An investigation into conspicuous consumption in a transitional economy a study of emerging urban vietnamese consumers

The current study addresses two fundamental research issues concerning the antecedents and consequences of conspicuous consumption in the context of Vietnam, a transitional economy.. To

The current study addresses two fundamental research issues concerning the antecedents and consequences of conspicuous consumption in the context of Vietnam,

a transitional economy The first issue deals with several individual difference

variables as potential antecedents of conspicuous consumption The second issue deals with the possible consequences of conspicuous consumption and its effects on consumption satisfaction and life satisfaction To address the first research issue pertaining to the antecedents of conspicuous consumption, this study focuses on the impact of several individual difference variables that are associated with changes in transitional economies Specifically, I investigate and empirically evaluate whether modern status orientation, materialistic values, and the individualistic self have a positive impact on conspicuous consumption I also examine whether traditional

status orientation, the collectivistic self, and consumer ethnocentrism are negatively related to conspicuous consumption

In addition, I examine the outcomes of this consumption behavior at an

individual level Specifically, I investigate whether individual consumers in

transitional economies are satisfied with their luxury consumption experiences for the purpose of status, and in turn, whether satisfaction with consuming luxury products has a significant contribution to satisfaction with life in general

1.1 RESEARCH MOTIVATION

Conspicuous consumption is an interesting facet of consumers’ desire for worldly goods (e.g., Belk 1988a; Veblen 1899; Wong 1997; Wong and Ahuvia 1998), and has both theoretical and managerial import for marketers and consumer

researchers Despite its importance, the concept of conspicuous consumption has attracted little serious attention from scholars (Wang 1999), and has mainly been described theoretically (Eastman et al 1999) In addition, it has been noted that

“despite the pervasiveness of the concept of conspicuous consumption, empirical research and theoretical models on the nature and influences of conspicuous

consumption have been relatively scarce” (O’Cass and Frost 2002, p 70) It seems that there is a limited understanding of the antecedents and consequences of

conspicuous consumption, especially the outcomes from a consumer research

perspective Accordingly, there is a great need for an enhanced understanding of the phenomenon, and for an empirical investigation into its antecedents and consequences

from a consumer research point of view

1.1.1 WHY TRANSITIONAL ECONOMIES?

The movement toward free markets in transitional economies such as China, Vietnam, and Eastern European countries has generated great theoretical and

managerial interest in the marketing challenges and issues that are unique to these economies (Batra 1997) Accordingly, the study of marketing issues, and specifically consumer behaviors, in these markets has received increasing attention from both scholars and practitioners

It has been suggested that significant levels of conspicuous consumption are expected in transitional economies where the movement of the centrally planned economy toward a market system has provided consumers with the motivation and opportunity for engaging in conspicuous consumption (see Belk 1999; Lascu et al 1994) While the previous society (before the economic transition) stressed equality among people, in the current society, the potential for social mobility – upward or downward – is much greater Therefore, the desire to gain status has become an important concern for many consumers in the society where “as a result of transition, ownership of goods plays a significant role in status definition” (see Lascu et al 1994,

p 89) The desire for respectability (i.e., “a show of luxury”), and “feelings of

deservingness due to prior deprivations” have motivated many consumers in

transitional economies to engage in luxury consumption (Belk 1999, p 50) Due to the economic transition, retail availability, especially the availability of luxury items that “most quickly and prominently appeared in new retail kiosks, established state stores, and in the streets and markets” (Belk 1999, p 40), and the rapid and significant increase in income levels have created the opportunity for motivated consumers to engage in conspicuous consumption

Vietnamese consumers (mainly from urban areas), similar to consumers in other transitional economies, now tend to engage in the consumption of luxury goods and services, and aspire to own foreign imported brands for an image of status (e.g., Fforde 1998; Toyama 2001) It is noted that “goods, brands, and symbols associated with popular culture and conspicuous consumption are very much a part of Vietnam now and their popularity is increasing exponentially” (Shultz, Pecotich, and Le 1994,

p 247)

Previous research has mainly focused on the conspicuous consumption

phenomenon in developed/Western societies where the patterns of conspicuous consumption may be different from other societies due to changes in primary

motivations (Mason 1981) In transitional economies, as affluence is a new

phenomenon, consumers (emerging middle and upper class consumers) might feel the need to display their newfound wealth Economic achievement would be a cultural fixation, and therefore many consumers may place more emphasis on symbolic products to claim a desirable status (see Wong and Ahuvia 1998)

On the other hand, in developed societies, many middle and upper class consumers “have come to take affluence for granted, and hence have shifted their focus to other forms of self-expression and self-actualization” (see Wong and Ahuvia

1998, p 431) Consumers’ motivation could be to display not only financial rewards, but also their ‘taste’ in product choice, placing a greater importance on hedonic experiences In addition, the opportunity for conspicuous consumption is open not only to the middle-class but to all status-minded consumers (Mason 1981)

Accordingly, the existing findings from literature, focusing mainly on the issues in developed countries, may not be able to adequately explain conspicuous consumption in the context of transitional economies, and may be unable to capture

all the unique factors influencing it in these economies For instance, transitional economies are often associated with features such as a small percentage of wealthy consumers These consumer groups are newly emerging, have growing incomes and newfound opportunities, and are not as numerous as in developed countries

According to Cui and Liu (2001) “consumers in transitional economies have unique concerns and consumption patterns and are still far from joining the global consumer segment” (p 100) Prahalad and Lieberthal (1998) also suggest that in transitional economies, emerging middle class consumers are significantly different from those in the West Unlike the middle-class consumers in the West, “little rich consumers (middle class consumers) are not as confident about their future and remain relatively conservative”, and spend less freely due to lower income levels (Cui and Liu 2001, p 101) Moreover, the consumer market is in the early stage of development (Cui and Liu 2001) and everything is in the process of changing In addition, in transitional economies, there is a coexistence of traditional and Western/modern societal and cultural values, attitudes and behaviors Individual consumers are living within, and hence are influenced (though at different levels) by an increasingly global consumer culture Therefore, although Western literature can be useful, it may only serve as a starting point due to the uniqueness of the consumption situation in transitional economies (Feick et al 1995)

As a transitional economy, Vietnam is opening up to many new marketing experiences Although each transitional economy market is unique in its own aspects (Batra 1997), Vietnam is expected to share common characteristics with other

transitional economies such as China and some of the Eastern European countries Accordingly, Vietnam is considered a meaningful research site for investigating

consumer behaviors, in particular the phenomenon of conspicuous consumption, in the context of transitional economies

1.1.2 WHY EMERGING URBAN CONSUMERS?

It has been noted that, in general, conspicuous consumption is more evident in urban areas compared to rural areas due to a higher level of sophistication in the city (Chao and Schor 1998; Veblen 1899) The extant literature on transitional economies also suggests that urban areas, especially big cities, are often influenced by

globalization and consumer culture, and the impact of economic reform in them is more evident (e.g., Shultz and Pecotich 1994)

