Conspicuous Consumption Among Young Adults

Published Date: 02 Nov 2017

Chapter 2: Literature Review

2.0 Introduction

This chapter discusses the theoretical background and definition of conspicuous consumption, status consumption and theory of conspicuous consumption. Furthermore, it also consist of an overview of mobile phone, young adults, purchase intention, purchase behaviour, relationships between purchase intention and purchase behaviour and the conceptual framework for the proposed topic. This is to provide further details regarding the proposed topic. The purpose of this literature review is to discover the previous studies done by the researchers and consequently helps to improve the explanation of this study.

2.1 An Overview on Conspicuous Consumption

2.1.1 General definition

According to the Dictionary.com, conspicuous is the term that can be notable by people in the economy. It can easily know for others people and gain attention from the people in term of the quality or feature that have been provided. Furthermore, it cans also being supported by the Merriam-Webster, which says it is easily to seen by the eye or mind in order to attract attention from other people. In others word, it is meant that any expenditure that is counted as conspicuous consumption, it should be visible, displayable or knowable to people other than those directly engaged in its consumption.

Conspicuous consumption can be defined as the behaviors of people can be seen from buying a lot of things which is unnecessary. (Longman American Dictionary, 2000, p.296). Conspicuous consumption is the use of the purchase high priced products in order to signal their wealth and their status. In others words, it is meant that people always buy anything that is luxury product in which that is not necessary. This is because they want to gain the prestige and the status from others people. That is meant that they are not satisfied with the physical needs, but rather to satisfy their desire for status and esteem from others. For instance, nowadays people always buy expensive mobile phone like smart phone rather than normal mobile phone. Hence, these can be further support by Trigg (2001), conspicuous consumption is one of the people behavior that spend money on their spare time such as spend more on leisure activities and buying luxury goods.

Wong (1997) also suggest that conspicuous consumption can be described as product satisfaction is come from the people reaction toward the product rather than multi-purpose its had given. According to the Veblen (1934) and Charles and colleagues (2007), conspicuous consumption is result when the consumption is to represent one’s economic power to others, that is let others know their power and status. So, conspicuous consumption can be summarized as that people are buying an expensive products in order to make them to show off of their status and prestige. This term also being argued by Bagwell and Bernheim (1996) and Comeo and Jeanne (1997) that it is a consumer desire for their riches from others people.

2.1.2 Conspicuous Consumption and Status Consumption

Status consumption is the process by which consumers endeavor to increase their social standing through conspicuous consumption and possessions. In other words, status consumption is the conspicuous consumption that focuses on the status. According to Eastman et al. (1999), status consumption is defined as "the motivational process by which individuals strive to improve their social standing through the conspicuous consumption of consumer products that confer and symbolize status both for the individual and surrounding significant others". Status is "an expression of evaluative judgment that conveys high or low prestige, regard or esteem" (Donnenwerth and Foal 1974, p.786). Furthermore, status is also significant as power that based on respect, consideration and admires from others people (Eastman et al, 1999).

Status consumption is based on conspicuous consumption and conspicuous consumption is based on status (Veblen, 1934). There are often mean the same and often used interchangeably in previous studies. However, the conspicuous consumption and status consumption are different consumer measures, yet they are related in that they are both impacted by interpersonal or word-of-mouth communication. The difference between the conspicuous consumption and status consumption has been suggested by Eastman et al. (1999), conspicuous consumption is displaying wealth that inflating the purchaser’s own ego while status consumption is represent status of the purchaser and surrounding others when they are buying a product or service.

2.1.3 Veblen’s Theory of Conspicuous Consumption

This theory is associated with the American economist, Thorstein Veblen; it is based on the evolution of a leisure class whose members are not requires to work but appropriate a surplus produce by those who do work, the working class. One’s good name can be maintained by accumulate and acquire property in the hierarchy (Veblen 1899, in Trigg 2011). In the hierarchy who do have own property tend to have status and honor. However, for those who do not have property tend to have no status.

Social performance of members of the leisure class is the transformation of wealth into status. Status is defines as the perception of other members of society make on individual’s position in society and it can be achieved by signal their wealth. Two main ways of individual can display wealth is been found by Veblen are through extensive leisure activities and through lavish expenditure on consumption and services. As according to Trigg 2011, Veblen argues that if the population is more mobile, then the communities become less close-knit. Hence, it is important to note that by displaying of wealth through consumption of goods is more important than displaying of leisure (Veblen (1899) 1994, in Trigg 2011).

