First Impressions: Status Signaling Using Brand Prominence

50 Pages Posted: 3 Sep 2008 Last revised: 18 Apr 2009

See all articles by Young Jee Han

Young Jee Han

University of Southern California - Marshall School of Business

Joseph Nunes

University of Southern California - Marshall School of Business

Xavier Dreze

University of Pennsylvania - The Wharton School

Date Written: September 2, 2008

Abstract

Consumers use products to signal status in different ways. We propose a classification system employing four tiers to explain consumers' choice among subtly or conspicuously branded items based on how and to whom they wish to signal. The first tier consists of consumers who are well-acquainted with luxury brands and thus relative experts. They are designated as patricians. Patricians signal horizontally, spending more to buy brands that are labeled discreetly and are recognizable primarily to other experts. Relative novices to luxury brands comprise the second tier, the parvenus. They crave status and thus buy more accessible (less expensive), conspicuously branded goods that signal to those below and to other neophytes that they have arrived. Using data from two of the world's largest luxury brands, we substantiate a negative relationship between the conspicuousness of the brand on the product (what we call "Brand Prominence") and price for status goods. In addition, a survey reveals how a greater need for status leads to displaying the brand loudly, while greater expertise leads to the opposite. Further, a field survey of patricians and parvenus demonstrates that while patricians can recognize and value luxury goods even in the absence of brand markings, parvenus cannot.

Our third tier is labeled poseurs; they cannot or will not buy authentic luxury goods but instead buy copies of what they believe will signal status, the products favored by the parvenus. This creates a significant market opportunity for loud copies of luxury goods. We study this market using data from Thai counterfeiters and online sellers of knockoffs revealing how counterfeiters disproportionately copy louder, less expensive, products. The lowest tier, dubbed plebs, does not participate in the market for luxury goods. Taken together, our field and lab experiments, along with the analysis of market data for authentic and counterfeit luxury handbags, supports the proposed model of status signaling behavior based on expertise, need-for-status, and brand prominence.

Keywords: Luxury Goods, Status, Brand, Counterfeits, Brand prominence

JEL Classification: M10, M31

Suggested Citation

Han, Young Jee and Nunes, Joseph and Dreze, Xavier, First Impressions: Status Signaling Using Brand Prominence (September 2, 2008). Marshall School of Business Working Paper No. MKT 15-09, Available at SSRN: https://ssrn.com/abstract=1262479 or http://dx.doi.org/10.2139/ssrn.1262479

Young Jee Han

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

Joseph Nunes (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

Xavier Dreze

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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