In transitional economies such as China and Vietnam, emerging consumers, including middle and upper class consumers, have received attention from both scholars and practitioners due to their increasing growth and important role (e.g., Cui and Liu 2001; Speece 1998) In China, the rising middle-class is considered partly the product of Chinese modernization and global marketing This segment, representing the future of China, includes young adults who mainly live in the cities (Zhang and Shavitt, forthcoming)

For many countries, the major forces of cultural change (e.g., through trade and mass media) arrive mainly from the outside (Hofstede 2001; Zhang and Shavitt, forthcoming) In transitional economies such as China, the newly formed middle class

is considered the key cultural recipient of these influences Therefore, this segment of consumers is a force that determines the cultural orientation of China’s future In addition, they are considered a profitable market (Zhang and Shavitt, forthcoming)

In Vietnam, the situation is similar The emerging consumer market, primarily located in urban areas, has been growing rapidly (Speece and Nair 2000) This group

of consumers tends to show a strong desire for luxuries and to engage in conspicuous consumption

1.2 THEORETICAL BACKGROUND

The concept of conspicuous consumption was introduced more than one

hundred years ago in Veblen’s well-known Theory of the Leisure Class (Veblen

1899) The theory of conspicuous consumption has been frequently mentioned in mainstream economics (Brown 1999; Peukert 2001; see Trigg 2001 as well) Recently

it has also received more attention from consumer researchers (e.g., Eastman et al 1999; Wong 1997; Wong and Ahuvia 1998)

In this study, I use the literature and concepts from consumer research (e.g., status consumption, luxury consumption, status orientation, materialism, consumer ethnocentrism, and consumption satisfaction), social psychology (e.g., individualism-collectivism), economics (conspicuous consumption), and social research (e.g., status concern, life satisfaction) to develop the conceptual framework and formulate

hypotheses At the core of this study are the concepts of conspicuous consumption and the related concepts pertaining to antecedents and consequences of this

consumption behavior from the perspective of consumer research

Conspicuous consumption has been referred to as the purchase, use, display, and consumption of goods and services as a means of gaining and displaying social status (e.g., Braun and Wicklund 1989; Mason 1981; Packard 1959; Veblen 1899) It has also been described as status consumption (Eastman et al 1999) and “public” consumption of luxury products (Wong 1997; Wong and Ahuvia 1998) In this study,

I employ the definition of conspicuous consumption as consumers’ tendency to

purchase and consume luxury goods and services for the status or social prestige that they confer on their owners

Previous studies have attempted to examine several factors influencing

conspicuous consumption, including psychological antecedents (Braun and Wicklund 1989), societal values (e.g., Dubois and Duquesne 1993; Wong 1997), cultural factors (e.g., Wong and Ahuvia 1998), and demographic characteristics (e.g., Chao and Schor 1998; Dubois and Duquesne 1993) However, it seems that modest

research effort, especially with empirical evidence, has been given to understanding the possible antecedents of conspicuous consumption from a consumer research perspective

In this study, I examine the impact of several individual difference variables

on conspicuous consumption in the context of Vietnam These variables include status orientations (traditional status orientation and modern status orientation), materialism (success, centrality, and happiness) (Richins and Dawson 1992), self-perception (individualistic self and collectivistic self) (Singelis 1994; Singelis et al 1995), and consumer ethnocentrism (Shimp and Sharma 1987) The status orientation construct is proposed for this specific research and the scales measuring it are

developed and validated in this study I argue that the concept of status orientation is

a pervasive phenomenon in transitional economies It is conceptualized as

consumers’ orientation toward the value placed on symbols of status and on the attainment of higher status Two sub-constructs, traditional status orientation and modern status orientation, respectively refer to consumers’ orientation toward the value placed on traditional status symbols (before the economic transition) and modern status symbols (at present)

With regard to the consequences of conspicuous consumption, it seems that little research attention has been given to the outcomes of this consumption behavior, especially in transitional economies The current study focuses on two possible outcomes of conspicuous consumption at the individual level: consumption

satisfaction and life satisfaction

1.3 CONTRIBUTIONS OF STUDY

This study is expected to provide theoretical contributions, as well as

implications for practicing managers and policy makers First, by investigating conspicuous consumption, in the context of Vietnam, the current study is expected to enrich the theory of conspicuous consumption in general and in transitional

economies specifically It has been suggested that in many areas of consumer

research, prior studies have mainly been conducted in the context of developed countries, primarily in the US Furthermore, research interest investigating consumer behavior in the context of transitional economies to date has only attracted modest attention (Nguyen, Jung, Lantz, and Loeb 2003) Studies on the topic of conspicuous consumption seem to be no exception This research topic has recently received more research interest and effort from scholars to examine it in the context of transitional economies, where it is considered an emergent consumption phenomenon In this study, the proposed conceptual framework and hypotheses pertaining to the

antecedents and consequences of conspicuous consumption in transitional economies are tested in the context of Vietnam It is expected that Vietnam will present a

meaningful research site in terms of providing a new perspective in understanding conspicuous consumption behavior in a transitional economy

Second, the extant literature has suggested that although conspicuous

consumption is an important research topic, and has been investigated for a long time (since 1899 by Veblen), it seems that the phenomenon has not been completely explained in terms of its antecedents, and especially in terms of its outcomes

Although several past studies have attempted to examine the factors influencing conspicuous consumption, they did not pay significant attention to the impact of the individual difference variables My study models a set of important antecedents of conspicuous consumption as individual difference variables, and also models the consequences of conspicuous consumption with regard to satisfaction with luxury consumption and satisfaction with life in general In other words, a number of

possible influencing factors of conspicuous consumption and its possible

consequences are all examined together in the proposed model The results of my study, while highlighting some consumption values and behaviors that are unique to a transitional economy, also suggest a global convergence of some consumers’

tendencies and behaviors in both transitional economies and advanced economies

Third,I developed and validated a new scale for status orientation including two subscales measuring modern status orientation and traditional status orientation respectively The rigorous scale development paradigm recommended by Gerbing and Anderson (1988) was employed in developing the new scale, resulting in a reliable and valid measure of status orientation

Fourth, with regard to research methodology, a main survey was supplemented

by a preliminary qualitative study This was carried out to provide a more

comprehensive understanding of the emerging phenomenon of conspicuous

consumption In addition, the current study uses LVSEM (latent variable structural equation modeling) to test the conceptual model It is noted that this methodology has

the potential to enhance the way I conduct consumer research including “the ability to control for measurement error; an enhanced ability to test the effects of experimental manipulations; the ability to test complex theoretical structures; the ability to link micro and macro perspectives; and more powerful ways to assess measurement reliability and validity” (Mackenzie 2001, p.159) In this study, LVSEM was used to assess the reliability and validity of all measures used in the study, in particular, to assess the new scale I developed for this specific study: the scale of status orientation

In addition, LVSEM was used to test the proposed theoretical model with fourteen path relationships

Fifth, several managerial implications are offered to managers of both

international and local firms operating, or intending to operate in transitional

economies such as Vietnam The implications deal with understanding the market’s business opportunities; understanding consumers in TEs and their characteristics that would help marketers with market segmentation, and with developing meaningful marketing strategies that are appropriate to the context of transitional economies

