1

The Impact of Brand Image on Consumer Behaviour of Luxury

Goods of Fashion Industry in China

By

Chi-Wen Cheng

2006

A Dissertation presented in part consideration for the degree of
MSc International Business














2
Acknowledgement

I would like to attribute my work to my family, especially my parents fully support,
and I would like to thank my supervisor, Professor T.C. Melewar for guiding me from
the very beginnings proposal till the ends final work.

Besides, I appreciate all my friends and flatmates accompany so that I can pass the
difficult time during the work. Especially, thanks Heidi, Lucy and WeiJiin for helping
me conducting the interview and my best friends company, Kamil.

Without all of you, I will not be able to finish this dissertation. Thank you.






















3
Abstract

When we are marching into the next century, we have been witnessing China emerge
as a great economic entity in the world. China, as a newly emerging market, has many
affluent opportunities to be discovered and developed by business organisations from
different industries. With the great population and the governments liberalising
attitude, China has made itself an auspicious country for luxury goods of fashion
industry. Consequently, it is significant for marketers to understand how Chinese
consumers behave and what their attitude is so as to tap the astronomical opportunity
in China.

As a result, I am inspired to find out the impact of brand on consumer behaviour of
luxury good of the fashion market. Also, due to China as a potential emerging market,
my supervisor and I decided to narrow down the research scope to only China, instead
of Asia. Consequently, this essay aims to describe the impact of brand on consumer
behaviour of luxury goods, to examine how brand image influences consumer
behaviour, how Chinese consumers perceive luxury goods and propose how luxury
goods companies can counter the piracy problem from the brand perspective of luxury
goods of the fashion industry in China.











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Table of Content

Page
Chapter 1 Introduction
1.1 Background of the Study...1
1.2 Project Objectives......3
1.3 Methodology......3
1.4 Organisation of the Report.4

Chapter 2 Industry and Company Review
2.1 Introduction6
2.2 Introduction of China.6
2.2.1 Political Environment........6
2.2.2 Economic Environment.7
2.2.3 Demographics Environment......9
2.2.4 Social Environment.......11
2.3 Industry Review
2.3.1 Fashion Market......12
2.3.2 Bvlgari.......15
2.3.3 Cartier........17
2.3.4 Salvatore Ferragamo......19
2.4 Summary..21

Chapter 3 Review of Literature
3.1 Introduction.23
3.2 Luxury Goods..23
3.2.1 Definition of Luxury Goods.......23
3.2.2 Symbols of Luxury Goods.26
3.3 Brand Concept
3.3.1 Definition of Brand........27
3.3.2 Why is brand important?........................................................................29
3.3.3 Brand Equity..30
3.3.4 Brand Awareness........31
3.3.5 Brand Image...32
3.4 Consumer Behaviour
3.4.1 Why is consumer behaviour important?.................................................37
3.4.2 Definition of Consumer Behaviour........38
3.4.3 Consumer Behaviour Process.........39
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3.4.4 Influences on Consumer Behaviour.........44
3.5 Market Segmentation
3.5.1 Geographic Segmentation........48
3.5.2 Demographic Segmentation.....49
3.5.3 Psychographic Segmentation...49
3.6 Summary...49

Chapter 4 Discussion
4.1 Introduction...50
4.2 Findings.....50
4.2.1 Company...50
4.2.2 Industry.53
4.2.3 Literature and Interview54
4.3 Proposed Strategy.......62
4.4 Summary 66

Chapter 5 Conclusion
5.1 Major Recommendation.67
5.2 Limitations of the Study.68
5.3 Future Research Directions69


















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List of Figures

Page

Figure 1 Chinas Contribution to luxury goods sales...........2
Figure 2 Sex ratio at birth in China.........10
Figure 3 Urban/Rural Population Distribution11
Figure 4 Different kinds of logic& thinking of a Firms Foundation..28
Figure 5 Consumer Decision Process..40
Figure 6 CDP Model44
Figure 7 Maslows Hierarchy of Needs...46
Figure 8 Prestige-Seeking Consumer Behaviour.........58





















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Chapter 1 INTRODUCTION
1.1 Background of the study
A product is something that is made in a factory; a brand is something that is bought
by a customer. A product can be copied by a competitor; a brand is unique. A product
can be quickly outdated; a successful brand is timeless.
--- Stephen King, WPP Group, London

In 1988, Nestle acquired Rowntree with 2.5 billion British pounds. This case shows
clearly that Nestle not simply buys the tangible assets of Rowntree but also the brand
name. According to de Chernatony, this is because it is not factories which make
profits, but relationships with customers and it is brand names which secure these
relationships. For example, Philip Morris bought Kraft for $12.9 billion, four times
the value of Krafts tangible assets (de Chernatony, p.17). Therefore, it is easy to
know that a successful brand can not only become a companys competitive
advantage but also generate potential profits for the company.

Moreover, a brand is a distinguishing name and/or symbol (such as a logo, trademark,
or package design) intended to identify the goods or services of either one seller or a
group of sellers, and to differentiate those goods or services from those of competitors
(Aaker p.7, 1991). He further explains that a brand thus signals to the customer the
source of the product, and protects both the customer and the producer from
competitors who would attempt to provide products that appear to be identical.

In addition, based on economics principle, when people have more disposable income,
he or she will spend more money on luxuries instead of necessities. To quote BBC
news, this phenomenon has long been true in Japan, whose fashion-conscious people
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account for a quarter of the worlds luxury-goods sales. By looking a little farther
ahead, it is clear that other Asian countries, and particularly China and India, will
follow where Japan has led (BBC news 2004). According to the Boston Consulting
Group, China already accounts for 5% of the world luxury market- the same share, it
is worth remembering, as post-communist Russia. Figure 1 shows the contribution of
China, Russia, and India to total sales of luxury-goods companies.

Figure 1, Contribution of China to total sales of luxury-goods companies












source: Merrill Lynch

From the paragraphs above, it is known that brand value has become one of the core
issues of marketing domain. Thus, companies who understand the importance of
brand value are able to differentiate themselves in the markets. Moreover, realising
how consumers respond to brands is helpful for companies to design and construct
marketing activities. Furthermore, with the growing power of Chinese market, it is
essential to understand how consumer behaves in China in order to apply the right
strategy. As a result, this essay will be beneficial for the luxury goods companies who
want to or have already entered to the fashion industry in China to learn how Chinese
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consumers respond to luxury goods.

1.2 Project Objectives
According to the paragraphs above, I am inspired to find out the impact of brand on
consumer behaviour of luxury good of the fashion market. Also, due to China as a
potential emerging market, my supervisor and I decided to narrow down the research
scope to only China, instead of Asia. Consequently, this dissertation aims to describe
the impact of brand on consumer behaviour of luxury goods, to examine how brand
image influences consumer behaviour, how Chinese consumers perceive luxury goods
and propose how luxury goods companies can counter the piracy problem from the
brand perspective of luxury goods of the fashion industry in China. Meanwhile, in this
study, luxury goods are interchangeable with luxury brands during the discussion.

1.3 Methodology
This dissertation will be conducted based on literature review and it will be supported
by interview. Since it is based on literature review and all the information will be
required from official organisations and publications, I assume that there will be
enough concrete evidence to support my analysis and conclusions. As for the
interview, according to Wright and Crimp, group discussions, usually known as focus
groups in the USA, are the most frequently used form of data collection. They also
suggest that groups vary in the number of members (anything from 3-10 members is
feasible) and duration (a minimum of one hour and a maximum of three or four hours
is the norm for most projects) and very often in their ambience. Hence, this interview
will be based on group discussion of three people. Often longer in duration, are more
emotional in content, with the research objective being to explore the motivations and
psychological preferences of the group informants (Wright and Crimp p.389, 2000).
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Thus, the duration of the interview will be two hours discussion.

The purpose of the interview will be conducted in order to find out how Chinese
people perceive luxury goods and propose a solution for marketers to deal with piracy
problem. Wright and Crimp (2000) say that in most cases the definition of the
population to be studied includes many more units than can possibly be contacted
perhaps because of cost, time or other valid reasons. Therefore, due to narrowing
down the research scope, the interview participants will be targeted at the age between
20-25 years old young lady with advanced education from Beijing, Shanghai or
Guangzhou in China.

1.4 Organisation of the report
Chapter 1 Introduction
The chapter will be an overview on the introduction of the purpose and methodology
of the whole essay.

Chapter 2 Industry and company review
This chapter will be an overview of China from several perspectives which are
political, economic, social, and technology. In addition, there will be a section of
fashion market in China. Also, there are three companies of luxury goods of fashion
market which are Bvlgari, Cartier, and Salvatore Ferragamo. Each company will be
introduced in detail about the history, the corporation spirit, the product and the
marketing issues.

Chapter 3 Literature review
This chapter will be the summary of the explanation of luxury goods, brand concept,
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consumer behaviour and market segmentation.

Chapter 4 Analysis
The examination of how brand image affect consumer behaviour, and how Chinese
consumers respond to luxury goods brands will be included in this chapter. In addition,
the proposed strategy to counter piracy problem of luxury goods in China will be also
contained within the chapter.

Chapter 5 Conclusion
A high-level summary of the whole dissertation, the limitation of this essay and the
future research directions will be included in this chapter.















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Chapter 2 INDUSTRY AND COMPANY REVIEW
2.1 Introduction
Webber, Wang and Ying consider that the concept of globalisation provides the
fundamental lens through which we understand recent political and economic change
in China. Webber defines globalisation as the development of an economy and forms
of governance that span much of the world. According to the definition, such a
development reflects a variety of processes: the integration of production, trade and
capital formation across national boundaries in global corporations; the emergence of
functions of global governance that partially regulate national economic, social and
environmental policies; and the imposition of market relations into spheres of cultural
and social life previously immune from market pressures (Webber, Wang and Ying;
p.3).

Therefore, since 1980s, China government has started to design new political policies
and modify financial regulations gradually to orient its central planned economy to
market economy. Consequently, China emerged as a potential and commanding
market in the international stage. The following paragraphs will be concentrating on
the political, economic, demographics and social environment and fashion market of
recent China.

2.2 Introduction of China
2.2.1 Political Environment
China has been under the governance of the Chinese Communist Party since 1949. In
the late 1970s till 1997, Chinas leader, Deng Xiaoping started to encourage more
economic openness and foreign trade (Economist 2006). Although there were many
violence and tyranny undergoing over past two decades, yet the Chinese government
13
also devoted on the growth of GNP(Gross National Product). Nowadays, several
millions of the citizens have been pulled out from the poverty under the effort of
Chinese government.

When Deng died in February 1997, Jiang Zemin and Zhu Rongji became president
and prime minister individually. In 2001, after more than 50 years in power, the
Chinese Communist Party faces an economic and political challenge resulting from
opening up more widely to the outside world and its development picking up speed as
heroic as, and far more complex than, any that has gone before while Deng was in
charge (Economist 2001). In 2001, the magazine, Economist, states that when China
joins the World Trade Organisation (WTO), the state will find it has fewer direct
controls over the economy. Therefore, some optimists suppose that the Communist
partys authority will be loosened and its political form will be transform into liberal
democracy gradually.

However, the process of the democratisation of China is still in the very early stage.
Therefore, many regulations and laws have not been as concrete and reliable as
imagined. As a result, it is helpful for business organisations to understand the
political structures, related rules and local customs in China. For example, guanxi is a
very important factor when conducting business in China. It means the relationship
and the connection with the relevant people. To build guanxi with the officials of
relevant government units is beneficial for investors to save time on difficult and
multifarious processes of applications.

2.2.2 Economic Environment
With the more frequent interaction with the global economic system, Chinas
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transformation from central planning to market economy can be studied and
discovered from two areas which are trade and foreign direct investment (FDI). By
1997, in terms of both total imports and total exports, China had become the tenth
largest trading country in the world (Webber, Wang and Ying; p.16). Chinas top four
trade partners are the United States, Hong Kong, Japan, and the European Union (FDI,
2004). Shi states that Chinas importance in world trade will increase, as the total
value of its trade is estimated to exceed $US400 billion by the year 2000 and double
that by 2010 (Webber, Wang and Ying; p.16). Generally speaking, according to
Webber, Wang and Ying, the fundamental foreign trade policy of China can be seen
from the quotation, to maintain a balance between imports and exports. The export
expansion is aimed at importing the advanced technology and equipment needed in
economic construction, materials in short supply domestically and necessary
consumer goods. Under the circumstance of too rapid increase in imports, anaemic
growth of exports and the emergence of a trade deficit, we try to reach a balance
through active export expansion instead of passive import reduction (MOFTEC 1999;
Lardy 1992).

