The Impact of Status Seeking on Consumers’ Word of Mouth and Product Preference—A Comparison Between Luxury Hospitality Services and Luxury Goods

Abstract

Despite the rapid growth of the luxury hospitality market, academic research has largely neglected the differences between luxury hospitality services and luxury goods, as well as the role of status seeking on luxury consumption. Relying on the status consumption and experience recommendation theories, the authors examine the combined effects of consumer characteristics (need for status) and product type (hospitality services vs. goods) on consumers’ word-of-mouth intentions. The results suggest that parvenus, who are high in need for status, are more likely to talk about their luxury goods purchases than patricians, who are low in need for status. More interestingly, both parvenus and patricians indicate equally strong intentions to spread positive word of mouth on luxury hospitality purchases. This study also extends the experience recommendation theory and reveals that parvenus are less likely to choose luxury hospitality services than patricians to advance their happiness.

Keywords

luxury consumption luxury hospitality services word-of-mouth status consumption experience recommendation

In the past decade, the luxury segment of the hospitality industry has expanded at an unprecedented rate. According to a recent survey conducted by Yankelovich/The Futures Company (2010), 83% of respondents indicate that they are willing to splurge by dining at luxury restaurants. Similarly, the luxury segment is leading the recovery of the lodging industry, generating $792.5 million in room revenue in the first half of 2011 (Chiem, 2011; DeLollis, 2010). Data from Smith Travel Research show that the luxury segment had the highest occupancy rate (77.7%) in the second quarter of 2013, followed by the upper upscale (76.4%) and upscale (75.9%) segments. Despite this strong performance, only a few studies have examined consumer behaviors in the luxury hospitality context (Han & Hyun, 2013; Hwang & Hyun, 2012; Hyun & Kim, in press; Kim, Han, & Lee, 2001; Kim, Lee, & Yoo 2006; Lee & Hwang, 2011; Wall, Okumus, Wang, & Kwun, 2011; Wu & Liang, 2009), and little is known about the differences between luxury hospitality consumption and luxury goods consumption.

Van Boven and Gilovich (2003) conducted a series of seminal studies to investigate the differences between experiential purchases and material purchases. They suggested that experiences (e.g., vacations and dining) were more likely to make people happy than material possessions (e.g., clothes and jewelries), and this phenomenon was called “experience recommendation” (Carter & Gilovich, 2010; Rosenzweig & Gilovich, 2011; Van Boven, 2005; Van Boven, Campbell, & Gilovich, 2010). Building on the theories of experience recommendation and status consumption, in the present study we aim to examine the joint effects of purchase type and consumers’ need for status on word-of-mouth (WOM) intentions.

We first link status seeking to WOM communication. Because people who are high in need for status (called parvenus in Han, Nunes, & Dreze’s [2010] luxury 4 P’s framework) tend to signal social status through luxury consumption, they are expected to be more likely to talk about their luxury purchases than people who are low in need for status (called patricians). We further propose that purchase type (hospitality services vs. material goods) will moderate such an effect. A recent study revealed that experiences are more closely connected to the self than material possessions (Carter & Gilovich, 2012). Prior research indicates that consumers are more likely to spread WOM about things with which they feel closely connected (Ahearne, Bhattacharya, & Gruen, 2005; Asatryan & Oh, 2008; Bhattacharya & Sen, 2003; Brown, Barry, Dacin, & Gunst, 2005). In this article, we argue that the impact of need for status on WOM will be attenuated in the context of luxury hospitality services. Although patricians (low in need for status) are not motivated to use luxury products to signal status, they should exhibit a high tendency, just as parvenus, to talk about their luxury hospitality purchases (i.e., dining or travel experiences) because such experiences are close to their self-concepts. On the contrary, luxury goods are not tightly integrated with the self, and therefore, parvenus who mainly seek social status via consumption are expected to have a higher propensity to generate WOM on luxury goods consumption than patricians.

