Luxury Perceptions: A Comparison of Korean and American Consumers

Abstract

The market for luxury goods and services has been one ofthe important segments of the markets for the past 10 years. This market has a global audience with consumers buying similarproducts in many different locations. Global marketers arefaced with the task of targeting goods and services to consumergroups with a diversity of preferences. Marketers need tobe aware of the way in which culture influences perceptionsof goods and services. This study investigates the global market,comparing collectivist/individualistic cultures (Korean/American consumers) and age-groups on perceptions of luxuryand necessity. This study compares 662 Korea and U.S. consumerson perceptions of luxury/necessity, motivations to buythings they do not necessarily need, and elasticity of categoriesof goods and services. Six hundred and sixty-two female participants completed thequestionnaire. Participants were from both the U.S. (340) andSouth Korea (322). Ages ranged from 20 to 84 years of age. One-fourth of the participants were over 53 years of age,one-fourth were 25 or younger. Half the participants were between26 and 52 years of age. Four age-groups were established,with participants over 53 comprising the oldest group,those between 36 and 52 years of age in the second oldestgroup, those between 25 and 35 comprising the third groupand those under 25, the youngest group. The key results of the study show that there are differencesbetween age and cultural groups. In order to see relationshipsin the data, the 30 categories were factor analyzed by cultureto determine their underlying dimensions. Three factors werefound as Traditional Luxuries, Modern Luxuries and Safetyand Security Goods and Services. The ratings for each of thefactors were summed and entered into two independentANOVAs. There was no expectation of an interaction betweenage and culture. Age-group had a main effect on the ratingsfor Modern Luxuries and Safety and Security Goods andServices. Culture had a main effect on ratings for all threefactors, with Korean participants giving the safety and securityfactor higher ratings than did U.S. participants. U.S. consumers were more likely to decide to make purchasesto improve the quality of life, for pleasure, beautifyingthe home, for relaxation, and entertainment than were Korean consumers. Korean consumers were more likely to decide tomake purchases because of status, as a self-gift, on an impulse,or for emotional satisfaction than were U.S. consumers. Korean consumers in all age-groups rated status as a moreimportant factor in their decisions than did U.S. consumers. U.S. consumers rate entertainment as important, particularly foryounger consumers, while Korean consumers in all age-groupsrated it similarly and not as important. Age-group also influenced motivations to buy. Younger consumerstended to decide to make a purchase for pleasure, status,entertainment, satisfaction and on impulse. Younger consumerswere less likely to buy for beautifying the home. Overall, individualistic consumers tend to indicate that whenthe decision is made to buy things they don’t necessarily need,the enjoyable aspects of consumption are more important thanfor collectivist consumers. The youngest age-group also ratesthe enjoyable aspect as more important than do olderage-groups. Culture and age-group play an important role ineconomic elasticity of categories for these participants. Findings include differences between cultures and age-groupson which goods and services are considered ‘things that arenot necessarily needed’ and motivations to buy. This studygives new insights to global marketers in developing marketingplans for collectivist and individualistic target markets in thisglobal market.