brand assets. Due to the increased demand for luxury in emerging markets such as China, India, and the Middle East, opportunities abound to expand the business more than ever. In the past, luxury fashion brands could rely on strong brand assets and secure regular customers. However, the recent entrance of numerous fashion brands into the luxury market, followed by heated competition, signals unforeseen changes in the market. A decrease in sales related to a global economic downturn drives luxury businesses to change. Now they can no longer depend solely on their brand symbol but must focus on brand legacy, quality, esthetic value, and trustworthy customer relationships in order to succeed. A key element to luxury industry becomes providing values to customers in every way possible. As a means to constitute customer assets through effective communication with consumers, luxury brands have tilted their eyes toward social media. Marketing communication using social media such as Twitter, Facebook, and YouTube has already been evaluated as business take-off tools for luxury fashion brands. Traditional designer houses such as Louis Vuitton provide live broadcasting fashion shows on their blogs. Ralph Lauren, Chanel, Donna Karan, and Gucci have worked with Apple to create iPhone applications. Many luxury houses create their own Twitter accounts or post themselves on Facebook. Brands and customers are communicating with each other without any restriction in time, place, and medium so that old-fashioned one-way communication is changed to interactive two-way direct communication. In this way, brands and customers are working together to create new products, services, business models, and values. Meanwhile, brands can gain exposure and strengthen relationships with customers. Social media marketing (SMM) is a two-way communication seeking empathy with young users, and even enforcing the familiar emotions associated with existing luxury brands to a higher age group. In addition, social media activities of brands provide an opportunity to reduce misunderstanding and prejudice toward brands, and to elevate brand value by creating a platform to exchange ideas and information among people online. With the increased use of SMM by luxury brands, it has become highly necessary to quantitatively analyze the effects of the social media. Thus, the purpose of this study is to identify the constructs of perceived SMM activities of luxury fashion brands, and to evaluate Journal of Business Research 65 (2012) 1480–1486 ☆ The authors gratefully acknowledge the reading and revision suggestions by C. Anthony Di Benedetto and Rajan Nataraajan to an earlier draft. The authors alone are responsible for all limitations and errors that may relate to the study and the paper. ⁎ Corresponding author. Tel.: +82 2 2123 3109. E-mail addresses: [email protected] (A.J. Kim), [email protected] (E. Ko). 1 Tel.: +1 612 624 2254. 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.10.014 Contents lists available at SciVerse ScienceDirect Journal of Business Research

the influence of those activities on customer equity and purchase intention. As the luxury business environment is undergoing a rapid change, this research will redefine the properties of luxury brands that affect their performance so as to guide businesses to manage and elevate them. This research will propose a strategy to enhance brands' performance by defining specific factors relating to customer equity and purchase intention. Moreover, the findings will enable luxury brands to forecast customer purchasing behavior and manage their customer equity and social media activity as well. 2. Social media marketing activities 2.1. SMM activities and their effects on firm performance Social media are online applications, platforms and media which aim to facilitate interactions, collaborations and the sharing of content (Richter & Koch, 2007). They take a variety of forms, including weblogs, social blogs, microblogging, wikis, podcasts, pictures, video, rating and social bookmarking. As their use increases exponentially, not only existing social networkers but even business firms and governmental organizations are joining and using them as communication tools. Unlike individual social networkers, these entities actively make use of the media for advertising and marketing. While commercial messages and interactions with consumers partner with media, events, entertainment, retailers, and digital services through social media, it is possible to perform integrated marketing activities with much less effort and cost than before. According to Kim and Ko (2010a), social media can have a dramatic impact on a brand's reputation. One-third of survey participants posted opinions about products and brands on the brand's blog, and 36% thought more positively about companies that have blogs. A recent study by DEI Worldwide (2008) provides the following statistics: 70% of consumers have visited social media sites to get information; 49% of these consumers have made a purchase decision based on the information they found through the social media sites; 60% said they were likely to use social media sites to pass along information to others online; and 45% of those who searched for information via social media sites engaged in word-of-mouth. The report states that companies not engaging in social media as part of their online marketing strategy are missing an opportunity to reach consumers. With a significant percentage of people passing along information to others through social media, the value of one customer is worth far more than what he or she initially spends. Thus, firms and brands now need to factor in the value of customers and also the influence of social media on them. 2.2. SMM activities of luxury brands Technology development benefits the world of fashion by attracting customers to interact with the brands. Fashion brands' involvement in such things as tweeting, blogging, and networking has led luxury brands to participate in the current trend. At first, most of the brands were somewhat reluctant to use technology; however, the industry has come to consider technology as an opportunity rather than a threat. Unlike the first predictions, social media do not act against the positive reputation of brands. Interaction with customers via social media sites such as Facebook and Twitter actually builds up friendly attention, even affection, toward brands and stimulates customers' desire for luxury. Luxury brands' use of social media began to surge in 2009. Gucci created a multicultural social network site, “Guccieyeweb.com,” as Gucci launched a new sunglasses collection targeting digital generation customers. Gucci updates its Facebook site as often as three times a day and is constantly tweeting on Twitter. Burberry launched a social network site, “Artofthetrench.com,” in November 2009, with the purpose being noncommercial: to elicit admiration for the design of their trench coats and create Burberry fans while communicating its culture with customers. Online sales increased after the site was launched and the participation of customers online resulted in broadened insights for Burberry as Burberry creates more stories of the brand (Samsung Design Net, 2009). Dolce & Gabbana uses social media in order to get direct feedback from its customers. Dolce & Gabbana invites fashion bloggers to the front seats of its fashion shows, and the bloggers instantly upload feedback from the show on Facebook and Twitter. In that way, customers get to see their favorite brand modeled directly without the involvement of fashion editors or merchandisers, and the company builds purchase intentions right away. Chanel, Louis Vuitton, Yves Saint Laurent, and Stella McCartney now have Facebook as well as Twitter accounts. 3. Customer equity and its drivers The value a customer brings to a firm is not limited to the profit from each transaction but is the total profit the customer may provide over the duration of the relationship with the firm (Kumar & George, 2007). Thus, customers are seen as the intangible assets a firm should wisely acquire, maintain, and maximize just like other financial assets (Blattberg et al., 2001). Customer equity, usually defined as the discounted sum of customer lifetime values, has been considered the most determinant of the long-term values of the firm (Kim, Park, Lee, Knight, Xu & Jeon, 2010; Lemon et al., 2001). 3.1. Drivers of customer equity Lemon et al. (2001) defines three types of equity—value, brand, and relationship—as key drivers of overall customer equity. First, “value equity” is the customer's objective assessment of the utility of a brand, based on perceptions of what is given up for what is received (Vogel et al., 2008). Three key influences on value equity are quality, price, and convenience (Lemon et al., 2001). Second, relationship equity expresses the tendency of customers to stay in a relationship with a brand, going beyond objective and subjective assessments of it. Usually, loyalty programs under a firm's control may enhance relationship equity; however, loyalty toward a certain brand grows weaker than yesterday as a variety of alternatives are offered to customers. What is necessary is to build strong customer relationship through special treatment or recognition, and community programs can be an efficient way to boost relationship equity. Third, brand equity is a customer's subjective and intangible assessment of the brand over and above its value (Kim et al., 2008; Lemon et al., 2001). Brands are the best at building images that make customers identify that specialty from among others (Keller, 1998). The key actionable levers of brand equity are brand awareness, attitude toward the brand, and corporate ethics (Lemon et al., 2001). 4. Purchase intention Purchase intention is a combination of consumers' interest in and possibility of buying a product. As a result of many studies, it strongly relates to attitude and preference toward a brand or a product (Kim, Kim & Johnson, 2010; Kim & Ko, 2010b; Kim & Lee, 2009; Lloyd & Luk, 2010) so that measuring purchase intention assumes consumers' future behavior based on their attitudes. Purchase intention is an attitudinal variable for measuring customers' future contributions to a brand, whereas customer equity is a behavioral variable accounting for actual purchasing record. As forecasting of consumers' future behavior becomes a critical issue for a firm, that future behavior should be estimated more punctually (Park, Ko & Kim, 2010). A.J. Kim, E. Ko / Journal of Business Research 65 (2012) 1480–1486 1481

5. Design of hypotheses Initially, the purpose of marketing is to form a communication by which a firm is able to inform customers of its products and services and create interest in its offering. Marketing is a multidimensional process made up of various strategies; however, a primary goal of any marketing strategy is to increase sales and profitability. According to Srivastava et al. (1998) marketing is an investment that improves customer equity drivers. As a brand's engagement in social media performs as a marketing activity to build a relationship with customers and increase corporate profits, luxury brands' social media activity is expected to initiate positive influence on the drivers of customer equity. H1. Perceived social media marketing activities have positive effect on value equity. H2. Perceived social media marketing activities have positive effect on relationship equity. H3. Perceived social media marketing activities have positive effect on brand equity. In calculating customer equity, Rust et al. (2000) attempt to link marketing input to customer reaction. Since examining customer equity drivers and developing the RLZ model incorporating a customerspecific, brand-switching matrix, Rust et al. (2004) tested their previous model in the airline industry and proved that value equity, relationship equity, and brand equity are all related to customer equity. The same model was also applied to measuring customer equity of fashion brands in several studies (Ko & Oh, 2009; Ko & Lee, 2009; Yun & Ko, 2006; Zhang, Ko, & Kim, 2010). In order to identify constructs of each customer equity driver and prove the RLZ model's acceptance in the luxury fashion industry, consider the following three hypotheses were developed. H4. Value equity relates positively to customer equity. H5. Relationship equity relates positively to customer equity. H6. Brand equity relates positively to customer equity. In order to predict future customer behavior, ways of matching their attitudes and actions seems necessary. As proven in many studies dealing with decision-making processes, attitude is the antecedent of behavior. Thus, customer equity drivers are likely to have similar influences on purchase intention as well. Therefore, this study (a) compares and analyzes the effects of customer equity drivers on customer equity and purchase intention, and (b) examines a path from purchase intention and customer equity. Hence, the final hypotheses are put forth as follows: H7. Value equity relates positively to purchase intention. H8. Relationship equity relates positively to purchase intention. H9. Brand equity relates positively to purchase intention. H10. Purchase intention relates positively to customer equity. 6. Method 6.1. Preliminary test A preliminary test was completed to select a sample luxury brand. Fifteen graduate students majoring in fashion marketing were asked to list three luxury fashion brands that came to mind when thinking of luxury. Louis Vuitton was mentioned most often. According to Digital IQ Ranking developed by Scott Galloway, NYU Stern (L2 Think Tank, 2010), Louis Vuitton was ranked number one among luxury fashion brands. Gucci, Burberry, and Dolce & Gabbana followed after. Digital IQ of luxury brands were rated based upon four categories; (1) effectiveness of brand site, (2) marketing efforts and off-site brand presence and visibility on search engines, (3) brand presence, following, content, and influence on major social media platforms, (4) compatibility and marketing on smart phones and other mobile devices. Since Korean consumers have developed high brand awareness of Louis Vuitton and the brand also shows high engagement in SMM activities, Louis Vuitton was chosen to represent luxury brands in this study. 6.2. Measures SMM activities of luxury brands include introducing a brand's products, services, and a brand itself in a sincere manner and providing variety of services to consumers who engage in social media activities as means of marketing communications. This study measured perceived activities and provided values on brand's social media platforms. 90% of luxury brands are on Facebook and 48% are on Twitter as for 2010 (L2 L2 Think Tank, 2010). Since Facebook and Twitter are most often used by luxury fashion brands as means of SMM, a visual stimulus expressing Louis Vuitton's SMM activities on those sites was employed in the measurements. Twenty-five items for measuring perceived SMM activities were gathered from previous studies on luxury brand's social media marketing, attributes of two-way communication media, influence of mobile advertising, and characteristics of mobile fashion shopping related researches and modified to fit for this research through pretest (Chung & Lee, 2008; Han & Shu, 2010; Kim, 2010; Kim & Chung, 2009; Lee, 2007). Twenty-two items were developed in accordance with Berry (1995), Gagliano and Hathcote (1994), Rust et al. (2000), and Wiedmann et al. (2009) to measure value equity. Constructs of value equity measures included price, product quality, service quality, convenience, and the tangible environment of the retailer, individual value, and social value. Ten items to measure relationship equity were developed from Hennig-Thurau et al. (2002) and Ju and Chung (2002). Items assessed preferred treatment customer service, coincidence of image with brand, and overall affection. Measures of brand equity included brand awareness, perceived value, brand personality, brand association, and perceived uniqueness aspects. Ten items to measure brand equity were developed from Aaker (1991) and Yun (2006). Customer lifetime value of Louis Vuitton was estimated to represent customer equity as presented in Rust et al. (2004). Measures include number of expected purchases during the specified time period (customer lifetime), purchase frequency in a unit time (one year), discount rate, purchase volume, probability of purchasing that brand over competitors (equal or fewer than four competitors), and contribution margin. Brand's discounted rate and contribution margin was cited from LVMH 2009 Annual Report (2010). Measures of purchase intention were developed from the instrument used in Park et al. (2007). All of the above measurement statements were measured using five-point Likert-type Scales (1= Strongly disagree, 5= Strongly agree). 6.3. Sample and data collection Convenience samples were drawn from the Seoul metropolitan area via mall intercept method. Major luxury shopping districts in Korea are formed around the Seoul area and consumers living there tend to be more conscious of purchasing luxury brands and to have comparably high purchasing power for luxury fashion goods. Since this study focuses on luxury brand's SMM, respondents were 1482 A.J. Kim, E. Ko / Journal of Business Research 65 (2012) 1480–1486