Last, Carter and Gilovich (2012) suggested that the notion of experience recommendation might not hold true in the context of luxury consumption, in particular when consumers aim to signal social status through consumption objects. On the basis of the theory of status consumption and the intangible nature of hospitality services, we also explore patricians’ and parvenus’ preferences between luxury hospitality services and luxury goods with the intention of advancing happiness and enjoyment.

To recap, the purposes of this research are (a) to investigate the joint effects of product type and consumers’ need for status on WOM intention and (b) to examine whether preferences for luxury goods and luxury hospitality services vary between patricians and parvenus. The differentiation between patricians and parvenus will contribute to the luxury consumer behavior literature as well as to luxury marketing practices. More important, the contrast between luxury goods and luxury hospitality services will reveal how consumers behave differently in the two purchase contexts.

Literature Review

Consumers Characteristics: Patricians and Parvenus

In their innovative luxury 4 P’s framework, Han et al. (2010) categorized consumers into four groups on the basis of their wealth and need for status: patricians, parvenus, poseurs, and proletarians. Need for status refers to a consumer’s intention to improve his or her social standing through luxury consumption (Eastman, Goldsmith, & Flynn, 1999). Both patricians and parvenus are wealthy consumers, but they differ in their quest for status via consumption objects. Patricians are low in consumption-related need for status, while parvenus seek status through luxury consumption. Poseurs and proletarians are less affluent consumers; the former seek status but tend to purchase counterfeits because they cannot afford authentic luxury products, while the latter do not value status and therefore are not motivated to purchase either conspicuous or inconspicuous luxury products (see Figure 1). In the present study, we examine authentic luxury consumptions and hence focus primarily on patricians and parvenus.

Figure 1

Luxury 4 P’s Typology

The word patrician originally referred to a group of ruling class families in ancient Rome who had high social status and privileged nobility. The word parvenu is borrowed from French, and it often refers to those considered “nouveau riche” or “new money.” In sociology, parvenus are usually people from humble backgrounds who rapidly gained wealth and have quickly climbed up the social ladder (Augustine, 1994; Bauman, 2001; Bourdieu, 2000; Walkerdine, 2003). The distinction between patricians and parvenus is similar to the social class categorization of upper-upper class and lower-upper class. For example, Bourdieu (1984) portrayed parvenus as those who have low cultural capital and are eager to conspicuously display their consumption objects. Conversely, patricians have high cultural capital and tend to avoid ostentatious displays (Holt, 1998; Üstüner & Holt, 2010). However, the sociological characteristics of patricians and parvenus (e.g., socioeconomic status, family background, occupational status, education level) are beyond the scope of this study. Instead, we rely on Han et al.’s (2010) luxury 4 P’s framework and differentiate the two groups on the basis of need for status.

According to Eastman et al. (1999), need for status is defined as “the motivational process by which individuals strive to improve their social standing through conspicuous consumption of consumer products that confer and symbolize status both for the individual and surrounding significant others” (p. 42). Because possessions can be seen as an extension of the self (Belk, 1988), people crave social status by accumulating expensive possessions.

Veblen’s (1899) theory of the leisure class can be considered the foundation of status consumption research. His theory sheds light on how people use wealth and material possessions to enhance their social status. Veblen argued that people strive for social status by comparing and competing with one another for material resources. In other words, people live to show off their wealth. In such a pecuniary competition system, people try to distance themselves from people in lower classes, while mimicking the behaviors of people in higher classes. Similarly, sociologist Georg Simmel (1904/1972) proposed the upper-class theory of fashion. He stated that there are two conflicting forces that drive changes in fashion. First, lower classes adopt the status symbols of the classes above them as they attempt to climb the ladder of social status. Second, upper classes abandon fashions that are adopted by lower classes as they attempt to distinguish themselves from the lower classes. Therefore, sociological characteristics such as socioeconomic status and family upbringing are important antecedents of consumers’ need for status.

Kastanakis and Balabanis (2012) examined the psychological antecedents of consumers’ need for status. They argued that the notion of self-construal is the driving force behind social comparisons. Consumers with independent self-construal perceive themselves as independent entities, and consequently, they tend not to focus on social hierarchies. On the contrary, consumers with interdependent self-construal define themselves as a part of their social surrounding and tend to purchase expensive products to enhance their social rankings. The study results revealed a positive relationship between interdependent self-construal and need for status, while the relationship between independent self-construal and need for status was negative.