Foreign direct investment (FDI) has been the most significant factor to stimulate the
economic growth, economic reform and the implementation of open door policy in
China in the past two decades. By 1998, China had absorbed total foreign direct
investment of US$234 billion, involving some 302,326 separate projects (SSB 1998).
Graham and Wada point out that according to official sources, in the period
1992-1996, FDI from developing Asian nations dominated total FDI flows into China,
but since 1996 a growing portion of these flows has come from other sources (i.e.,
Europe, North America, and Japan). Based on their research, the FDI comes from
Europe, North America and Japan has been focused on export-processing activities in
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sectors in which China has revealed comparative advantage while the FDI from
developing Asian nations has been orientated more toward the domestic market in
sectors in which China has not showed comparative advantage. As a result, a rising
percentage of FDI from Japan, Europe, and North America has been that overall the
activities of foreign-invested enterprises in China have become somewhat more
focused on the domestic market, and less on export markets, in the late 1990s relative
to the mid-1990s (Graham and Wada, 2006).

According to World Bank statistics, Chinas gross domestic products (GDP) in 2005
reached US$2.263825 trillion, US$94 million more than that of Great Britain, thereby
becoming the fourth largest economic entity in the world. Chinas GDP per capita is
US$1,090 while the total GDP is US$1.4 trillion in 2003. Meanwhile, the gap
between the rich and the poor in China is the largest in the world. In China, over 80%
of the wealth only occupies 20% of the population. The British Economist states that
the GDP per capita of China has been growing three times faster than the U.S. China
may surpass the States and become the number one economic power (Peoples Daily,
13 July 20062).

2.2.3 Demographics
China is situated in eastern Asia, bounded by the Pacific in the east. It is the third
largest country in the world which is next to Canada and Russia and it has an area of
9.6 million square kilometers, or one-fifteenth of the world's land mass. Till 1998, the
total population in China has already reached 1.24810 billion which occupies the
largest population in the world. Based on China National Statistics Bureaus data,
Chinas population is distributed unevenly with more in the east (more than 300
persons per square kilometer) and fewer in the west (about 40 persons per square
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kilometer. In addition, the proportion of population aged at 0-14 was 26.4 percent,
those aged 15-64 was 67.2 percent, and that of the people aged 65 and over was 6.4
percent.

Melewar (2004) states that among the segmentations of China market, most notable is
the trend towards increased purchasing power of women and young people.
According to the statistics, women around the world give birth to 106 baby boys for
every 100 girls on average, and the sex ratio for first births in China matches the
average (Economist 1998). Figure 1.1 shows the sex ratio at birth in China by
different age. From the figure 1.1, it is not difficult to predict that in the future, the
female ratio of the population will overwhelmingly dominate Chinas demographics.

Figure 2 Sex ratio at birth in China by birth order

Source: The Economist (1998)

Moreover, it is expected that the share of the urban population in the total population
will rise dramatically in the near future (Kwan et al, 2003) which can be proved from
the figure below that people from rural area have swarmed into the big cities over the
last two decades. The urban population increased from 23.7% to 30.0% between 1985
and 1998 while the rural population decreased from 76.3% to 70.0%.

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Figure 3 Urban/Rural Population Distribution (1985-1998)









Source: Peoples Daily, 2006

Another unique characteristic of Chinas population is that the government adopts
one-child policy. Jason Tian, a CEO of Baithe.com that uses extensive personality
profiles to match couples, said that parents became very tolerant with their children
which turns their children become unable to tolerant at other people and unable to
cooperate with other people (Taipei Times 2006). Therefore, the new, young
generation will become more self-centred and spoiled than the old generation.

2.2.4 Social Environment
About 50 years ago when New China was founded, 80 percent of the Chinese
population were illiterate or half-illiterate, with the total school enrollment only
accounting for 4.76 percent of the whole population (Peoples Daily 2006). Out of
every 10,000 people, there were only 2.2 college graduates, 23 middle-school
graduates and 450 elementary school graduates. According to Peoples Daily (2006),
by the end of 1997, the rate of illiteracy had dropped to 12 percent, and by 1998
elementary school education had been popularized among 92 percent of the populated
areas, and the state-regulated nine-year compulsory education had been realized in 73
0
20
40
60
80
100
120
1
9
8
5
1
9
8
7
1
9
8
9
1
9
9
1
1
9
9
3
1
9
9
5
1
9
9
7
Rural(%)
Urban(%)
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percent of the populated areas in the country, thus making the educated Chinese
population reach one-fourth of the total. Therefore, the average of Chinese people
who are getting educated is now higher than that of other developing countries with
the same average. Moreover, the higher-learning education developed rapidly and its
structure was greatly improved. In the recent decades after the new policy of reform
and opening up was carried out, the higher-learning bodies of various types have
trained 18 million undergraduates 400,000 graduates (Peoples Daily 2006). In
addition, the government also devotes on developing international exchange in
education in the past two decades. In the present time, there has been already 300,000
Chinese students studying overseas and 40,000 foreign students studying in China.

2.3 Industry Review
Among 1.3 billion people in China, 50 million people occupy the middle-class in
the society. The strong consumption ability of this group of people is also the
reason why worldwide companies want to launch their business in China.
Companies from fashion industry are no exception. According to China Fashion
Industry Review, there are three major influential cities for fashion in China
which are Beijing, Shanghai, and Guangzhou. From the newly open shops in
those cities, such as Armani, LV, Ferragamo, etc, it is not difficult to see that
luxury goods companies have already started to march into the fashion market in
China. The next few pages follow the overview of the fashion industry in China
and three of the luxury goods companies as the representation of the industry in
this essay. Those three companies are Bvlgari, Cartier, and Ferragamo.

2.3.1 Fashion Market
On December 2, 2004 the conference, Luxury 2004: the Lure of Asia, took place in
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Hong Kong which was also the first time in Asia. During the conference, all the world
luxury industry participants held positive attitude toward the business in the area of
Asia-Pacific. Among these participants, there were many worlwide fashion industry
leaders, such as the chairman of LVMH Moet Hennessy Louis Vuitton, the CEO of
Salvatore Ferragamo, and the executive vice president of Hermes International. All of
them express that they feel confident in the development of business in China in
particular due to its fast economic growth and vast population.

According to Xinhua News (2004), Louis Vuitton will open 13 stores in the Chinese
mainland by the end of year 2004, and all their products enjoy robust sales there. In
addition, what follows after the opening of a Louis Vuitton flagship store in Shanghai
will be another flagship store in Beijing. Moreover, Prada is targeting 30 stores in the
Chinese mainland by 2008 and Giorgio Armani who opened a store in Shanghai in
April announced direct store sales on the mainland up by 17 percent and plans 20 to
30 stores in the mainland by 2008 when the next Olympic Games will be held in
China (Xinhua News 2004). Even the CEO of Salvatore Ferragamo, Ferruccio
Ferragamo states that he feels content that he has already developed the business in
China since 1994 which generating good returns.

From the paragraph above, it is not difficult to see that Chinese luxury market has
come heated. To quote the group executive chairman of Dickson Concepts
(International) Limited, Dickson Poon, Of the companys 390 stores worldwide, 140
are in the Chinese mainland. He suggested that in order to avoid the heated luxury
market competition in big cities like Beijing or Shanghai, the luxury industry could
target the mid-sized cities in the Chinese mainland (Xinhua News 2004). A fashion
editor of Xinhua New even pointed that China is not just a promising land for the
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luxury industry, but has already become the fashion manufacturer for the world.
According to statistics, Asia accounts for 40 percent of the world market for luxury
brand sales, followed by America and Europe. Market watchers noted that with the
saturation of luxury brand sales in Japan, China offers potential as a long-term
equivalent of dominant market (Xinhua News 2004). According to Peoples Daily
(2006), in 2010 the expenditure of Chinese luxury goods will amount to 500 billion
Yuan, becoming the third largest luxury goods market precede only by America and
Japan.

To quote Peoples Daily (2006), using animals to represent the different social classes
we can outline a map of the relative distance between consumption of luxury goods.
In the article, there are three animals corresponding to three different social classes
which are King Lions, Foxes, and Rabbits. King Lions stand for the upper class
people who never mind how much money they spend. According to Peoples Daily
(2006), they are the creators of the luxury goods market; it is not money that they take
into consideration but the issue of choice.

As for the Foxes, most of them have advanced education and keep a high expenditure
of their life standards. In addition, people from this category have a good sense of
fashion trend. As stated by Peoples Daily (2006), these are the so-called newly rich
inlanders, many of who are born in mid or late 60s and 70s. In terns of the
distribution of job occupation, close to 50% are high-levels superintendents,
specialists and government officials (Peoples Daily 2006, June 6). When it comes to
the category, rabbits, there is another term for them, moonlight clan which means
they normally consume most of their salary each month. The reason to describe them
with moonlight clan is because the pronunciation of moonlight in Chinese is the
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same as that of squandering each month. On the word of Peoples Daily (2006), this
group of people with a monthly income between 1000 to 3000 Yuan are able to
spend millions. For example, he or she will buy a 1800 Yuans bag even his or her
salary is only 2000 Yuan. In their opinion it is the appearance that determines ones
value; diligently spending can also be productive and young people need to publicise
themselves better (Peoples Daily 2006 June 6).

From the paragraphs above, it is easy to see that the fashion market in China has
become a promising land for many luxury goods companies. As stated by Peoples
Daily (2006), the luxury goods market in China sees a great potential, attracting the
attention of a lot of luxury goods companies and the concern of authoritative media of
the world. One of the most important reasons is the huge population which can
generate massive consumption every year. To quote Peoples Daily (2006), the
Japanese have been considered the most-blind-faith consumer-group of the world, but
now a tendency indicates that the Chinese people are most likely to take the place.
The daily wealthier people bear a stronger ever desire of being identified. They need
famous brands, crazy in shipping and buying. Therefore, China becomes a potential
market for those luxury goods company.

2.3.2 Bvlgari (www.bvlgari.com)
History
Bvlgari was established in Italy by Greek, Sotirio Bulgari. The jewellery is
designed with Italian style, a forward-looking, creative spirit which never ceases
to draw inspiration from the timeless beauty of Greek and Roman art, while
giving it a distinctive contemporary touch. It defines pure luxury as which
obtained by means of daring combinations, precious materials, purity of design
22
and meticulous attention to detail. It considers its brand as the word for jewellery,
excellence and prestige no matter in Rome, Paris, London, New York, Los
Angeles, Tokyo, or Dubai.

The launch of its international expansion starts in the 1970s in New York. What
followed after the first overseas shop opening in New York were other stores
opening in Paris, Geneva, and Monte Carlo. Later in the 80s, Bvlgari initiates
Bvlgari watch which becomes a worldwide success story and is considered an
all-time classic. On July 17, 1995, Bvlgari is listed on the Milan Stock Exchange
as the Holding Company Bvlgari S.p.A. In the present time, it is also traded at
the IRS of London Stock Exchange. In 2001, it announces the launch of Bvlgari
Hotel and Resorts which is a joint venture with Mariott International with the
aim of opening a small and exclusive number of luxury hotels in most major
cities and resorts all over the world. The first hotel is established in Milan in
2004 and in later this year, October 2006, the resort in Bali will be opened.

Culture
As for the museum of Bvlgari, it is a project to preserve the firms heritage by
creating a museum collection, where by the most significant and grand pieces
create by the firm are gradually bought back. In the museum, the exhibition of
the firms momentous and precious works interprets Bvlgaris stylistic
development over time.

Expansion Business
Up to now, Bvlgari has more than 40 companies in 22 countries and has around
195 store in 38 countries located in the most exclusive shopping areas of the
23
world. Under the management of its chief executive, Francesco Trapani, Bvlgari
has been ranked as the top 94 brand in the world and become number three in
jewellery industry running after Cartier and Tiffany & Co. The secret of his
success of leading Bvlgari to rapid growth is because he has his own way to
conduct business which is that he does not follow trends. He says, It depends on
how your business grows. We see more potential on focusing on our own brand
(Business Weekly 10 October 2005). For example, comparing to other luxury
goods companies, the timing of Bvlgari entering into China market is quite late.
The company did not launch its business in China until China joins WTO in
2004. Up to 2006, it only has three stores in Beijing and Shanghai. As a result, it
is not hard to see Trapanis conservative way to conduct business. He says that
the number of the stores in China should not be an issue as long as each store can
generate handsome profits.