restricted to consumers who had purchased any luxury fashion item within the previous two years and who had previous experience with Louis Vuitton's social media sites. Data were collected from survey questionnaires from May 10 to 25, 2010. From among the 400 survey questionnaires distributed, 362 were finally analyzed after excluding incomplete responses. 6.4. Data analysis In order to achieve the purpose of this study and to test hypotheses, the SPSS 17.0 and AMOS 18 statistics package programs were used. With SPSS 17.0, descriptive analysis was adopted to analyze the results of the preliminary test and to find out demographic characteristics of the sample. Also, Cronbach's α was adopted to test reliability. Using AMOS 18.0, confirmatory factor analysis was conducted to prove the validity of each instrument, while structural equation modeling was used to test hypotheses. 7. Findings 7.1. Demographic analysis Among a total of 362 luxury consumers, most of the respondents were female (79.3%), 58% were in their twenties, and 22.9% were in their thirties (consumers in their forties and fifties took up almost 9% each). With regard to education, 44.2% had a graduate degree, 38.1% had a college degree, and 17.7% were currently in college. Overall, the sample showed very high status in education. Regarding average household income levels, 23.3% of incomes were between 12 million and 15 million KRW, whereas 22.1% earned between 9 million and 12 million KRW. The total percentage of respondents whose income was over 9,000,000 KRW (a high income level) was 61%. This result was an expected outcome since the study sample represented luxury consumers with high purchasing power. Because this study deals with luxury fashion brands, respondents' luxury purchasing behavior was asked as well, indicating that 31.5% spend between 1 million and 3 million KRW per year and 23.8% between 3 million and 5 million KRW. High-volume consumers who spend more than an average of 5 million KRW were summed up to 24.6%, while those at the minimum level of luxury purchasing (b1 million KRW) comprised 20.2%. Except for this latter group, nearly 80% of the sample was real consumers of luxury fashion brands entailing a certain amount of monetary contribution. Table 1 summarizes the demographic characteristics of the sample. As for customer lifetime value (CLV) across samples, those less than 50,000 KRW represented 64.1% of the sample, 50,000 to 100,000 KRW made up 10.2%, and 100,000 to 500,000 KRW represented the second most at 22.9%. Those with CLV of more than 500,000 KRW totaled 2.7%. 7.2. Constructs of perceived social media marketing activities In advance of investigating the influence of SMM activities on customer equity drivers, the constructs of those activities perceived by consumers were revealed. Since dimensions of SMM activities were not clearly distinctive as a result of exploratory factor analysis, confirmatory factor analysis (CFA) was conducted. Cronbach's α of constructs was measured to prove internal consistency of each variable. First, a model to test the validity of the activities resulted in a satisfactory fit with the data: χ2= 138.5, df= 34, p= .000, AGFI= .88, GFI= .93, NFI= .94, IFI= .96, CFI= .95, RMSEA= .05. The five constructs of SMM activities were then verified; see Table 1. The first construct related to having fun using Louis Vuitton's social media; thus, it was defined as “Entertainment.” Factor loading of each item was .95 and .92, with a high Cronbach's α of .94. The second construct related to items representing interaction among other users accompanied by the use of Louis Vuitton's social media. This factor was named “Interaction” because items included information sharing and opinion exchange attributes. Factor loadings ranged from .68 to .92, with a Cronbach's α of .87. The third construct represented fashion-forward characteristics of Louis Vuitton's social media by including items that explained trendiness and newness. Therefore, the third factor is “Trendiness.” Factor loadings and Cronbach's α were qualified. Construct 4 represents customized property of social media, involving customized information and way of information searching. This factor is “Customized” and factor loadings were .91 and .83, with Cronbach's α of two items at .86. The last construct included customer's intention to pass along information seen in Louis Vuitton's social media, and is “Word of Mouth.” Factor loadings and Cronbach's α were qualified. A standardized factor loading of every item in the model was at a significant level (pb.001). Result indicates that a luxury brand's marketing activity using social media platforms entertains customers by offering a variety of free contents as well as social network activity, and enables customized information searching. Activities on the brand's social media platforms create interaction among users that can lead to word-ofmouth effects and include fashion and trend attributes. In contrast to existing marketing activities that appeal directly to the value of actual products or services, a luxury fashion brand's SMM activities focus more on hedonic and empirical values that can be reached by indirect brand experience. 7.3. Measurement model Confirmatory factor analysis (CFA) on the whole set of constructs in the structural equation model was conducted to test for convergent factor validity of the conceptual model and Cronbach's α was applied to test the reliability of each construct. The CFA model includes social media marketing activities, value equity, relationship equity, brand Table 1 Confirmatory factor analysis of perceived social media marketing activities. Construct Items Factor loading Cronbach's α Entertainment Using LV's social media is fun. .95 .94 Contents shown in LV's social media seem interesting. .92 Interaction LV's social media enables information sharing with others. .92 .87 Conversation or opinion exchange with others is possible through LV's social media. .90 It is easy to deliver my opinion through LV's social media. .68 Trendiness Contents shown in LV's social media is the newest information. .93 .83 Using LV's social media is very trendy. .75 Customization LV's social media offers customized information search. .91 .86 LV's social media provides customized service. .83 Word of mouth I would like to pass along information on brand, product, or services from LV's social media to my friends. .72 .70 I would like to upload contents from LV's social media on my blog or micro blog. .75 Model fit: χ2= 138.5, df= 34, p= .000 AGFI= .88, GFI= .93, NFI= .94, IFI= .96, CFI= .95, RMSEA= .05 A.J. Kim, E. Ko / Journal of Business Research 65 (2012) 1480–1486 1483

equity and purchase intention, and customer equity is excluded in the analysis since it is measured in customer lifetime value as a ratio variable. The means of measured variables of each latent constructs from the results of previous CFA were calculated to represent respective latent constructs which became measured variables (items) of CFA on measurement model. The latent constructs were correlated, whereas the measurement items and their error items were constrained to be uncorrelated. After dropping some items that possessed low factor loadings, validity of constructs was assessed by estimating the confirmatory measurement model. As a result, Trendiness and Customization constructs of SMM were removed from the model. The model resulted in satisfactory fit to the data: χ2= 161.3, df= 34, p= .000, AGFI= .85, GFI= .92, NFI= .92, IFI= .93, CFI= .93, RMSEA= .05. All variables demonstrate adequate construct reliability (Cronbach's α> .7); see Table 2. Followed by CFA of model constructs, Pearson correlation analysis was examined to verify discriminant validity among all the variables in the conceptual model. See Table 3 for findings. 7.4. Structural model The conceptual model was tested according to Anderson and Gerbing (1988). With the results of the CFA in the prior section, the model was tested by standardized coefficients and other fit statistics. Fig. 1 shows the findings. Overall model fit was satisfactory. The chi-square statistic (χ2= 183.5, df= 43) was at a significant level (p= .000), and the fit indices were within accepted standards (RMR= .04, NFI= .91, IFI= .93, CFI= .93, GFI= .92, RMSEA= .05). After the overall model fit was approved, hypotheses were tested via structural equation modeling. With regard to the three paths between SMM activities and customer equity drivers (H1–H3), the estimation results showed that every path was significant at the p= .000 level. SMM activities had positive effects in value equity (β= .19, t= 3.75), relationship equity (β= .36, t= 5.40), and brand equity (β= .36, t= 5.91). To restate, the entertainment, interaction, and word-of-mouth effects of SMM activities work positively in enhancing customer equity drivers. With regard to the relationship between the customer equity drivers and customer equity (H4–H6), only one path was significant at the level of pb.05. Unlike previous studies, value equity and relationship equity had no significant effect on customer equity, while brand equity had a negative influence (β=−.45, t=−2.53). The result for H6 was supposed to be a consequence followed by characteristics of a sample brand used in this study. As Louis Vuitton becomes popular among Korean consumers and counterfeits of its products sweep through the market, the unique and distinctive elements that form the Louis Vuitton brand equity somewhat degrade the scarcity value of the brand, resulting in a negative effect on customer equity. In regard to the relationship between the three customer equity drivers and customer equity, the study evaluates the drivers' influences on purchase intention (H7–H9). The estimation results show that value equity (β= .47, t= 3.47) and brand equity (β= .66, t= 7.73) had positive effects on purchase intention at a significant level of p= .000. However, relationship equity did not have a significant influence on purchase intention. Purchase intention likely will improve by SMM activities through value equity and brand equity. A possible explanation for this non significant effect of relationship equity on customer equity and purchase intention is that relationship equity can be formed by a long-term relationship between a brand and a customer; thus, insofar as the respective sample were not loyal customers of Louis Vuitton, measuring relationship equity became difficult. Finally, a path between purchase intention and customer equity (H10) was significant at the level of p= .000 (β= .83, t= 4.13). Since a path from purchase intention to customer equity is significant, SMM activities of luxury fashion brands could consequently influence customer equity through the effects of value equity and brand equity on purchase intention. 8. Conclusions and implications The study presents here examines the effects of the social media marketing activities of luxury fashion brands on customer equity and purchase intention. SMM activities perceived by consumers were significantly efficacious to luxury fashion brands' future profits. The findings of the study support the following conclusions. First, SMM marketing activities of luxury fashion brands comprise five constructs; entertainment, interaction, trendiness, customization, and word of mouth. The brands' SMM activities perceived by consumers include distinctive values compared to old-fashioned marketing performances. Second, SSM activities perceived by customers are influential to all customer equity drivers. Since these activities for luxury fashion brands act affirmatively toward all drivers, they are fairly effective. As an integrated marketing medium, SSM activities effectively enhance value equity by providing novel value to customers that traditional marketing media do not usually provide. The brand's social media platforms offers venues for customers to engage in sincere and friendly communications with the brand and other users, so the brand's intended actions on the social communication scene were positively affecting relationship equity and brand equity as well. As the main purpose of marketing communication is to improve customer equity drivers by strengthening customer relationship and creating purchase intent, SMM activities contribute as effective marketing communication methods. With the growing interest of luxury fashion brands in providing luxurious values to customers in every way possible, using social media for marketing appears to be an appropriate medium to attract luxury consumers at the moment. As so, more luxury brands should engage in social media activities to Table 2 Validity and reliability test for structural equation model. Construct Items Factor loading Cronbach's α Social media marketing activities Entertainment .76 .77 Interaction .66 Word of mouth .75 Value equity Product/service quality .90 .77 Social value .71 Relationship equity Affinity .84 .81 Special treatment .80 Brand equity Uniqueness .84 .78 Distinctiveness .75 Purchase intention I would like to purchase LV .83 .80 I would like to recommend LV to others .79 Model FIT: χ2= 161.3, df= 34, p= .000 AGFI= .85, GFI= .92, NFI= .92, IFI= .93, CFI= .93, RMSEA= .05 Table 3 Correlation matrix among each constructs. Constructs 1 2 3 4 5 6 Mean S.D. 1 SMM 1.00 3.19 .76 2 Value equity .37⁎⁎ 1.00 2.68 .81 3 Relationship equity .28⁎⁎ .70⁎⁎ 1.00 2.43 .81 4 Brand equity .41⁎⁎ .50⁎⁎ .53⁎⁎ 1.00 3.09 .80 5 Purchase intention .48⁎⁎ .53⁎⁎ .54⁎⁎ .65⁎⁎ 1.00 3.07 .92 6 Customer equity .18⁎⁎ .43⁎⁎ .36⁎⁎ .31⁎⁎ .51⁎⁎ 1.00 5.27 1.16 ⁎⁎ pb.01. 1484 A.J. Kim, E. Ko / Journal of Business Research 65 (2012) 1480–1486

