Luxury Perceptions: A Comparison of Korean and American Consumers

The market for luxury goods and services has been one of the important segments of the markets for the past 10 years. This market has a global audience with consumers buying similar products in many different locations. Global marketers are faced with the task of targeting goods and services to consumer groups with a diversity of preferences. Marketers need to be aware of the way in which culture influences perceptions of goods and services. This study investigates the global market, comparing collectivist/individualistic cultures (Korean/American consumers) and age-groups on perceptions of luxury and necessity. This study compares 662 Korea and U.S. consumers on perceptions of luxury/necessity, motivations to buy things they do not necessarily need, and elasticity of categories of goods and services. Six hundred and sixty-two female participants completed the questionnaire. Participants were from both the U.S. (340) and South 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 between 26 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 oldest group, those between 25 and 35 comprising the third group and those under 25, the youngest group. The key results of the study show that there are differences between age and cultural groups. In order to see relationships in the data, the 30 categories were factor analyzed by culture to determine their underlying dimensions. Three factors were found as Traditional Luxuries, Modern Luxuries and Safety and Security Goods and Services. The ratings for each of the factors were summed and entered into two independent ANOVAs. There was no expectation of an interaction between age and culture. Age-group had a main effect on the ratings for Modern Luxuries and Safety and Security Goods and Services. Culture had a main effect on ratings for all three factors, with Korean participants giving the safety and security factor higher ratings than did U.S. participants. U.S. consumers were more likely to decide to make purchases to improve the quality of life, for pleasure, beautifying the home, for relaxation, and entertainment than were Korean consumers. Korean consumers were more likely to decide to make 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 more important factor in their decisions than did U.S. consumers. U.S. consumers rate entertainment as important, particularly for younger consumers, while Korean consumers in all age-groups rated it similarly and not as important. Age-group also influenced motivations to buy. Younger consumers tended to decide to make a purchase for pleasure, status, entertainment, satisfaction and on impulse. Younger consumers were less likely to buy for beautifying the home. Overall, individualistic consumers tend to indicate that when the decision is made to buy things they don’t necessarily need, the enjoyable aspects of consumption are more important than for collectivist consumers. The youngest age-group also rates the enjoyable aspect as more important than do older age-groups. Culture and age-group play an important role in economic elasticity of categories for these participants. Findings include differences between cultures and age-groups on which goods and services are considered ‘things that are not necessarily needed’ and motivations to buy. This study gives new insights to global marketers in developing marketing plans for collectivist and individualistic target markets in this global market.