2.3.3 Cartier (www.cartier.com)
History
In 1847, Louis-Francois Cartier takes over the workshop in Paris of his master,
Adolphe Picard. Five years later, 1853, the shop was only opened for private
clients. Till 1899, the son of the founder, Alfred Cartier chooses to open another
jewellery shop on a very expensive street in centre of Paris which all the elegant
products that women want can be obtained from. For the international expansion,
it is taken place during the next generation of Alfred Cartier. His three sons
establish different shops in London, New York and Paris respectively which
brings an international dimension of Cartiers business.


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Culture
The design of Cartiers jewellery has always to be innovative, meanwhile, it has
to keep the classic element in it as well. Therefore, Cartier always proposes a
new trend of its design which makes Cartier avant-garde artist. Between 1914
and 1938, it is a period of intuition and innovation of Cartier. For example,
in1924 for the very first time in Cartiers history, there is a mention of a ring
with a very singular shape which is made up of three intertwined bands in
platinum, pink gold, and yellow gold.

For Cartier 1997 is like no other: the Maison is celebrating its 150
th
anniversary.
They hold a exhibition called Cartier 1900-1939 to retraces the first four decades
of the historical temples (Paris, London and New York) each under the
management of one of the Cartier brothers: Louis, Jacques and Pierre, grandsons
of the founder of the Maison. The exhibition was held at the New York
Metropolitan Art Museum and at the British Museum in London. In 2001, the
first issue of the magazine, Cartier Art, is published which aimed to perpetuate
three of Cartiers fundamental values: creativity, authenticity and originality.

Expansion Business
According to China International Business, recently it states that Cartier is the
top luxury brand in China. In 2005, Cartiers biggest single sale in China was a
$1.5 million diamond necklace which contributes to a 40 percent surge in sales
(Taipei Times 15 January 2006). Josephine Chien, the regional manger of Catier
in East China says that the number of Cartiers boutiques in China has already
increased from two in 2004 to eleven up till now. Furthermore, she also points
out the fact that by 2010, the number of boutiques will expand to almost 30
25
which will turn China as the second largest market of Cartier which is Japan at
the moment.

2.3.4 Salvatore Ferragamo (www.salfatoreferragamo.com)
History
Salvatore Ferragamo is one of the world most important and best known Made in
Italy luxury brands. Salvatore Ferragamo is the founder of this brand. He was
born in a small village in Italy, Bonito. He is passionate for shoes. Therefore, he
learned how to make shoes from a shoemaker in Naples when he was 11 years
old. At the age of 13, he opened his own shop in Bonito. He realized that he
wanted to make a humble and honourable trade and to create a form of high
craftsmanship aiming at no less than functional and aesthetic perfection. For
Salvatore to understand the working procedures quality limitation and the
modern machinerys usage of making shoes took place when he went to visit his
brother who worked in a large footwear company in Boston, USA at the age of
14. Later in the early Twenties, he moved to Santa Barbara, California where his
shoes became famous for its beauty and comfort among Hollywood actors and
actresses.

During the post-war period, Salvatore Ferragamos shoes were known as a
symbol of Italys reconstruction through design and production. Salvatore creates
a lot of memorable inventions, such as the metal-reinforeced stiletto heels which
became famous because of worn by Marilyn Monroe, gold sandals, and the
invisible sandals with uppers made from nylon thread which in 1947 were to win
Salvatore the prestigious Neiman Marcus Award, the Oscar of the fashion
world that was the first time awarded to a footwear designer. As stated before,
26
Salvatores passion is to create and produce the most beautiful shoes in the world.
Therefore, after he passed away in 1960, his family was inherited of carrying on
this idea and completing the plan that Salvatore had worked on in his final years
which is transforming the brand, Salvatore Ferragamo into a great fashion house.
After the effort of his Wife, Wanda Ferragamo Miletti and his six children,
Salvatore Ferragamo has now become a major luxury company.

Culture
Salvatore considers that fashion goes hand in hand together with culture.
Therefore, from the Salvatore Ferragamo Museum and the art galleries in its
major flagship stores, it is not difficult to see the companys cultural activities.
The Salvatore Ferragamo Museum opened in Florence in 1995. In the Meseum,
there are a collection of over ten thousand models of shoes created by Ferragamo
over 40 years. A small collection of period shoes of 18
th
and 19
th
century, a
collection of clothing from 1959 onwards, a collection of handbags from 1970,
and a huge document archive are also preserved in the Museum. From the
companys perspective, to found the museum is a formidable undertaking for a
fashion company. The reason is that it is not only a matter of historical
documentation and the brands prestige, but also a far-sighted and profound
awareness of values and qualities which are not ephemeral and which must thus
be conserved and recorded. As a result, the intent of the establishment of the
Museum is not just to record the history and collect the works of the company,
but to design, organize and promote exhibitions, seminars and other events
focusing on contemporary fashion culture which reflects the companys interest
in all current cultural issues that significantly influence lifestyles and dress
styles.
27
Expansion Business
Salvatore Ferragamo entered the market in China in 1992. Therefore, it has
already obtained brand recognition by now. To quote the companys chief
executive, Ferruccio Ferragamo, Thanks to an early start, we are in good
position- and we have to make sure we maintain it. At the top end of the market,
they appreciate especially things that are not made in China and we are 100
percent made in Italy. From the statement, it is easy to see that China market is a
promising land for the luxury goods industry. According to International Herald
Tribune (2005), the company celebrates its decade in Beijing where it has been
refurbished.

However, there exists counterfeit problem in the market. Ferragamo says that
most of the worlds fakes now come from China or other Asian countries where
labour costs are low (International Herald Tribune 28 September 2005). In China,
the cost to replicate the fake luxury goods is very low while the profit of that is
astronomical. Therefore, some people doubt if China is an opportunity for luxury
goods industry. Nevertheless, Ferragamo points out that Italians have feeling and
perception that other people are unable to acquire all of a sudden. In addition, he
also believes that from the time being, Chinese people will learn to understand
the real values of luxury goods. Consequently, the company still holds a positive
attitude towards the China market.





28
2.4 Summary
In this Chapter, it shows the political, economic, demographic, social
environments and fashion market in China. Since the late 1970s when it adopted
open-door policy, China has produced many business opportunities. Under the effect
of globalisation, China has started to get in touch with the world. With the great
population and the governments liberalising attitude, China makes itself a promising
and potential land for luxury goods of fashion industry. In addition, it is plain to know
that each luxury goods company has an old history and its own characteristic.
Consequently, the value each luxury companys brand is embedded in the companys
culture. With the liberalization of the China market, those luxury goods companies are
eager to develop their business in the promising land. However, due to Chinas
particular culture, those luxury goods companies face the difficulty of dealing with
counterfeit problem. As a result, brand recognition becomes significant regarding to
this issue. Thus, in the next chapter, the literature review will be mainly about brand
concept and consumer behaviour.











29
Chapter 3 REVIEW OF LITERATURE
3.1 Introduction
According to Lins paper, the crystallisation of brand image in a meaningful form
by Gardner and Levy (1955) contributed to the onward understanding of more
enduring motivations for purchase in a sense that the sets of feelings and attitudes that
consumers had about brands, their image of brands, were crucial to purchase choice
(Dobni and Zinkhan, 1990). Therefore, it is clear that brands differentiate products
and represent a promise of value (Kotler and Gertner, 2002). Consequently, in order to
examine the significance level of brand image on consumer behaviour of purchasing
luxury goods of fashion market, it is significant and essential to study brand concept
and consumer behaviour. Moreover, in order to narrow down the research scope of
consumer behaviour of luxury goods of fashion industry in China, the review of
market segmentation will also be introduced. As a result, the next few pages will be
focused on the literature review of luxury goods, brand concept, consumer behaviour
and market segmentation.

3.2 Luxury Goods
3.2.1 Definition of Luxury Goods
The online encyclopaedia, Wikipedia, defines luxury goods as a good at the highest
end of the market in terms of quality and price. Moreover, classic luxury good include
haute courtue items, such as clothing, accessories, and luggage and many markets
have luxury segment. Therefore, income can be an indicator to measure the demand of
luxury goods. To quote Dubois and Duquesne (1993), luxury goods are expensive in
relative and absolute terms, moreover, they are identified as such by the market and
even more so when one considers them to be trivial products without any clear
functional advantage over their non-luxury counterparts. From the quotation, it is not
30
difficult to find out that when using income as an indicator to measure the demand of
luxury goods. Most of the people consuming luxury goods are from high income
groups. As a result, many producers of luxury goods tend to believe their clientele
comes from primarily upper income classes (Dubois and Duquesne, 1993).

Those who have privileged economic status are willing to pay exceptionally high
prices in order to show off how wealthy they are. In Dubois and Duquesnes research,
this group of people is consistent with conspicuous consumption model. Through the
product quality, aesthetic design, excellence of service of luxury goods (Dubois and
Duquesne, 1993), they express their ability to pay premium price. To them, luxury
goods companies brands stand for a standard of excellence (Dubois and Duquesne,
1993).

According to Dubois and Duquesne, another group of people who purchase luxury
goods is for self-identity. Dubois and Duquesne (1993) suppose that they are
consistent with the hedonic consumption and extended self-personality models. For
this group of people, to procure luxury goods is to state their own values. Dubois and
Duquesne (1993) state that brand names represent certain symbols for them. They
purchase certain brands luxury goods to show their unique tastes and values.
Therefore, in Dubois and Duquesnes opinions, if there is a marketing strategy in
positioning the brand at the intersection of both of the groups, it will be an interesting
and challenging strategy due to the reason that the brand will draw its fascination for
one group from the legitimacy given by the other.

In Bentley and Malefyts paper, they point out that there is a group of people who buy
luxury goods results from fulfilling the emotional needs. They see luxury as an
31
indulgence of the senses. Under this context, they suppose that luxury is more about
personal indulgence, immediacy of experience and fulfilling inward as well as
outward needs. They (2002) state that consumers no longer buy luxury brands to
symbolically ally themselves with a group; rather, they use luxury brands to make
statements about how they are different from a group. In other words, those people
who purchase luxury goods to satisfy their own emotional needs are trying to attach
their own values to the brands meanings.

Bentley and Malefyts idea is in accordance with the professor of the University
of Florida, James Twitchell. In professor Twitchells opinion, luxury is a sensation. He
considers that luxury has nothing to do with intrinsic quality of a product but the
narrative attached to it (Colyer 2005). As a result, this kind of people purchasing
luxury goods is to express their personal own values via meanings embodied in
brands.

To sum up, luxury goods can be defined as premium goods with high product quality,
aesthetic design, and excellence service purchased by people from upper income class
to show off their social status (Dubois and Duquesne, 1993). Furthermore, it can be
defined as a sensation (Twitchell) purchased by people for self-identity (Dubois and
Duquesne, 1993), personal indulgence, immediacy experience and fulfilling inward as
well as outward needs via the luxury goods brands meanings (Bentley and Malefyt,
2002). That is, people who purchase luxury goods can be grouped into two categories.
One is using luxury goods to reveal their wealth and social status. The other group is
buying luxury goods to identify themselves. Therefore, in the next section, the
symbols and meanings of luxury goods will be examined from those two perspectives.

32
3.2.2 Symbols of Luxury Goods
Show off Wealthy/ Express Social Status
Dubois and Duquesne (1993) say that the affluent classes of a society express their
economic superiority over the rest by the purchase, and especially the possession of
luxury goods which serve as status symbols. Therefore, wealthy people purchase
luxury goods not only to show off how wealthy they are, but also to express their
social status. According to Dubois and Duquesne, two consumption patterns therefore
can be known: snobbism and bandwagon..

People with snobbish behaviour incline to purchase less of the product if others buy it
as well (Dubois and Duquesne, 1993). That is to say, people differentiate themselves
from others by purchasing certain products. As a result, people from wealthy
background tend to purchase luxury goods resulting from the snobbish attitude.