anticipate positive contributions to brands by providing new luxury values to customers. Third, unlike findings in prior studies, the three customer equity drivers show no positive influence on customer equity in the case of a luxury fashion brand. In fact, brand equity has a negative influence in the present study. Possible reasons for the results are as follows. First, in the process of measuring the customer equity of the sample luxury brand, future purchasing behavior toward a certain brand was collected from general luxury customers whose customer lifetime value for the measured brand was not comparably high. Second, due to increased competition among luxury fashion brands, it has become more difficult to sustain customer loyalty toward a specific brand and other factors might have been affecting customer equity more than the three drivers examined in this study are hardly controlled by brands over time. The findings of this study not only draw attention to defining customer equity drivers of luxury fashion brands, they also indicate the great difficulty in measuring customers' future behavior. As competition among luxury fashion brands becomes more intensive from providing plenty of alternatives to customers, the prosperity of the brands no longer seems promising. The importance of managing customers as brands' valuable assets cannot be emphasized more. In comparing the influence of three customer equity drivers on purchase intention, value equity, and brand equity, this study found significant positive impacts. The Korean luxury fashion industry is barely into its mature stage, and Korean customers tend to be trend-sensitive cross-shoppers with shallow loyalty toward specific brands. Restating that, Korean luxury consumers hardly can develop relationship equity toward a luxury fashion brand. For now, brand and value equity are more influential to luxury fashion brands' performance than relationship equity. Finally, concerning the relationship between purchase intention and customer equity, which can be redefined as a short-term attitudinal variable and a long-term behavioral variable, the two factors connect each other highly. Luxury fashion brands should continuously invest their efforts to improve value equity and brand equity because both equities affect purchase intention. As SMM activities influence these factors, taking social media marketing into account can be a possible solution. This study had some difficulties in locating the effects of SMM activities on a brand's customer equity. However, the study should be counted meaningful in that it has defined attributes of a newly introduced manner of marketing communication and evaluated its effects in its introductory stage. 9. Limitations and future research The limitations and future research directions are as follows. First, as an initial effort to evaluate effect of social media marketing, a visual stimulus used to measure attributes of social media marketing activities face difficulties in controlling possible error. Due to a reason mentioned above, limitation follows in generalizing the result of the study. Future study should develop effective instrument to measure social media marketing more appropriately. Second, the study questions prior findings on the relationship among customer equity drivers and customer equity in the case of luxury fashion brand. As three equity drivers have no significant effects on luxury brand's customer equity, studies to figure out relevant factors affecting customer equity of luxury brands seem necessary in order to provide practical information on managing and enhancing their important asset. Plus, worth of customer lifetime value that this study calculates was quite low considering price of luxury fashion goods. With necessity of defining factors driving customer equity of luxury fashion brands pointed out, an accurate equation to measure customer lifetime value of luxury fashion brands is necessary. Lastly, empirical findings on this study from samples of Korean luxury consumers who are innovative in use of technology and fans of luxury brands. However, western consumers mostly use luxury *** p < .001 χ2 = 183.5, df = 43, p = .000 RMR = .04, NFI =.91, IFI = .93, CFI = .93, GFI = .92, RMSEA = .05 Fig. 1. Results of structural equation model. A.J. Kim, E. Ko / Journal of Business Research 65 (2012) 1480–1486 1485

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Increasing customer equity of luxury fashion brands through nurturing consumer attitude☆ Kyung Hoon Kim a, ⁎, Eunju Ko b,1 , Bing Xu b,2 , Yoosun Han c,3 a Department of Business Administration, Changwon National University, 9 Sarimdong, Gyeongnam, 641-773, Republic of Korea b Department of Clothing and Textiles, Yonsei University, 262 Seongsanno, Seodaemun-gu, Seoul, 120-749 Republic of Korea c Department of Business Administration, University of Illinois at Urbana Champaign, 350 Wohlers Hall, 1206 South Sixth Street, Champaign, IL 61820, USA article info abstract Article history: Received 1 February 2011 Received in revised form 1 July 2011 Accepted 1 September 2011 Available online 1 November 2011 Keywords: Attitude toward luxury brands Customer equity Customer lifetime value Value equity Brand equity The global luxury industry has seen steady growth for the last 15 years. It is one of the most attractive and profitable industries. Asia became the most potential region where the average income has risen significantly. Korea is one of the most attractive luxury markets in Asia. This study examines consumers' attitudes toward luxury brands and the relationship among attitude toward luxury brands, drivers of customer equity and customer lifetime value in Korea. Results of data analysis indicate that experiential need and fashion involvement are important antecedents of participants' attitude toward luxury brands. Attitude toward luxury brands positively influences luxury brand equity and value equity. This research finds that there is no significant relationship between attitude toward luxury brand and relationship equity. And as we expected, customer equity positively influences customer lifetime value. © 2011 Elsevier Inc. All rights reserved. 1. Introduction World-wide sales volume of luxury goods increased significantly up to US$ 130 billion in 2007 (Okonkwo, 2007). In particular, the demand for luxury brands has grown rapidly in Asia. Ownership of luxury brands can reflect the owner's social status as luxury brands are universally recognized as a statement of good taste in a global economy (Nueno & Quelch, 1998). There are various definitions of luxury brands. For example, luxury brands are defined as products whose price and quality ratios are the highest in the market (McKinsey, 1990). Vigneron and Johnson (1999) indicate that luxury brands are the highest level of prestigious brands encompassing several physical and psychological values. In spite of the increase in luxury brand products consumption, there is a paucity of research in this area. Fionda and Moore (2009) identified seven dimensions of luxury brands, including brand/marketing strategy, product and design, price exclusivity, communications strategy, brand leadership/designer, distribution strategy and heritage. However, a few studies have examined consumers' attitudes towards luxury brands. Since many European luxury brands have expanded rapidly into the emerging markets of Asia, it is important that these companies understand the determinants of consumers' attitudes toward the luxury brand. The purposes of this study are: (1) to identify the antecedents of attitude toward luxury brands, (2) to examine how consumers' attitudes toward luxury brands impact customer equity, (3) to investigate the effect of consumer' attitudes toward luxury brand products on customer lifetime value, and (4) to determine the impact of customer equity on customer lifetime value in a Korean context. This study presents a review of the relevant literature and conceptual research model and proposes research hypotheses. This research reports data analysis, discusses the results, and suggests managerial implications. 2. Literature review 2.1. Antecedents of attitude toward luxury brands 2.1.1. Materialism Belk (1984, 1985) defined materialism as a personality-like trait that distinguishes individuals who regard possessions as essential to their identities and lives compared to those who regard possessions as secondary. Richins and Dowson (1992) defines materialism as “a set of centrally held beliefs about the importance of possessions in one's life” focusing on the value placed on the acquisition of material objects. Richins and Dowson (1992) also argue that materialism influences consumption arenas, that is, the type and quantity of goods purchased. Journal of Business Research 65 (2012) 1495–1499 ☆ The authors thank Charles R. Taylor, Villanova School of Business and Seigyoung Auh, Thunderbird School of Global Management, for valuable comments and input to improve the quality of this manuscript. ⁎ Corresponding author. Tel.: +82 55 213 3346. E-mail addresses: [email protected] (K.H. Kim), [email protected] (E. Ko), [email protected] (B. Xu), [email protected] (Y. Han). 1 Tel.: +82 2 2123 3109. 2 Tel.: +82 2 2123 4651. 3 Tel.: +1 82 2 2123 4651. 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.10.016 Contents lists available at SciVerse ScienceDirect Journal of Business Research

2.1.2. Experiential need Experiential need reflects consumers' need for novelty, variety, and sensory gratification or pleasure (Park, Jaworski, & MacInnis, 1986). Experiential need has have been recognized as an aspect of consumption that is an important consideration as firms develop products to satisfy consumer needs. 2.1.3. Fashion involvement A number of previous studies have utilized involvement to examine fashion clothing (e.g. Browne & Kaldenberg, 1997; Fairhurst, Good, & Gentry, 1989; Flynn & Goldsmith, 1993; Tigert, Ring, & King, 1976). The importance of involvement is demonstrated by the defining role of fashion clothing in society. Further, fashion clothing's continual and cyclical nature implies people are often drawn into the “style” or fashion of the moment and that there are those who place a great deal of emphasis on their clothing. 2.2. Customer equity (CE) CE research is developing rapidly as researchers identify important factors in the relationships among key constructs (Hogan, Lemon, & Rust, 2002). Some marketing literatures have established value equity, brand equity, and relationship equity as key constructs of CE (Rust, Zeithaml and Lemon, 2000a,b; Rust, Lemon and Zeithaml, 2004; Rust, Lemon & Narayandas, 2005). These constructs are referred to as “drivers” that influence changes in customer equity are considered as determinants of CE. CE can be viewed as a tool that can be used to justify the development and implementation of a variety of marketing strategies. Blattberg and Deighton (1996) indicated that a firm should understand the value of their customer base to determine the optimal investment in specific customers. Other research has linked CE to the financial performance of a firm. Rust et al. (2004) focused on CE as a tool to evaluate marketing decisions. Managing budgets, companies must make resource allocation decision for marketing efforts including advertising, promotions, and sales. 2.3. Customer lifetime value (CLV) The notion of lifetime value of a customer has been well accepted by both researchers and business practitioners. It is generally believed that lifetime customers are the most profitable to a firm. Reichheld and Teal (1996) attributed the increase in profits from loyal customers to their willingness to pay price premiums, the added profits from sales through referrals, profit from cost savings obtained by serving a longtime customer, and revenue growth from a loyal customer due to increased sales to that customer. These are the most commonly held reasons for increase in profitability from lifetime customers. Customer lifetime value (CLV) is gaining importance as a marketing metric in both academia and practice. Many big companies are routinely using CLV as a tool to manage and measure the success of their businesses (Gupta et al., 2006). 3. Research model and hypotheses 3.1. Research model Fig. 1 shows a broad overview of the conceptual model used to discuss the relationships among antecedents of attitude toward luxury brands, customer equity customer lifetime value. 3.2. Research hypotheses Some studies (Fournier & Richins, 1991; Richins, 1994; Wong, 1997) have reported that materialism has a direct positive effect on conspicuous consumption or status- or success-oriented consumption. Fournier and Richins (1991) reported that two important motivations for materialism are status display and self-affirmation through ownership of status-oriented possessions. Richins (1994) found that highly materialistic people are more likely to value expensive and publicly displayed possession items, which signal success and social status. Some studies (Bearden & Etzel, 1982; Piron, 2000) have categorized luxuries into publicly and privately consumed. As such, materialists could consume luxury brands for the purpose of publicly displaying their success and social status. Considering the characteristics of global luxury brands, an individual's belief that others would recognize one's luxury brands may play a crucial role in luxury brand purchases. Korean consumers regard global luxury brands as symbols of prosperity and social status in a cross-culture context. Based on a review of the relevant literature, the following hypotheses are proposed: H1. Antecedents of attitude toward luxury brands will positively influence attitude toward luxury brands. H1-1. Materialism will positively influence attitude toward luxury brands. *ATLB: Attitude toward luxury brands Materialism Experiential Needs Fashion Involvement ATLB* Customer Lifetime Value Value Equity Relationship Equity Brand Equity Fig. 1. Research model. 1496 K.H. Kim et al. / Journal of Business Research 65 (2012) 1495–1499

