TAILIEUCHUNG - Signaling Status with Luxury Goods: The Role of Brand Prominence

Many beverage and fast-food marketers also engage in “community marketing,” in an effort to build relationships within the communities where they do business by giving something back to the community. McDonald’s, for example, has worked with A Better Chance Foundation to offer college preparatory school scholarships to black students in underprivileged areas. It has also developed the Black History Makers of the Future program, which highlights 30African-American children whom McDonald's feels will be among the leaders of tomorrow | Signaling Status with Luxury Goods The Role of Brand Prominence Young Jee Han Joseph C. Nunes Xavier Drèze Forthcoming in Journal of Marketing July 2010 Young Jee Han is a . student at the Marshall School of Business University of Southern California Los Angeles CA 90089-0443. This research emerged as part of her dissertation. Joseph C. Nunes is Associate Professor of Marketing Marshall School of Business University of Southern California Los Angeles CA 90089-0443. Xavier Drèze is Associate Professor of Marketing the Anderson School of Management at UCLA Los Angeles CA 90095-1481. Questions should be directed to Young Jee Han at Joseph C. Nunes at jnunes@ or Xavier Drèze at . The authors would like to thank the Marketing Science Institute for their generous assistance in funding this research. We would also like to thank Claritas for providing us with data. We are indebted to Vincent Bastien former CEO of Louis Vuitton for the time he has spent with us critiquing our framework. 1 ABSTRACT This research introduces brand prominence a construct reflecting the conspicuousness of a brand s mark or logo on a product. We propose a taxonomy that assigns consumers to one of four groups based on wealth and need for status and demonstrate how each group s preference for conspicuously or inconspicuously branded luxury goods corresponds predictably with their desire to associate or dissociate with members of their own and other groups. Wealthy consumers low in need for status wish to associate with their own kind and pay a premium for quiet goods only they can recognize. Wealthy consumers high in need for status use loud luxury goods to signal to the less affluent that they are not one of them. Those who are high in need for status but cannot afford true luxury use loud counterfeits to emulate those they recognize to be wealthy. Field experiments along with analysis of market data including .

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