Hence, according to Trigg 2011, Veblen has label the type of behavior as conspicuous consumption, that is people spending money in order to signal of their wealth for others people. Besides, in the research of Trigg 2011, Veblen also stated that conspicuous consumption is the important factor in determining the consumer behavior that is for all social classes.

2.1.4 Conspicuous Consumption and Mobile Phone

Most of the consumers use mobile phone is because they are perceived of the quality. Perceived quality is the customer’s perception toward the quality of the product or service. Quality is a perceptual, conditional and somewhat subjective attribute and may be understood differently by different people. The quality-value-loyalty linkage is consistent with prior work on customer behaviors (Cronin et al, 2000). Quality is expected to have a direct impact on value (Anderson and Sullivan, 1993). For instance, there are many consumers would like to purchase "PADINI" or "GIORDANO" cloth; this is because they are perceived that their cloth have a good quality and they are satisfy on their needs and wants. Besides, consumer will associate the luxury products with superior brand quality and reassurance and in turn perceive more value from it.

Self-identity and sense of belonging will also causes consumer to purchase the mobile phone. According to Oxford English Dictionary (OED), identity is meant "the quality or condition of being the same in substance, composition, nature, properties or in particular qualities under consideration". Hence, it has been remarked by many that the expanded or enhanced social networks afforded by mobile phones have created a new sense of identity for various groups of people such as teenagers (Lorente, 2002). There have four classic facets to the sense of belonging that is place, family, country and race. Because of these, there are many users are getting closer and closer to their mobile phone and at all times of the day. Many people are afraid to leave home without it and feel uncomfortable when others peruse their mobile menus or messages. In a 2003 UK survey, 46% of mobile phone users described the loss of their mobile as a form of "bereavement" (Harkin, 2003).

2.2 An Overview on Mobile Phone

Mobile phone is also known as cell phone and it is an electronic device. It is use for the telecommunication purposes. There are differences between the mobile phone and the cordless telephones which is that the mobile phone can be use everywhere at any place and time. Services that provide by the mobile phone include Short Message Service (SMS), Multimedia Messaging Service (MMS) for sending and receiving photos and videos, Internet Browsing, Gaming and camera with video recorder. A mobile phone is also a symbol of belongingness to a group and as a part of one’s identity (Jokinen & Kangas, 2000; Nurmela et al., 2000).

Srivastava (2005) has proposed that the reason of people purchase mobile phone has helped the mobile phone to shift from being a "technological object" to a key "social object". This is because nowadays mobile phone is an important tool for them to communicate within each other’s at any place and any time. Hence, this has change their think and behavior towards the purchasing of mobile phone. For instance, there are many people who are using the mobile phone to keep track the prices in Kenya and oversee the bakery orders in Nigeria (Samuel Greengard, 2008).

According to Castells et al., (2007, p.85), "obtaining a mobile phone is a milestone that indicates success, not only financially but also culturally in term of the integration within society". As the mobile phone evolves in the market, this has resulted that social relationships being affected (Marquardt, 1999). By using the mobile phone, it can help to increase the electronic interactions between family and friends. However, because of this device, has cause the face to face interaction being reduced. As a result, the mobile phone has changed the individual cultural norms and values (Rauch, 2005).

2.2.1 Types of mobile phone

Actually there are many types of standard mobile phone such as AMPS (Analog), TDMA, CDMA and GSM. However, mostly it is categories into two types that are conventional mobile phone and smart phone.

2.2.1.1 Conventional mobile phone

Most of the models are compact and the overall function is generally straightforward. Normally, it will allow for sending and receiving text messages and can also help to store a lot of contact number in the mobile phone. Furthermore, it also has provided basic features such as camera, video, music, games and support for wireless Bluetooth headsets for hands-free communication.

2.2.1.2 Smart phone

Nowadays, there are many people who are using smart phone to check for the e-mail and appointments. Smart phone can help them to handle multiple tasks such as office documents and it also has an open source operating system for developers.

There are two types of smart phone that is smart phone for personal use and smart phone for business purposes. Smart phone for personal use are good in playing music, reading and multimedia services, but it not allow people to make or edit document. Moreover, smart phone for business purposes allow people to make or edit document because it have Microsoft Outlook.

Different market segment have been used by the developer in order to release different phone series. For instance, BlackBerry focused on enterprise consumer email needs, Sony Ericsson which has walkman series is for the music lover and the Nokia N series and Apple I-Phone are good for all types of multimedia application.