Sixth, this study is expected to provide implications for policy makers’ actions

in an attempt to make things better for both individuals and society, as well as for consumers and businesses Several issues are suggested for the attention of policy makers including guiding and educating consumption behaviors, specifically with regard to conspicuous consumption; dealing with the prevalence of counterfeit luxury brands; supporting domestic production and local-made products; and building a reasonable balance between traditional cultural values and modern values

The final contribution of this study lies in the suggestions I provide with regard to future research directions Several research venues are recommended including investigating conspicuous consumption with a larger and more

representative sample; exploring new factors influencing conspicuous consumption in the context of a transitional economy; examining the differences in conspicuous consumption between urban and rural areas, between emerging and the other groups

of consumers; and conducting cross-cultural studies (e.g., among transitional

economies or between transitional economies and developed economies)

1.4 ORGANIZATION OF STUDY

This dissertation comprises seven chapters After this introductory chapter, the literature review is presented in Chapter 2 Chapter 3 will discuss the conceptual framework and research hypotheses of this study Chapter 4 presents the preliminary qualitative study, which will be followed by the discussion on the development and validation of the new status orientation scale in Chapter 5 Chapter 6 reports the data collection through the main survey, and the subsequent analysis I also focus on hypothesis testing using structural equation modeling The discussion on the findings are also addressed in this chapter Finally, Chapter 7 presents the conclusion,

theoretical and managerial implications, implications for public policy makers, the study’s limitations and suggestions for future research

CHAPTER 2

LITERATURE REVIEW

This chapter reviews the literature on conspicuous consumption, transitional economies (TEs) and the related concepts that provide the foundation for this study

In the first section of the chapter, the literature on conspicuous consumption is

reviewed Specifically, I provide detailed reviews of the definitions of conspicuous consumption This is followed by a discussion of transitional economies and of Vietnam, the research site for this study I then discuss conspicuous consumption in transitional economies in particular In the second section, I review the key concepts that represent the proposed antecedents and consequences of conspicuous

consumption in TEs Finally, the chapter concludes with a summary of the key research issues

2.1 CONSPICUOUS CONSUMPTION IN TRANSITIONAL

ECONOMIES

In this section, I first review the definitions of conspicuous consumption in the literature Next, I discuss the characteristics of TEs, and present the research context for this study: Vietnam, a transitional economy in Asia Finally, I examine

conspicuous consumption as an emergent phenomenon in TEs

2.1.1 DEFINITION OF CONSPICUOUS CONSUMPTION

Conspicuous consumption has been described as status-seeking consumption,

“public” consumption of luxury products, and status consumption (e.g., Eastman et al 1999; Veblen 1899; Wong and Ahuvia 1998) A popular opinion from previous

studies suggested that conspicuous consumption involved the purchase, use, display, and consumption of goods and services that were considered as a means of gaining and displaying social status (Braun and Wicklund 1989; Mason 1981; Packard 1959; Veblen 1899) In other words, the desire for status was considered as an underlying motivation for people to engage in conspicuous consumption

More than one hundred years ago, the concept of conspicuous consumption

was introduced in Veblen’s well-known Theory of the Leisure Class (Veblen 1899)

Conspicuous consumption was considered as a means for the upper/very wealthy class to display their wealth and status According to Veblen (1899), conspicuous consumption could be identified by the avoidance of work, the wearing of expensive, dysfunctional clothing, and a life of idleness This idea implied a positive correlation between people’s wealth and their conspicuous consumption In this case, the

expensive (highly-priced) products were more attractive for rich people because they presented prestige and helped establish social standing among peers Veblen proposed that the strongest motivation for human economic endeavors was the individual’s desire to exceed others in the accumulation of goods

The theory of conspicuous consumption has been frequently mentioned in mainstream economics (Bagwell and Bernheim 1996; Brown 1999; Peukert 2001; Trigg 2001) Recently it has received more attention in other research streams In consumer research, Wong (1997), and Wong and Ahuvia (1998) referred to

conspicuous consumption as the “public” consumption of luxury products It has been noted that luxury products must have a degree of exclusivity (Bourne 1957), and luxuries tended to be rare or expensive (Belk 1999) According to Bearden and Etzel (1982), if the item was virtually owned by everyone, it was not conspicuous

Eastman et al (1999) reviewed the literature on conspicuous consumption since Veblen (1899) It was noted that since products had symbolic uses, people consumed products to signal their social status In addition, people exhibited different propensities in the buying of products for the status these products conferred In their study, the concept of status consumption was 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” (p 43) Based on this

conceptualization, they developed a unidimensional scale measuring status

consumption In a recent study by O’Cass and Frost (2002), while discussing the domains of status consumption and conspicuous consumption, it was stated that

“essentially, they both mean the same thing and status consumption and conspicuous consumption have often been treated interchangeably” (p 68-69)

Conspicuous consumption has been considered an individual difference variable (Eastman et al 1999) Building on the conceptualizations of previous

research, the definition of conspicuous consumption, as employed in this study, refers

to consumers’ tendency to purchase and consume luxury goods and services for the status or social prestige that they confer on their owners

2.1.2 TRANSITIONAL ECONOMIES AND THEIR CHARACTERISTICS

In the past several decades, the world has witnessed a historical transition of a number of nations by the reforming of their economies In Asia, China started its economic reform in the late 1970s, followed by the countries in Southeast Asia like

Vietnam which began Doi Moi, or “economic renovation” in the mid 1980s The

former Soviet Union and Central and Eastern European countries have also been

involved in the transition process since the late 1980s and the early 1990s

(Westernhagen 2002)

“Transitional economies” often refer to countries that were centrally planned

in the past and which are undergoing a market transition in the present These

economies include some Asian countries such as Vietnam and China, Russia and others in the former Soviet Union, and some Eastern European countries such as Poland, Hungary, East Germany and Czech Republic (Desai 1997; Feick et al 1995; Fforde and Vylder 1996; Shultz and Pecotich 1997) The transition of these countries has also been noted as the movement from command to free market economies (Batra 1997), and from closed to open economies (Shultz and Pecotich 1997) From the consumption perspective, TEs are “going through a period of transition from a

planned economy, where consumption was prescribed, to a market economy, where consumers are free to pursue their acquisition fantasies” (Lascu et al 1994; p.92)

Although there is great variance across TEs, the extant literature has suggested that TE markets typically share some common characteristics They are briefly presented as follows First, TEs are often mentioned as emerging markets with growth potential (Batra 1997), although they have been coping with enormous challenges Eastern Europe and the former Soviet Union have achieved the growth rates of 5 to 8 percent (Batra 1997) albeit suffering output collapses following their initial reforms

As a specific example, Poland achieved a greater than 5 percent growth in 1994 and this was expected to accelerate (Parker et al 1997) The growth rates have also been impressive among TEs in Southeast Asia (Shultz and Pecotich 1997) For more than a decade, China has enjoyed very rapid growth, averaging 9.4 % between 1978 and

1995, while Vietnam has experienced average GDP growth above 7% since Doi Moi began in 1986 (World Bank 1996)