H1-2. Experiential need will positively influence attitude toward luxury brands. H1-3. Fashion involvement will positively influence positively attitude toward luxury brands. H2. Attitude toward luxury brands will positively influence customer equity. H2-1. Attitude toward luxury brand will positively influence value equity. H2-2. Attitude toward luxury brand will positively influence relationship equity. H2-3. Attitude toward luxury brand will positively influence brand equity. H3. Attitude toward luxury brand will positively influence customer lifetime value. Rust et al. (2004) conducted CE studies in the airline industry and in the facial tissue industry with each yielding different drivers. Since drivers may change from one industry to another (Blattberg & Deighton, 1996; Rust et al., 2000a,b), the drivers should be established on an industry-by-industry basis. Firms need to recognize which of these three equities is most important for key customers and then focus their efforts on improvement. Value equity, which is a customer's objective assessment of the utility of a brand, includes convenience, price, and convenience (Zeithaml, 1988). Relationship equity is “the tendency of the customer to stick with the brand above and beyond objective and subjective assessment (Rust et al., 2005)”. Relationship equity refers to a choice made by consumers when they patronize a business based on the connection they feel to the organization. Brand equity, which is a customer's subjective and intangible assessment of the brand above its value, is influenced by brand awareness, attitude toward the brand, and corporate ethics. The growing interest in brands creates the need for brand equity measurement and management models that help companies manage and fortify brands continuously (Mun, 2002). As a brand becomes a core asset in creating a corporation's value, brand marketing has become one of core strategies that corporations pursue (Kang, Kim & Shin, 2007; Ko & Yun 2004). In this study, we also want to identify the driver that most impacts customer equity/customer lifetime value for luxury brands. Thus, the following hypotheses are posited: H4. Drivers of customer equity will positively influence customer lifetime value. H4-1. Value equity will positively influence customer lifetime value. H4-2. Relationship equity will positively influence customer lifetime value. H4-3. Brand equity will positively influence customer lifetime value. 4. Method 4.1. Measures Scales developed in past researches were used to measure the constructs on five-point rating scales (1= strongly disagree, 5= strongly agree). Six items (e.g., “It is important to me to have really nice thing”, “I would like to be rich enough to buy anything I want”) measure materialism (Prendergast and Wong 2003); and four items (e.g., “I am aware of luxury brands and want to be one of the first to try them”, “It is important for me to be a luxury leader”) measure experiential need (Kim, Forsythe, Gu, & Moon, 2002). And five items (e.g. “I find fashion clothing a very relevant product in my life”, “Fashion clothing is a significant part of my life”) measure fashion involvement (O'Cass, 2001). The three drivers of customer equity are value equity, brand equity and relationship equity. Vogel, Evanschitzky, and Ramaseshan's (2008) five-point bipolar adjective scales measure value equity, brand equity, and relationship equity. Five-items (e.g., “How would you rate your luxury products experience at this store”) measure value equity; four-items (e.g., “X is a strong brand”, “X is a unique brand”) measure brand equity; and five items (e.g. “As a member of the loyalty program, they do services for me that they don't do for most customers”, “I am familiar with the employees that perform the service”) measure relationship equity. Seven questions elicited information related to expenditures on and frequency of consumers’ product purchases to determine customer lifetime value. For purposes of this study, Chanel was the brand used to calculate customer lifetime value. CLV for a customer (omitting customer subscript) is (Gupta et al., 2006) CLV ¼ XT t¼0 pt−ct ð Þrt ð Þ 1 þ i t −AC Where: pt=price paid by a consumer at time t, ct=direct cost of servicing the customer at time t, i=discount rate or cost of capital for the firm, rt=probability of customer repeat buying or being “alive” at time t, AC= acquisition cost, and T= time horizon for estimating CLV. 4.2. Sample and data collection A purposive sampling technique was used in this study. Given the focus on luxury brands, the sample (n=114) consists of undergraduate and graduate students at two private women's universities in Seoul. Students enrolled at private universities tend to have enough financial resource to purchase luxury brand products. A self-administered questionnaire was used to collect data during March 2009. Table 1 shows the demographic characteristics of respondents. Most (73.7%) of respondents were majoring in textile and clothing area followed by marketing. All of the respondents were female. 4.3. Data analysis A series of confirmatory-factor analysis models were estimated using the data from samples. The two-step approach to structural equation modeling suggested by Anderson and Gerbing (1988) was Table 1 Demographic analysis of respondents. Characteristics Categories Frequency Percentage (%) Gender Female 114 100 Major Marketing 31 27.2 Clothing and textiles 53 46.5 Social science 10 8.8 Others 20 17.5 Income per month* Missing 3 2.6 Under 2 million 13 11.4 2 million–4 million 13 11.4 4 million–6 million 17 14.9 6 million–8 million 22 19.3 8 million–10 million 13 11.4 Over 10 million 33 28.9 Luxury consumption per month* Missing 1 .9 Under 1 million won 96 84.2 1 million–2 million won 13 11.4 2 million–3 million won 3 2.6 Over 4 million won 1 .9 * unit: Korean Won. K.H. Kim et al. / Journal of Business Research 65 (2012) 1495–1499 1497

used in this study. Before estimating the paths to test the relationship among constructs, a confirmatory-factor analysis for attitude toward luxury brand and customer equity was conducted to analyze validity through Amos 7.0. Table 2 indicates the results of the CFA for the measurement model and shows factor loadings and t-values. Table 2 also indicates that every item has a significant t-value on its latent construct for each factor. The CFA model is acceptable because GFI (.91) and AGFI (.84) values are acceptable. Cronbach's Alpha was used to check reliability. All of the values of Cronbach's Alpha are higher than 0.6, therefore, reliability of the data was high enough for further analysis. In summary, the measurements used in this research have high enough validity and reliability for further analysis. 5. Results and discussion As shown in Table 3, we find, among the three antecedents of attitude toward luxury brand, experiential need and fashion involvement have a significant relationship with attitude toward luxury brand. Meanwhile, we could not prove materialism has a significant relationship with attitude toward luxury brand. Attitude toward luxury brand has a significant relationship with value equity and brand equity, but not with relationship equity. Drivers of customer equity have significant relationships with customer lifetime value. Attitude toward luxury brand has no significant relationship with customer lifetime value. 6. Conclusions and implications First, according to the research results, the significant relationships between experiential need, fashion involvement, and attitude toward luxury brands imply that the young female Korean consumers express their values through purchasing luxury brands. Young Korean female consumers are willing to try, to experience luxury brands. Under the influence of a globalized consumption ethic created by transnational companies' global marketing efforts, consumers around the world are increasingly sharing the ideal of material lifestyles and valuing well-known brands that symbolize prosperity (Solomon et al., 2004). It implies that Korean young female consumers think that owing luxury products is the best way to show their own style, and they prefer becoming fashionable to being unique. Second, customer equity can be viewed as a tool that can be used to justify the development and implementation of a variety of marketing strategies and as a tool to evaluate marketing decisions (Severt & Palakurthi, 2008). Attitude toward luxury brands positively influences customer equity, and the relationship between attitude toward luxury brands and brand equity is significant. Korean young female consumers have strong brand awareness and focus on product quality. As college students, respondents value price competitiveness and overall fairness due to their relative purchasing power. The relationship between attitude toward luxury brand and value equity was not strong. Most young consumers have a limited history of purchasing luxury brands products, which implies they could not have chances to understand value of luxury brands. Third, relationship equity and brand equity have positive influence on customer lifetime value. Brands are regarded as a vital vehicle for marketing strategies and thus as a legal asset. Brands with favorable image can secure a group of loyal consumers who can generate stable revenues for company (Kang et al., 2007). Marketing managers should emphasize brand equity when introducing their brand into a new market. Investment in advertising and improvement of service in retailing may help to build relationship with consumers in the long term (Ko et al., 2009). Investment in advertising and improvement of service in retailing may help to build relationships with consumers that engender long-term loyalty (Ko et al., 2009). Loyalty program, updating customer's information in real time, acknowledging customer birthdays with gifts, customized service, and special treatments, to name few, can help to build and maintain strong customer relationships. Young consumers are an important consumer market for luxury fashion brands. They try various brands to discover the ones that reflect their image of themselves. Companies which can make a connection with this potentially lucrative market segment may develop lifelong customers. Luxury brand marketers should use effective marketing strategies to improve young consumers' customer equity and customer lifetime value. One strategy for accomplishing this goal Table 2 Confirmatory factor analysis and reliability analysis. Factors Scales Factor loadings t-Value Cronbach's alpha Materialism It is important to me to have really nice thing. .92 4.60 .73 I would like to be rich enough to buy anything I want. .63 Fixed For experience I am aware of luxury brands and want to be one of the first to try them. .75 6.71 .77 It is important for me to be a luxury leader. .83 Fixed Fashion involvement I am very much involved in/with fashion clothing. .83 8.60 .88 For me personally fashion clothing is an important product. .96 Fixed Attitude toward luxury brand I react favorably to luxury brands. .72 Fixed .82 Luxury brands are good brands. .54 5.04 Value equity The quality–price ratio with the dealer with respect to products is very good. .60 3.23 .65 For the time spent on luxury products, would you say shopping is highly reasonable .80 Fixed Relationship equity As a member of the loyalty program, they do services for me that they do not do for most customers. .53 2.43 .80 As a member of the loyalty program, they do services for me that they do not do for most customers. .46 Fixed Brand equity X is a strong brand. .84 Fixed .64 X is a unique brand. .48 3.65 Fit statistics χ2 = 77 df= 56, GFI= .91, AGFI= .84, NFI= .88, CFI= .96, RMSEA= .06 Table 3 Results of hypothesis test. Hypothetical path Path estimates t-Value Results Materialism → .05 .52 Not supported Attitude toward luxury brand Experiential need → .32 3.61*** Supported Attitude toward luxury brand Fashion involvement → .18 2.18* Supported Attitude toward luxury brand Attitude toward luxury brand → .23 2.23* Supported Value equity Attitude toward luxury brand → .22 1.84 Not supported Relationship equity Attitude toward luxury brand → .66 5.63*** Supported Brand equity Value equity → −178.41 −3.08** Supported Customer lifetime value Relationship equity → 193.97 3.88*** Supported Customer lifetime value Brand equity → 172.85 3.25** Supported Customer lifetime value Attitude toward luxury brand → −66.21 −1.97 Not supported Customer lifetime value *pb.05, **pb.01, ***pb.001. 1498 K.H. Kim et al. / Journal of Business Research 65 (2012) 1495–1499

is for global luxury marketers to develop bridging lines with fashionable designs and relatively affordable prices to attract young customers with considerably potential purchasing power. Brand serves as a symbolic language that allows consumers to communicate their personality to each other. Therefore, how brand meanings are established and how a firm communicates brand meanings to consumers are important (Kim, Lee, & Lee, 2008). Luxury marketers are making their products more affordable by extending their brands to reach middle-income consumers (Meyers, 2004). Marketing managers should consider brand equity when introducing their brand into a new market. 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Asymmetrical effects of past experiences with genuine fashion luxury brands and their counterfeits on purchase intention of each☆ Boonghee Yoo, Seung-Hee Lee ⁎ a Department of Marketing and International Business, Frank G. Zarb School of Business, Hofstra University, Hempstead, New York 11549 United States b Department of Clothing & Textiles, College of Art and Design, Ewha Womans University, Seoul, 120-750 South Korea article info abstract Article history: Received 1 March 2011 Received in revised form 1 April 2011 Accepted 1 September 2011 Available online 16 November 2011 Keywords: Fashion marketing Genuine luxury brands Counterfeit luxury brands Counterfeiting Fashion Purchase intention Asymmetrical effect Income Brand name Price South Korea As counterfeiting activity continues to thrive around the world, marketers of fashion luxury brands work hard to discourage counterfeiting and to protect their revenues. This research evaluates the business risk related to fashion counterfeit consumption behavior by examining the effect of past experiences with counterfeit luxury brands (CLBs) and genuine luxury brands (GLBs). Based on survey data from five designer fashion product categories, Study 1 finds an asymmetrical effect that past experiences with GLBs are negatively related to purchase intention of CLBs, whereas past experiences with CLBs do not relate to purchase intention of GLBs. Study 2, based on experimental data from two luxury handbag brands with realistic price information, confirms the results of Study 1. This study also discusses research and managerial implications. © 2011 Elsevier Inc. All rights reserved. 1. Introduction McCarthy (2004) defines counterfeiting, or “manufacturing knockoff,” as “the act of producing or selling a product containing an intentional and calculated reproduction of a genuine trademark. A counterfeit mark is identical to or substantially indistinguishable from a genuine mark.” Counterfeiting activity is estimated to account for 5 to 7% of world trade, depriving genuine manufacturers of about $600 billion a year, with a growth rate of 1700% over the past 10 years (Economist, 2010). As for luxury fashion brand counterfeiting, in the U.K., more than 64% of the U.K. Customs seizure cases were luxury brands (The Financial Times, 2005). U.S. Customs and Border Protection also reports luxury brands as a major object of counterfeiting, seizing about $273 million in 2008, a 39% hike in value from the previous year (Casabona, 2009). Counterfeit luxury brands are so prevalent that the U.S. Congress advocates the Innovative Design Protection and Piracy Prevention Act, which extends copyright protection to fashion brands and works for the Anti-Counterfeiting Trade Agreement with eleven countries that represent the major counterfeiting victims and offenders (The U.S. Congress, 2010). Counterfeits create enamor problems for the global society. First of all, they pose a serious threat to legitimate businesses by undermining innovation, which is a key component of corporate revenues and national economic growth (Wilke & Zaichkowsky, 1999). The U.S. Customs and Border Protection blame counterfeit merchandise for the loss of more than 750,000 American jobs as well as the loss of tax revenues (Meyers, 2008). Criminal investigations also find that counterfeits serve as a major means of supplying funds to terrorist organizations, including Al-Qaeda, Hezbollah in Lebanon, and the group accused of the Madrid train bombings in 2004 (International Herald Tribune, 2007; Ungoed-Thomas, 2005). Consequently, manufacturers, distributors, researchers, and policy makers pay a great deal of attention to developing strategies that discourage counterfeiting to protect the victims of counterfeiting. They propose and implement various anti-counterfeiting measures, including diligent legal litigation (Economist, 2010). Nevertheless, counterfeiting continues to thrive around the world because of the growing demand worldwide for well-known luxury brands, lack of consumer and counterfeiter morality, production and distribution capabilities in less developed countries, inadequate penalties for counterfeiters, and technological Journal of Business Research 65 (2012) 1507–1515 ☆ The authors thank guest co-editor Eunju Ko (Yonsei University), three anonymous JBR reviewers, Arch G. Woodside (JBR Editor in Chief), James W. Gentry (University of Nebraska-Lincoln), and Jiwoong Shin (Yale University) for their valuable comments on an earlier version of this paper and Carol Porr and Kiwoong Yoo for editing advice; and they acknowledge that this research was supported by a Summer Research Grant from the Frank G. Zarb School of Business, Hofstra University. ⁎ Corresponding author. Tel.: +82 2 3277 3080; fax: +82 2 3277 2852. E-mail addresses: [email protected] (B. Yoo), [email protected] (S.-H. Lee). 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.10.018 Contents lists available at SciVerse ScienceDirect Journal of Business Research