As for people with bandwagon behaviour, they lean to purchase the product because
others buy it as well (Dubois and Duquesne, 1993). The majority of this group is from
the middle class. According to Bouxirot and Shin, they buy accessible luxury goods
manufactured in series. They also state that the consumption of these categories of
luxury goods is a way to catch up with the upper class (Allrs, 2004).

Self-Identity
Bouxirot and Shin (2005) state that through the possession of luxury goods we can
express our social values, sexuality, age, hobbies, and a myriad of other aspects of
identity. As stated in the previous paragraphs about the definition of luxury goods, it is
easy to know that some people purchase luxury goods resulting from either fulfilling
their emotional needs or stating their own values through the symbols carried by
33
luxury brands.

3.3 Brand Concept
3.3.1 Definition of Brand
American Marketing Association defines a brand as a name, term, sign, symbol, or
design, or a combination of them intended to identify the goods and services of one
seller or group of sellers and to differentiate them from those of competition. In other
words, a brand contains various elements, such as a name, logo, symbol, package
design, or other attribute (Keller p.2, 1998) which differentiate a product from another.
In order to let consumers identify a product, a company normally creates a brand
based on different elements. For example, Kleenex is a brand name of tissue paper.
Since 1926 it has become a generic trademark in American English. Nowadays, the
majority of people have used the brand, Kleenex to refer to tissue. Another example is
that when he or she says Apple, people think of computers. Therefore, it is easy to see
that using the brand elements to create and build a brand is able to help consumers
identify products. This is also Levys view that people use symbols to distinguish
themselves from others (Levy, 1959).This definition can be concluded by Interbrands
John Murphys words, Creating a successful brand entails blending all these various
elements together in a unique way- the product or service has to be of high quality and
appropriate to consumer needs, the brand name must be appealing and in tune with
the consumers perceptions of the product, the packaging, promotion, pricing and all
other elements must similarly meet the tests of appropriateness, appeal, and
differentiation (Keller p.5, 1998).

From the figure below, de Chernatony points out that the functional features of the
product which are in the inner circle normally occupies 80% of the cost and brings
34
only 20% of the impact. On the contrary, the two outer circles which compose brand
name, image, perception and services only accounts for 20% of the cost but generate
80% of the added values and impact of a product (de Chenatony and McDonald p.8,
2003).
Figure 4 Different kinds of logic & thinking leads to a firms foundation

Source: de Chernatony & McDonald p.9, 2003
Moreover, he considers the figure as depicting not only a product, but also a
relationship with the customer. In his opinion, this relationship is personified either by
the organisations name, or by the brands name on the product itself. Consequently, it
is not difficult to find out the difference between a product and a brand. The
difference lies in the underpinning value of a brand. A brand is more than just the sum
of its component parts and it embodies additional attributes (de Chernatony and
McDonald p.14, 2003). As a result, it is the added value (de Chernatony and
McDonald 2003) that arouses consumers perception of a brand. This idea is in
accordance with Keller. From Kellers point of view, brands take on special meaning
to consumers. That is to say, it is the embedded meaning of a brand that is perceived
by consumers. Therefore, the underpinning value of a brand has a profound influence
35
on consumers perception.

3.3.2 Why is brand important?
From the paragraphs above, it is easy to see why a brand is important. The reason is
because consumers perception of a product can be affected greatly by the added value
of a brand. According to Keller (1998), to consumers, brands identify the source or
maker of a product and allow consumers to assign responsibility as to which
particular manufacturer or distributor should be held accountable. That is to say,
brands provide a shorthand device or means of simplification for their product
decisions (Keller p.7, 1998). He concludes seven points which is the roles that brands
play from consumers perspective which are identification of source of product,
assignment of responsibility to product maker, risk reducer, search cost reducer,
promise, bond or pact with maker of product, symbolic device, and signal of quality
(Keller p.7, 1998). Meanwhile, the same points can be found out from the quotation of
de Chernatony and Riley (1998), Brands star life with distinctive names, possibly
endorsed by the corporate reputation or sign of ownership. The brands functional
capabilities become recognised and, to build a relationship with consumers, the
service component becomes important. Legal protection is used to deter competitive
infringement, but symbolic feature gives the brand a personality, making it more
difficult to copy. As consumer confidence increases, through skilful presentation as a
risk reducer, the brand becomes associated with unique added values and becomes
effective shorthand notation representing a few high quality pieces of information
facilitating rapid consumer choice. At the nucleus of the brand is strategic direction
which influences how these elements are bonded together. To sum up, the value
and meaning of a brand is able to effect on the change of consumers perception of a
product. Thus, brand is important because the identical product may be evaluated
36
differently by consumers depending on the brand identification or attribution it is
given (Keller p.9, 1998).

3.3.3 Brand Equity
As a result, if a brand is a good one then consumers will purchase it and it becomes a
valuable asset (Murphy p.3, 1998). However, how do consumers respond to different
brands? That is, how do brands differentiate themselves from each other? The answer
to the question is brand equity. From de Chernatonys point of view (2003), a much
stronger emphasis was placed on brands purely as differentiating device between
similar offerings at the turn of the century. That is to say, brand can be used as a
differentiate device and what makes consumers respond to different brands is the
effect of brand equity. Brand Equity Board defines that brands with equity can
provide an ownable, trustworthy, relevant, distinctive promise to consumers. Keller
(1998) states that brand equity relates to the fact that different outcomes result from
the marketing of a product or service because of its brand name or some other brand
element, as compared to outcomes if that same product or service did not have that
brand identification. That is to say, through marketing activities, brand equity
becomes the underpinning value of brand.

There is an example which can explain how people recognise and respond to a brand.
In de Chernatonys book, he mentioned a test between Diet Pepsi and Diet Coke.
When the two brands are concealed, the test shows that 51% of the consumers prefer
Pepsi while 44% of them prefer Coke and 5% of them can not tell the difference. For
comparison, another test is conducted without concealing the brands. Without
covering the brands, it shows that only 23% of the consumer prefers Pepsi and the
percentage of the consumer who prefers Coke increases to 65% and 12% of them
37
thinks that two brands of cola are equal. As a result, de Chernatony concludes with a
question, How can this be explained if not in terms of the added values that are
aroused in the minds of consumers when they see the familiar Coke logo and pack?
Therefore, it is easy to see that how important brand equity is to the brand. People
perceive and respond to a brand because of brand equity the underpinning value of
the brand. From the test mentioned above, it is clear to know that how powerful the
brand equity is and also explains why nowadays more and more companies are
concerned about creating brand equity. From the perspective of the customer-based
brand equity framework, brand knowledge is the key to creating brand equity (Keller
p.46, 1998). This perspective presented by Keller (1998) is that establishing brand
awareness and a positive brand image in consumer memory, in terms of strong,
favourable, and unique brand associations, produces the knowledge structures that can
affect consumer response and produce different types of customer-based brand equity.
To quote de Chernatony and McDonald (2003), consumers brand knowledge results
from their level of awareness and the images they have about the brand, thus these
two components are at the heart of any brand attributes. Consequently, when it comes
to creating brand equity, it is important to understand brand knowledge which entails
two components: brand awareness and brand image. However, the purpose of this
essay will be on the impact of brand image on consumer behaviour, thus the focus
will be on discussing brand image.

3.3.4 Brand Awareness
Brand awareness reflects the salience of a brand and facilitates consumers abilities to
identify the brand with a specific product category (de Chernatony and McDonald
p.444, 2003). That is to say, brand awareness shows how much people can recognise
and identify a brand. Keller (1998) claims that brand awareness is created by
38
increasing the familiarity of the brand through repeated exposure (for brand
recognition) and strong associations with the appropriate product category or other
relevant purchase or consumption cues (for brand recall). To put the statement in other
words, brand awareness consists of both brand recognition, which is the ability of
consumers to confirm that they have previously been exposed to a brand, and brand
recall, which reflects the ability of consumers to name the brand when given the
product category, category need or some other similar cue (Dolak, 2003) Aaker (1996)
also states four ways to examine brand awareness which are brand recognition, brand
recall, brand dominance and brand knowledge. From Aakers point of view, brand
recognition refers to the consumers ability to recall previous exposure or experience
with the brand, brand recall refers to the consumers ability to retrieve the brand from
memory when given the product category as a cue, brand dominance identifies the
most important brand in a specific product category, and brand knowledge evaluates
the consumers interpretation of the values linked to a brand (de Chernatony and
McDonald p.444, 2003).

3.3.5 Brand Image
American Marketing Association defines brand image as the perception of a brand in
the minds of people. That is to say, brand image reflects consumers perceptions of a
brands characteristics and can be gauged by the associations they hold in their
memory (de Chernatony and McDonald p.444, 2003). Keller (1998) also supposes a
positive brand image is created by marketing programmes that link strong, favourable,
and unique associations to the brand in memory. Dobni and Zinkhan (1990) point out
that the conception of Gardner and Levy (1955) is that products has a social and
psychological nature as well as a physical one, and that the sets of feelings, ideas, and
attitudes that consumers had about brands, their image of brands were crucial to
39
purchase choice. Namely, what affects consumers purchasing behaviour is not just in
need to use the product, but also try to express their emotions from the brand. James
Duesenberry (1949) also claims that from his observation, the act of consumption as
symbolic behaviour was probably more important to the individual than the functional
benefits of the product. Dobni and Zinkhan (1990) also points out that this argument
has been confirmed that brand image considerations can guide purchase choice
(Dolich, 1969), that products are often purchased or avoided not for their functional
qualities, but because of how, as symbols, they impact the buyer-users status and
self-esteem (Levy, 1959), and that a product is more likely to be used and enjoyed if
there is congruity between its image and the actual or ideal self image of the user
(Sirgy, 1985).

However, up to the present, there is still no single authoritative definition of brand
image. The reason is that too many definitions of brand image are defined from
various perspectives. In Dobni and Zinkhans research, they mentioned that the
proliferation of brand image research has been accompanied by some drawbacks.
Bullmore (1984) suggested that over time and through overuse, or misuse, the
meaning of brand image has evaporated and has lost much of its richness and value.
Consequently, Levy (1958) indicated that such indiscriminate application as a
debasement of the concept. Consequently, Dobni and Zinkhan followed Gardner and
Levys article and revealed that considerable variation exists among authors on five
separate, but related, aspects of brand image which include (1) the names which
have been ascribed to this phenomenon, (2) the formal definitions that have been
offered, (3)the components of brand image, (4)the instruments that have been used to
measure it, and (5)perspectives on the origin, creation, formulation and manipulability
of brand image (Dobni and Zinkhan, 1990).
40
First of all, there are some scholars illustrating the intangible aspect of consumer
product evaluation, such as symbolic utility (Pohlman and Mudd 1973), the
symbols by which we buy (Levy 1958) and perceived product symbolism
(Sommers 1963) which reflects on the symbolic nature of brands and products. To
quote Levy (1958), A symbol has been defined as a thing which stands for or
expresses something else; in casual usage it has been said to be a general term for all
instances where an object, action, word, picture or complex behaviour is understood
to mean not only itself but also some other ideas or feelings. Thus, it is known that
symbols represent various roles, such as personal attributes, goals, social strivings and
patterns, and serve as communication devices between individuals and their
significant referents (Dobni and Zinkhan, 1990).

Besides, there are other scholars put the emphasis on human qualities and, accordingly,
have coined such terms as brand personality (Hendon and Williams 1985), brand
character (Hendon and Williams 1985), personality image (Sirgy 1985), and the
social and psychological nature of products (Gardner and Levy 1955). According to
Dobni and Zinkhan, the personification of a brand and its image with human
characteristics has been approached from two distinct perspectives. One is about
suggesting the brand has a distinct personality of its own and the other focuses on
associating the consumers personality or self concept with the image of the product
or brand (Dobni and Zinkhan, 1990). As a result, Dobni and Zinkhan states that many
consumer theorists are of the view that purchase behaviour is determined by the
interaction of the buyers self concept with the products personality, and in this
context the definitional relationship is also especially apt.