Need for Status and WOM

As described in the luxury 4 P’s typology, the main difference between patricians and parvenus is the level of need for status. Parvenus are high in need for status and use luxury consumption as a way to signal wealth and status. More important, they derive satisfaction from audiences’ reactions to displayed objects, rather than from the positive attributes of the objects themselves (Eastman et al., 1999; Veblen, 1899). To achieve satisfying audience reactions, parvenus who are high in need for status tend to conspicuously display their consumption objects. For example, Veblen (1899) argued that people put their wealth on display to demonstrate how wasteful they can afford to be, thereby elevating their social status. In this article, we argue that to enhance their social status, parvenus also tend to actively tell their family and friends about their luxury purchases. As defined by Westbrook (1987), WOM communications are “information communications directed at other consumers about the ownership, usage, or characteristics of particular goods and services and/or their sellers” (p. 261). In other words, WOM communication can help consumers to reach more audiences and achieve stronger audience reactions. Therefore, parvenus who are high in need for status are expected to be more likely to spread positive WOM on their luxury consumptions than patricians. However, we further argue that product type moderates the effect of need for status (patricians vs. parvenus) on WOM communication.

The Joint Effect of Product Type and Consumer Characteristics on WOM

Experience recommendation theory suggests that consumers will be happier if they spend their money on life experiences such as travel and dining rather than material possessions such as clothes and jewelry. Life experiences can be defined as “events or series of events that a person lives through such as a vacation abroad, a night out on the town, or an afternoon at a local cafe, rather than things obtained and kept in one’s possession” (Caprariello & Reis, 2013, p. 199). Although for certain consumption objects, there might not be a clear distinction between experiential purchases and material purchases (e.g., a pair of skis, a ticket to a concert), consumers consistently identify hospitality services (dining and travel) as experiential purchases (Howell & Hill, 2009; Howell, Pchelin, & Iyer, 2012; Van Boven & Gilovich, 2003).

To reveal why life experiences are valued more than material possessions, Carter and Gilovich (2012) conducted five studies and demonstrated that experiential purchases composed an essential part of one’s self-concept and were more closely related to the self than material possessions. Once experiences such as vacation and dining are consumed, they become a part of memory and will support consumers’ assessments of the self. On the contrary, material possessions have permanence only outside of memory. Although Belk (1988, 1990) suggested that people might define their identities through their consumption objects, and in turn, those material possessions could contribute to the individual’s self-identity, Carter and Gilovich demonstrated that experiences were significantly more tightly integrated with the self than material possessions. In one of their experiments, for example, respondents drew circles representing experiences significantly closer to the center “self” circle than they drew circles representing material possessions.

This is important because extant research on WOM suggests that consumers’ self-identification influences WOM intention and behavior. Customer identification can be defined as the overlap between one’s self-schema and an organization’s schema (Brown et al., 2005), and it has a positive impact on positive WOM communication (Brown et al., 2005; De Matos & Rossi, 2008; Kim, Han, & Park, 2002; Kuenzel & Halliday, 2008; Tuškej, Golob, & Podnar, 2013). Prior research has shown that consumers who were closely related to an organization or a brand were more likely to say positive things about the organization or brand and to recommend it to others (Ahearne et al., 2005; Asatryan & Oh, 2008; Bhattacharya & Sen, 2003; Brown et al., 2005). Asatryan and Oh (2008) and Brown et al. (2005) measured consumer identification using a visual scale that captured the distance between a center-self circle and an organization’s identity circle. This is similar to the method used by Carter and Gilovich (2012), who measured the distance between a center-self circle and a product-type circle. Therefore, in this study, we extend the notion of consumer-brand identification to the domain of product type.