Second, although the annual consumer income per capita in TEs is still low compared to Western standards (Batra 1997), the living standards in TEs have been improving Most people have increasing purchasing power and opportunities to enhance their material lot (Williams 1992) It has also been noted that the living standards have improved significantly especially for people living in urban areas Statistical figures showed that in China, the average urban resident’s real income increased rapidly after economic reform in 1978 The index of per capita annual income in 1997 was 311.9 compared with 100 in 1978 (China Statistical Yearbook 1998) In addition, consumption patterns have changed too Prior to the economic reform, most of the income of a Chinese family was spent on necessities After the reform, with increased incomes, people have started paying attention to luxury items (Fan 2000, p 84-86)

The reforms in TEs have resulted in the changing pattern of income

distribution of the domestic populations The reform has raised the overall income nationally, and it has also achieved what Deng Xiaoping desired, that is, to let ‘a proportion of the people get rich first’ (Deng Xiaoping, in Fan 2000, p 89) In

practice, most of these ‘new rich’ live in urban areas, especially in big cities and are often found among the younger population In China, youths are considered the wealthiest consumers in the country (Fan 2000, p 90) In Russia, the income profiles suggest that “the gap between rich and poor has become markedly greater since the

1992 breakup of the Soviet Union” (see Belk 1999, p 49) In Vietnam, the economy’s transition has helped to create an emerging class of young middle class consumers in the cities (www.nfovn.com 2001) Batra (1997) pointed out that one of the common

“base line characteristics” of TE markets was “the presence of a relatively small elite

urban high-income market amidst a relatively much larger subsistence- and

low-income market” (p.96)

Third, Shultz and Pecotich (1997) suggested that although the consumers in

TEs were generally poor and “unsophisticated”, this was changing fast A nascent

phenomenon in these economies is the rapid growth and attractiveness of a middle

class in urban areas, which will drive domestic consumption In contrast to more

developed countries where a middle class has already been established, in TEs like

China and Vietnam, “the middle class is barely emerging and even now apparent only

in urban areas” (Chua 2000, p 23) Table 2.1 shows some figures regarding the

proportions of the emerging consumers (i.e., middle class consumers and

upper/“yuppies” consumers) and their income levels in two TEs in Asia, Vietnam and

China (Cui and Liu 2001; Lan Anh 2001; www.nfovn.com 2001)

TABLE 2.1

THE EMERGING CONSUMERS IN VIETNAM AND CHINA Vietnam China The emerging consumers account for 35% -

37% of the urban population (nearly 6 million)

and 5% of the countryside’s population (3

million) They include the following groups:

The emerging consumers account for 20% of the urban population (80 million people)

They include the following groups:

1 Class A: monthly household income of

These middle class consumers have been investigated in several recent studies

(e.g., Cui and Liu 2001; Speece and Nair 2000) It has been suggested that this market

segment is potentially attractive for both local and international firms in terms of its spending power, population size and trend of development, and its increased exposure

to Western products and new lifestyles (Cui and Liu 2001) A number of

characteristics associated with emerging urban consumers have been suggested in the literature Specifically, they have high incomes, and are often highly educated and young In terms of occupation, emerging urban consumers may fall in some major groups including ‘young executives’ who work for foreign companies, ‘entrepreneurs’ who own private companies, and the ‘salaried urban middle-class’ who work for state-owned companies/organizations (Fforde 1998; Toyama 1998) They often have a more active lifestyle, especially for the group of yuppies who ‘work hard and play hard’ (Cui and Liu 2001; www.nfovn.com 2001) This is in line with the description

of the rising Chinese middle-class consumers in a recent study by Zhang and Shavitt (forthcoming) They “are 18-35 years old, live in large cities along the east coast, and most of them have high levels of education and income.” Their lifestyles are

considered to be greatly influenced by global marketing and mass media With regard

to consumption patterns, the urban middle class is considered value-oriented in shopping (Speece 1998) They show a preference for branded products and foreign goods, and a desire to own luxury products (Batra 1997; Tong 1998; Toyama 2001; Wang 1999; Wong and Ahuvia 1998) According to Shultz and Pecotich (1997), the emergence of the middle class in TEs with activated needs, rising expectations and disposable incomes to spend for their satisfaction has led to an increase in domestic consumption

Fourth, the literature also suggests that by implementing an ‘open door’ policy, TEs have created a new marketing environment in which consumers are aware

of and purchase many kinds of goods and services from around the world (Feick et al

1995; Shultz and Pecotich 1997) The increase in the availability of consumer goods has a powerful impact on the psychology of the new emerging consumers (Beresford and Dang 2000) Although the market infrastructure in TEs is still undergoing reform, shopping systems have developed rapidly, providing convenience for consumers and facilitating a variety of consumption patterns As a result, the purchase of goods, including luxuries, is growing rapidly (Batra 1997)

In sum, over the past several decades, the world has witnessed the historical movement from centrally planned economies to market economies in TEs in some countries Albeit exhibiting some variances, the TEs share a number of common characteristics that suggest opportunities and motivations for conspicuous

consumption In the next section I will review this important and newly emerging phenomenon in TEs

2.1.3 VIETNAM, THE RESEARCH CONTEXT

Vietnam started its Doi Moi in 1986 The economy has since achieved high growth rates with annual GDP growths of more than 8 percent from 1992 to 1997, and greater than 9 percent in 1995 and 1996 (World Bank 2000) Although the growth rate was reduced to 5.8 percent in 1998, it hit 6.8% in 2001, the second highest in the region (after China) and among developing economies (Vietnam Investment Review 2002) The estimated figure for 2002 was 7.04% (Vietnam Economic Times 2002)

Vietnam is considered a promising market for both local and international firms with her population of nearly 80 million in which 75 percent live in rural areas and 25 percent live in urban areas (Vietnam Economic Times 2002) Population density is very high in urban areas, especially in the big cities There are about three

million people in Hanoi, the capital of Vietnam, and more than five million people in

Ho Chi Minh City (Vietnam Statistical Yearbook 1999)

Thanks to Doi Moi, the standard of living has increased for all citizen groups (Do 1997; Fforde 1997; Shultz and Pecotich 1994), especially in big cities that are increasingly middle class (Speece and Nair 2000) The findings from a survey

conducted by a market research company, Taylor Nelson Sofres, suggest that the emerging consumers or ‘consuming class’ account for an average 37 percent of the population in major cities (Lan Anh 2001) with a monthly household income of US$

300 and more (www.nfovn.com 2001) These figures are somewhat similar to China where the middle class consumers (“little rich” consumers) have an annual household income of 29,166 RMB (US$ 3,522) (Cui and Liu 2001) Compared with the rest of the population, the emerging consumers have much higher incomes Vietnam’s General Statistics Office states that nearly 77% (around 60 million people) of the population living in rural areas have an average annual per capita income of just over US$ 150 The comparative figure is over US$ 600 for people in Hanoi and US$ 900 for people in Ho Chi Minh City (www.nfovn.com 2001)

The ‘consuming class’ of about 8.7 million individuals in Vietnam is highly concentrated in urban areas These consumers have consumption and entertainment habits such as wandering the streets and shopping, and playing sports (Lan Anh 2001) Along with their high incomes, the emerging consumers are more demanding shoppers and tend to spend more money when shopping These consumers also seem

to show a strong desire for luxury products and services such as traveling abroad, having cars, and owning the latest personal computer models (Lan Anh 2001)