Next, there are many formal definitions collected by Dobni and Zinkhan according to
41
different categories. The general definition of brand image and the definition of which
the emphasis were on symbolism as well as on personification are already explained
in the previous paragraphs. Thus, this paragraph will be of the emphasis on meanings
and messages as well as on cognitive or psychological elements. Swartz (1983)
proposed that to the extent that functional differences between brands of the same
product were minimal, message differentiation could be used as a viable product
differentiation strategy. That is, brand image is the certain underlying meaning
attached to the product in order to differentiate itself from other brands. As for the
cognitive or psychological elements, it concentrates on mental effects by naming any
one of ideas, feelings, attitudes, mental constructs, understanding or
expectations as the cardinal determinant of brand image (Dobni and Zinkhan,
1990).

Third, Levy (1978) talks about brand image as being composed of a mixture of the
physical reality of the product and the beliefs, attitudes and feelings that have come to
be attached to it. Reynolds and Gutman (1984) discuss the components of brand
image in terms of a means-end chain, identifying an implication network which
reflects memory linkages as the fundamental component of brand image. Therefore,
from different views to discuss the component of brand image can develop different
marketing activities to cultivate brand image.

According to Dobni and Zinkhan, there has been considerable diversity in the
perspective from which brand image has been assessed. For example, Pohlman and
Mudd (1973) stated that some researchers have measured the image of individual
dimensions of a brand while Dolich said that some researchers have arrived at a single
measure for brand image overall. In Dobni and Zinkhans paper, it also mentions that
42
the brands image has been measured in isolation, relative to its competition (Boivin
1986), in relation to consumer ideal points and advertisement images (Keon 1984),
and in relation to each of a persons actual self-image (Sirgy 1985). Also, it points out
that it has been measured as a function of brand usage and brand conspicuousness
(Bird, Channon and Ehrenberg, 1970), for clarity and sharpness (Pohlman and Mudd,
1973), for stability over time and for discriminating attributes (Green and Devita,
1977), and has been assessed and compared from the perspective of the retailer versus
that of the consumer (McClure and Ryans, 1968). Therefore, when it comes to the
measurement of brand image, it is difficult to conclude a standard instrument to
measure it due to the plethora of definitions.

Finally, there is the debate about whether an image is something that is conveyed or
something that is received (Dobni and Zinkhan, 1990). Bullmore (1984) disagrees that
image belongs to brand. He suggests that peoples mind both contains and creates the
image, and that it is mediated or stimulated by the consumers experiences. On the
other hand, there are some other scholars suggesting that an image is projected to the
consumer by marketer and that it can be selected, created, implemented, cultivated,
and managed by the marketer over time (Dobni and Zinkhan, 1990). As a result,
Dobni and Zinkhan conclude that an amalgam of the above perspectives supports the
view that product image is a function of the interaction between perceiver and product
stimulus.

To sum up, Brand image is (Dobni and Zinkhan, 1990):
1. the concept of a brand that is held by the consumer.
2. largely a subjective and perceptual phenomenon that is formed through consumer
interpretation, whether reasoned or emotional.
43
3. not inherent in the technical, functional or physical concerns of the product.
Rather, it is affected and molded by marketing activities, by context variables, and
by the characteristics of the perceiver.
4. where brand is concerned, the perception of reality is more important than the
reality itself.

3.4 Consumer Behaviour
3.4.1 Why is Consumer Behaviour important?
If marketers have a clear idea of what consumers need and how consumers think, they
can design an effective marketing strategy to affect consumers behaviour. Therefore,
understanding customers is the cornerstone upon which the marketing concept is built
(Jobber p.66, 2004). For example, in order to shake up entrenched market shares and
tap into consumers often unexpressed needs, appliance giant Whirlpool Corporation
hired an anthropologist to observed how people use their appliances at home (Kotler
p.183, 2003). The result shows that in busy families, women are not the only one
doing the laundry and therefore Whirlpool develops colour-coded washer and dryer
controls which makes it easier for kids and men to pitch in (Kotler p.183, 2003). On
the contrary, when IKEA entered in American market in 1985, its sale performance
was not as good as expected. The reason is that the company neglects U.S. customers
need. For example, IKEAs kitchen cupboards were too narrow for the large dinner
plates typically used in the U.S., and IKEAs glasses were to small for U.S. customers
who typically add ice to their drink and hence require large glasses (Mellahi, Fynas,
and Finlay p.5, 2005). Hence, from the two examples above, it is easy to see that how
important it is to understand and know consumers needs. Consequently, an in-depth
knowledge of customers is a prerequisite of successful marketing- it influences the
choice of target market and the nature of the marketing mix developed to serve it
44
(Jobber p.66, 2004).

In addition, Blackwell, Miniard and Engel (2001) also points out that knowing why
and how people consume products helps marketers understand how to improve
existing products, what types of products are needed in the marketplace, or how to
attract consumers to buy their products. In essence, consumer behaviour analysis
helps firms know how to please their consumers and directly impact company
revenues (Blackwell, Miniard and Engel p.10, 2001). Thus, consumer behaviour
becomes a significant and indispensable issue.

3.4.2 Definition of Consumer Behaviour
Consumer behaviour is defined as activities people undertake when obtaining,
consuming, and disposing of products and service (Blackwell, Miniard and Engel p.6,
2001). That is to say, consumer behaviour is the study of consumer behaviour
including and understanding of consumers thoughts, feelings, and actions and an
understanding of relevant marketing strategies (Arnould, Price and Zinkhan p.23,
2004). According to Blackwell, Miniard and Engels definition, it mentions three
activities which are obtaining, consuming and disposing. Obtaining refers to the
activities leading up to and including the purchase or receipt of a product, such as how
you decide what to buy, where to buy and how to pay and transport the product
(Blackwell, Miniard, and Engel p.6-7, 2001). They (2001) explain consuming as how,
where, when and under what circumstances consumers use products and interpret
disposing as how consumers get rid of products and packaging. Therefore, it is easy to
know that Blackwell, Miniard and Engel conclude that obtaining, consuming and
disposing compose consumer behaviour.

45
In Arnould, Price and Zinkhans point of view, consumer behaviour is individuals or
groups acquiring, using, and disposing of products, services, ideas, or experiences.
Acquiring includes a range of activities such as receiving, finding, inheriting,
producing, and of course, purchasing while consuming includes collecting, nurturing,
cleaning, preparing, evaluating, serving, displaying, storing, wearing, sharing, and
devouring (Arnould, Price, and Zinkhan p.9, 2004). As for disposing, it contains
giving, throwing away, recycling, and depleting (Arnould, Price, and Zinkhan p.9,
2004). As a result, they (2001) state that consumer behaviour comprise either
individual or group acquiring, consuming and disposing products, services, ideas and
experiences.

3.4.3 Consumer Decision Process
Five Roles
Both of Jobber (2004) and Kotler (2003) claim that in the buying decision process,
people play different roles in decision-making process. It can be divided into five
roles which are initiator, influencer, decider, buyer and user as follows (Jobber p.67,
2004; Kotler p.200, 2003):
1. Initiator: The person who first suggests the idea of buying the product or
service; information may be gathered by this person to help the
decision.
2. Influencer: The person who attempts to persuade others in the group
concerning the outcome of the decision and typically gather
information and attempt to impose their choice criteria on the
decision.
3. Decider: The individual with the power and/or financial authority to make
the ultimate choice regarding whether to buy, what to buy, how to
buy, or where to buy.
4. Buyer: The person who conducts the transaction and makes the actual
purchase.
5. User: The person who consumes or uses the product or service.
46
Therefore, from the interpretation of five roles, it is not difficult to find out that
ultimate user may not be the most influential person during the purchasing
decision-making process. Consequently, knowing the target consumers roles is
helpful to design the market segments.

However, how do people make a decision while buying a product? The Consumer
Decision Process (CDP) model, a simplified version of which is shown in figure
below, represents a roadmap of consumers minds that marketers and managers can
use to help guide product mix, communication, and sales strategies (Blackwell,
Miniard, and Engel p.71, 2001).
Figure 5 How Consumers Make Decisions for Goods and Services

Sources: Engel, et. Al. p.71, 2001
In the very beginning, this model was recognised as EKB model which was developed
by Professors Engel, Kollat, and Blackwell. Later on, this model was renamed as
EBM model to acknowledge the work of Professor Miniard. They define that the
seven stages of the model will pass through consumers mind while making a buying
47
decision. The seven stages are need/problem recognition, search for information,
pr-purchase evaluation, purchase, consumption, post-consumption evaluation, and
divestment. In their opinion, peoples consumption results from satisfying their needs
or solving their problems. Therefore, the CDP model shows how people solve the
everyday problems in life that causes them to buy and use products of all kinds
(Blackwell, Miniard, and Engel p.71, 2001).

Stage 1&2 Need/Problem Recognition and Search for Information
According to Blackwell, Miniard, and Engel, need recognition occurs when an
individual senses a difference between what he or she perceives to be the ideal versus
the actual state of affairs. Namely, consumption takes place when people think they
need to buy a product which is worth of solving a problem. After recognising the
problem, consumers will want search for more information. From Blackwell, Miniard
and Engels point of view, the search may be internal, retrieving knowledge from
memory or perhaps genetic tendencies, or it may be external, collecting information
from peers, family, and the marketplace. Kotler (2003) defines the search as two
levels which are heightened attention and active information search. Heightened
attention is that a person simply becomes more receptive to information about a
product while active information search is looking for reading material, phoning
friends, and visiting stores to learn about the product (Kotler p.204, 2003).

Kotler (2003) considers that the consumer information sources come from four parts:
personal sources, such as family and friends, commercial sources, such as advertising
and packaging, public sources, such as mass media and consumer-rating organisations,
and experiential sources, such as handling and examining the product while Blackwell,
Miniard, and Engel (2001) categorise sources as marketer-dominated, such as using
48
advertising and salespersons or nonmarketer-dominated, such as family and media. In
addition, Jobber (2004) points out that the objective of information search is to build
up the awareness set- that is, the array of brands that may provide a solution to the
problem. It explains the reason that a company must strategise to get its brand into the
prospects awareness set, consideration set, and choice set as well as why the
company must also identify the other brands in the consumers choice set so that it
can plan competitive appeals (Kotler p.205, 2003).

Stage 3 Pre-Purchase Evaluation of Alternatives
The next stage, evaluation of alternatives is to reduce the awareness set to a smaller
set of brands for serious consideration. Consumers compare what they know about
different products and brands with what they consider most important and begin to
narrow the field of alternatives before they finally resolve to buy one of them
(Blackwell, Miniard, and Engel p.76, 2001). According to Blackwell, Miniard, and
Engel, consumers use new or pre-existing evaluations stored in memory to select
products, services, brands, and stores that will most likely result in their satisfaction
with the purchase and consumption. The evaluation alternatives can be divided into
salient attributes and determinant attribute. Salient attributes are considered as
potentially the most important, such as price, reliability these factors believed to vary
little between similar brands while determinant attributes, such as personality, styles
usually determine which brand or store consumers choose, especially when they
consider the salient attributes to be equivalent (Blackwell, Miniard, and Engel p.77,
2001). This idea is in accordance with Fishbein and Ajzen model. According to Jobber,
this model suggests that an attitude towards a brand is based upon a set of beliefs
about the brands attributes (e.g. value for money, durability and these are the
perceived consequences resulting from buying the brand). In addition, those attributes
49
that are weighted highly will be that persons choice criteria and have a large
influence in the formation of attitude which is the degree to which someone likes or
dislikes the brand overall (Jobber p.71, 2004).

Stage 4&5 Purchase and Consumption
After making a decision on whether to buy or not and what to buy, consumers will
face two phases while conducting the purchase. First, consumer will choose one
retailer over another retailer (or some other form of retailing such as catalogs,
electronic sales with the aid of a TV or PC, or direct sales.) and the second phase
involves in-store choices, influenced by salespersons, product displays, electronic
media, and point-of purchase (POP) advertising (Blackwell, Miniard,and Engel p.79,
2001). Therefore, while conducting purchase, consumers may change their buying
decision depending on the two phases.