2.2.2 Mobile as fashion

Mobile phone has become a status of symbol. Some users engage in "stage phoning" (Plant 2000) or speaking loudly in order to be heard and seen by others. In addition, individual identity can be shown by looking on personalization of the mobile phone especially the youth. Mobile phone has become fashion accessories rather than communication devices (Figure 1). This is because nowadays market has come out variety of mobile cover which is brightly and colorful in order for individual to show their identity. For instance, in Japan, mobile users personalize their phone with colorful beaded accessories. Moreover, all this also can be found on the market that with everything from embedded precious stones to leather.

Figure 1: Nokia helps you reveal your hidden self.

2.2.3 Importance of using mobile phone

Nowadays mobile phone has become more important to many people in the world. This is because everybody has their own mobile phone. As compare with 1990’s, mobile phone is the luxury item for people due to of its price, but in modern technology it has become cheaper items. Mobile phone not only can help us to keep in touch with others, it also helpful in emergency situation, it can help to store data and gives entertainment to people in today life. The global mobile phone market now stands at approximately 1.8 billion subscribers, and is forecasted to reach 3 billion by the end of 2010 (Reid and Reid, 2007).

By the end of 2007, there were approximately 3.3 billion mobile phone users worldwide which is equivalent to a penetration rate of 49% of the last year (International Telecommunication Union, 2008). The mobile phone penetration in Thailand has increased its growth rate to over 50% in 2006 in comparison to 35% in 2005 (Ministry of Information and Communication Technology, 2008). According to Ofcom (2007), mobile phone penetration in UK has increased by 41.3% between 2003 and 2007.

According to Sidney Aronson, an American sociologist (1971), in an urban setting the home phone functions psychologically to reduce loneliness and anxiety, to increase feelings of security and to maintain consistency within family and friendship groups. The telephone is used to compensate for the geographical scattering of family and friends. Aronson (1971) suggests that a key social function of the telephone is in maintained its users’ "intimate social networks" or "psychological neighborhoods".

2.3 An Overview on Young Adults

According to Erik Erikson (1975, p.255) under the stage of human development, young adults is define as a person who are in the age range from 20 to 40. The young adult’s stage in human development precedes middle adulthood. Young adults can be considered as the healthiest time of life because they are free from diseases or any problem.

According to Barak and Gould (1985), fashionable or stylish products are more likely by the young adults rather than older people. There are the people who are more willing to try new products because it can help them to have a self-confident. Young adults are a person who is more informed, pragmatic and will always seek excitement in products and services (Sharma, 2004). Nowadays, there are many young consumers will spend their money on clothing, internet and mobile phones (Spero and Stone, 2004).

2.3.1 Mobile Phone and Young Adults

Mobile phone has become one tool that inseparable from young adults. This is because nowadays mobile users have getting younger. One of the survey found that 56% if Italian children aged nine or ten own a mobile phone (John Hooper, in The Guardian, 2003). In the UK, there were 400,000 children under the age of ten owning a mobile phone as of August 2003, up from 80,000 in 2000 (Cellular News, 2003). Young people use the mobile is just to enhance their social networks. This is because by doing this it can help them to maintain their status, in terms of age, gender and peer group. Besides, they also like to personalize of their mobile phone through ringing tones, wallpaper and covers than their counterparts. Furthermore, there are many teenagers do not recognize the difference between speaking on their mobile phone and meeting face to face. Hence, this has result a popular trend among them that is short messages services (SMS) over voice call. This is because it is much less expensive than calling over mobile phone. There are many countries had use the SMS to delivered the school examination results to the students (Di-ve, 2003). Moreover, not only SMS is popular among the young adults, but the use of the mobile Internet applications is also popular among them. Then, the use of the technology has helped them to save a lot of time and the mobile information society will take in the future.

2.4 An Overview on Purchase Intention

Purchase intentions are an important construct widely used in marketing research and marketing practice in such areas as new product testing (Silk and Urban, 1978), forecasting (Infosino, 1986), advertising research (MacKenzie et.al, 1986), and market segmentation (Sewall, 1978). Purchase intentions are defines as individual will buy the product if the product meets their needs, attitude and perception towards it and which the company is produced it. In other words, purchase intention can be described as a plan to purchase the product or service in the future time. By doing so, it allow each individual to combine all the factors in order for an individual to make a purchase decision of the product or service. All brands should available in market in order to test for the purchase intention of specific brand (Teng, Laroche and Huihuang, 2007). Purchase intention has wider implications and will often have positive impact on an individual’s actions (Ajzen and Driver, 1992; Pierre et al, 2005; Schlosser et al, 2006).