Because hospitality experiences are closely connected to a consumer’s self, we argue that consumers tend to actively tell others about their luxury hospitality purchases, regardless of their levels of need for status. Even though patricians are low in need for status and do not use luxury consumptions to attract audience attentions, they are likely to share their luxury hospitality consumptions with their family and friends because such consumption experiences can help define themselves and support their self-assessments. Therefore, we expect that both patricians and parvenus will actively spread positive WOM on luxury hospitality services.

Unlike luxury hospitality services, luxury goods are less closely related to the self-concept. Compared with patricians, parvenus are high in need for status, and they engage in luxury consumption to seek social status and impress their audiences (Eastman et al., 1999; Han et al., 2010). In other words, parvenus are motivated to actively promote and broadcast their luxury consumptions. Therefore, parvenus are more likely to talk about their luxury goods consumptions than patricians. Taken together, we put forth the following two hypotheses:

Hypothesis 1: Parvenus are more likely to spread positive WOM on luxury goods purchases than patricians.

Hypothesis 2: Parvenus and patricians will exhibit an equal likelihood to spread positive WOM on luxury hospitality purchases.

Luxury Preference Between Patricians and Parvenus

Beyond examining the effect of product type and consumer characteristics on WOM, we focus specifically on luxury consumption. Per Carter and Gilovich’s (2012) suggestion, we questioned whether the experience recommendation holds true among consumers who engage in luxury consumption to signal wealth and status. On the basis of extant studies on status consumption, we propose that compared with patricians, parvenus are less likely to show a preference for luxury hospitality services over luxury goods.

Prior research on status consumption has shown that consumers who were high in need for status preferred highly visible products over less visible ones (Chao & Schor, 1998; Fan & Burton, 2002; Fisman, 2008; Hudders, 2012; Schor, 2007). For example, Chao and Schor (1998) revealed that consumers were more willing to engage in status consumption of highly visible products (e.g., lipstick) than less visible products (e.g., facial cleansers). Fisman (2008) also suggested that for people who engaged in status consumption, wealth signals needed to be easily observed by the audiences they were trying to impress. Typically, the audiences (including both close companions and strangers on the street) can easily observe expensive material possessions but will have a harder time inferring how much people spend on luxury travel and dining experiences. Therefore, when making consumption decisions, status seekers prefer choices that are highly visible in public. Heffetz (2012) conducted a national survey on the visibility of consumer expenditures. He revealed that in general, “physical objects—durable and nondurable goods—have the highest visibility average [scores], while the less tangible service-related expenditures have the lowest visibility averages [scores]” (p. 21). Therefore, compared with luxury goods, the intangible nature of luxury hospitality services makes them more difficult to display and less likely to attract attention from audiences.

Parvenus are high in need for status, and their satisfaction and happiness on status consumption depends mainly on an audience’s size and reactions (Eastman et al., 1999; Carter & Gilovich, 2012). Therefore, compared with luxury goods, the less conspicuous nature of luxury hospitality services makes them less attractive in terms of status-enhancing attributes. In other words, parvenus may prefer luxury goods in order to impress others. Conversely, patricians are not motivated to use luxury consumption to mark their social status, and their satisfaction does not depend on an audience’s reactions. Therefore, they will choose memorable hospitality experiences over tangible luxury goods in order to advance their happiness. Accordingly, we propose the following:

Hypothesis 3: Compared with patricians, parvenus are less likely to prefer luxury hospitality purchases to luxury goods purchases with the intention of advancing consumption enjoyment and happiness.

Method

Participants

Real luxury consumers were recruited through a luxury research company specializing in luxury consumer behaviors. All respondents had annual household incomes of more than $100,000; they were familiar with luxury brands and had purchased luxury products (both goods and hospitality services) in the past 6 months. In total, 228 participants filled out the survey. One hundred nineteen were women (52.2%), 188 had bachelor’s degrees or higher (82.5%), 196 were Caucasian (86.0%), and the majority were 24 to 70 years of age.

