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Cross-category indulgence: Why do some premium brands grow during recession?

Author

Listed:
  • Tanya Mark

    (University of Guelph)

  • Colette Southam

    (Bond University)

  • Jan Bulla

    (University of Bergen)

  • Sergio Meza

    (University of Guelph)

Abstract

Reports about luxury categories and premium brands growing during recession are multiple. This marketplace behavior, however, is counterintuitive to what traditional economics would predict. The authors propose and test a theory to explain why demand for premium brands may grow despite a contraction in the economy. They define cross-category indulgence as the strategy of moving across categories (in contrast to moving within category) to satisfy the desire to indulge while dealing with budgetary constraints. The authors test empirically for cross-category indulgence using a unique dataset that compares dining in with dining out. They find support for cross-category indulgence and rule out other possible explanations for the increase in demand for a premium brand. The authors discuss that premium brand managers that understand this marketplace behavior and create opportunities for their brand to be the leader in their category may alleviate a decrease in demand for their brand during tough economic times.

Suggested Citation

  • Tanya Mark & Colette Southam & Jan Bulla & Sergio Meza, 2016. "Cross-category indulgence: Why do some premium brands grow during recession?," Journal of Brand Management, Palgrave Macmillan, vol. 23(5), pages 114-129, September.
    • Handle: RePEc:pal:jobman:v:23:y:2016:i:5:d:10.1057_s41262-016-0004-6
    DOI: 10.1057/s41262-016-0004-6
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    References listed on IDEAS

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    1. Wagner A. Kamakura & Rex Yuxing Du, 2012. "How Economic Contractions and Expansions Affect Expenditure Patterns," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 39(2), pages 229-247.
    2. Kivetz, Ran & Simonson, Itamar, 2002. "Self-Control for the Righteous: Toward a Theory of Precommitment to Indulgence," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 29(2), pages 199-217, September.
    3. Steven Cook, 1999. "Cyclicality and Durability: Evidence from U.S. Consumers' Expediture," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 299-310, November.
    4. H. Leibenstein, 1950. "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 64(2), pages 183-207.
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    Cited by:

    1. Hemant C. Sashittal & Avan R. Jassawalla & Ruchika Sachdeva, 2023. "The influence of COVID-19 pandemic on consumer–brand relationships: evidence of brand evangelism behaviors," Journal of Brand Management, Palgrave Macmillan, vol. 30(3), pages 245-260, May.
    2. Shaun M. Powell, 2016. "Journal of Brand Management – Year end review 2016," Journal of Brand Management, Palgrave Macmillan, vol. 23(6), pages 601-611, November.
    3. MacDonald, Daniel & Dildar, Yasemin, 2020. "Social and psychological determinants of consumption: Evidence for the lipstick effect during the Great Recession," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 86(C).
    4. Boisvert, Jean & Christodoulides, George & Sajid Khan, M., 2023. "Toward a better understanding of key determinants and consequences of masstige consumption," Journal of Business Research, Elsevier, vol. 161(C).

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