With regard to the marketing infrastructure, although wet markets still remain popular in rural areas in Vietnam, supermarkets and shopping centers have been

growing quickly in major cities At present, there are more than 100 supermarkets in Hanoi and more than 500 in Ho Chi Minh City (Information Service 1080, 2003) Furthermore, many small shops along the streets, together with shopping centers, and wet markets are providing a variety of products and services for different income groups Consumers can easily find both foreign and local products with a wide range

of prices This practice is quite different from before the economic reform (Do 1997) According to Beresford and Dang (2000), Vietnamese consumers, especially those in the new middle class, have been receiving higher incomes, as well as enjoying the sudden increase in the availability of consumer goods, like ‘a drought meeting a rain storm’ (p 154)

In Vietnam, the shift from a centrally planned economy to an economy driven

by market forces has led to significant changes in all aspects of the society, including fundamental changes in societal values (Shultz, Pecotich, and Le 1994; Shultz et al 1998) It is noted that Doi Moi in Vietnam has eroded the traditional value systems that were premised on a centrally planned and subsidized economy (Boothroyd and Pham 2000, p.151; Fforde 1997; Hoang 1999; and Toyama 2001, p 20) It has also been suggested that the modern influences brought about by Doi Moi tend to coexist with many of the values, attitudes and behaviors that are associated with the

traditional Vietnamese culture (e.g., Shultz, Pecotich and Le 1994) In line with this, Nguyen (1994) noted that “today, Vietnam is witnessing a great synthesis and

integration of the various cultures present in Vietnamese society: tradition with modernity, Oriental values with Western values, preservation of national culture with international integration” (p 97) In addition, among the groups of consumers in the society, the young emerging consumers in TEs generally, and in Vietnam specifically

are often considered to be much more influenced by modernity and Western values (e.g., Wong and Ahuvia 1998; Zhang and Shavitt, forthcoming)

Vietnam is a TE in Asia which is considered the biggest market for luxury and prestige brands from the West (Wong and Ahuvia 1998) Wong and Ahuvia (1998) have suggested that the differences in the practice of luxury consumption between Southeast Asian and Western cultures are due to the impact of cultural factors As mentioned above, due to the economic transition, there have been many changes in the cultural values in TEs like Vietnam This study, with its focus at the individual level, will examine the impact of cultural values (i.e., individualism-collectivism)

In sum, given the changes in the marketing environment, Vietnam is

considered to have great potential as a consumer market (www.nfovn.com 2001) with many consumers exhibiting strong desires for luxury products As a TE, Vietnam shares common characteristics with other TEs such as high growth rates, improved living standards, and changes in the patterns of income distribution with the presence

of emerging middle-class consumers However, Vietnam is unique in some aspects Vietnam had experienced pain and difficulties from continuous wars against the French, the Chinese, the Japanese, and the Americans Before 1975, the economy in the North, following Marxist-Leninist policies, was centrally planned, while the economy in the South, under the Saigon regime, was market-oriented Independence and reunification were finally established in the country in April 1975 However, cultural differences between the North and the South have been suggested in the literature (e.g., Lantz and Le 2001; Shultz, Pecotich, and Le 1994) It is noted that Vietnam’s conditions and its special historical circumstances “provide a unique environment in which to study the effects of the development of a marketizing

economy in all its evolutionary phases on the consumption activity of its people”

(Shultz, Pecotich, and Le 1994, p 226) In addition, it is expected that Vietnam would present a meaningful research site for investigating consumer behaviors in general and conspicuous consumption in particular, in the context of TEs

2.1.4 CONSPICUOUS CONSUMPTION IN TEs

Mason (1981) suggested that conspicuous consumption should be a significant factor in those societies where both the motivation and the opportunity for this

behavior were present Based on this, high levels of conspicuous consumption are expected in TEs According to Batra (1999), the rapid increase in incomes of

consumers in TEs, especially for urban middle-class consumers, has led to increased economic mobility Additionally, the consumers have greater exposure to global media and Western lifestyles which have increased their desires for quality branded products The need for status through ownership and public display of status products that communicate power and prestige seemed to have increased In line with this, Belk (1999) has suggested that consumers in TEs such as in Romania, Russia, and China have very strong desires for luxuries, and the most basic explanation for this desire is ‘a desire for respectability’ In practice, conspicuous consumption has been

in evidence as an emerging phenomenon in TEs where it may not have been socially accepted in the past (Belk 1999; Fforde 1998; Toyama 2001; Tong 1998) The

phenomenon of a strong ‘lure of luxuries’ among consumers in TEs has been referred

to as “leaping luxuries” (Belk 1999; Belk 2003)

In China, for instance, conspicuous consumption is considered a newly

emerging phenomenon in the reform era when consumers have both the ability and opportunity for luxury consumption (Wang 1999) It is noted that many people aspire

to own and consume Western brands for an image of status For instance, there is a

tendency to leave tags on sunglasses and labels on the sleeves of suits and coats (Belk 1999; Hong 1994) In addition, an increasing number of people, especially emerging consumers like the ‘little rich’ (middle class) and yuppies, tend to consume more luxury items such as mobile phones, air conditioners, and acquire other big-ticket items such as computers and private cars (Cui and Liu 2001) The entrepreneurs, the pioneers in consumption activities, often engage in conspicuous consumption such as spending money in the “high class consumption arena” where one pays high prices for services such as upscale restaurants, golf courses, and nightclubs (Wang 1999)

Similarly, in Eastern European countries, luxuries have been especially

appealing and important for consumers In Romania, for instance, the expensive overcoat is considered a powerful luxury good that may make someone very happy after acquiring it In Russia, “there is also a boom market in consumer luxuries” such

as fashion clothes, foreign fragrances, and imported cosmetics brands (Belk 1999)

In Vietnam, conspicuous consumption has been evident in urban areas with young girls wearing short skirts and riding the Honda “Spacy”, an imported

motorbike which costs around US$ 4000 (Fforde 1998) (the average annual per capita income is around US$ 300) Other groups of consumers have indulged in big villas, Mercedes cars and memberships to high class clubs (Toyama 1998) It has been suggested that the consumption of goods, brands, and symbols that are associated with conspicuous consumption has captured the hearts and minds of many Vietnamese (Shultz and Pecotich 1994), and the trend is becoming more pervasive (Shultz,

Pecotich, and Le 1994)

Briefly, the phenomenon of having a rampant desire for luxury products and strongly engaging in luxury consumption for the sake of status have been found in many TEs from Russia and Romania in Eastern Europe to China and Vietnam in Asia

The prominence of this luxury consumption may result from the sudden emergence of opportunities for luxury in TEs and the pent-up desires of consumers after years of deprivation (Belk 1999)