advances enabling counterfeiting activities (Chaudhry, 2006; Green & Smith, 2002; Lee & Yoo, 2009; Olsen & Granzin, 1993; Wee, Tan, & Cheok, 1995). While marketers of genuine luxury brands (hereafter called GLBs) struggle with their corresponding counterfeit luxury brands (hereafter called CLBs), ironically, in the software industry, counterfeits are known to benefit original brands. For example, Conner and Rumelt (1991) find that software piracy increases the number of program users; consequently, manufacturers object to software protection. Givon, Mahajan, and Muller (1995) also find that the sales of genuine word processors and spreadsheets in the U.K. significantly increase because of active word-of-mouth resulting from pirated items. Slive and Bernhardt (1998) insist that software manufacturers maximize their profit by tolerating piracy. Maltz and Chiappetta (2002) oppose eliminating software pirates because they can help firms identify useful innovative technologies. Haruvy, Mahajan, and Prasad (2004) demonstrate with real market data that piracy aids a full and fast market penetration of software. The photocopying of journal articles by users (Liebowitz, 1985) as well as illegal music file sharing (Peitz &Waelbroeck, 2006) also has similar findings. An important question that arises is whether, as observed in pirated software, inferior products (CLBs in our research) benefit quality products (GLBs) (McGinnis & Gentry, 2009). Obviously, marketers of GLBs must not agree, but little research has investigated the effect of CLBs on GLBs and vice versa. Therefore, the purpose of this research is to examine the effect of past experiences with CLBs (GLBs) on the purchase intent for GLBs (CLBs). The result will be a major contribution of this study to the literature. In the study, we narrowly define counterfeit consumers as consumers who are not deceived by counterfeiters, but knowingly purchase and consume CLBs. In fact, such nondeceived consumers of CLBs comprise the majority of such consumers; they are well aware of unlawful retail outlets selling CLBs, and such sellers also explicitly inform consumers that they are selling CLBs (Gentry, Putrevu, Shultz, & Commuri, 2001; Grossman & Shapiro, 1988). In the following sections, we summarize the current research trend on CLBs, develop research hypotheses, and conduct two studies to test the hypotheses across luxury fashion product categories. Finally, we discuss the managerial and research implications of the findings. 2. Research trend and hypothesis development 2.1. Research trend and past behavior Researchers describe possible antecedents of intention to purchase CLBs by a variety of variables (Lee & Yoo, 2009). Based on a comprehensive literature review, Eisend and Schuchert-Güler (2006) classify the determinants into four groups. The first group includes demographic and psychological characteristics (Bloch, Bush, & Campbell, 1993; Cheung & Prendergast, 2006); self image (Bloch et al., 1993; Yoo & Lee, 2009); social expressions (i.e., to express themselves and to fit in;Wilcox, Kim, & Sen, 2009); attitudes toward counterfeiting (Cordell,Wongtada, & Kieschnick, 1996; Penz & Stöttinger, 2005; Schlegelmilch, Stöttinger, & Der Kauf, 1999); readiness to take risk, fashion involvement, ethical predisposition, self identity, and price consciousness (Penz & Stöttinger, 2005); and materialism and expected future social status (Yoo & Lee, 2009). The second group consists of product-related features such as product importance, retailer image, durability, style, fashionableness, and price (Bloch et al., 1993); product attributes and brand image (Bian & Moutinho, 2009); price of GLBs (Harvey & Wallas, 2003); and quality differences between CLBs and GLBs (Jenner & Artun, 2005; Schlegelmilch et al., 1999). The third group has social and cultural contexts such as expected penalty associated with counterfeit purchase and culture (Harvey & Wallas, 2003); social norm (Penz & Stöttinger, 2005); and anti-counterfeiting campaigns (Schlegelmilch et al., 1999). The fourth group includes purchase situations and mood of consumer such as access to the counterfeits (Penz & Stöttinger, 2005). The above review shows that little research has investigated two important issues on counterfeiting: first, how marketing activities of GLB firms affect CLB purchases and, second, how past behavior (e.g., purchase experiences with CLBs) affects CLB and GLB purchase intentions. The purpose of this study is to examine the role of past behavior on CLBs and GLBs. Future research needs to examine the effect of GLB marketing activities on CLB-related consumer behaviors. The theory of reasoned action finds that past behavior affects future behavior more significantly than intentions or perceptions of behavioral control do (Bagozzi, 1981; Ouellette & Wood, 1998). Past behavior generates an inertial habit with repeated behavior and predicts future behavior better than cognitive evaluations of alternatives do (Bamberg, Ajzen, & Schmidt, 2003). As a result, past behavior heavily influences the current and future shopping patterns of consumers. This view predicts that once consumers use CLBs, they are likely to buy them again, although such product choice inertia may diminish in the long run. Seetharaman, Ainslie, and Chintagunta (1999) confirm that inertial choice behavior formed by past behavior makes consumers repeat the same purchase patterns and is less sensitive to marketing programs developed to change such decision-making. Such findings about past behavior suggest that the more consumers experience CLBs the more they will be likely to purchase them. However, in the context of luxury fashion brands, past behavior is likely to provide consumers with unique consequences; some of them are negative and others are positive. These consequences would in turn affect the behavior related to GLBs in a unique way, which might be different from the consumers of pirated software. Specifically, our four hypotheses investigate the effect of past purchase experiences with CLBs and GLBs on the future intention to purchase each. 2.2. Research hypotheses 2.2.1. The effect of past experiences with CLBs on the purchase intention of CLBs As consumers experience CLBs, the research expects that they are likely to purchase more CLBs not only because of habitual behavior with regard to buying CLBs, which is the strongest reason, but also for the following weaker reasons. First, many consumers tend to buy CLBs for novelty and variety needs, and such novelty- and variety-seeking behavior is more frequently found for less expensive products (Wee et al., 1995). Consumers perceive the brand name, the label, and recognizable design characteristics such as logo, color, and pattern to be valuable. Such hedonistic or novelty reasons make consumers value a CLB for its own sake (Babin, Darden, & Griffin, 1994). When consumers pursue hedonistic rather than utilitarian or status needs, they will easily accept CLBs and not worry about probable low quality. Even when others notice that they consume CLBs, consumers who do so for pure hedonistic reasons will not feel socially embarrassed. They do not consider a consumer image built on CLBs to be an issue of lower self-esteem. Second, CLBs separate prestige from quality aspects of GLBs, while GLBs offer both (Grossman & Shapiro, 1988). One main goal that consumers pursue from CLBs is higher social status. Accordingly, the primary benefit of CLBs is symbolic rather than functional, although high-end CLBs provide satisfactory physical quality (Gentry et al., 2001). As long as observers have difficulty to distinguish CLBs from GLBs, symbolic shopping purposes will reinforce consumers' desire to continue purchasing CLBs (Grossman & Shapiro, 1988; Wilcox et al., 2009). Third, CLBs provide price advantage, which researchers consider to be the primary reason for buying CLBs (Albers-Miller, 1999; Dodge, Edwards, & Fullerton, 1996; Harvey & Wallas, 2003; Prendergast, Chuen, & Phau, 2002). A CLB is a lower-quality, lowerprice choice, whereas a GLB is a higher-quality, higher-price choice (Gentry, Putrevu, & Shultz, 2006; Prendergast et al., 2002). However, interestingly enough, CLB consumers do not mind low quality and poor materials because they do not see CLBs as inferior choices when they see the economic benefits of such products, a decision 1508 B. Yoo, S.-H. Lee / Journal of Business Research 65 (2012) 1507–1515

that is probably due to budget constraints (Dodge et al., 1996; Nia & Zaichkowsky, 2000). Instead, they perceive the purchase of CLBs to be better in an economic sense and enhance societal welfare (Ang, Cheng, Lim, & Tambyah, 2001; Van Kempen, 2003). Therefore, H1. Past experiences with CLBs related positively to the intention to buy CLBs. 2.2.2. The effect of past experiences with CLBs on the purchase intention of GLBs No significant correlation is likely between past experiences with CLBs and the intention to buy GLBs due to a mixed effect in which CLB experiences would produce favorable attitudes toward GLBs, but those attitudes are unlikely to generate strong enough intention to buy GLBs. Consequently, CLB experiences have no impact on GLB purchases. But let us discuss why consumers would prefer GLBs after experiencing CLBs. First, consumers might not consider CLBs to be serious and ultimate purchases, but a prelude to the purchase of GLBs (Gentry et al., 2001). Admitting that a CLB is an inferior version of a GLB, consumers try a CLB as an experiment and as part of an ongoing quest whose ultimate goal is to make a decision on the purchase of GLBs. (Wee et al., 1995). Second, CLB consumers develop a fear of being embarrassed and losing status, which stems from their familiarity and involvement with GLBs (d'Astous & Gargouri, 2001). CLBs would therefore induce consumers to consider GLBs as a better choice, which is more true in case consumers have high normative susceptibility (high expectations of what would impress others) (Van Kempen, 2003). Through experiences with CLBs, consumers become more aware of the value of GLBs than before: GLBs provide all the positive benefits such as exclusivity, durability, better quality, after-sales service, low social risk, status, ethicality, and legality (Cheung & Prendergast, 2006; Yoo & Lee, 2009). Third, the brand equity theory predicts that CLB consumers switch to GLBs particularly because of the memory and knowledge of the original brand. Brand equity is the value added to a product by its brand name, but the brand name alone does not guarantee strong brand equity because a CLB is unlikely to transfer specific and positive brand associations attached to a GLB, which is built through long-term personal experiences with the GLB (Yoo, Donthu, & Lee, 2000). However, despite all those risks of CLBs and benefits of GLBs, CLB consumers are unlikely to increase the purchase intention of GLBs. Most of all, they cannot ignore the price advantage of CLBs, which will make GLBs look less attractive (Albers-Miller, 1999; Dodge et al., 1996; Harvey & Wallas, 2003; Prendergast et al., 2002). Purchased CLBs prove that consumers are not free from financial restraints or that they are prone to savings and sensitive to prices, appreciating the low-price choice for the same brand name. In addition, CLB consumers lose interest in GLBs for non-price related reasons. A most salient one is demonstrated in using a product in public to impress or keep up with other people. From that perspective, CLBs function in the same manner as GLBs do. Therefore, positive and negative effects of experiences with CLBs, when mixed together, would result in no significant impact on the intention to purchase GLBs. H2. Past experiences with CLBs do not relate to the intention to buy GLBs. 2.2.3. The effect of past experiences with GLBs on the purchase intention of CLBs We expect that being familiar with GLBs is likely to affect the purchase intention level of CLBs negatively because GLB consumers are determined status-seekers (Mason, 1998). Their conspicuous behavior can be better explained by “positioning economy” (consumption is significantly influenced by social and psychological motives associated with attempts to improve relative social standing and prestige) than traditional “material economy” (consumption is purely influenced by utilitarian considerations) (Mason, 2001). Having familiarity with GLBs, they are more likely to exclude CLBs from their purchase consideration after evaluating the social and functional risks linked to CLBs, ultimately losing interest in buying them. Therefore, H3. Past experiences with GLBs relate negatively to the intention to buy CLBs. 2.2.4. The effect of past experiences with GLBs on the purchase intention of GLBs We also expect that once consumers have bought GLBs they will purchase more GLBs than before because GLBs fulfill their desire for higher social status through ostentatious display (Wilcox et al., 2009). First, GLB consumers would continue to be gratified by the admiration of observers who recognize the GLBs being used. Since the GLB is a sign of wealth and social superiority, one strong reason for buying GLBs stems from the desire of superiority over others (Mason, 1998). Thus, such consumption should be conspicuous to others. To status-seeking consumers, a GLB is an expression of membership to an elite society. Second, GLB consumers would experience less cognitive dissonance because the inherent quality of the GLBs matches the prestigious product image tangibly (Nia & Zaichkowsky, 2000). More importantly, status-seeking consumers would be selfsatisfied by their socially inspired perceptions of how other consumers see them (Mason, 1998). As a result, consumers would enhance their self-image by continuing to buy GLBs. H4. Past experiences with GLBs relate positively to the intention to buy GLBs. 3. Method To test the hypotheses, we conducted two studies. In Study 1, using a descriptive survey method, we examined how past behavior affects purchase intention of GLBs and CLBs. In Study 2, we examined Study 1 findings under experimental conditions in which the price level of both CLBs and GLBs was manipulated because price takes an important role in purchases of luxury fashion brands. 3.1. Study 1 (A survey) 3.1.1. Selecting product categories and brand Five luxury fashion product categories (i.e., designer handbags, shoes, apparel, sunglasses, and jewelry such as watches, earrings, rings, and necklaces) were selected for the following reasons. First, the degree of luxury brand counterfeiting is enormous for these fashion product categories. Second, they are consumer products with which consumers are very familiar. Third, as we examine nondeceptive counterfeiting, the selected categories fit the purpose of the research well. Fourth, functional and symbolic attributes of these product categories are well-balanced. Finally, consumers recognize major brands in the selected categories. To decide which specific luxury fashion brands should be selected from each category, we conducted a pretest with 500 female college students attending major universities in South Korea (hereafter called Korea), which is a great producer, exporter, and consumer of CLBs. Korea's luxury fashion brand market has increased by 12% last 5 years and is now estimated as $3.8 billion, but might be much larger when counterfeits are taken into account (The Asia Economist, 2011). We asked participants to indicate their past behavior with individual brands in each of the product categories. Based on the collected data, we selected top brands whose counterfeits were purchased by the majority of those who had ever bought CLBs of each product category. B. Yoo, S.-H. Lee / Journal of Business Research 65 (2012) 1507–1515 1509

