INSEAD: When political ideology shapes luxury buying
KUALA LUMPUR: Political allegiance has a critical role in the decision to buy luxury goods, new research by INSEAD reveals, with conservative consumers being motivated to maintain their status, which in turn increases their desire for luxury goods and services.
New empirical research by INSEAD associate professor of Marketing David Dubois, Jeehye Christine Kim of Hong Kong UST Business School and Brian Park of J. Mack Robinson College of Business at Georgia State University, shows that conservative shoppers are much more likely than their liberal counterparts to purchase luxury items if and when they believe the purchase will help them maintain their social status.
This is down to a conservative inclination to preserve socioeconomic order and an aversion to change in the social hierarchy, said Dubois. This can influence the demand for luxury products positioned as having the ability to maintain one’s status as well as make conservatives more sensitive to luxury at times of change in the broader environment such as social changes.
Initiated at INSEAD, Dubois and his colleagues’ research is among the very first to establish a causal link between luxury purchasing patterns and political proclivity.
It builds on a fundamental understanding that people buy luxury goods to signal their status. Novel to the research, the authors show that people seek status signalling for one of two critical reasons: to maintain their social position vis à vis others, or to advance their social standing.
In their paper, “How Consumers’ Political Ideology and Status Maintenance Goals Interact to Shape Their Desire for Luxury Goods”, , Dubois, along with colleagues Kim and Park, hypothesised and found that when the motive to maintain one’s current status is salient, conservatives desire luxury goods more than liberals.
“This is because conservatives – but not liberals – tend to view these goods as strengthening the stability of their position,” Kim said.
“This also indicates that conservatives’ greater desire for luxury goods does not stem from “keeping up with the Joneses” but rather from a strong urge to maintain their social standing,” Dubois added.
Respondents provided information about their political beliefs, their desire to buy luxury goods and their social status. Du bo is and his team found a direct link between the political orientation of high status individuals and how likely they were to buy a luxury car.
“We found that Republicans with high social status were 9.8 per cent more likely than high-status Democrats to buy a luxury car. Intrigued, we dug a little deeper and discovered that while high-status Democrats spent US$29,022 on average, their Republican counterparts were spending US$33,216 on cars. For luxury car sellers that meant a median difference of 14.45 per cent increase in sales to conservative customers,” Dubois said.
In another study demonstrating the practical consequences of the effect, the researchers asked 300 individuals to indicate their willingness to pay for a set of headphones framed as a luxury or a non-luxury product.
After status-maintenance was momentarily activated, individuals of strong conservative beliefs were willing to pay on average US$109.8 the headphones. By comparison, the desire for the headphones was 83 per cent lower after status-advancement was instead momentarily activated among individuals with strong conservative beliefs, amounting to a willingness to pay of US$59.9.
The difference was also significant when comparing it to that of individuals with strong democrat beliefs. “That US$109.8 that Republicans are willing to pay compares to only US$65.1 that Democrats with the same status maintenance goals were willing to pay – a difference of 65 per cent,” says Kim.
“This is a very accessible tool for luxury brands. Political affiliations can be determined along geographical lines – and there are tons of granular data easily accessible that enable brands to enact a segmentation based on political ideology”, said Park.
Recognisable digital footprints indicative of conservative or democratic beliefs may also be leveraged on online platforms such as social media or even search patterns.
“It’s easy to assess people’s ideology from what they’re saying online on social media– who they follow, the content they ‘like’ – and via their preference for different media outlets or platforms.” said Dubois.
The key, says Dubois, is then to refine product or service positioning and messaging in a way that highlights how that product helps customers maintain their status. Conserving status frequently permeates communication in the luxury sector.
Luxury brands could also consider changes in one’s market environment when making brand or communication decisions. Political changes or external threats or crises that can potentially reshuffle the hierarchy can indeed also activate the motivation to maintain status.
“External shocks like economic crises or a threat to status can produce a surge in interest for conspicuous consumption, in particular beauty and appearance products – a phenomenon referred to as “the lipstick effect”.” These findings suggest that the lipstick effect may be stronger among Republicans than Democrats. “Republican consumers are susceptible to economic or political uncertainty because conservative ideology naturally tends towards the conservation of the hierarchy and the preservation of status,” said Dubois.
“Making the connection between politics and audience segmentation might be new, but it is also a logical step,” said Kim. Luxury and politics share in common being at the heart of stratifying societies for centuries.
“We felt it was a natural question to ask. If political ideology shapes people’s views about social hierarchy – from resource redistribution to social judgment, why shouldn’t it also sway consumption behaviours tied to social hierarchy, such as the desire for positional products, among which luxury are primary?”
“And it turns out that political affiliation is a very easy segmentation variable that can genuinely inform luxury brand strategy and practices ,” Dubois concluded.