Market Research on Luxury Watches Essay Example for Free

Market research on Luxury Watches stressMarket Trend There was a slow-down in the evolution in sales of premium and extravagance construees in India in 2008-09. It prompted the market leader Titan industries to enter the economy market. Following the footsteps, sumptuosity sojourn smears like Tag Heuer and Rolex introduced low- worth models. But in recent years, mobile phones may also see dampened growth in the keenness of palees in India, as they provide a time read-out as well as alarm and other time-related functions.Watch industry experts believe that their growths original function is progressively losing importance, and that wristwatches be now being bought as fashion accessories. Owning more than one watch is like owning various pieces of jewellery. Competitive landscape The economy watch contain is being met for the most part by the unincorporated sector and by direct imports. The premium segment is increasingly being peppered by fashion dishonors mu ch(prenominal) as Esprit, Swatch, Fossil and Tommy Hilfiger. There has also been firm value growth for these brands, with growing demand from middle- and upper-income groups in urban India.Titan, HMT and Maxima atomic number 18 the leading Indian players and Timex, Casio and Swatch ar now the strong multinational players in the market. more multinationals are entering the retail market, but no new domestic companies fall in done so, and the multinationals character of value sales has increased over the review period. Premium Brand Product Perception With the watches market in India now becoming fashion and style dictated, especially at the premium end, companies now institute models and designs every six months. International brands such as Fossil launch spring/summer and wintertime vomit ups.Titan, on the other hand, times its launches to fit in with the Indian festive season Deepavali and weddings. Companies like Casio and Swatch and opulence brands like Rolex are exp loring a niche market for chronographs, but this is currently negligible. Companies also need to serve to production innovations. The Citizen eco-friendly watch has been well received in India and is reportedly selling well in its charge bracket, eliminating the trouble of replacing batteries and encouraging the use of multiple watches.Apparel brands such as Esprit, Tommy Hilfiger, Benetton and Levis realize all gained familiarity among Indias urban youth, who may become more willing to try these brands premium watches. Affluent, urban Indians may feel more comfortable about buying premium watches, epoch continuing to indirect request lavishness watches as examples of overindulgent or insensitive spending. refreshful Rich India The New generous India is now folly into the experience of owning Luxury Brands. Indias rapidly growing high-end retail market is expected to increase from the around $3.5 billion in 2008 to $30 billion by 2015. Luxury clothing, fragrances, premium wine, high-end watches nurse achieved skillful penetration among male Indian consumers. Among women, jewellery and cosmetics can already boast high levels of awareness, followed by categories such as handbags and mobile phones. These tips, turn non necessarily being collapse (in flavour, performance, or appearance) than their less expensive substitutes, are procured with the main purpose of displaying wealth or income or status symbol of their possessors. There is a transparent shift from Old luxury to New luxury.Old luxury is de alrightd by the attributes, qualities and features of the product, whilst New luxury is specify by the consumers point of focus on the experience that their grease ones palms stimulates and non in ownership or possession of the product itself. The customers Redefined luxury as they believe it to be a sign of self worth They are worth it it authenticates the buyers success and status it is a signal to others that the owner is a member of an e xclusive group They require flawless performance in this application, the cost of product malfunction is too high to buy anything but the best.Motivation of Study The matter of wearing and enjoying fine timepieces is a passion that these days must be goodified. We like nice expensive watches as yet though cheap watches exist to do the same thing. indeed like any other luxury good , today modern shoppers buy luxury goods to reward themselves, to satisfy psychological needs or to pay off themselves feel good to press out off their personality or to pressurise their self-esteem.Contribution of the research This call for aims to sympathise the above said consumer buying behaviour which will garter the present marketing Managers to better reposition their branding and advertising strategy to capture the correct target market for luxury products to boost the sales in times where economy are at a challenge. Literature Review Research Objective This engage intends to find out if consumer buying behaviour of young purchasers are shaped by divisors such as premium price of luxury watches, perceived forest of luxury watches, societal status and brand loyalty associated with theconsumption of luxury brand. This study also intends to evaluate whether perceived qualities of the luxury branded