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ABSTRACT
KEYWORDS: premium, luxury, pricing, consumers
Changing consumer perceptions of luxury are complicating the process by which consumers decide whether or not paying for premium branded goods and services is worth it. This study indicates that consumer behaviour is reflected in changing market conditions and that factors such as personal interest in the spending category are very important in determining whether consumers will pay more. This underlines the importance for companies and organisations of understanding trends in consumer behaviour and lifestyle. The study also explores how the expansion of the price spectrum in specific brands and markets is allowing consumers to shop at the price point which suits them, which creates more entry points for luxury shopping and satisfies demand for low prices. It also suggests that long-term shifts in consumer attitudes are behind the proliferation of intangible attributes that consumers associate with 'premiumness'.
INTRODUCTION: LUXURY REVISITED
Previous research has demonstrated how the concept of 'luxury' or 'premium' is becoming increasingly fluid, unstable and experiential (Future Foundation/nVision, 2004b). As such, 'premiumness' takes on many different forms for different people and is dependent on the mood and experience of the consumer.
This paper draws on new research in an attempt to determine how the context of the changing environment for luxury may inform which products and services consumers are actually willing to pay a premium for, or at least agree that paying for premium is worth it.
Accordingly, it begins with an assessment of the extent to which UK consumers feel able to engage in luxury markets and describes how this is offset by the continuing desire and demand for low prices. Building on the theme of complexity within the notion of 'premium', the second section of the paper examines such phenomena as shopping across the price spectrum, the extension of price ranges in the marketplace, the changing relationship between price and premium, and the importance of consumer interest in the market in determining desire for premium branded goods and services. Research on the variation between different markets and demographic groups in terms of the perception that premium goods and services are worth paying more for is then presented as a basis for constructing marketing strategies.
LUXURY IN THE LOW PRICE SOCIETY
Since 1980, there...