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Are the poor willing to pay a premium for designer labels? a field experiment in Bolivia

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  • Luuk Van Kempen

Abstract

This paper provides an empirical test of whether consumers in developing countries who live under conditions of poverty are prepared to pay a premium for products that feature a designer label, not because these are perceived as being of higher quality but for symbolic reasons. For this purpose a field experiment was conducted among urban, low-income consumers in Bolivia. An incentive-compatible procedure was used to elicit willingness-to-pay for designer brand perfume and an intrinsically equivalent non-branded perfume. After correcting for possible “quality illusion”, we find that poor consumers, as a group, are willing to pay a premium for the designer label as a symbol. This willingness to pay for a designer logo depends on respondents' relative economic situation, education level and the frequency of watching soaps on television.

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  • Luuk Van Kempen, 2004. "Are the poor willing to pay a premium for designer labels? a field experiment in Bolivia," Oxford Development Studies, Taylor & Francis Journals, vol. 32(2), pages 205-224.
    • Handle: RePEc:taf:oxdevs:v:32:y:2004:i:2:p:205-224
    DOI: 10.1080/13600810410001699957
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    Cited by:

    1. Srivastava, Abhinav & Mukherjee, Srabanti & Jebarajakirthy, Charles, 2020. "Aspirational consumption at the bottom of pyramid: A review of literature and future research directions," Journal of Business Research, Elsevier, vol. 110(C), pages 246-259.
    2. Abhishek Mishra & Satyabhushan Dash & Naresh Malhotra, 2015. "An integrated framework for design perception and brand equity," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 5(1), pages 28-44, June.
    3. Saravana Jaikumar & Ankur Sarin, 2015. "Conspicuous consumption and income inequality in an emerging economy: evidence from India," Marketing Letters, Springer, vol. 26(3), pages 279-292, September.
    4. Stokburger-Sauer, Nicola E. & Teichmann, Karin, 2013. "Is luxury just a female thing? The role of gender in luxury brand consumption," Journal of Business Research, Elsevier, vol. 66(7), pages 889-896.
    5. Bian, Qin & Forsythe, Sandra, 2012. "Purchase intention for luxury brands: A cross cultural comparison," Journal of Business Research, Elsevier, vol. 65(10), pages 1443-1451.
    6. Abhishek Mishra & Satyabhushan Dash & Naresh K. Malhotra, 2015. "An integrated framework for design perception and brand equity," AMS Review, Springer;Academy of Marketing Science, vol. 5(1), pages 28-44, June.
    7. Ramendra Singh & Sangeeta Trott, 2019. "Non-deceptive deliberate purchase of brand lookalikes: a BOP customer value perspective," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 46(1), pages 15-26, March.
    8. Martin Ravallion & Shaohua Chen, 2011. "Weakly Relative Poverty," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1251-1261, November.
    9. Jaikumar, Saravana & Singh, Ramendra & Sarin, Ankur, 2018. "‘I show off, so I am well off’: Subjective economic well-being and conspicuous consumption in an emerging economy," Journal of Business Research, Elsevier, vol. 86(C), pages 386-393.
    10. Lee, Jieun & Ko, Eunju & Megehee, Carol M., 2015. "Social benefits of brand logos in presentation of self in cross and same gender influence contexts," Journal of Business Research, Elsevier, vol. 68(6), pages 1341-1349.
    11. Armando Memushi, 2014. "Conspicuous Consumption and Albanians: Determinant Factors," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 12(1), pages 65-87.
    12. Maria Teresa Cuomo & Pantea Foroudi & Debora Tortora & Shahzeb Hussain & T.C. Melewar, 2019. "Celebrity Endorsement and the Attitude Towards Luxury Brands for Sustainable Consumption," Sustainability, MDPI, vol. 11(23), pages 1-21, November.
    13. Truyts, Tom, 2012. "Signaling and indirect taxation," Journal of Public Economics, Elsevier, vol. 96(3), pages 331-340.
    14. Rik Linssen & Luuk Kempen & Gerbert Kraaykamp, 2011. "Subjective Well-being in Rural India: The Curse of Conspicuous Consumption," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 101(1), pages 57-72, March.
    15. Avinash G. Mulky, 2011. "Marketing to the Bottom of the Pyramid and subsistence markets - A research agenda," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(2), pages 9-14.

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