2.2 ANTECEDENTS AND CONSEQUENCES OF CONSPICUOUS CONSUMPTION IN TRANSITIONAL ECONOMIES

This study is interested in investigating conspicuous consumption in TEs, with its antecedents and consequences, focusing at the individual consumer level In this section, I first discuss several individual difference variables as possible antecedents

of conspicuous consumption, including status orientations, materialism,

self-perception, and consumer ethnocentrism Next, I discuss possible outcomes and

consequences of conspicuous consumption pertaining to satisfaction with luxury

consumption and satisfaction with life in general

2.2.1 ANTECEDENTS OF CONSPICUOUS CONSUMPTION

Prior research has suggested several antecedents of conspicuous consumption

In a study by Braun and Wicklund (1989), a person’s incompleteness (e.g., degree of experience and expertise) and the commitment to the identity s/he is striving towards (e.g., the commitment to achieving personal or professional goals) have been

considered psychological antecedents from which certain forms of conspicuous

consumption may stem Past research has also suggested the role of bandwagon effect

in explaining innovation adoptions (e.g., Abrahamson and Rosenkopf 1993), and specifically status/luxury product purchasing behavior (e.g., Dubois and Duquesne 1993; Vigneron and Johnson 1999) Leibenstein (1950) referred to the bandwagon effect as the fact that represents the desire of people to buy and consume products to

conform with the people they wish to be associated with, and to be “one of the boys.” Vigneron and Johnson (1999) proposed that the bandwagon effect influences an individual to conform with the prestige groups and/or to be distinguished from non-prestige reference groups

Previous studies have also suggested several important factors stemming from social pressure that may have potential impact on conspicuous consumption such as social conformity (Fraser 1971), the threat of lost competitive advantage

(Abrahamson and Rosenkopf 1993), and the desire to gain social status (Roger 1983)

In addition, the impact of several demographic factors such as income and the level of education on conspicuous consumption was also examined (e.g., Chao and Schor 1998; Dubois and Duquesne 1993) This study focuses on several individual

difference variables as possible antecedents of conspicuous consumption in TEs which are considered emerging with the economic transition process These variables are presented in the following sections

2.2.1.1 Status Orientation

As presented above, conspicuous consumption is defined as consumers’ tendency to purchase and consume luxury goods and services for the status or social prestige that they confer on their owners This suggests that status orientation (i.e., consumers’ orientation toward the value placed on symbols of status and on the attainment of higher status) could be an antecedent of conspicuous consumption

Status has been defined in various ways (Eastman et al 1999) In social

research, the concept of status is often associated with the concept of social class According to Schiffman and Kanuk (2000), the concept of social class was defined as

“the division of members of a society into a hierarchy of distinct status classes, so that

members of each class have relatively the same status and members of all other classes have either more or less status” (p 297) Social class is often measured in

terms of social status that is, “the relative rankings of members of each social class in terms of status factors” (p 298) Three status factors that have been frequently used in estimating social class are relative wealth, power, and prestige (Donnenwerth and

Foal 1974; Schiffman and Kanuk 2000) Veblen’s theory of conspicuous consumption (1899), having some resonance with this, suggested that the very wealthy

leisure/upper classes were associated with high status Specifically, it was noted that

“to own property is to have status and honor, a position of esteem to have no

property is to have no status” (Veblen 1899; see Trigg 2001, p 100)

According to Donnenwerth and Foal (1974), status was defined as “an

expression of evaluative judgment that conveys high or low prestige, regard or

esteem” (p 786) In line with this, Balkin (1997) defined social status as the degree of prestige and honor that individuals or groups enjoy This prestige involved “the approval, respect, admiration, or positive qualities imputed to a person or group” (p 2318) Similarly, Weber (1946) used status to reflect the social honor attached to a group or people It has been suggested that in contemporary usage, the term status refers to one’s standing in a social hierarchy that is determined by respect, deference

or social influence (Ridgeway and Walker 1995)

In a recent study by Thye (2000), while addressing the issue of whether status differences would produce power, the concept of status-value was described as a type

of worth, esteem, or honor attached to individual characteristics Another definition referred to status as a form of power consisting of respect, consideration, and envy from others, an attribute that many people desire and devote a lot of energy to

acquiring (Barkow 1992)

In consumer research, it has been suggested that one’s social status could be displayed and enhanced through the use of products In other words, products could

be used to signal the social status of the owners and convey desirable impressions to others (e.g., Eastman et al 1999; Lascu et al 1994; Mason 1981) This is because goods and services have symbolic properties (e.g., Belk 1988b; McCracken and Roth 1989; Midgley 1983; Wallendorf and Arnould 1988), and therefore, they can play the role of status symbols

The literature has suggested that consumers vary in the extent to which they are concerned with status and status symbols Status concern has been referred to as the individual’s orientation toward emphasizing prestigious possessions (Richins 1994) In a recent study by Jung et al (1999), status orientation, as an underlying dimension of Singaporeans’ value systems, referred to “people’s desire to get other people’s attention by obtaining things representing status…” (p.235) Kaufman (1957), in a sociological research study, developed a concept of status concern “as the value placed on symbols of status and on the attainment of higher status” (p 380) He also developed a ten-item scale measuring status concern However, the measure does not appear to have been rigorously tested In addition, it was noted that the scale was not strictly unidimensional A possible problem with Kaufman’s scale for consumer behavior research is that it was developed to serve a study in the area of sociology and was administered only to American undergraduates

The shift from a centrally planned economy to a market economy in China, Vietnam and other Eastern European countries has had a significant impact on all aspects of society in these TEs Lascu et al.’s (1994) study on consumer purchase behavior in Romania, noted that “the transition taking place in Eastern European countries has very significantly affected the meaning of social status”, and that status

concern “is a very relevant concept for the study of consumer behavior in these transition economies” (p 89-90) It was suggested that a fear of status loss or a desire

to gain status had become an important concern, and status considerations were likely

to influence the purchase and consumption decisions of consumers in these countries

In addition, it was noted that unlike the earlier period, “as a result of transition,

ownership of goods plays a significant role in status definition” (Lascu et al 1994, p

89) Recent studies on other TEs also suggested that certain material objects could play the role of status symbols (Belk, 1999; Lascu et al 1994; Toyama 1998; 2001)

With regard to status and status symbols in TEs, it is expected that there would

be a significant difference between consumers’ perceptions of status and status

symbols that existed before and after the economic transition It has been noted that,

in the past, people could have a happy life without placing importance on material values For instance, in China, consumers had to experience austere times when consumption, especially of luxuries, was condemned (Belk 1999), and the slogan

“hard work and plain living” was emphasized (Wang 1999) At present, however, many people have a strong desire for material objects such as “cars, big houses, and villas”, and wealth and money seem to be important avenues to display one’s success (Hoang 1999, p 363)

Since consumers in TEs might relate to traditional values and modern values

at different levels, it is expected that they vary in the extent to which they value the status symbols that existed before and after the economic transition Building on previous studies’ conceptualizations of status and status concern, I conceptualize

status orientation as consumers’ orientation toward the value placed on symbols of status and on the attainment of higher status Due to the impact of the economic transition in TEs, two sub-constructs are also proposed; traditional status orientation

and modern status orientation They respectively refer to consumers’ orientation

toward the value placed on traditional status symbols (before transition/Doi Moi) and modern status symbols (at present) These two sub-constructs of status orientation are expected to have different influences on conspicuous consumption Specifically, it is predicted that the higher the level of traditional status orientation held by the

consumer, the lower his/her tendency of engaging in conspicuous consumption The reverse relationship is expected for modern status orientation