Prada and Louis Vuitton were selected for luxury handbags as they account for 64.7% of those who had ever purchased counterfeit luxury handbags; likewise, Salvatore Ferragamo and Gucci, 59.3% for designer shoes; DKNY, Prada, and Calvin Klein, 56.6% for apparel; Gucci and Chanel, 54.3% for sunglasses; and Agatha, Cartier, and Tiffany, 53.2% for jewelry. 3.1.2. Data collection procedure and measures A new sample of female university students in Korea voluntarily participated in the study. Interviewers visited classes on scheduled dates and explained the study to the participants and asked them to answer the survey. A student sample is often considered inadequate because of its poor representation of the general population. However, students are deemed adequate in this sort of study because first, they are frequently examined for counterfeiting research (Chakraborty, Allred, & Bristol, 1996; Cordell et al., 1996). In fact, female Korean students, called the “Luxury Generation,” actively purchase both CLBs and GLBs (Park, Rabolt, & Jeon, 2008; Yoo & Lee, 2009). Second, students as a maximally homogeneous sample are expedient for theory validation research (Calder, Philips, & Tybout, 1981). A total of 400 participants completed the questionnaire. Elimination of incomplete responses left 332 eligible responses for analysis. They were 21.4 years old on average (SD=2.9). Their CLB and GLB purchasing experience was 50% and 40% for the selected handbag brands, respectively; 37% and 25% for the designer shoes brands; 43% and 50% for the apparel brands; 27% and 44% for the sunglasses brands; and 48% and 49% for the jewelry brands. We measured purchase intention of CLBs and GLBs by five items. We repeated the following question for each of the five product categories (anchored with “very unlikely” as 1 and “very likely” as 7): “How much are you willing to purchase any of the following CLBs (GLBs)?” The reliability of purchase intention was .87 for CLBs and .91 for GLBs. We also measured past experiences with CLBs (GLBs) by five items, each of which was computed by adding up the responses to the following two yes–no questions: “Have you ever purchased any of the following CLBs (GLBs)?” (purchase experience) and “Have you ever owned any of the following CLBs (GLBs)?” (ownership experience). The reliability of the five-item past experiences was .60 for CLBs and .74 for GLBs. We then conducted exploratory factor analysis for the 20 items (i.e., 2 types of product: CLB vs. GLB×5 product categories×2 purchase variables: past purchase vs. intention to buy) to examine whether the responses would be loaded on the intended factors. Factor analysis with a Varimax rotation method produced four clear factors, and all items were highly loaded on their corresponding factors, confirming discriminant and convergent validity of measures. The variance explained by the factors was 59.2% overall. Specifically, purchase intention of CLBs accounted for 18.7% of the variance; purchase intention of GLBs, 19.5%; past experiences with CLBs, 8.7%; and past experiences with GLBs, 12.3%. 3.1.3. Analysis and result We conducted structural equation modeling to estimate parameters of the structural model in an effort to test the hypotheses simultaneously and obtained the completely standardized solutions by the LISREL 8 maximum likelihood method. The result is reported in Fig. 1. The structural model specified the purchase experiences as the exogenous constructs (with CLBs as ξ1 and with GLBs as ξ2), both of which were related to two endogenous constructs (intention to purchase CLBs as η1 and intention to buy GLBs as η2). Goodness-of-fit statistics, indicating the overall acceptability of the structural model analyzed, were satisfactory: χ2 (158)=405.48, RMSEA=.069, SRMR=.057, GFI=.89, AGFI=.85, CFI=.91 and IFI=.91. Past behavior was related to purchase intention, as hypothesized. Specifically, past experiences with CLBs were positively related to intention to buy CLBs (H1). Their path estimate was .87 (t=5.80, pb.0001). Past experiences with CLBs were not significantly related to intention to buy GLBs (H2). Their estimate was .09 (t=1.36). Past experiences with GLBs were negatively related to intention to buy CLBs (H3). Their estimate was −.23 (t=−2.87, pb.01). On the other hand, past experiences with GLBs were positively related to intention to buy GLBs (H4). Their estimate was .48 (t=6.55, pb.0001). In summary, all hypotheses were supported. Past experiences alone explained 68% of the variance of purchase intention of CLBs and 27% of the variance of purchase intention of GLBs. This high amount of variance explained for demonstrates that purchase intention of both CLBs and GLBs was substantially influenced by past behavior. Interestingly enough, however, the direction of influence was asymmetrical between CLBs and GLBs: as hypothesized, past experiences with CLBs did not affect purchase intention of GLBs, whereas past experiences with GLBs decreased purchase intention of CLBs. To check the robustness of the findings, the two dependent variables were individually regressed on the same two independent variables as well as four other control variables: age and income were measured as one ratio scale each and materialism and self image were respectively measured by Richins and Dawson's (1992) 18-item scale of materialism and Ahn, Lee, Lim, Yang, and Lennon's (2001) 19-item scale of selfimage. The resulting regression confirmed the same directional effect of past product experiences. Specifically, Intention to purchase CLBs=.08−.02 (n.s.)×Age−.008 (n.s.)× Income+.30 (pb.01)× Materialism+.17 (pb.10)×Self-image+.48 (pb.0001)×Past experiences with CLBs−.12 (pb.05)×Past experiences with GLBs. R-square was .27 (F=19.08, pb.0001). In contrast, Intention to purchase GLBs= −.62−.02 (n.s.) ×Age+ .02 (pb.01) × Income+ .79 (pb.0001) × Materialism+.29 (pb.01)×Self-image+.14 (pb.01)×Past experiences with CLBs+.22 (pb.001)×Past experiences with GLBs. R-square was .33 (F=25.39, pb.0001). The only difference from the LISREL result was the significant positive effect of past experiences with CLBs on purchase intention of GLBs. The major contribution to this difference must be income: if the constraint of income is resolved, CLB consumers might actually develop desire for GLBs. 3.2. Study 2 (An experimentation) The findings from Study 1 confirm that past experiences with luxury fashion brands, either counterfeit or genuine, are related to purchase intention of CLBs and GLBs in asymmetrical ways. However, to overcome the weakness inherent in the cross-sectional survey method, we additionally constructed Study 2, an experiment. 3.2.1. Experimental design and data collection For Study 2, we selected two real luxury brands (Prada and Louis Vuitton) of the designer handbag category. As reported in Study 1, Prada's and Louis Vuitton's counterfeits were the two most popularly purchased brands in the category. The experimental design was 2 (brand name: Prada and Louis Vuitton; within) by 2 (price of the GLB: US$1000 and US$500; between) by 4 (price of the CLB; absence of the counterfeit, 5% of the GLB price, 10%, and 20%; between). We did not manipulate only the brand name but also the price level of CLBs and GLBs. Price is known as the most crucial factor for CLB purchases (Albers-Miller, 1999; Bloch et al., 1993; Dodge et al., 1996; Harvey & Wallas, 2003; Prendergast et al., 2002). The rationale of the hypotheses of this study was heavily related to price, but in Study 1 the price information was neither manipulated nor measured. However, by letting participants exposed to realistic price explicitly, Study 2 attempts to make a more convincing case about the findings of Study 1. We selected the prices of the GLBs and their corresponding CLBs based on actual purchase prices found in Study 1 to represent realistic market prices. In this experimental design, purchase intention of the CLBs and GLBs was a function of brand name, price, and past behavior. But note that the purpose of Study 2 was not to test the effect of brand name or price but to test the robustness of the findings of Study 1 under experimental conditions with realistic market information. 1510 B. Yoo, S.-H. Lee / Journal of Business Research 65 (2012) 1507–1515

A new sample of female college students in Korea voluntarily participated in the study. First, we asked participants to provide their past two-year purchase experiences with the genuine and counterfeit handbags of the two brands selected, along with demographic information. Then, we asked participants to read one of the eight experimental scenarios for Prada, which was randomly assigned to them. On the next page, we asked them to do the same task for the Louis Vuitton handbag for one of its eight scenarios. The third version of the Prada scenarios, for example, read in big letters, “Assume that you see the two following products while shopping: a genuine Prada handbag for $1000 and its counterfeit version for $100.” Then, we asked them to reply to the two-item purchase intention scale for each of the GLBs and the CLBs: “How much are you willing to purchase this genuine (counterfeit) handbag?” The purchase intention was measured twice: anchored in “very unlikely” as 1 to “very likely” as 7 and “not at all” as 1 to “a lot” as 7. Purchase intention was the mean score of the two items. The scale achieved a very satisfactory reliability ranging from .90 to .97 for both GLBs and CLBs across experimental conditions. Overall, the study obtains 420 eligible responses for Study 2. Each experimental design scenario was responded to by 44 to 59 participants, showing no significant difference in frequency (χ2 (7)=3.16, p>.85). Participants were 21.5 years old on average (SD=2.6) and their monthly personal discretionary income ranged from US$50 to US$1200, with an average of US$339 (SD=US$144). Those who purchased a genuine luxury handbag paid US$554 on average for Prada and US$754 for Louis Vuitton, whereas those who bought a counterfeit version paid US$48 for Prada and US$74 for Louis Vuitton. 3.2.2. Hypotheses testing and result We tested the same four hypotheses of Study 1 with Study 2 data. We used the pooled sample because of its potential to capture the overall trend across experimental conditions and resolve the small sample size problem that might take place when testing the hypotheses separately for individual experimental conditions. For the structural equation model as shown in Fig. 2, two exogenous variables were created to indicate past experiences with counterfeit (ξ1) and genuine (ξ2) brands, each of which consisted of two items: purchase experiences with Prada and Louis Vuitton handbags for the last 2 years. Two endogenous variables measured intention to buy counterfeit (η1) and genuine (η2) brands. Each endogenous variable consisted of two items, each of which was a mean score of two 7-point purchase intention questions for each brand. Fig. 2 reports the completely standardized solutions for the structural model by LISREL. Goodness-of-fit statistics indicate that the model analyzed has a good fit: χ 2 (15)= 28.95 (pb.05), RMSEA= .033, SRMR= .034, GFI= .98, AGFI= .96, CFI= .97 and IFI= .97. Overall, the model accounted for 32% of the variance in intention to purchase CLBs and 13% of the variance in intention to purchase GLBs. The result shows that past experiences with CLBs were positively related to intention to buy CLBs (H1) with the path estimate of .57 (t= 4.27, pb.0001). Past experiences with CLBs were not significantly related to intention to buy GLBs (H2). The estimate was .02 (t= .28). Past experiences with GLBs were negatively related to intention to buy CLBs (H3). Their estimate was −.14 (t=−1.79, pb.05). On the other hand, past experiences with GLBs were positively related to intention to buy GLBs (H4). The estimate was .36 (t=4.14, pb.0001). In summary, all the hypotheses were again supported in Study 2. The result was consistent with that of Study 1. In particular, H2, supported in both studies, clearly reveals the importance of price in GLB purchases. When CLB consumers were given both the GLB's price (US$500 or US$1000) and its counterfeit's price (ranging from 5% to 20% of the GLB price), they lost the desire to purchase the GLBs. However, the good news was that the path between past CLB experiences and the purchase intention of GLBs was not negative. CLB buyers did not resort to the CLBs even when learning that the GLB was too expensive. Unlike CLB consumers, GLB consumers kept strong loyalty to GLBs, and were not affected at all by the availability and low price of CLBs. 3.2.3. Examining the predictors of purchase intention of GLBs and CLBs To examine further what other factors affect the purchase intention of GLBs and CLBs, we conducted regression with Study 2 data for five predictors: brand name, income, CLB ratio, GLB price, and CLB price. Brand name (two values) was a dummy variable where Louis Vuitton was a benchmark brand over Prada. Income (ratio-scaled) reflected monthly discretionary income translated into US dollars. CLB ratio was computed by the proportion of CLB purchases over the combined CLB and GLB purchases. The ratio ranged from 0 (have purchased GLBs only) to 1 (have purchased CLBs only). GLB price (two values) was the price of the genuine handbag brand (US$1000 versus US $500). CLB price (three values) was the price of the counterfeit handbag Fig. 1. The asymmetrical effect of past experiences with CLBs and GLBs on the purchase intention of each (Study 1: A survey). B. Yoo, S.-H. Lee / Journal of Business Research 65 (2012) 1507–1515 1511