2.5 An Overview on Purchase Behavior

Cultural, social, personel and psychological factors will influence the purchase behaviors of individual. Purchase behavior refers to the buying decision and act of people through the buying and using of the products. According to Solomon (2009, p.33) that stated consumer behavior as the process of individual purchase and use of the product to satisfy their needs and desire. Consumer behavior is an ongoing process because it is involves a lot of things, which will influence consumer’s decision making process especially speaking before, during and after a purchase (Mooij, 2003).

2.5.1 Type of Purchase Behavior

2.5.1.1 Trial Purchases

Trial purchases are described as when a consumer purchases a product for the first time and buys a smaller quantity than usual. This is because consumer attempts to evaluate a product through direct use. For instance, when consumers purchase a new brand of laundry detergent about which they may be uncertain, they are likely to purchase smaller trial quantities than if it were a familiar brand. Consumers can also be encouraged to try a new product through such promotional tactics as free samples and coupons.

2.5.1.2 Repeat Purchases

When a new brand in an established product category such as toothpaste, chewing gum or cola is found by trial to be more satisfactory or better than other brands, therefore consumer are likely to repeat purchase. Repeat purchase behavior is closely related to the concept of brand loyalty.

2.6 Relationship between Purchase Intention and Purchase Behavior

Studies show that stated intentions to purchase do not perfectly correlate with stated behavior (Bagozzi 1981). Besides, the process by which purchase intentions are translated into purchase behavior across individuals and by which intentions and purchases evolve over time is rich. The relation between intent and behavior is stronger if the behavior is one for which individuals have prior experience (Bentler and Speckart, 1919). Moreover, the relation between intent and behavior will also fail to be perfect if assessed intent does not correspond to actual intent at the time the behavior is performed. As the time between the measurement of intent and behavior increases, intent may change due to the emergence of new information (Armstrong, 1985) or a change in the individual’s attitude toward the behavior (Ajzen, 1985). Hence, intentions are a powerful but imperfect predictor of future purchase behavior.

2.7 Conceptual Framework

Conceptual framework below is derived from the Theory of Planned Behavior and Theory of Reasoned Action (S. Pookulangara, J. Hawley and G.Xiao, 2011; Z. Tang, F. Luo and F.Xiao, 2011; J.F.George, 2004). Variables in the framework consist of status, prestige, materialism, price, quality, attitude and perceived usefulness. All these variables have been used to examine the effect on the consumers’ purchase intention and purchase behavior. Purchase intention and behavior of consumer toward the mobile phone may be influenced by all these variables either positively or negatively depending on the hypothesis argument that had been derived.

Purchase Behavior

Status

Purchase Intention

Conspicuous Consumption

Prestige

Perceived usefulness

Materialism

Attitude

Quality

Price

2.7.1 Status

Social status will influence the economic behavior of people toward the purchasing. This is because social status will interacts with the distribution of income and reflects non-observable abilities of individuals (Rege, 2008). Status is a scale of social standing that is often realized in differing socially deictic linguistic forms. Status will causes people to imitate other people with higher income term of their consumption behavior (Duesenberry, 1949). In sociology, social status is the honor or prestige attached to one’s position in society. Status attainment is a process by which subjects mobilize and invest resources for returns in socioeconomic standings (Lin, 1999). In other words, people buy prestige goods to improve their social position.

Besides, social status can also refer to the position or rank of a person or group within the society. It can be divided into two ways, which is achieved status and ascribed status. Achieved status is one can earn their social status by their own achievements; while ascribed status is one can be place in the stratification system by their inherited position. According to Marcoux et al, 1997 stated that social status demonstration is a dimension of conspicuous consumption. Consumption not only means exploiting functional benefit, but also a way for gaining social prestige and exhibiting status and one’s own identity. In other words, it is the way for people to show off their status and wealth. Status value is associated with consumers’ desire to gain prestige from the acquisition of status-laden products.

2.7.2 Prestige

According to Brucks et al (2000), consumers often use the price of product for evaluating the associated prestige. In terms of acquiring social benefit, prices of goods become a signal of not only quality but also prestige, which is an outcome of status. In Veblenist thought, consumers have been evaluated as price-oriented because of their intention to affect other people by purchasing higher-priced goods and get the respect of others (Tellis and Gaeth, 1990).