watch have influence on the buying last of consumer. It is also intended to determine whether the high property standards of luxury watches are the grounding consumers opt for the luxury watches. Affiliations of social status of acquiring certain luxury branded goods will also be studied to understand whether consumer buying luxury branded goods just for the matter of being affiliate with certain quarters of pack having the same luxury brand of goods.This study also will also evaluate whether brand loyalty of luxury brand will influence the buying decision of consumer. This study also aims to uncover whether a person who has been abroad is a reason for the consumer bu y a luxury watch Research Question The purpose of this study is to evaluate what motivational factors encourage consumers into purchasing luxury brand watches . In evaluating this statement , this study aims to answer the following questions Is it the price or the type of users of the brand that drives the buying behaviour of the consumer for luxury branded goods?Is it the strong emotion of needlelike themselves with the lower class consumers that drives higher class consumers to turn to luxury brands? Is it the tag name of a mega brand that drives the gigantic term demand for that luxury brand? Is gender a deterministic factor in deciding the purchase of a luxury brand? If yes then what factors are important gender unused ? Is it the product utility or the brand experience that is key for luxury watch brands? Will a persons visit abroad influence his decision to purchase a luxury watch?Previous Research contribution Findings of overall previous research indicate that in dividuals preferences plays a key role in purchasing luxury goods. Individuals preferences may be found on desire and non-desires, which are ground on experience in purchasing luxury items from their rapture, or nondesire such as bias towards brand products. Leibenstein (1950, p. 188) classified demand of goods and services consumption in relevant to motivation into two main aspects functional and non-functional. Functional demand is demand for a commodity which is due(p) to the qualities inherent in the commodity itself.On the contrary, demand of goods consumption that comes from other factors, which is not the product quality, is defined non-functional demand. The outcome from Leibensteins (1950) study especially stresses the role of social cause towards luxury brands consumption, and derived three main effects Veblen, Snob, and Bandwagon INTERPERSONAL EFFECTS Perceived Conspicuous Value Perceived curious Value Perceived friendly Value Ostentation Non-Conformity Conformity VEBLENIAN SNOB BANDWAGON Interpersonal effects (Vigenron Johnson) (1999 p.7) Veblen meat The Veblen effect can be explained finished conspicuous consumption in which volume feel that it is necessary to purchase luxury products because they have a high price tag (Leibenstein, 1950). Conspicuous consumption is use by people to show wealth, situation and status (Veblen, 1899). Prices of product have a satisfying aspect in consumers opinion of quality (Vigneron Johnson, 1999). Studies by Erickson Johansson (1995) have shown that price is used to judge quality of luxury products between a range of brands.Usually people would associate high prices with better quality. Additionally, those who do associate high prices with better quality would also suggest that high prices show a considerable amount of prestige (Lichtenstein et al. , 1993). Snob encumbrance The snob effect takes into account personal and emotional desires (personal effects), and the influence of other peoples behav iour (interpersonal effects) towards the purchasing of luxury brand products (see Figure 1). The snob effect can be further explained through two circumstances. freshmanly, the launch on new products which creates exclusivity in which the snob would purchase the product immediately because a minor amount of consumers at that particular time would have acquired it. Snob consumers only purchase trammel items that have a high value, whereas those readily available are less desirable. Rare items demand honour and prestige (Solomon, 1994,p. 570). Products that are viewed as unique, popular, and expensive causes a higher demand for consumers (Verhallen Robben, 1994), especially snob consumers.Snyder and Fromkin (1977) support the statement by Verhallen and Robben (1994) suggesting that people have the desire to be unique. IndiaThe Affluent Masses Luxury volumes have been spurred by a significant growth in the rich in recent past. The new rich come in varied shapes, sizes and style quo tients. Exporters, multinational bankers, college kids earning plum salaries at call centers or BPO operations, palmy corporate wives, and successful entrepreneurs.What they have in common is that they have very high purchasing power Bandwagon Effect The bandwagon effect represents consumers who purchase luxury products because they wish to fit in with a particular group. For example, people would consume products that are fashionable and stylish to associate themselves to similar people (Berry, 1994). Dubois Duquesne (1993) explains that the snob and bandwagon effect are not alike. Although the similarity between the bandwagon and