(US$50, $100, versus $200 for a $1000 genuine handbag; $25, $50, versus $100 for a $500 genuine handbag, which represented 5%, 10%, and 20% of the price of the genuine handbag). As reported in Table 1, both dependent variables were predicted well (R-square of .34 for CLB purchase intention and .25 for GLB purchase intention, pb.0001). Purchase intention of GLBs was significantly affected by four factors (brand name, income, CLB purchase ratio, GLB price), whereas purchase intention of CLBs was affected by three factors (income, CLB ratio, and CLB price). From the regression analysis, the following important observations can be made. First, brand name was a significant factor in the GLB purchase (pb.01) but not in the CLB purchase. This difference might imply that the value of brand name (i.e., brand equity) matters only when buying GLBs but not CLBs. In conclusion, consumers do not care what brand they are wearing for CLBs. Second, income affected the GLB purchase positively (pb.05) but the CLB purchase negatively (pb.05), meaning high-income consumers buy GLBs whereas low-income consumers buy CLBs. This difference must be good news to fashion marketers of GLBs because, due to the enormous income gap, GLB and CLB markets appear well separated and have little interactions with each other, implying that CLB consumption may not seriously affect the revenues of GLBs. Third, the CLB ratio affected the GLB purchase negatively (pb.001) but the CLB purchase positively (pb.001). This result was consistent with the main hypotheses of this study in that the more frequent consumers are exposed to the CLB (GLB) the more likely are they to purchase the CLB (GLB), confirming d'Astous and Gargouri (2001) finding that CLB evaluations associates negatively with brand loyalty to GLB and vice versa. Fourth, the GLB price affected the GLB purchase negatively (pb.05) but did not affect the CLB purchase, whereas the CLB price affected the purchase negatively (pb.05) but did not affect the GLB purchase. This asymmetrical relationship shows two things: purchase intention of either a GLB or a CLB is a function of its own price, not of the other alternative's price, and consumers prefer a lower price for both GLB and CLB. Consumers pursue the economic advantage of CLBs, but even when buying GLBs they prefer a lower price. 4. Discussions and implications Study 1 and Study 2, confirming the hypotheses, include four major findings. First, past behavior of GLBs is a strong predictor of future behavioral intention toward GLBs. Second, past behavior of CLBs is a strong predictor of future behavioral intention toward CLBs. CLB consumers show a strong purchase intent for CLBs even when not given the advantageous price of CLBs and the intimidating price of GLBs. Third, GLB consumers show negative intention to buy CLBs, not developing an interest in CLBs at all, even when the advantageous price information of CLBs is available. The more often they experience GLBs, the less likely consumers purchase CLBs. Fourth, CLB consumption experiences are not related to intention to buy GLBs. This result cautiously implies that CLB consumers might not steal the sales of GLBs because however many of CLBs they have purchased before do not decrease the desire to buy GLBs, and that past experiences with CLBs are simply irrelevant to GLB purchases in the future. This result is consistent with Nia and Zaichkowsky (2000) in that CLBs do not decrease the demand for GLBs and that the value, satisfaction, and status of GLBs do not diminish as a result of the availability of CLBs. Study 2 (experimental design) produced the very same result as Study 1 (cross-sectional survey). In Study 2 price information was provided for both GLBs and CLBs, but the negative relationship between past experiences with GLBs and purchase intention of CLBs was maintained, meaning that GLB buyers were not tempted at all by cheap CLB prices. At the same time, the study found no relationship between past experiences with CLBs and purchase intention of GLBs, which means that CLB consumers were not intimidated by the Fig. 2. The asymmetrical effect of past experiences with CLBs and GLBs on the purchase intention of each (Study 2: An experimentation). Table 1 Antecedents of purchase intention of luxury brands: regression results. Independent variables Dependent variables Purchase intention of the GLB Purchase intention of the CLB Intercept 3.6580 **** 3.4183 **** Brand name 0.7297 ** 0.1151 Income 0.0019 * −0.0020 * CLB ratio −1.1955 *** 1.2899 *** GLB price −0.0011 * −0.0003 CLB price −0.0015 −0.0080 * R2 0.34 **** 0.25 **** *pb0.05; **pb0.01; ***pb0.001; and ****pb0.0001. 1512 B. Yoo, S.-H. Lee / Journal of Business Research 65 (2012) 1507–1515

expensive GLB prices. As a result, they did not develop hostile behavioral intention against GLBs. The price disadvantage of GLBs as well as the price advantage of CLBs did not make CLB buyers develop a dislike for GLBs or make GLB buyers develop a love for CLBs. However, as Table 1 reports, the GLB (CLB) price matters only when a consumer buys the GLB (CLB), not the other. In summary, buying a GLB (CLB) is affected by its own price level, but not by the alternative's, that is, the CLB's (GLB's) price. 4.1. Managerial and policy implications Counterfeit consumer behavior is very important to luxury fashion brand manufacturers, distributors, and policy makers (e.g., Lee & Yoo, 2009). The purpose of this research was to examine exactly how past experiences with CLBs is related to the purchase intention of GLBs and vice versa. This research shows that the answer depends on two factors: past behavior and product price. If a consumer has bought more CLBs than GLBs in the past, the consumer is more likely to buy CLBs. On the other hand, if a consumer has bought more GLBs than CLBs, the consumer does not mind the price gap between the GLB and its counterfeit version and is highly likely to choose the GLB over the CLB. Based on those findings, strategists should consider implementing the following managerial ideas to increase purchase intent for luxury fashion brands in the midst of the thriving counterfeiting phenomenon. First, the current study finds that CLB consumers develop a strong intention to buy CLBs. Therefore, consumers should be discouraged not to develop such behaviors. For that purpose, for example, consider promoting consumers' perceived risks of buying and consuming CLBs. As consumers buy luxury fashion brands to satisfy a desire for social and financial status, recognition, and superiority, they would reject CLBs, believing they could be embarrassed socially in front of others (Ha & Lennon, 2006; Nia & Zaichkowsky, 2000; Penz & Stöttinger, 2005; Wilcox et al., 2009). Appealing to the law to maximize the social risk of CLB consumption may be one of the best methods (Prendergast et al., 2002) of eliminating CLBs. Appealing to the law would be very effective in coercively constraining consumers' habitual practice of buying CLBs since they rely on past behavior without much consideration of cognitive and rational evaluations to control the behavior (Yoo & Lee, 2009). Unfortunately, in luxury brand counterfeiting, copyright laws punish mainly the supply side of it, such as creators, manufacturers, distributors, dealers, and sellers (e.g., Colchester, 2010), but rarely the demand side, such as buyers and owners (Lee & Yoo, 2009). However, Penz and Stöttinger (2005) find that the fewer the obstacles to purchase CLBs, the higher the intention to purchase them. This suggests that a legal action against CLB consumption would create huge concern in the consumer's mind. Harvey and Wallas (2003) find through an experiment that consumers would not buy CLBs if they had a high chance of being detected and prosecuted by law enforcement authorities for purchasing them. Accordingly, they call for more stringent enforcement of anti-counterfeiting legislation penalizing individual buyers. From this perspective, the fact that fashion counterfeits are often implicated in terrorist activities should be used for a development of anti-counterfeit law against individual CLB consumers (e.g., Johnson, 2010). Actively promoting the fact that money could possibly go to funding terrorist organizations would help to curb the appeal of counterfeit products (International Herald Tribune, 2007). Bringing CLB consumers to court is not feasible, yet under current laws, diligent investigation and prosecution of copyright law violators among CLB suppliers could work as a very effective tool to educate consumers that CLBs are illicit products and buying them is a socially undesirable behavior (AlbersMiller, 1999). Second, as the high price of GLBs significantly discourages the intention to buy GLBs, the value of GLBs should be enhanced. For example, the styles and designs of GLBs need to last for a reasonable length of time to make spending money on GLBs seem to be worthwhile. Although fashion, style, and popularity are important characteristics of luxury brands, fast and radical changes of the design would encourage consumers to buy CLBs to live up with fast-changing designs, which decrease the financial value of existing GLBs. But when the design or major theme fades slowly enough, the expensive price of the GLB would pay off as the consumer can use the product for a long time. Even when a change of the design should be made, key patterns by which consumers recognize the brand from others must remain unchanged to minimize social embarrassment that might occur from wearing out-dated designs. Third, as the price advantage of CLBs is not a determinant of GLB purchases, in order to make consumers switch from CLBs to GLBs, fashion marketers should convince counterfeit consumers that noneconomic benefits of GLBs overwhelmingly outweigh those of CLBs. For example, not only brand name but also other brand benefits such as durability of the brand, warranty, refund, and post-purchase services should be communicated to consumers because a counterfeiter can easily copy the brand name but not other brand attributes. Such educational communication will help consumers to balance the expensive price of a GLB with the lower price of a CLB. At the same time, consumer education should also emphasize the negative consequences of CLBs on legitimate businesses, conveying the sentiment of fashion marketers. For example, Santo Versace, president of Altagamma and Versace, remarked (Euronews, 2010), “If you purchase a counterfeit product, first of all you're supporting the black economy and in practice, tax evasion as well as child labor and the financing of organized crime. So if you buy a fake article I think that you'll be ashamed of yourself.” Fourth, fashion marketers of luxury brands can make new GLB items delivered faster by using designated online shopping sites (O'Connell, 2010). Such a fast move would make the manufacturing and delivery of counterfeits much slower than that of GLBs, and the designated online sites will guarantee the purchase of authentic products. A lot of online shopping sites such as eBay have made buying and selling CLBs much easier. Sales of CLBs via the internet are estimated to reach $135 billion in 2010 and are likely to increase (Economist, 2010). Fifth, this study finds that once consumers own and use GLBs, they are very likely to become loyal consumers to GLBs. For that purpose, affordable versions of GLBs can be an effective tool to attract CLB consumers. They may function as a bridge in aiding consumers to adopt GLBs quickly and permanently. Of course, however, the strategy of less expensive products could engender an erosion of the brand's reputation and could cannibalize revenues of the more expensive versions of the brand. In a worse scenario, the affordable versions could be perceived as semicounterfeits, diluting the brand equity. To avoid such problems, lower priced GLBs need to distinguish themselves from high-end GLBs. One practical idea is to target young consumers such as teens and preteens with designs that are more affordable in price and more youthful in design. 4.2. Research implications The study here examines the impact of past behavior on the purchase intention of GLBs and CLBs. Although purchase intention is strongly linked to actual purchase, future research needs to examine purchase behavior directly. One idea is to use a choice task in which consumers are asked to make a purchase choice between a GLB and its counterfeit version. Such a choice task may create a more realistic situation for consumers in which they are allowed to buy only one item, real or fake. And the task would be able to examine dynamic choice behaviors between GLBs and CLBs under a variety of experimental settings. B. Yoo, S.-H. Lee / Journal of Business Research 65 (2012) 1507–1515 1513