Regarding annual household income, 191 respondents had incomes between $100,000 and $199,999 (83.3%), and 37 reported incomes between $200,000 and $250,000 (16.7%). As indicated by Danziger (2010), luxury consumers can be grouped into two basic categories. The first segment is “ultra-affluent” consumers, with annual household incomes of more than $250,000; the other segment is “high earners not rich yet,” with annual household incomes between $100,000 and $249,999. According to a luxury tracking report from Unity Marketing (2012), ultra-affluent consumers represent the top 2% of households in the United States. To enhance the usefulness of our study findings, we limited our sample to the “high earners not rich yet” segment in the present study (n = 191).

Study Design

A 2 (product type: luxury hospitality services vs. luxury goods) × 2 (consumer characteristics: patricians vs. parvenus) quasi-experimental between-subjects design was used to test the hypotheses. Need for status was measured and used to classify participants to either patricians or parvenus. At the beginning of the survey, all participants were randomly assigned to the two product-type conditions. They were asked to indicate their favorite luxury hotel and restaurant brands or their favorite luxury goods brands that they had purchased before. They could either choose from a provided list or write down a brand name if it was not on the provided list. The two brand lists were created in consultation with the luxury research company. On the basis of the company’s quarterly spending survey, popular luxury brands identified by luxury consumers were included in the lists. Luxury hospitality brands such as Aman Resorts and Morton’s and luxury goods brands such as Louis Vuitton and Cartier were provided (refer to the Appendix for a full list of luxury brands). After choosing their favorite luxury hospitality services or luxury goods brands, participants were instructed to indicate their WOM intentions considering all the pleasant purchases they had with their favorite luxury brands. Next, all participants were instructed to fill out several unrelated questions to disguise the study purpose. Then, participants were told that the researchers were interested in examining consumers’ purchase preferences with the intention of advancing life happiness. They were instructed to imagine that they received a $2,000 bonus and were considering one of the two luxury consumption choices: (a) a luxury item such as a Louis Vuitton handbag or an Omega watch or (b) a weekend getaway at a luxury hotel such as The Ritz-Carlton. The respondents were asked to indicate their anticipated satisfaction with each option given an intent to advance their happiness and enjoyment.

Measurement

Need for status was measured using ten 7-point, Likert-type scales adapted from Eastman et al. (1999) and Eastman and Eastman (2011) (e.g., “I would buy a product just because it has status”; Cronbach’s α = .955). WOM intention was measured using three 7-point, Likert-type scales from Zeithaml, Berry, and Parasuraman (1996) (e.g., “I would like to say positive things about the brand to others”; Cronbach’s α = .94). Anticipated satisfaction was assessed using three 7-point, Likert-type scales anchored on dissatisfied and satisfied, unhappy and happy, and feel bad and feel good (Shiv & Huber, 2000; Cronbach’s α = .965 for luxury goods option and .957 for luxury hospitality services option).

Previous studies have shown that materialism may influence consumers’ preferences between experiences and goods (Carter & Gilovich, 2012; Millar & Thomas, 2009; Nicolao, Irwin, & Goodman, 2009). According to Richins and Dawson (1992), materialist people tend to acquire material goods because such acquisitions are important to their self-images and life satisfaction. It is possible that materialist people prefer material goods over experiential services to advance happiness and enjoyment in life (Richins, 2004). Hence, we included a short version of materialism (six items) as a covariate (e.g., “I admire people who own expensive homes, cars, and clothes”; Cronbach’s α = .849). Demographics were captured at the end of the questionnaire.

Results

The Effects of Product Type and Consumer Characteristics on WOM

To test Hypotheses 1 and 2, a moderated multiple regression analysis was conducted (Aiken & West, 1991; West, Aiken, & Krull, 1996). Product type was dummy coded as luxury goods = 0 and luxury hospitality services = 1. Need for status was mean centered, and the product of centered need for status by product type was created. We then performed a multiple regression with WOM intention as the dependent variable and centered need for status, product type, and the interaction term as predictors. Table 1 presents the results, which demonstrate that the main effect of product type (B = 0.345, t = 2.665, p = .008) and the main effect of need for status (B = 0.381, t = 5.678, p < .001) were significant. More important, the product type and need for status interaction effect was significant (B = −0.269, t = −2.728, p = .007). This interaction is visualized in Figure 2.