Stage 6&7 Post-Consumption Evaluation and Divestment
After obtaining the product and consuming it, the next stage comes, post-consumption
evaluation. In this stage, the satisfaction of the consumption will result in the storing
evaluation in memory and refer to them in future decisions. On the contrary, when
experiences and performance fall short of expectations, dissatisfaction occurs
(Blackwell, Miniard, and Engel p.80, 2001). Another situation which will happen in
this stage is that people feel uncertain about if they make a right choice on purchasing
the product. Blackwell, Miniard, and Engel (2001) define the situation as
post-purchase regret or cognitive dissonance. They also point out that the higher the
price, the higher the level of cognitive dissonance. As for the last stage, recycling and
environmental concerns play a role in consumers divestment methods (Blackwell,
Miniard, and Engel p.82, 2001).
50
3.4.4 Influences on Consumer Behaviour
From the figure (CDP model) below, it is clear to see that consumer decision process
is affected mainly by two factors, individual differences and environmental influences.
Five major elements are included in individual differences which are demographics,
psychographics, values, and personality; consumer resources; motivation; knowledge;
and attitudes while environmental influences compose culture, social class family
personal influence and situation elements. (Blackwell, Miniard, Engel p.84, 2001)

Figure 6 Consumer Decision Process (CDP) Model
.
Source: Engel, et. Al. p.85, 2001

Individual Differences
To quote Canadian demographer, Demographics explain 2/3rds of everything. They
help predict which products will be in demand and what school enrolments will be in
the future. They also help forecast which drugs will be in fashion ten years down the
51
road and which types of crime can be expected to increase. Therefore, demographic
analysis can be used in two ways as market segment descriptors and in trend analysis.

Psychographics is an operational technique to measure lifestyles which is a summary
construct defined as patterns in which people live and spend time and money,
reflecting a persons activities, interests, and opinions (AIOs) (Blackwell, Miniard,
and Engel p.219, 2001). Furthermore, it used to design a thorough understanding of
market segments.

From Blackwell, Miniard, and Engels point of view, values represent consumer
beliefs about life and acceptable behaviour. They also state that values transcend
situations or events and are more enduring because they are more central in the
personality structure. As for personality, it is defined as consistent responses to
environmental stimuli which is an individuals unique psychological makeup that
consistently influences how the person responds to his or her environment (Blackwell,
Miniard, and Engel p.214, 2001). Therefore, values explain how people choose to
believe and behave while personality is the inner emotion responding to the
environment.

Each person brings three primary resources into every decision-making situation: (1)
time, (2) money, and (3) information reception and processing capabilities (attention)
(Blackwell, Miniard, and Engel p.84, 2001). In other words, purchasing decision will
be influenced by consumers budget. When it comes to motivation, Engel (2001)
defines it as the drive to satisfy both physiological and psychological needs through
product purchase and consumption. Maslows hierarchy of need (see figure 6) can be
used to examine motives. From the figure, it is easy to see that Maslows hierarchy is
52
a useful concept because it reminds us that people attach different priorities to their
needs (Blackwell, Miniard, and Engel p.247, 2001).

According to Maslows need hierarchy, the needs are specified from lower-level needs
to upper-level needs. There are five needs which are summarised as follows (Arnould,
Price and Zinkhan p.270, 2004):
1. Physiological: the biological needs for food, water, and sleep
2. Safety and security: shelter, protection, and security
3. Social: affection, friendship, and acceptance
4. Esteem: prestige, success, accomplishment, and self-esteem
5. Self-Actualisation: self-fulfillment and enriching experiences
Figure 7 Maslows Hierarchy of Needs

Source: Engel, et al. p.246, 2001

As for knowledge, it is defined as the subset of the total amount of information stored
in memory that is relevant to product purchase and consumption (Blackwell, Miniard,
and Engel p.259, 2001). Thus, consumer knowledge is a pivotal role during
53
purchasing decision process. Engel (2001) says that behaviour is strongly influenced
by attitudes toward a given brand or product. That is to say, due to peoples preference
toward a certain brand or product, the purchasing decision will be affected.

Environmental Influences
In Engles opinion, culture refers to the values, ideas, artefacts, and other meaningful
symbols that help individuals communicate, interpret, and evaluate as members of
society. Namely, cultural norms are the rules that govern behaviour, and are based
upon value: beliefs about what attitudes and behaviour are desirable (Jobber p.87,
2004).

Social class means that people from similar socioeconomic background share similar
values and behaviours. Social class is helpful information while segmenting market.
According to Blackwell, Miniard, and Engel, analysis of market segments by
socioeconomic profile helps in the development of a comprehensive marketing
programme to match the preferences and behaviour of the market target.

As for family factor, there are two reasons which make them important during
consumer decision process. First, many products are purchased by a family unit and
secondly individuals buying decisions may be heavily influenced by other family
members (Blackwell, Miniard, and Engel p.560, 2001). As a result, the influence of
family becomes significant during the process.

Consumers often respond to perceived pressure to conform to the norms and
expectations provided by others- seeking and taking their counsel on buying choices,
observing what others are doing as information about consumption choices, and
54
comparing their decisions to those with others (Blackwell, Miniard, and Engel p.85,
2001). Therefore, consumers behaviours are influenced by whom they are correlated
which is defined as personal influence by Engel (2001) and he names these group of
people reference group who influence a persons attitude or behaviour.

The last factor is situation. Situation influence consumer behaviour is because it is
changing quickly and unpredictable. For example, situation changes when job layoff
takes place. Therefore, Engel (2001) concludes that behaviours change when
situations change.

3.5 Market Segmentation
From the previous paragraphs, it is plain that it is different influences that contribute
to different consumer behaviours. Therefore, it is impossible to develop one standard
product to suit each ones taste. Peter Doyle from value-based marketing once said,
Finding the most revealing way to segment a market is more an art than a science.
Any useful segmentation scheme will be based around the needs of customers and
should be effective in revealing new business opportunities. As a result, the
following pages will be focus on how to conduct market segmentation based on the
influences on consumer behaviour.

3.5.1 Geographic segmentation
According to Jobber, geographic segmentation method is useful where there are
geographic locational differences in consumption patterns and preferences. It calls for
dividing the market into different geographical units such as nations, states, regions,
counties, cities, or neighbourhoods (Kotler p.287, 2003). In this essay, the geographic
segmentation locates in Asia-Pacific region, China. In China, the geographic
55
segmentation can be further divided into urban and rural.

3.5.2 Demographic Segmentation
Demographic segmentation contributes to distinguishing consumer groups. It is
divided into groups on the basis of variables such as age, family size, family life cycle,
gender, income, occupation, education, religion, race, generation, nationality, and
social class (Kotler p.287, 2003). Therefore, in this essay, the demographic
segmentation in China will be focus on age, income, occupation, education, and social
class regarding to consumption of luxury goods of the fashion market.

3.5.3 Psychographic Segmentation
Jobber (2004) states that psychographic segmentation involves grouping people
according to their lifestyle and personality characteristics. He also says that using
lifestyle to group people according to their way of living, as reflected in their
activities, interests and opinions. In addition, he points out that buyer and brand
personalities are likely to match where brand choice is a direct manifestation of
personal values but for most fast-moving consumer goods (e.g. detergents, tea) , the
reality is that people buy a repertoire of brands. Therefore, personality segmentation is
helpful when people purchase products to reflect their inner values through the brands
meaning.

3.6 Summary
Through the literature review, how brand image and consumer behaviour interacts and
how consumer behaviour influences attribute to market segmentation become obvious
and comprehensible. As a result, in the next chapter, these topics will be combined
and examined under the context of luxury goods of the fashion market in China.
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Chapter 4 DISCUSSION
4.1 Introduction
From the previous chapters, it is known that China, as a newly emerging market, has
many affluent opportunities to be discovered and developed by business organisations
from different industries. With the great population and the governments liberalising
attitude, China has made itself an auspicious country for luxury goods of fashion
industry. Moreover, through the literature review, it is obvious that consumer
behaviour is positively correlated with brand image.

In order to examine the impact of brand image on Chinese consumer behaviour, the
findings from the previous chapters will be introduced and combined in this chapter.
First, the three companies introduced in chapter 2 will be analysed from their
marketing activities, especially in China. Next, the development of fashion industry in
China will be summarised.

Thirdly, from the literature review and interview, two questions which are also the
main purposes of this essay will be answered; how brand image affects consumer
behaviour and how Chinese people perceive luxury brands. Finally, a strategy to
tackle with counterfeit problem will be proposed.

4.2 Findings
4.2.1 Company
Bvlgari emphasises that pure luxury equals high quality and purity. It also considers
itself as representation of jewellery, excellence and prestige. At the present time, it is
ranked as the third largest company in jewellery industry following after Cartier and
Tiffany & Co. Although it has a prestige name in the world and is even listed on
57
Milan and London stock exchange, it does not follow the trend. When most luxury
companies engage with the business of merges and acquisition, it insists on managing
business on its own way. Furthermore, unlike other luxury companies entering into
the China market in 1990s, it only started its business in China from 2004 when
China joins WTO. Up to April 2006, it only opened the fourth store in Guangzhou
other than Beijing and Shanghai. The CEO of Bvlgari, Francesco Trapani has said that
it takes time to understand thoroughly about the China market regarding to its
economic structure and the culture of the society. Therefore, to develop the business
in China, Bvlgari adopts a conservative attitude.

Cartier, the largest jewellery company in the world, defines its luxury brand as
innovative and classic design. It positions its products as practical with creative and
elegant design. In addition, recently Cartier is considered the top luxury brand in
China according to China International Business. The sales in China have doubled for
the past several years, reports China representative Dimitri Kaczorowski, who sees
the beginning of a luxury consumption wave (Chandler, Wang and Zhang, 2004).
So far, Cartier has 12 boutiques locating in 9 cities in Mainland China. As stated by
the regional manager of Cartier in East China, Josephine Chien, the number of
boutiques will expand to almost 30 by 2010 which will turn China as the second
largest market of Cartier which is Japan at the moment. As a result, it is known that
Cartier is devoted to and has already generated profits from the China market. To
quote BusinessWeek, In order to grow sales, Cartier is making aggressive play for
nouveaux riches in emerging markets such as China and Russia.

As for Salvatore Ferragamo, it is famous for its shoes as Made in Italy luxury brand.
The asset of the company is worth 575 million and its business is operating in 55
58
countries with 450 customised sales stores and 2000 employees. Its products are
defined as beauty and comfort and became well-known due to the usage by
Hollywood actors and actresses. The company entered the China market in early
1990s. Ferruccio Ferragamo noted that he was glad about his company's decision of
opening the first store in China in 1994, as the decision brought about good returns
(Xinhua News 2004). Another family member of Ferragamo, Leonardo Ferragmo who
is also the chairman of Altagamma, an association of Italian companies in the
high-end market, stated that the company is expected to open another seven boutiques
in China in the next few years, in addition to the 25 shops it already has on the
mainland and Hong Kong (China Daily 2004). Moreover, he also said that China is
very important and we have to move with the economy. Consequently, it is easy to see
that Salvatore Ferragamo has already seen China as the target market for the
development of its business.

Even though those three companies have different attitudes about initiating business
in China, they share one thing in common- all of them establish museums or art
galleries. The purpose for those three companies to initiate museums and art galleries
are the same which is to reserve the masterpieces of the companies and to record the
history of the companies. However, to read between the lines, there is another purpose
behind it which is to build up the companies public relations. For example, once the
CEO of Bvlgari was been interviewed by Time magazine, he was been asked why a
brand known for jewellery would venture into hotels. He answered that it was a p.r.
(public relation) machine for the brand (Time 2005). To quote the CEO, Francesco
Trapani, We do not expect that this will be a huge moneymaking venture. Its more
an image thing. The main objective- and we hope eventually to have hotels in five to
seven markets- is to develop something unique. (Time 2005)
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According to BusinessWeek magazine, Cartier sponsors cultural events as it expands
in new markets in order to gain publicity without seeming crassly commercial. In
2005, Cartier has organised exhibits of its jewellery at a Shanghai museum and
watches at Beijings Forbidden City, while displaying a carved-ice model of its
flagship Paris store at an ice festival in the Chinese city of Harbin (BusinessWeek
2006). Fornas, Cartiers marketing director noted that these kinds of activities create a
very important resonance for the brand (BusinessWeek 2006). In addition, the luxury
companies may even want to influence people by the companies cultural activities.
For instance, Salvatore Ferragamo tries to influence peoples lifestyles and dress
styles by organising and promoting exhibitions and seminars. Consequently, it is
obvious that those luxury companies use the establishment of luxury architecture or
art exhibitions to build brand images and affect peoples perception of their brands.

4.2.2 Industry
According to a new survey by Ernest and Young, China is expected to surpass the
United States to become the worlds second largest consumer of luxury goods within a
decade and it is predicted that China will have a 29% share of luxury brand sales by
2015. Currently, Japan dominates the global market, with 41% of all luxury brand
sales (BBC News 2005).