In Study 2, brand name, income, and price strongly influence the buying intention of CLBs and GLBs. Future research needs to investigate the role of each in more detail. In addition, future research needs to identify other factors that influence CLB purchases. Suspected but under-researched factors include personal factors, environmental factors, and product and marketing factors. Research will reveal which factors drive consumers to select CLBs over GLBs and vice versa. From such studies, managers and policy makers will be able to formulate more effective measures against CLB consumption behaviors. Most studies focus on individual differences in explaining consumer behavior related to CLBs, but future research also needs to examine cultural differences. For example, consumers in a collectivist culture, being more afraid of social disapproval, might not want to reveal that their products are in fact fakes, whereas consumers in an individualist culture, in which individual decisions are respected, might boast to friends about consuming quality fakes for a much lower price. But an understanding of how cultural environments of the society and individuals' cultural values motivate consumers to purchase CLBs remains largely unknown (e.g., Yoo, Donthu, & Lenartowicz, 2011; Yoo, Lee, & Jung, 2011). The current study relies on self-reports, but consumers are likely to underreport the consumption of illicit products. Such social desirability bias, a major threat to the validity of research, is often found among those who are older, more educated, employed, and living with their own family (Kim, Hill, & Martha, 2003). As our sample was female college students, they did not fit the profile of those susceptible to the bias. 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Luxury fashion brand consumers in China: Perceived value, fashion lifestyle, and willingness to pay ☆ Guoxin Li ⁎, Guofeng Li, Zephaniah Kambele School of Management, Harbin Institute of Technology, China article info abstract Article history: Received 1 June 2010 Received in revised form 1 April 2011 Accepted 1 September 2011 Available online 28 October 2011 Keywords: Luxury fashion brand Fashion lifestyles Perceived brand value Willingness to pay Mainland China A better understanding of the Chinese consumption of luxury fashion brands may assist the fashion industry when targeting China as the soon-to-be largest consumer market. This study aims to examine Chinese consumers' willingness to pay for luxury fashion brands related to their fashion lifestyle and perceived value. Practicality fashion lifestyle, perceived social/emotional value, perceived utilitarian value, and perceived economic value were found to have a significant influence on the willingness of Chinese consumers to pay for luxury fashion brands in a multiple regression model (n= 480). This research also examines the different effects of fashion lifestyles and perceived value on willingness to pay among four groups characterized by different previous genuine and counterfeit purchasing experiences. This study deepens understanding of consumer perceptions and behaviors relating to luxury fashion brands in China. © 2011 Elsevier Inc. All rights reserved. 1. Introduction The rapidly growing appetite for luxury brands in the emerging economies of Asia, especially China, has helped boost the growth of the luxury market in recent years. According to a recent forecast report by Bain & Company, the global sales share of luxury brands decreased by 16% in the US, 10% in Japan, and 8% in Europe, but the share increased by 12% in China in 2009 (www.bain.com). Data from the World Luxury Association (WLA) show that the value of luxury goods expenditures in China has increased by US$6 billion each year (www.luxurychina.org). A report by iResearch consulting group has predicted that China will become the largest trading and consuming partner for global luxury brand companies in the five years following 2010 (www.iresearchchina.com). These growth statistics indicate a promising future for the Chinese luxury fashion brand market. Chinese consumers are increasingly brand aware, and they intend to invest in luxury fashion brands (Bruce & Kratz, 2007). However, conditions are not adequate to realize the large market that may result from strong consumer intentions to purchase luxury brands. The factors that influence consumers' willingness to pay for fashion luxury brands must also be considered. China's culture is different from Western cultures (Henriksen, 2009), and thus, Chinese luxury consumption may not follow the trends of the Western world. The Chinese perceive luxury brand value in terms of China's unique cultural background. Because of rapid economic development, the Chinese fashion lifestyle is gradually beginning to show its own distinct characteristics. Although prior research pertaining to fashion lifestyles examines different cultures and markets such as the US (Kim & Lee, 2000) and Korea (Ko, Kim, Taylor, Kim, & Kang, 2007), researchers do not examine fashion lifestyles in China sufficiently. Luxury fashion brand consumption relates to the problem of counterfeit products in China. Luxury fashion brands are easy and inexpensive to reproduce and are thus common targets for counterfeiting (Yoo & Lee, 2009). Counterfeiting in China is increasing, with Chinese consumers purchasing counterfeit products either intentionally or unintentionally (Zaichkowsky, 2006). Chinese consumers also perceive that the sales of counterfeit products may influence the value of real luxury fashion brands (Bian & Veloutsou, 2007). This research examines whether or not Chinese consumers' willingness to pay for luxury fashion brands relates to their fashion lifestyles and the perceived value of luxury fashion brands. Furthermore, this research examines the impact of previous purchases of genuine or counterfeit luxury fashion brands on the relationships among fashion lifestyles, perceived brand value, and willingness to pay for luxury fashion brands. The study here offers two contributions. From an academic perspective, this study broadens the theoretical research pertaining to fashion lifestyles proposed by Ko et al. (2007) by exploring the Chinese context. From a practical perspective, the study's results provide suggestions for competitive marketing strategies for luxury fashion companies in the Chinese market. Gaining a better understanding of the behavior of Chinese consumers of luxury fashion brands should benefit the Journal of Business Research 65 (2012) 1516–1522 ☆ The authors acknowledge the financial support provided by the National Natural Science Foundation of China (70803008) and are grateful to the respondents for their support in data collection. The authors alone are responsible for all limitations and errors that may be related to the study and the paper. ⁎ Corresponding author at: Harbin Institute of Technology, School of Management, Box 1222, No. 13 Fayuan Street, Nangang District, Harbin, 150006 PR China. E-mail addresses: [email protected], [email protected] (G. Li). 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.10.019 Contents lists available at SciVerse ScienceDirect Journal of Business Research

fashion industry by improving customer relationships in potentially the largest consumer market. 2. Literature review 2.1. Conceptualizing luxury fashion brands The concept of “luxury” comes from the Latin “luxuria,” which means “extras of life” (Danziger, 2005). “Luxus,” which is the root of “luxury,” means “extravagant living” according to the Oxford Latin Dictionary (1992). Luxuries are objects of desire that provide pleasure. As nonessential items or services, these objects contribute to luxurious living by providing an indulgence or convenience beyond the indispensable minimum (Wiedman, Hennigs, & Siebels, 2007). In the academic literature, researchers use “luxury” to describe the top category of prestigious brands (Vigneron & Johnson, 2004). Consumers gain prestige by purchasing luxury goods; this concept is referred to as “conspicuous consumption” (O'Cass & McEwen, 2004). Luxury goods have always been associated with wealth, exclusivity and power and have been identified with the satisfaction of nonessential wants (Brun et al., 2008; Dubois & Gilles, 1994). The term “luxury brands” identifies high quality, expensive and nonessential products and services that are perceived by consumers as rare, exclusive, prestigious, and authentic and that offer high levels of symbolic and emotional value (Tynan, McKechnie, & Chhuon, 2009). The concept of a luxury brand was first defined by Vigneron and Johnson (2004) and then further defined by Wiedman et al. (2007) as the highest level of prestigious brands that provide several types of physical and psychological values. Researchers agree that “luxury” defines not a category of products but a conceptual and symbolic dimension. This dimension comprises values that are strongly related to cultural elements or socioeconomic context (Vickers & Renand, 2003). Vickers and Renand (2003) recognized luxury goods as symbols of personal and social identity. Luxury brands confer esteem upon their owner and satisfy psychological and functional needs. These characteristics are the main factors distinguishing luxury from nonluxury products or counterfeits (Arghavan & Zaichkowsky, 2000). Today, marketers commonly use the word “luxury” to persuade consumers to purchase products that are more expensive (Tynan et al., 2009). Jackson (2004) defines the luxury fashion brand as “characterized by exclusivity, premium prices, image and status, which combine to make them desirable for reasons other than function.” People distinguish luxury fashion brands as brands with the following characteristics: global recognition, core competence, high quality and innovation, powerful advertising, immaculate in-store presentation, and superb customer service. Research has considered why consumers purchase luxury fashion brands. For example, people follow fashion to gain the attention of others as a form of social communication (Potts, 2007). Fashion may function as a mechanism that periodically and speculatively transforms some elements of a consumer's lifestyle (Potts, 2007). Luxury fashion brands are publicly consumed luxury products that consumers can easily employ to signal wealth (Vigneron & Johnson, 2004). 2.2. Willingness to pay for luxury brands The willingness of consumers to pay for products or services reflects their purchasing intentions. Consumer willingness to pay is one of the strongest indicators of brand loyalty and may be the most reasonable summary measure of overall brand equity (Aaker, 1991; Netemeyer et al., 2004). Netemeyer et al. (2004) suggest that perceived quality, perceived value cost and brand uniqueness may be the direct antecedents of a consumer's willingness to pay a premium price for a brand. A consumer's willingness to pay a premium price may be a direct antecedent of brand purchasing behavior. 2.3. Fashion lifestyle “Lifestyle” is a term from the field of psychology (Coreil, Levin, & Jaco, 1985). Lifestyles refer to the everyday behaviorally oriented facets of people. Each lifestyle type is characterized by a unique style of living that is based on a wide range of activities, interests, and opinions (Plummer, 1974). Lifestyles encompass cultural affiliation, social status, family background, personality, motivation, cognition, and marketing stimuli (Horley, 1992). Researchers show that fashion lifestyles are important characteristics of consumers (Ko et al., 2007). A fashion lifestyle is defined as consumer's attitudes, interests, and opinions that relate to the purchase of fashion products (Ko, Kim, & Kwon, 2006). The concept of a fashion lifestyle is an important dimension in fashion customer segmentation. For example, Shim and Bickle (1994) outline three fashion lifestyle segments: symbolic/instrumental users, practical/conservative users, and apathetic users. In a study of the female apparel market in the US, Kim and Lee (2000) identify six dimensions of fashion lifestyles: price consciousness, fashion consciousness, information seeking, self-confidence, attitude toward local stores, and time consciousness. In addition, Ko et al. (2007) conducted a factor analysis for 13 fashion lifestyle items and outline four factors for fashion lifestyles: brand prestige, personality, practicality, and information/ fashion. Previous studies describe the significant relationships between lifestyles and traditional consumer purchase behaviors (Fullerton & Dodge, 1993; Green et al., 2006; Jih & Lee, 2004; Wells, 1974). According to research, lifestyles significantly influence consumer behavior (Fullerton & Dodge, 1993; Jih & Lee, 2004). Consumer decision making occurs in a predictable sequence that ranges from lifestyle to overt purchase behavior (Fullerton & Dodge, 1993). Fashion lifestyles are important variables in predicting consumer shopping behavior for retail products and brands (Ko et al., 2007). H1. A consumer's fashion lifestyle has a positive influence on his/her willingness to pay for luxury fashion brands. 2.4. Perceived brand value As an important research construct in the marketing literature, perceived brand value receives much attention from researchers. Brand equity provides value to customers by enhancing their interpretation of and ability to process information, their confidence in purchase decisions, and their satisfaction (Aaker, 1991). Researchers define brand value in many ways. For example, Yoo and Donthu (2001) define brand value as the differences between consumer responses to focal brands as compared with unbranded products when both products have the same level of marketing stimuli and the same product attributes. Researchers measure perceived brand values with multiple dimensions. Vigneron and Johnson (1999) propose five perceived values that significantly affect consumer decision processes regarding prestigious brand selection, including conspicuous value, unique value, social value, emotional value, and quality value. Phau and Prendergast (2000) propose that luxury brands involve exclusivity, perceived quality, brand awareness and a well-known brand identity. Yoo and Donthu (2001) measure brand value using three dimensions: brand loyalty, perceived quality, and brand awareness/association. Wiedman et al. (2007) extend Vigneron and Johnson's model (1999) to enhance research on consumer perceived value in relation to luxury consumption. These authors define consumer perceptions of luxury value along financial, functional, individual, and social dimensions. Burmann, Jost-Benz, and Riley (2009) explores the external sources of brand value at the behavioral level, including factors such as brand benefit clarity, perceived brand quality, and uniqueness. Kim, Kim, and Lee (2010) proposes consumer perceptions of brand G. Li et al. / Journal of Business Research 65 (2012) 1516–1522 1517