On the Effectiveness of Price Anchors with Second-hand Luxury Products

Abstract

Mental shortcuts are used by humans in decision-making processes to simplify cognitive operations. These processes are also termed heuristics and have been researched in the past. It was observed that people in the ordinary consumer sector are extremely vulnerable to environmental factors. For this reason, companies use various tactics to strongly influence and direct consumers in their purchasing decisions. This thesis focuses on the luxury goods market. In particular, the extent to which intuitive buying is possible in the luxury sector and the influence of heuristics in luxury consumption will be investigated, as this has not been explored before. In this context, price is used as an anchoring heuristic. For this purpose, a mixed-methods analysis was applied. A quantitative study in the form of an online experiment was conducted to test the anchor effect during an imaginary secondhand luxury purchase. In addition, short expert interviews were performed as a qualitative analysis to gain practical insights into marketing strategies in the luxury sector. The results demonstrate that intuitive purchases in the luxury market are possible but depend on various factors of the consumer's overall condition before undertaking this type of purchase. Furthermore, the results show that the anchoring heuristic is limited to a certain degree in the luxury sector. The results additionally reveal that prices are not the decisive factor for consumers. Attributes including brand personality, image and maintaining brand desirability allow consumers to build an aspiration towards the brand.

Keywords: psychology, luxury, consumer behaviour, heuristics, pricing, second hand