On the word of China Daily, today Chinas 1.3 billion people march into the allure of
luxury brands that hold up the illusory promise of beauty, wealth and power. The
investment bank, Goldman Sachs estimates the Chinese luxury goods market is
already turning over billions of dollars and in 10 years time it will be one of the
worlds biggest (China Daily 2004).

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The China Brand Strategy Association claims that some 175 million or 13.5% of
Chinese can afford to purchase a variety of luxury brands, most of whom are buyers
of personal accessories like cosmetics, watches, wallets, clothes and jewelleries
whose age are between 30 and 40. Furthermore, the association also claims that this
relatively flush group earns as much as 240,000 yuan (US$30,000) per year and has
between 300,000 to 500,000 in savings and by 2010 their numbers are expected to
increase to 250 million (China Daily 2004).

Also, according to Chien, the deputy manager of Cartier, while customers in China
are not as sophisticated as in other Asian countries, the newness and freshness of the
market makes shoppers particularly opened minded and gives companies greater
creative opportunity. Therefore, it is clear that with the great potential population,
China has become a promising land for luxury brands.

4.2.3 Literature Review and Interview
How does brand image affect consumer behaviour?
In last chapter, the Consumer Decision Process (CDP) model has been mentioned
which composes seven stages. Those stages include need recognition, search for
information, pre-purchase evaluation of alternatives, purchase, consumption,
post-consumption evaluation, and divestment. However, not all the stages will be
influenced by brand image. After the explanation of the seven stages, it is known that
only need recognition, search for information, pre-purchase evaluation, purchase,
post-consumption evaluation and divestment involves the effect of brand image.

Need Recognition
During this stage, the reason why people conduct consumption is because peoples
61
need have to be satisfied. According to Maslows hierarchy of needs, it is easy to see
that peoples desires can be specified into five categories: physiological, safety and
security, social, esteem, and self-actualisation. It is obvious that peoples need is range
from the basic biological needs to emotional needs. Therefore, consumption happens
when people need to satisfy their demands. Consequently, the motivation to consume
products is generated.

The motivation of consumption of luxury goods is from the benefits of the products.
That is to say, people want to purchase luxury goods because they have the demand
which may be for physiological, social esteem or self-actualisation reason. As a result,
brand image results in generating the reason for people to purchase luxury goods.
Namely, the benefits of luxury goods can be produced by brand image which will
further stimulate peoples motivation of consumption.

Search For Information
In this decision process, according to Jobber (2004), the objective of information
search is to build up the awareness set- that is, the array of brands that may provide a
solution to peoples needs. Therefore, it is known that when people have the
motivation to purchase luxury goods, they will start searching for information of
luxury brands before purchasing. As a result, brand image becomes influential to this
stage.

In the previous chapter, it is mentioned that Kotler (2003) points out four consumer
information sources which are personal sources, commercial sources, public sources,
and experiential sources. On the base of those four sources, it can be identified that
the effect of brand image takes place in the information sources. That is to say, when
62
people search for information from the four sources, they trace back the knowledge of
luxury goods either from their memory or from friends and family. Hence, brand
image is able to contribute effect to the four sources which will results in stimulating
consumers recognition of luxury brands.

Pre-Purchase Evaluation of Alternatives
People reduce the awareness set of luxury brands to a smaller set of brands for serious
consideration at this stage. Thus, the evaluation alternatives will be a small range of
luxury brands than the previous stage and it can be grouped into two attribute: salient
and determinant. According to Blackwell, Miniard, and Engel (2001), salient
attributes are considered as potentially the most important, such as price, reliability
these factors believed to vary little between similar brands while determinant
attributes, such as personality, styles usually determine which brand or store that
consumers choose, especially when they consider the salient attributes to be
equivalent. As a result, it can be seen that brand image has influence on determinant
attributes which is the key point for consumers to decide whether to buy the product
or not.

Purchase
In this process, consumers decisions will be affected by two phases. First, consumer
will choose one retailer over another retailer, such as from the internet, a catalog, or a
direct sales person. Secondly, their decisions will be influenced by in-store factors
such as store decoration, and the attitudes and services of sales people. As a result, if
these two factors are not in accordance with the brand image that consumers have
from the previous stages, the decision of consumption may be terminated. Therefore,
it is known that the influence of brand image involves in those two phases.
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Post-Consumption Evaluation
To quote Engel et al., Probably the most obvious reason companies must pay
attention to customer satisfaction is that it influences whether consumers will buy
from the same company again. Positive post-consumption evaluations are essential for
retaining customers. Hence, if the luxury brand that consumers buy can not satisfy
their expectation and demand, then they will not be loyal to the brand next time.
Consequently, it is important for luxury companies to maintain the consistency of its
brand image so as to contribute positive effect to the post-consumption evaluation.

Divestment
Divestment is that last stage of the consumer decision process. Consumers have
several options, including outright disposal, recycling, or remarketing (Blackwell,
Miniard, and Engel p.82, 2001). Therefore, one of the reasons that consumers dispose
luxury products should be correlated with brand image. Buyers of the luxury goods
may change or feel tired of the image of the luxury brand, thus they alter their
consumption behaviour. As a result, brand image will be effective in this decision
process as well.

How do Chinese people perceive luxury brands?
From the literature review, the characteristics of luxury brands are recognised. Based
on the last chapter, the symbols of luxury goods can be divided into two main
categories which are show-off wealthy/express social status and self-identity.
Therefore, the way people perceive luxury brands is in accordance with these
categories. Accordingly, the Chinese peoples perception of luxury brands can be
interpreted by the categories. In order to have a further explanation of the question,
there is a model of prestige-seeking consumer behaviours (Figure 7) will be
64
discussed.
Figure 8 Prestige-Seeking Consumer Behaviours

Sources: Vigneron and Johnson, 1999
The Veblen Effect
According to Vigneron and Johnson, the veblenian effect also represents perceived
conspicuous value. They also noted that Thorstein Veblen (1899) many years ago
suggested that conspicuous consumption was used by people to signal wealth and, by
inference power and status. Thus, the utility of prestige products may be to display
wealth and power and one could consider that highly visible prestige brands would
dominate the conspicuous segment of the consumers (Vigneron and Johnson, 1999).

If I see someone wearing any luxury goods, the first impression I get will be that wow he or
she is so rich because as a student like us, it is impossible to pay for luxury brands. Moreover,
I dont think it is suitable for us, students to carry luxury goods because it doesnt match our
status. But if I start working as while-collar worker, then I will buy luxury goods to show my
social status. (2)
Yeah, I will feel the same. If someone at my age holds a luxury bag, like Gucci or Christian
Dior, then I would assume that she is from a wealthy family and shes expressing how
wealthy she is by using luxury brands (3)
If people from white-collar carry luxury goods, then I would say he or she must earn a lot of
65
money so that they can afford luxury goods. However, I dont think a girl at my age can
afford any luxury goods. Therefore, if I see someone wearing luxury goods, I would definitely
say he or she must come from a wealthy family. (1)

In addition, according to analyst of the Morgan Stanley, Claire Kent, when the
westerners are getting more and more careful in buying only those well-known
luxuries the Chinese seem to be fond f getting in those not quite acquainted with them.
Because these brand-names are more attractive to show them off by saying, look, how
wealthier I am! (Peoples Daily, 2004)

Therefore, it can be concluded that Chinese young girls consider that one wearing any
luxury goods must either come from a rich background or have a white-collar job and
earn a lot of money. The perception of the Chinese young girls is that carrying luxury
goods does not go with their student status. As a result, they express that only are
people with rich background able and allowed to buy it. Furthermore, they also
express that they will buy luxury goods to show their social status in the future once
they start to work. Accordingly, the perception is in accordance with the veblen effect
which refers to show off wealthy and social status by using prestige brands.

The Snob Effect
Mason (1992) says that clearly it takes into consideration the personal and emotional
desire when purchasing or consuming prestige brands, but it also influences and is
influenced by other individuals behaviours. Vigneron and Johnson (1999) state that
the snob effect may take place during two circumstances: (1) when a new prestige
product is launched, the snob will adopt the product first to take advantage of the
limited number of consumers at that moment, and (2) snob effect is in evidence
when status sensitive consumers come to reject a particular product as and when it is
66
seen to be consumed by the general mass of people (Mason 1981,128).

If my friend told me she bought a new LV bag, then I will show greatly praise and ask her
how and where she gets the bag. (2)
When I go out with my friends, normally I dont wear any luxury goods. Nevertheless, if I
go out with my parents to have dinner or visit their friends, then I will carry the Burberry bag,
instead of a normal bag. (3)

From the interview, it is known that sample 2 would show great compliment to her
friend if she bought a newest LV bag which can be inferred that one of the reasons
that her friend buy LV bag is probably in snob attitude that just want to show off she
can get the newest bag. As for sample 3, she expresses that she usually dresses up
according to the group she is going to hang out with which is in accordance with the
snob effect as well.

The Bandwagon Effect
To quote Dubois and Duquesne (1993b), Even though snobs and followers buy
luxury products for apparently opposite reasons, their basic motivation is really the
same; whether through differentiation or group affiliation, they want to enhance their
self-concept. As stated by Vigneron and Johnson (1999), a person may use a prestige
brand during the week, to conform with their professional position, and use a modest
brand during the weekend, to match social standards of his/her neighbourhood. Thus,
they conclude that bandwagon consumers may use the perceived extended-self value
of prestige brands to enhance their self-concept.

I wont be influenced by my friends to buy luxury goods. I will only buy luxury goods based
on my own willingness. However, if the influence is coming from my parents, then I think my
decision will be affected. (1)
I wont buy luxury goods just because all my friends buy luxury goods but if the effect is
67
from parents, then I will be influenced. (2)
My decision to buy luxury brands will not be affected by my friends behaviours or opinions.
But my parents definitely have influence on my decision. My first luxury bag is given by my
parents. (3)
Everyone has different situations, so I dont think my purchasing decision of luxury goods
should be or will be influenced by my friends or relatives. (2)

Referring to the interview, all the samples declare that their purchasing behaviours of
luxury brands will be based on their own decision, rather than the influence from the
peers or family members except parents. Consequently, it can be deduced that the
bandwagon effect is not as strong as the veblen effect and snob effect regarding to
Chinese young girls perception of luxury brands.

The Hedonic Effect
According to Vigneron and Johnson (1999), recent studies in luxury consumption
have identified that luxury products are likely to provide subjective intangible benefits,
for example, Dubois and Laurent (1994) recognised that the emotional value was an
essential characteristic of the perceived utility acquired from luxury products: a
vast majority subscribe to the hedonic motive (One buys luxury goods primary for
ones pleasure) and refutes the snobbish argument (Dubois and Laurent 1994, 275).

Moreover, in Vigneron and Johnsons research, they point out that people who relate
to personal values that depend upon the individual alone for fulfilment, such as
self-respect (e.g., role-relaxed consumers, Kahle 1995, or inner-directed consumers,
Riesman, Denney and Glazer 1950), and who are not susceptible to interpersonal
influence (e.g., conformity to groups norms, Bearden, Netemeyer, and Teel 1989),
when purchasing and using prestige brands may represent hedonist type of consumers.

68
I will only buy luxury brands under the circumstances that I feel like to. (3)
Buying luxury goods should be cheerful thing. Therefore, the decision should not be made
due to showing off the wealth or social status. It should be made according to my own
willingness. Only I like the luxury product will I purchase the luxury good. There is nothing
to do with the showing off attitude. It is all about what I want. (2)
If I buy luxury goods, I would just feel like to indulge myself and make myself satisfied.
Therefore, spending so much money should be just to show off. (1)

On the words of the samples, it is interesting to find out that though what they claim is
in accordance with the hedonic attitude, yet it is opposite to what they perceive when
seeing people wearing luxury goods. All of the three samples claim that they will buy
luxury goods only if they feel like to, rather than influence by others which is
consistent with the hedonic effect. However, when they are asked what they reckon
when seeing someone wearing luxury goods, they all say that their perception will be
that they must show off their wealth and social status.