In sum, although status and the desire for status have received much attention

in the literature, limitations remain in terms of conceptualization, operationalization, and measures of status orientation, especially in the consumer research domain Moreover, previous research in the area seems to focus more on the context of

Western countries Modest attention has been given to the study of this concept in other contexts, such as TEs

2.2.1.2 Materialism

Much research attention has been given to materialism, an important research topic (e.g., Belk 1985; Burroughs and Rindfleisch 2002; Ger and Belk 1996a; Mick 1996; O’Guinn and Faber 1989; Richins and Dawson 1992; Rindfleisch et al 1997)

The term materialism has been measured in a variety of ways (see Richins and

Dawson 1992) In consumer research, researchers have viewed materialism as a personality trait (Belk 1984, 1985; Ger and Belk 1993), and as a consumer value (e.g., Fournier and Richins 1991; Richins 1994; Richins and Dawson 1992)

Belk (1984, 1985) defined materialism as “the importance a consumer attaches

to worldly possessions At the highest levels of materialism, such possessions assume

a central place in a person’s life and are believed to provide the greatest sources of

satisfaction and dissatisfaction” (p 291, 265) He identified three sub-traits of

materialism as follows:

Possessiveness is defined as the inclination and tendency to retain control or

ownership of one’s possessions

Nongenerosity is defined as an unwillingness to give and to share possessions with others

Envy is defined as the displeasure and ill will at the superiority of another person in

happiness, success, reputation, or the possession of anything desirable

Later, in another study by Ger and Belk (1996a), the original scale of Belk

(1985) was modified A fourth dimension was added and labeled Preservation, which

involved “the conservation of events, experiences, and memories in material form” (p.64)

Richins and Dawson (1992) viewed materialism as a consumer value, defining

it as a “set of centrally held beliefs about the importance of possessions in one’s life”

(p 308) They identified three important belief domains of materialism: a) defining success (the extent to which one uses possessions as indicators of success and

achievement in life), b) acquisition centrality (the extent to which one places

possession acquisition at the center of one’s life) and c) pursuit of happiness (the belief that possessions are essential to satisfaction and well-being in life)

Materialism has frequently been associated with Western and affluent

countries However, recent research has suggested that materialism exists also in less developed countries (LDCs) Higher levels of materialism were found for people from less affluent societies (e.g., Turkey and Romania) in the studies of Ger and Belk (1990, 1996b) Similarly, in a study by Webster and Beatty (1997), Thai consumers tended to be more materialistic than U.S consumers Several possible reasons were suggested including the desire to self-actualize and assert power, the increasing

exposure to Western lifestyles, and the high value placed on things that have not been acquired in less affluent societies

In TEs, it is suggested that the necessary conditions for materialism are met These conditions relate to “some bare minimum of economic means and

communication as to available goods and how other people (in the same society or in different societies) live and consume, and a sense of affordability” (Ger and Belk

1990, p.191) In Vietnam, for instance, in the past, people could have a happy life without placing importance on material values At present, however, material objects have become strongly desired by many people This practice could have several possible explanations Specifically, it could be due to the reformed standard of living and rapidly improving consumer purchasing power, especially in urban areas In addition, as a result of the “open-door” policy, various types of previously

unavailable products are now available in the market Consumers now have

opportunities to access global media, and thus are exposed to worldwide fashion, and modern lifestyles Accordingly, consumers, especially those belonging to the

emerging class, tend to place a higher value on material goods than before, and these goods seem to play increasingly important roles in their lives

Materialism seems to be associated with individualism/independence (Belk 1985; Richins and Dawson 1992; Wong 1997) Thus, is materialism prevalent in TEs which are often associated with collectivism? A study by Ger and Belk (1990)

suggested that materialism may not have to be individual-oriented, and it could be linked to enhancing the material well-being of several individuals like family

members Therefore, high levels of materialism could co-occur with generosity Moreover, in TEs, due to the economic transition, cultural values have been changing rapidly This implies that the TEs that are traditionally collectivistic may not

necessarily remain associated with low individualism A recent study by Zhang and Shavitt (forthcoming) suggested that the internal modernization (under “the economic reform and open policies”) and global marketing efforts in China had extensive influences on changing her cultural values and lifestyles Specifically, advertising was found to have a significant role in promoting modernity and individualism, especially among the rising middle class consumers Their findings suggested that both

modernity and individualistic values dominated current Chinese advertising although China has often been viewed as a more traditional and collectivistic country

Past research has suggested a link between materialism and conspicuous consumption Fournier and Richins (1991) suggested that “behaviors most frequently associated with materialism involve conspicuous consumption, in which audience reaction is very significant and provides product satisfaction.” In a recent study by Eastman et al (1999), a scale measuring status consumption was developed and a significant correlation between this scale and the materialism scale developed by Richins and Dawson (1992) was found In this study, I expect a positive impact of materialism on conspicuous consumption in the context of a TE

2.2.1.3 Self – Perception: The Individualistic Self and The Collectivistic Self

Individualism is often mentioned as a key cultural dimension (Hofstede 1980; Triandis et al 1990; Triandis et al 1988), and is perhaps the most central dimension

of cultural variability identified in cross-cultural research, receiving considerable attention in the cultural psychology literature (Aaker and Maheswaran 1997) By definition, “individualism pertains to societies in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her

immediate family” (Hofstede 1991) The key concepts in individualism include

independence, self-orientation, idiocentricism and freedom (Triandis et al 1988) Research has suggested that the important aspects of individualism involve focusing

on self-concepts (Triandis 1995) and self-identities (Wong 1997), being unique and differentiated (e.g., Aaker and Maheswaran 1997; Markus and Kitayama 1991), and emphasizing competition and achievement (Hofstede 1980; Triandis 1994; Singelis et

al 1995; and Wong 1997) On the other hand, the key concepts in collectivism pertain

to interdependence, other-orientation, allocentricism, harmony and conformity

(Triandis et al 1988) In other words, its emphasis is on maintaining harmony, security and obedience; belonging and fitting in, retaining relationships; and giving priority to the in-group’s goals

At the individual level, according to Triandis (1994), “all of us carry both individualist and collectivist tendencies; the difference is that in some cultures the probability that individualist selves, attitudes, norms, values, and behaviors will be sampled or used is higher than in others” (p.42) In line with this, Singelis (1994), following Markus and Kitayama’s self theory (1991), argued that two aspects of the self, the independent self and the interdependent self (self-construals), could and did coexist in individuals These two views of self have also been called the

individualistic and collectivistic self-concepts (Ahuvia and Wong 1998) In TEs like Vietnam, the movement toward a market driven economy has created many changes

in social values The “collectivistic political values” that dominated in the past still exist along with other modern social values such as the acceptance of wealth and individualism (Hoang 1999) It has been suggested that at individual levels,

individualism and collectivism coexist in Vietnamese consumers (Nguyen, Jung, Lantz, and Loeb 2003)