Table 1

Regression Results for Word of Mouth on Product Type and Need for Status: Luxury Goods

		Unstandardized Coefficient		Standardized Coefficient
Model		B	SE	β	t	p
1	Constant	5.617	0.092		61.238	.000
	Need for status	0.256	0.050	.320	5.146	.000
	Product type	0.345	0.131	.163	2.627	.009
2	Constant	5.618	0.090		62.117	.000
	Need for status	0.381	0.067	.476	5.678	.000
	Product type	0.345	0.130	.163	2.665	.008
	Status × Product	−0.269	0.098	−.229	−2.728	.007

Note: The luxury goods group was the reference group and was coded 0.

Figure 2

Interaction Effects of Product Type and Need for Status (NFS) on Word of Mouth

Consistent with Hypothesis 1, a simple slope test of the luxury goods group revealed that need for status was a significant predictor of WOM intention (B = 0.381, t = 5.678, p < .001), indicating that parvenus (high in need for status) are more likely to spread positive WOM on luxury goods purchases than patricians (low in need for status). To test Hypothesis 2, we ran another simple slope test with reverse dummy coding (luxury hospitality services = 0, luxury goods =1). The results (presented in Table 2) suggest that need for status was not a significant predictor of WOM intention for luxury hospitality purchases (B = 0.113, t = 1.565, p = .119). In other words, patricians and parvenus exhibit equal likelihood to spread positive WOM on luxury hospitality purchases, thus supporting Hypothesis 2.

Table 2

Regression Results for Word of Mouth on Product Type and Need for Status: Luxury Hospitality Services

		Unstandardized Coefficient		Standardized Coefficient
Model		B	SE	β	t	p
1	Constant	5.962	0.094		63.313	.000
	Need for status	0.256	0.050	.320	5.146	.000
	Product type	−0.345	0.131	−.163	−2.627	.009
2	Constant	5.963	0.093		64.223	.000
	Need for status	0.113	0.072	.141	1.565	.119
	Product type	−0.345	0.130	−.163	−2.665	.008
	Status × Product	0.269	0.098	.245	2.728	.007

Note: The luxury hospitality services group was the reference group and was coded 0. The dependent variable was word of mouth.

Luxury Preference Between Patricians and Parvenus

To test Hypothesis 3, an anticipated satisfaction difference score was first calculated (Shiv & Huber, 2000). This score was created by subtracting anticipated satisfaction with luxury goods from anticipated satisfaction with luxury vacations. A higher difference score represents a stronger preference for luxury hospitality experiences (Shiv & Huber, 2000). A hierarchical regression was performed, with materialism entered in the first step as a control variable, need for status entered in the second step as a predictor, and anticipated satisfaction difference score as the dependent variable. The results indicate that need for status was a significant predictor of anticipated satisfaction (B = −0.364, t = −2.407, p = .017). The negative relationship between need for status and anticipated satisfaction difference score indicated that compared with patricians (low in need for status), parvenus (high in need for status) were less likely to prefer a luxury hospitality purchase over a luxury goods purchase. Therefore, Hypothesis 3 is supported.

Discussion

Prior research on luxury hospitality consumption has focused mainly on understanding luxury consumer attitude, values, and luxury brand management (Bian & Forsythe, 2012; Hwang & Hyun, 2012; Kastanakis & Balabanis, 2012; Lee & Hwang, 2011; Wall et al., 2011; Wu & Liang, 2009; Yang & Mattila, 2014). However, the differences between luxury hospitality services and luxury goods as well as the role of status seeking on luxury consumption have received less attention (Hagtvedt & Patrick, 2009). To the best of our knowledge, this study is the first to contrast luxury goods and luxury hospitality services and further investigate luxury consumers’ behavioral patterns (WOM and consumption preference) according to their level of need for status. On the basis of extant studies on WOM communication, status consumption (e.g., Eastman et al., 1999), and experience recommendation, we show that patricians’ and parvenus’ WOM intentions differ between luxury goods consumption and luxury hospitality consumption.