the snob effect is that people wish to enhance their self-concepts, the differentiation is that they purchase luxury items for different reasons.Bandwagon consumers purchase items to be fit in with others, whereas snob consumers purchase items to be unique and stand out. Individuals who fit in with groups that purchase luxury brand products and/ or wis h to differentiate themselves from people who do not purchase luxury brands are influenced by the bandwagon effect (Vigneron Johnson,1999) Luxury is reward First time/New Purchasers They use luxury goods as a status symbol to say Ive made it . They are motivated by their desire to be successful and demonstrate this to others.Luxury brands that have widespread recognition are popular however they dont wish to appear abounding or hedonistic in their appearance. They want to purchase smart luxury that exhibit importance while not leaving them open to criticism. Personal Effects Consuming luxury products can also be from personal desires and taste. PERSONAL EFFECTS Perceived Emotional Value Perceived Quality Value Self-Actualization Reassurance infidel PERFECTIONIST Personal effects (Vigenron Johnson) (1999 p. 8) Hedonic Effect The hedonic effect occurs when consumers purchase luxury products and value the item. plenty who purchase items for self-fulfillment (e. g.inner direct cons umers, Riesman, et al. , 1950, or role relaxed consumers, Kahle, 1995), and those who are not affected by interpersonal influences (e. g. conforming to group norms,Bearden, et al. , 1989) represent the hedonic effect. Dichter (1960) explains that motivation of noncognitive and unconscious is able to persuade consumer preference of products. Products that are consumed are known to have an emotional value that is added to their character (Vigneron Johnson, 1999). When consumers purchase luxury products they expect that the item will offer benefits such as exclusiveness.Dubois Laurent, (1994) stated that if products create an emotional value for consumers, it represents that the product is in force(p) and holds an important characteristic. Perfectionist Effect The perfectionist effect exists when consumers purchase luxury items and expects superior products and performance as well as quality (Vigneron Johnson,1999). People who represent the perfectionist effect are those who are as sociated to personal values and judge a product according to their value of a luxury band product. An example of the perfectionist effect is when consumers are purchasing a luxury watch they expect it to be accurate.According to Groth and McDaniel, (1993, p. 10) stated that high prices may even make certain products or service more desirable, because people view products with high prices with neat quality (Rao Monroe, 1989). Additionally, consumers may assess the level of how luxury a product is by its quality (Vigneron and Johnson, 1999). systemology Research Method Quantitative data consists of closed end cultivation that includes numerical figures. The study has smooth quantitative data by applying closed-end questions towards a questionnaire.Focus Group Discussion to understand attributes both strong-arm and emotional that influence the purchase of a luxury watch. The group comprised of 7 individuals , 3 female and 4 male participants who have been users of luxury watches. Data Collection Primary Data collection Gathering information from consumers of luxury watches through online questionnaire survey Secondary Data Collection Research insights and hypothesis design with the help of previously published research work on luxury goods buying behaviour. Sampling Non-probability sampling mode is adopted.Since the target audience or respondents of interest are consumers of premium or luxury watches, the sampling method adopted here is convenience sampling and snow-ball sampling. Measurement Scaling Measurement Techniques used ? Perception correspond ? Utility of features in the watch Chronograph, Double dial, Indicator light etc. ? Stylish Designs that make the watch a fashion statement Respondents were asked to rate the 10 different brands in order to obtain their perception of these brands on the above defined dimensions Based on two predefined dimensions i. e ? ? ? searching Factor synopsis To understand the underlying factors influencing the pu rchase behaviour of luxury watch for men women and overall Regression To understand which interpersonal personal effect is critical when consumers make a luxury watch purchase decision Discriminant epitome To understand the group behaviours based on the following discriminating variable ? Gender ? bumble abroad ? Work ExperiencePurchasing power ? AMOS Confirmatory Factor epitome to ascertain the Exploratory Factor Analysis RESULT AND ANALYSIS 1.Discriminant Analysis Work-Ex Fresher induction Wilks lambda (0.627) is more than 0. 4 which is not significant Box M test is also insignificant However based on abbreviation top 5 attributes discriminating work ex fresher are Attributes Q5_7_attribute_analog Q5_2_attribute_alarm Q5_12_attribute_torch Q5_9__attribute_calculator Q4_8_attribute_celebrity_endorsement Variable burthen of discriminating function -. 366 . 361 . 331 . 271 . 262 2. Discriminant Analysis Gender Inference Wilks lambda (0. 