Along with the movement from the command economy to the market

economy in TEs, a salient characteristic (from a psychological perspective) is the move away from collectivist forms of societal organizations and attitudes toward more individualist forms (Reykowski 1994) This is in line with what has been

mentioned in the previous section In TEs, due to the influence of global marketing and mass media, cultural values have been changing quickly The new set of values, such as individualism and modernity, have been adopted quickly especially among the rising middle-class consumers Accordingly, it is expected that in TEs like Vietnam, there will be an increasing number of consumers who will possess a high level of individualism

The construct of individualism-collectivism has been suggested as an aspect of self that relates to conspicuous consumption (Wong 1997) Specifically, at the

individual level, the characteristics associated with two aspects of the self (the

individualistic self and the collectivistic self) seem to relate to the goal of conspicuous consumption (Wong 1997) In this study, it is anticipated that the individualistic self has a significant positive impact and the collectivistic self has a significant negative impact on conspicuous consumption

2.2.1.4 Consumer Ethnocentrism

The concept of ethnocentrism refers to the universal proclivity for people to view their own group as the center of the universe, to explain other social units from the perspective of their own group, and to reject people who are culturally dissimilar while blindly accepting those who are culturally like themselves (Booth 1979;

Worchel and Cooper 1979) With regard to the consumer research domain, consumer ethnocentrism is defined as “the beliefs held by consumers (American) about the

appropriateness, indeed morality, of purchasing foreign made products” (Shimp and Sharma 1987, p 280) This suggests that consumers who are characterized by a high degree of ethnocentrism have a negative attitude toward buying foreign products (i.e., purchasing imports is wrong), while less ethnocentric consumers evaluate foreign products more favorably or evaluate these products on their own merits without consideration for where they are made

Consumer ethnocentrism has been considered an important construct in international marketing research (Coompanthu 2003) It has also been suggested that the role of consumer ethnocentrism is “particularly relevant to countries that have recently undergone major socio-economic transformation” (Vida and Dmitrovie 2003, p.130; see Herche 1992 also) In TEs, the opening of formerly closed markets has facilitated the diffusion of many foreign products and brands to these markets (Yip 1995) that may be difficult to find during austere times (before the economic reforms) when luxuries were condemned (Belk 1999)

In TEs, the emerging consumers seem to show a tendency to prefer branded products and foreign/Western goods (Cui and Liu 2001; Feick et al 1995; Toyama 1998) Being exposed to the mass media and advertising, they are more likely to welcome Western values and ideas, and be receptive to new global brands (Zhang and Shavitt, forthcoming) In addition, since the foreign brands and products are often more highly priced than the local brands, they seem to signal higher quality and appeal to ‘an upper-end elite consumer segment’ (Batra 1997) On the other hand, in TEs, most domestic/local firms tend to be smaller in size, technically backward, and less efficient than their foreign counterparts Accordingly, they primarily emphasize low cost production (Nakata and Sivakumar 1995) As a result, they do not possess a reputation for high quality brands and prestigious images despite the great effort made

both by the local businesses in improving the products’ quality and image, and by the governments in promoting “buy-domestic” campaigns

In line with this, findings from a recent study showed that 65% of the people

in Hanoi and Ho Chi Minh City preferred imported products to local ones (MBL Vietnam, www.nfovn.com, 2001) A study by Nguyen et al (2000) on Vietnamese consumers’ buying behavior also found that about 85% of the respondents considered the consumer products made in Japan to be the most ‘attractive’ among Asian

countries, followed by those made in Singapore, Korea, and Thailand The figure was only about 4% for products made locally Similarly, the findings from a qualitative study by McDonald et al (2000), suggested that Western products in general were perceived by Vietnamese consumers to be of high status They were generally more expensive and less available, and thus they were perceived as exclusive

Accordingly, it may be expected that ethnocentric tendencies are low among Vietnamese consumers, at least for the emerging consumers in cities, due to the impact of economic transition However, consumers are different in their degrees of consumer ethnocentrism, and we anticipate that this has a significant negative impact

on consumers’ tendency to engage in conspicuous consumption

2.2.2 CONSEQUENCES OF CONSPICUOUS CONSUMPTION

Despite the importance of conspicuous consumption, its consequences have attracted modest attention from researchers So, what are the outcomes of such a consumption behavior? In examining the impact of status-seeking behavior on the economic-growth potential of a society, Rauscher (1997) questioned if status-seeking behavior has accelerated economic growth Although the study suggested that

“demand for conspicuous consumption goods may lead to an acceleration of

economic growth” (p 41), the results were inconclusive In the context of TEs, both the positive and negative aspects of conspicuous consumption for individuals and societies have been suggested (Belk 1999, 2003; Wang 1999) However, generally, little empirical evidence has been gathered with regard to the consequences of

conspicuous consumption My study focuses on the outcomes and consequences of conspicuous consumption at the individual level In the following section, I discuss two constructs that are expected to be potential consequences of conspicuous

consumption behavior: consumption satisfaction and life satisfaction

2.2.2.1 Consumption Satisfaction

Consumer satisfaction is considered a critical concept in marketing

management and consumer research Previous studies have paid attention to various aspects related to consumer satisfaction such as how to develop effective marketing strategies to enhance customer satisfaction (Chee and Peng 1996), and how to manage customer post-purchase satisfaction (Watkins and Liu 1996) In consumer research, it has been suggested that consumer satisfaction “may best be understood as an

evaluation of the surprise inherent in a product acquisition and/or consumption experience” (Evans, Moutinho, and Raaij 1996, p 265) Accordingly, much prior research has examined consumer satisfaction with the use or consumption of a

specific product Recently, Fitzsimons (2000) while examining consumer response to stockouts, investigated both consumer satisfaction with the decision process and consumer satisfaction with the consumption experience

This study focuses on conspicuous consumption Thus, I am interested in whether consumers are satisfied with their luxury consumption experiences in general (and not for a specific product or service) For the specific purpose of my research, I

conceptualize consumption satisfaction as a consumer’s degree of satisfaction with

the consumption experiences related to luxury products, specifically with

consumption for the sake of status

In TEs, conspicuous consumption involves the tendency to and the practice of purchasing and consuming luxury products It has been widely suggested that luxury products (mainly foreign ones) are perceived to be of high quality and project a superior prestige image (Lantz et al 2003; Supphellen and Rittenburg 2001)

Therefore, it may be expected that consumers generally would feel satisfied with owning and consuming these luxury products However, I predict that consumers with different tendencies to buy and consume products for status (the attitudinal aspect of conspicuous consumption), and with different levels of actual engagement in status consumption would be differentially satisfied with their luxury consumption

experiences More specifically, I expect that conspicuous consumption (both the attitudinal aspect and actual behavior) would have a positive impact on consumption satisfaction

2.2.2.2 Life Satisfaction

Consumer’s subjective well-being (SWB) refers to a general, overall, term state of well-being that includes both an individual’s cognitive and affective assessment regarding their life satisfaction (Ahuvia and Friedman 1998; Diener

long-1984) The term life satisfaction is often referred to as the cognitive aspect of SWB

According to Kau et al (2000), life satisfaction was often termed as a subjective way

of measuring quality of life It has been suggested that individuals’ lives consist of separate but related life domains/aspects such as family, work, friendship, health, physical appearance, and material possessions (Kau et al 2000; Leelakulthanit et al