Carter and Gilovich (2012) demonstrated the differential centrality of experiential services and material purchases to the self. They suggested that experiential services such as hospitality purchases were more closely integrated with one’s self-concept. Extant studies suggest that consumers who identify with an organization or a brand are more likely to say positive things and recommend the company or brand to others (Ahearne et al., 2005; Asatryan & Oh, 2008; Bhattacharya & Sen, 2003; Brown et al., 2005). In this study, we extend the notion of consumer identification to the context of product type. Because luxury hospitality services are closely related to self-concepts, we demonstrate that both patricians and parvenus exhibit equally strong WOM intentions on luxury hospitality purchases. On the contrary, luxury goods are less closely integrated with the self, and the effect of status seeking on WOM communication becomes salient. Parvenus are high in need for status, and they engage in luxury consumption to signal status. They are motivated to impress others via luxury consumption. Actively talking about their consumption objects enables parvenus to achieve such goals. Our findings indicate that compared with patricians, parvenus are more likely to spread positive WOM on luxury goods purchases.

Moreover, this study extends the experience recommendation theory to the luxury consumption context. Van Boven and Gilovich (2003) suggested that people with the intention of advancing their happiness and enjoyment preferred experiences to material goods. However, the less conspicuous nature of luxury hospitality services falls short of signaling wealth and status (Carter & Gilovich, 2012). Because parvenus’ satisfaction and happiness depend largely on status signaling, they perceive luxury hospitality consumption as a relatively poor choice to advance life happiness. Accordingly, compared with patricians, parvenus are less likely to choose luxury hospitality services over luxury goods with the intention of advancing happiness in life.

Managerial Implications

Besides theoretical contributions, this study provides important managerial implications for luxury hospitality practitioners. Although the classification of patricians and parvenus depends on the psychometric characteristic of “need for status,” the difference between the two groups can also be based on customers’ geographic location (Malshe, 2012). Claritas (a marketing research division of ACNielsen) groups U.S. ZIP codes on the basis of sociodemographic factors and consumer lifestyles. For example, people living in ZIP code 90274 (the Palos Verdes peninsula in Los Angeles County in Southern California) are likely to be patricians (Han et al., 2010). In addition, compared with most European countries, some countries (e.g., the “BRIC” countries of Brazil, Russia, India, and China) have newly advanced economic development, and the majority of luxury consumers in those countries are high in need for status (Eastman & Eastman, 2011; Shukla, 2012a, 2012b). For example, China has become wealthy during the past 30 to 40 years. The majority of luxury consumers in China arose from lower classes and accumulated their wealth in the 1970s and 1980s. Therefore, they purchase luxury products mainly to seek social status and material abundance (Ma, 2010; Malshe, 2012; Shukla, 2012a, 2012b). In fact, countries such as the BRIC nations, with a majority of luxury consumers being parvenus, have great potential for growth. According to Bain & Company, Chinese consumers now account for more than 20% of global luxury sales, and Asian consumers account for more than 50% of global luxury sales. Therefore, the results of the present study provide important implications for both domestic and international luxury hospitality marketers.

As demonstrated by previous studies, WOM is an effective and powerful marketing tool, and it has a strong influence on consumer preferences and behaviors (Gruen, Osmonbekov, & Czaplewski, 2006; Herr, Kardes, & Kim, 1991; Zhang, Ye, Law, & Li, 2010), as well as on sales and revenues (Chevalier & Mayzlin, 2006; Duan, Gu, & Whinston, 2008; Ye, Law, & Gu, 2009). Our results indicate that both patricians and parvenus indicate strong intention to spread positive WOM on luxury hospitality purchases; therefore, marketers of luxury hotels and fine-dining restaurants can take advantage of the power of WOM. They may provide more marketing campaigns and venues for their consumers to actively engage in WOM communications. For example, popular social Web sites such as Facebook and Twitter could be effective platforms for customers to share their consumption experiences and help promote brands. In addition, our results suggest that patricians are more likely to choose luxury hospitality services over luxury material goods with the intention of advancing happiness and enjoyment. Therefore, luxury hotels and fine-dining restaurants should focus on the hedonic value of their products and promote their services as memorable experiences.