578) is more than 0. 4 which is not significant based on analysis top 5 attributes discriminating males females Attributes Variable fish of discriminating function.Q4_3_attrifashion_statement Q5_3_attribute_dualclock Q5_13_attribute_barometer Q5_8_attribute_motion sensor Q9_2_buy_in_store .329 -. 285 -. 269 -. 259 -. 255 3. Discriminant Analysis Abroad Visit Inference Wilks lambda (0. 573) is more than 0. 4 which is not significant however based on analysis top 5 attributes discriminating foreign visited and not visited people Attributes Q5_9__attribute_calculator Q5_6_attribute_color Q5_16_attribute_warranty Q5_11_attribute_straptype Q4_9_attribute_brand_image Variable weight of discriminating function . 228 . 225 .221 -. 207 -. 205 3) Exploratory Factor Analysis-(Male Female) Research Question- Is gender a deterministic factor in deciding the purchase of the luxury watch. If yes what factors are important gender wise? Hypothesis- Women while making luxury goods purchase give more importance to emotional factors w hereas Men go for sensual Utility features Factor analysis for male respndents(58 males) imparts? ? ? ? ? ? ? ? Fac1(Ostentation) o o o o o o o o ? ? ? ? ? ? Sth to remmeber, hand gesture, to be unique Fac2(value added feature) Calculator,digital,compass.Fac3(Generic requirements) Shape, water resistance Fac4(Economic requirements) Discounts Fac 5(Tech savvy) Compass, Motion sensor Fac 6(basic) Analog,water resistance Fac 7(Wrist suitability) Strap type Fac 8(extra feautres)Date and day display, brand image Exploratory factor analysis female Respondents (23 females)Fac1(Economical) o o o o o o Warranty, after sales, analog, emotional satisfaction Fac2(Style) kind status, to be unique, fashion statement Fac3(Special requirements) Alarm,altimeter, digital,dual clock Fac4(value added feature)Calculator,compass,barometer, torch Fac 5(Tech savvy) Hand gesture,discount Fac 6(Exclusivity) Motion sensor,alarm,brand image Result Analysis? Meno Attach importance to Ostentaion, value added feaures and style(veblenian effect and perfectionist effect are dominating) ? Womeno Style, Economic attributes an generic requirements ( Hedonist and snob effects dominate 4. Checking the Interpersonal and personal effects shown by males and female while purchase of luxury watch in Store Research Questiono Is it the price or the type of users of the brand that drives the buying behaviour of the consumer for luxury branded goods?o Is it the strong emotion of discriminating themselves with the lower class consumers that drives higher class consumers to turn to luxury brands? o Is it the product utility or the brand perception that is key for luxury watch brands? Hypothesis-Luxury watch purchase is primarily to show off and as an indicator of status symbol veneblian effect. Users also buy luxury watches due to perceived emotional value or for hedonist reasons Veneblian Effect- Snob Effect Bandwagon Effect Hedonistic effect Type of effect Veneblian snob Bandwagon Hedonistic Coefficient 0. 517 0. 499 0. 274 0. 305.Inference- As we can clearly observe from the above table that the veneblian effect is very prominent in all cases of interpersonal or personal effects. That means People tend to buy Luxury watches to show off of their Public and Social Status. Snob and Bandwagon effect follows Veneblian effect. 5. Regression Analysis to check whether long term demand for luxury watches is driven by brand image Research Question Is it the brand image that drives the long term demand for that luxury brand? Hypothesis Brand Image for lucury brands is responsible for the long term demand of these watches.Inference Regression is insignificant with respect to the variables that drive brand image. Even the Rsquare value is 0. 071. Hence we can infer that brand image is not a good factor to explain the long term demand for luxury watches. 6. AMOS The default model is created based on exploratory factor analysis and taking research literature into account. Model Fit Summary Check Cmin/DF 2-5 OK GFI 0. 9 non OK PGFI0. 5 OK NFI,TLI,CFI0. 9 Not OK RMSEA max 0. 1 Not OK Model is comparatively fit as such But Goodness of fit index is not holding well. Validity Construct Reliability S No.1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Attributes Q4_1_attribute_social_status Q4_3_attribute_fashion_statement Q4_2_attribute_to_be_unique Q4_6_attribute_emotional_satisfaction Q4_9_attribute_brand_image Q5_9__attribute_calculator Q5_10_attribute_compass Q5_12_attribute_torch Q5_13_attribute_barometer Q5_3_attribute_dualclock Q5_4_attribute_altimeter Q5_2_attribute_alarm Q5_5_attribute_digital Q5_7_attribute_analog Q5_8_attribute_motionsensor Q5_16_attribute_warranty Q4_10_attribute_secon_time_brandpurchase Q4_4_attribute_premiumwatch_collection Q4_8_attribute_celebrity_endorsements.Constructs Error e1 e2 Delta 1. 028 1. 079 0. 608 0. 635 1. 282 1. 323 1. 687 1. 473 1. 793 1. 816 1. 032 2. 133 1. 407 1. 074 2. 078 0. 179 1. 402 1. 367 2. 019 Lambda 1 0. 67 0. 92 2 0. 884 0. 997 1 0. 912 0. 971 0. 774 1 1. 135 1. 005 1. 258 1 0. 876 0. 84 0. 403 1. 231 1 AVE CR Exclusivity e3 e4 e5 e6 e7 0. 81 0. 81 Tech_Savvy e8 e9 e14 0. 84 0. 68 Value_Added _Feature e15 e16 e17 e21 1. 22 0. 75 Reliability e22 e23 e26 0. 82 0. 69 Brand_Perce ption.