2.7.3 Materialism

According to Richins and Dawson (1992), materialism can be define as three components, that is success in life defined by possessions, acquisition as the central goal in life and acquisition as the path to happiness. Besides, materialism is described as a shallow cultural value and fuels narcissistic self-absorption of individuals (Oropesa, 1995). According to Tatzel (2002), materialism is defined as those with strong material values consume more than those who are less materialistic. Materialistic people are also more involved with status consumption that has public rather than private visibility. Highly materialistic individuals rely heavily on external cues, preferring those possessions that are displayed in public places (O’Cass and McEwen, 2004). Furthermore, materialistic consumers use possessions as a method of communication to others to show and project who they think they are (Belk, 1985). According to Sharma (2010), materialism is seems to be growing in the eastern emerging markets, but slowing down in the developed markets. He also suggests that materialistic consumers in emerging markets may attach a higher premium to luxury goods because they may help them attain a greater social status than their developed market counterparts.

2.7.4 Price

Price is the amount of money charged for a product or service. Price also means the sum of the values that customers exchange for the benefits of having or using the product or service. According to Nagle and Holden (1995), price is a signal of value that the consumer will receive. It is the factors that will affect the consumer’s purchase decision process. This is because consumers will select the product or service that relies on the product price. Different prices of product will satisfy their different needs and wants. Then, individual price perception will be different too. Higher pricing perceived by consumers might negatively influence their purchase probabilities (L. Y. Peng and Q. Wang, Qing, 2006). Price perception is thought to be related to price searching (D. R. Lichtenstein and W. O. Bearden, 1989). Consumers likely to influence by good quality services at competitive price during the searching process. Price may serve as a reference point for judging quality when other product information is not available (Monroe, 1976). According to Baltas (1997), price is an informational cue that increases consumer sensitivity to private brands.

2.7.5 Quality

According to H.J.Becker (2011), quality is defined as the consumers who receive information about the characteristics of the product while shopping or using the product. Quality has a direct impact on product or service performance and its will linked to customer value and satisfaction. Chueh and Kao (2004) describe product quality as the assessment of the product and it will influence by personel feelings. In others words, product quality can also define as the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. Zeithaml (1988) stated that the perceived quality as the consumers’ judgment about a product’s overall excellence or superiority.

Quality that has two dimensions, that is level and consistency. Quality level under product quality is means performance quality and it is meant that the ability a product to perform its functions. Hence, in order to achieve this quality level, companies need to target market needs and the quality level of competing products. Besides, high level of quality consistency in term of product quality is conformance quality. It is meant freedom from defects and consistency in delivering a targeted level of performance. Most of the consumers will perceive a high level of quality products in order to discover the differentiation of particular brand (A. S. Quek and U. C. Eze, 2012).

2.7.6 Attitude

Attitude toward the behavior is defined as the individual’s positive or negative feelings about performing a behavior. According to the Ajzen (2006), attitude toward the behavior is "a person’s overall evaluation of performing the behavior in question". The attitude dimension depends on an individual’s salient behavioural beliefs, which represent perceived outcomes or attributes of the behavior (Conner and Armitage, 1998). It is determined through an assessment of one’s belief regarding the consequences arising from a behavior and an evaluation of the desirability of these consequences. An individual will hold a favorable attitude toward a given behavior if he or she believes that the performance of the behavior will lead to mostly positive outcomes.

2.7.7 Perceived Usefulness

Perceived usefulness is defined as the extent to which a person believes that using a particular system will enhance his or her job performance (Davis et al, 1989). Consumers know that mobile phone is important and useful for them to communicate with others people. There has been extensive research in the information systems (IS) community that provides evidence of the significant effect of perceived usefulness on usage intention (Celik, 2008). According to Davis (1989), perceived usefulness stated that it has a stronger influence on usage. Davis’s study shows that users are driven to adopt a technology primarily because of the functions it provides them, and secondarily because of the easiness of benefiting from those functions. Customers are often willing to overlook some difficulties of usage if the service provides critically needed functions.

2.8 Conclusion

In short, conceptual framework that has been derived will be using for the research. This is because it is the factors that will influence the consumers to have the purchase intention and purchase behavior towards the mobile phone. Furthermore, the relationship between the purchase intention and purchase behavior will also been discussed.