On the other hand, our results indicate that compared with patricians, parvenus rely heavily on tangible evidence of their luxury consumption and are less likely to choose luxury hospitality services over luxury goods with the intention of advancing happiness and enjoyment. Therefore, luxury hotels and fine-dining restaurants in countries where the majority of luxury consumers are parvenus might want to incorporate some forms of tangible evidence into their service offerings. For example, they might offer complimentary products such as creative photos and videos, bumper stickers, T-shirts, and coffee-table books that showcase the luxury experiences to others either during the service consumption or as follow-up “thank you for your business” gifts. In addition, luxury hospitality firms aiming at parvenus might want to downplay the hedonic value of their services. For example, Wong and Ahuvia (1998) suggest that East Asian luxury consumers tend to be heavily influenced by social norms, and they seek symbolic values instead of hedonic values from luxury consumption (Kastanakis & Balabanis 2012; Shukla & Purani, 2011; Tsai, 2005). With this in mind, luxury hospitality companies may identify important opinion leaders in East Asian markets and encourage them to promote their brand use in social media and other marketing campaigns.

Limitations and Suggestions for Future Research

Several limitations of this study need to be recognized. First, as indicated by Van Boven and Gilovich (2003), the difference between experiential and material purchases is sometimes ambiguous. The two product types are, in fact, at the opposite ends of a continuum, and there may be overlap between the two types. Although the majority of hospitality services (e.g., lodging, restaurants, vacations) can be perceived as experiential purchases, there may be certain types of hospitality products that fall in the middle of the experience-goods continuum. For example, some consumers may perceive a beauty spa in a luxury hotel as an experiential purchase (valuing the intangible services and the memories), but others may perceive it as a material purchase (focusing instead on the tangible beauty products). Therefore, findings regarding the difference between luxury hospitality services and luxury goods should be interpreted with caution.

Second, WOM communication was captured as intention rather than actual behavior, and our WOM measures reflected only traditional WOM via family and friends. It would be interesting to examine how luxury consumers react to virtual WOM. Do affluent consumers have less of a need to talk about their consumption experiences in social media than their less wealthy counterparts? Or do the differences observed for the traditional WOM across parvenus and patricians carry over to the Internet? Future research is needed to study such questions.

Third, it is possible that patricians and parvenus identify with different types of luxury hospitality experiences. For example, patricians might identify with self-actualizing experiences (Holt, 1998) or educational and challenging activities (e.g., international travel, ski vacations, high-end sporting events, and some exotic trips such as safaris) and therefore be willing to generate positive WOM on such experiences. On the contrary, parvenus might prefer expensive prearranged travel packages that focus on luxury signaling (e.g., exclusive shopping tours, expensive time-share groups, celebrity-chef restaurants; Üstüner & Holt, 2010). Future research exploring the different preferences of hospitality experiences between patricians and parvenus would be fruitful.

Last, this study was conducted in the United States, and 86% of the respondents were Caucasian. As suggest by several scholars, luxury buying behaviors and consumers’ need for status are heavily influenced by culture and social development (Bian & Forsythe, 2012; Kastanakis & Balabanis, 2012; Li, Li, & Kambele, 2012; Shukla & Purani, 2011; Tsai, 2005; Wong & Ahuvia, 1998; Zhan & He, 2011). Future studies using respondents in other countries and with different cultural backgrounds may generate interesting findings.

Footnotes

Appendix: Luxury Brands Lists

Wan Yang (email: wy.wanyang@gmail.com) is an assistant professor in the College of Hospitality and Technology Leadership at University of South Florida. Her research interests include luxury consumption, consumer emotions, service failure and recovery, and cross-cultural issues in the hospitality and tourism industry.

Anna S. Mattila (email: asm6@psu.edu) is the Marriott Professor of Lodging Management in the School of Hospitality Management at The Pennsylvania State University. Her research interests focus on service encounters, with a particular interest in service failures, service recovery, and cross-cultural issues in services marketing.

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