4.3 Proposed Strategy
The Piracy Problem in China
Famous foreign-branded products began to flood the Chinese market as the nations
pace of opening and reform accelerated in the late 1990s (China Daily, 2004). To
quote the secretary-general of the China branch of the International Association of
Intellectual Property Rights Protection, Lu Pushun, Producers of fake producst have
used a number of tricks over the past three or four years, finding legal or underhand
means to sell fake goods by registering companies with names similar to certain
well-known trademarks. For example, Frances Pierre Cardin, the French fashion
icon, was surprised that he has many twin brothers in China. He also says that he
even saw a bulletin board reading Italian Pierre Cardin (Hong Kong) International
at an international fashion show in south of China, Nanjing in June 2001 (China Daily,
69
2004). As stated by Ying (2004), later, Cardin and his Chinese representatives found
that dozens of companies had registered corporate names under the Chinese
translation of Pierre Cardin or similar names, resulting in massive sales of counterfeit
Pierre Cardin goods in large department stores. He complaints to Vice-Premier Wu Yi
in 2003 saying that the counterfeits not only deteriorate Pierre Cardins market share
but damage its reputation.

From last paragraph, it is known that counterfeit problem increases the difficulty to
conduct business in China. Ferragamo says that most of the worlds fakes-now come
from China or other Asian countries where labour costs are low (International Herald
Tribune, 2005). Therefore, it is easy to know that those fakes are manufactured with
low costs but their profits are huge. According to International Herald Tribune,
Marzotto, whose family business is in fashion (including Hugo Boss and Valentino)
and textiles (which are still one third of its business), encapsulates the tug-of-love in
many traditional made-in-Italy companies. He points out that China is a big
opportunity only if they work clearly and play a fair game. As a result, it is not
difficult to see that counterfeit problem has made those luxury fashion brands the
brunt of thorny issue.

How do marketers build brand image to people in China?
According to de Chernatony and McDonald, really successful companies adopt a
holistic perspective by regarding their brands as strategic devices. That is to say, they
analyse the forces that can influence the well-being of their brand, identify a position
for their brand that majors on the brands unique advantages and defend this position
against competitors (de Chernatony and McDonald p.320, 2003). By adopting this
perspective, the marketer does not just emphasise design, or advertising, but instead
70
coherently employs all the companys resources to sustain the brands advantage over
competitors (de Chernatony and McDonald p.320, 2003). To quote de Chernatony and
McDonald (2003), A successful brand is an identifiable product, service, person or
place, augmented in such a way that the buyer or user perceives relevant, unique
added values which match their needs most closely. Furthermore, its success results
from being able to sustain these added values in the face of competition.
Consequently, from their point of view, if a company wants to be successful at
branding, it must find its own advantage that other companies are unable to emulate.

According to de Chernatony and McDonald, there are two broad types of brand
competitive advantage which are cost-driven and value-added. Cost-driven brands
refers to that consumers purchase them at a lower price than other competing brands
with similar features. As for value-added brands, it offers more benefits than
competitors brands, and for which a premium price is charged (de Chernatony and
McDonald p.326, 2003). From this perspective, luxury brands belong to value-added
brands. As stated by de Chernatony and McDonald (2003), value-added brands do not
succeed just through functional excellence; a strong image can also be a powerful
competitive advantage. Consequently, regarding to counterfeit problem in China,
luxury companies are suggested to tackle with it from consolidating their brand
images.

To strengthening the luxury brands images, the culture and spirits of the brands
should be enforced. Marzotto, whose family business includes Hugo Boss and
Valentino, believes that Italian fashion may have a more subtle and secret weapon
than slapping taxes on cheap imports: its heritage and its potential for creativity
(International Herald Tribune, 2005). He further explains that there is also the
71
capacity of Italy to invent something new. Menkes (2005) noted that Ferragamo also
hopes that Italy can offer intangible plus factors both in selling and manufacturing. To
quote Ferragamo, Everyone is scared about China. Potentially we can all have the
same machines, but Italians have feeling and perception that you dont suddenly
acquire. There is tradition here that I hope will be preserved, from one worker to
another and from father to son, that the Chinese can not suddenly implement. He also
believes that in very short time, the Chinese consumers have become capable of
understanding real values.

I wont buy fake goods because I feel weird to carry it when going out. Ill be afraid that
other people can recognise its a fake one. Also, I dont like to pretend I can afford it. Either to
buy a genuine one or buying nothing. (sample 1)
I bought a fake LV bag before. The quality is really bad. I wont buy it anymore. Moreover,
it is uncomfortable when carrying the bag to see my friends, especially when they ask me the
price and the shop. I felt I was pretending Im rich. The feeling to buy and use the fake LV
bag is really awful. I will never buy the fake one again. (sample 2)
I dont agree with using fake goods. If you want luxury brands, then you pay the full amount
to get one. I believe there is a reason luxury brands charge premium prices. (sample 3)

As a result, from the statement of the samples, it is known that young Chinese girls
with advanced education realise the difference between real luxury products and
knock-offs. Consequently, it is in accordance with Ferragamos belief that Chinese
people are able to learn the real value of luxury goods. Therefore, based on this
viewpoint, marketers from luxury goods companies are suggested to put emphasis on
the products originality, creativity, cultures and spirits so as to enhance their brands
and differentiate from the fake luxury brands.

In addition, from the finding of the industry in this study, it is known that luxury
goods companies normally build their public relations by holding exhibitions and
72
establishing museums. Consequently, through these activities, it is very likely to
educate Chinese consumers what is the value of real luxury goods. Also, it is possible
to cultivate the aesthetic sense of Chinese consumers. Therefore, through these
activities, luxury brands are able to build images to Chinese consumers.

4.4 Summary
In this chapter, it is exciting to find out that although Chinese people perceive luxury
brands as a way to express wealth and social status, yet the purpose they buy luxury
products is to satisfy themselves without thinking to show off their wealth while they
are still students. Thus, it seems that they adopt hedonic approach when purchasing
luxury brands but adopt the veblan attitude towards luxury goods used by other
people. However, due to the limitation of the interview, the result would be more
accurate when adopting more samples from different age groups. In addition, based
on de Chernatony and McDonalds point of view, marketers of luxury fashion
companies in China are advised to strengthening brand image from the enhancement
of cultures, originality, creativity and spirits which is difficult to be imitated by fake
luxury goods.













73
Chapter 5 CONCLUSION
5.1 Major Recommendations
From the previous few chapters, it is obvious that China has become a prosperous
land with great opportunities attracting to luxury fashion companies. Through the
analysis part of this study, it is known that the image of using luxury goods in China is
perceived as show-off wealth and social status. However, according to the interview
result, Chinese young girls with advanced education express that they would hold a
hedonic attitude when buying luxury brands. As for the snob effect, it is not common
to see from the interview. When it comes to bandwagon effect, all the samples state
that they will never purchase luxury brands because of the peer pressure or the trend.
They will only buy luxury goods according to their own willingness.

Even though China seems to be the wonderland for luxury goods companies to tap
Chinese consumers potential purchasing power, counterfeit problem is a serious issue
complained by those luxury companies. As a result, this study suggests marketers in
China how to build brand image regarding to counterfeit problem. Through enhancing
the particular features of those luxury fashion brands, such as their originality,
cultures, creativity and the spirits of company and design, it is possible to differentiate
them from these fake luxury products.

Moreover, through the establishment of exhibitions and museums by luxury goods
companies, it is highly possible to change and influence Chinese consumers
understanding of real luxury brands unobtrusively and imperceptibly. Meanwhile,
these activities are able to nurture the original aesthetic sense of Chinese consumers.
Consequently, it is likely to education Chinese consumers to understand the value of
real luxury goods and rejects fake luxury products.
74
Accordingly, the recommendation of this study can be concluded as follows:
1. Through enhancing the originality, creativity, cultures, and spirits of the luxury
goods, it is believed to differentiate the real luxury brands from replica.
2. Luxury goods companies are able to educate and cultivate Chinese consumers the
real values of the luxury goods so as to refuse fake products via holding art
exhibitions and establishing museums or galleries.

5.2 Limitations of the Study
Due to the confinement of time, there is some limitation emerging in this study. First
of all, resulting from the short period of the study, it is unable to collect large number
of samples for interview. It is believed that the more the sample is, the more accurate
the study will be. As a result, in order to maintain a valid study, it is recommended to
adopt a larger number of samples.

Moreover, the samples here are confined to a certain group which is focus on Chinese
young girls aged 20 to 25 with advanced education from the major cities in China,
Beijing, Shanghai, and Guangzhou. In this case, it is unable to obtain an overall view
of all Chinese peoples perceptions of luxury brands. Therefore, it is suggested that
with wider range of the choice of sample, it will be more accurate to gain
comprehensive analysis from the interview.

Finally, the last limitation lies on the confidentiality of the luxury goods companies
information. Resulting from the confidential feature of marketing information, it is
not easy to obtain the information of how these luxury goods companies market their
products and build their brand images. Therefore, the recommendation from this study
can only be a general one, rather than a detailed suggestion.
75
5.3 Future Research Directions
Due to the limitations discussed above, this study only provides a general view point.
Consequently, in order to further develop this view point, the future research will be
recommended to conduct from how luxury companies enhance their originality,
creativity, cultures and spirits. In addition, it is suggested that the future study can
focus on develop a more comprehensive view of Chinese peoples perception of
luxury brands. Last but not the least, the future research is recommended to analyse
how luxury companies build their brand images from various perspectives in detail.


























76
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83
Appendix 1
Student: Chi-Wen Cheng
Supervisor: Professor T.C. Melewar
Interview Question

The interview is conducted in order to find out how Chinese people perceive luxury
goods and propose a solution for marketers to deal with piracy problem. Wright and
Crimp (2000) say that in most cases the definition of the population to be studied
includes many more units than can possibly be contacted perhaps because of cost,
time or other valid reasons. Therefore, due to narrowing down the research scope,
the interview participants will be targeted at the age between 20-30 years old young
lady with advanced education from major big cities in China.

In addition, according to Wright and Crimp, group discussions, usually known as
focus groups in the USA, are the most frequently used form of data collection. They
also suggest that groups vary in the number of members (anything from 3-10
members is feasible) and duration (a minimum of one hour and a maximum of three
or four hours is the norm for most projects) and very often in their ambience. Hence,
this interview will be based on group discussion of three people. Often longer in
duration, are more emotional in content, with the research objective being to explore
the motivations and psychological preferences of the group informants (Wright and
Crimp p.389, 2000). Thus, the duration of the interview will be two hours discussion.




84
1. Please describe your family background, e.g. your parents occupations,
family members.
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- The environmental influences on consumer behaviour include culture, social class,
personal influences, family and situation. Thus, the question is helpful to learn
participants backgrounds.
2. How would you describe and define the features of luxury goods?
- Dubois, B. & Duquesne, P. (1993). The Market for Luxury Goods: Income versus
Culture. European Journal of Marketing, 27 (1), 35-44
- To find out how people perceive the symbols of luxury goods.
3. Have you ever bought luxury goods? If yes, why did you buy it, how did you
decide to buy a luxury good and who bought it for you?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- To find out participants purchasing process and experience.
4. Will you buy luxury goods under the influence or stimuli of anyone or
anything?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- To know the influences during the purchasing experience.
85
5. What is your purpose to buy luxury goods?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- To see participants purchasing motivation.
6. What is your feeling or what will your feeling be like when buying luxury
goods?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- To understand participants psychological response.
7. How would you judge or evaluate a person wearing luxury goods?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- Kim, J. S., Baik, M. K. & Kwon, J. H. (2002). A comparison of Korean, Japanese
and Chinese consumers' perceptions of the luxury product.. International Journal
of Digital Management, 2 .
- To find out how participants perceive luxury brand
8. How do you obtain the information of luxury goods brand?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- To learn how participants search for information of the CDP model.
9. What do you think the price of luxury goods?
86
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- To see how people perceive the luxury goods and how they respond to them.
10. What do you think of the fake luxury goods?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- M. Bouxirot, M. & Elena, S. (2005). A Little Emperor: an exploratory study on
consumer behaviour regarding luxury goods in China
- To see how participants perceive fake luxury goods
11. Can you recognize the fake and the real luxury goods?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- M. Bouxirot, M. & Elena, S. (2005). A Little Emperor: an exploratory study on
consumer behaviour regarding luxury goods in China
- To learn participants attitude towards the fake and the real luxury goods.
12. If you are going to buy luxury goods, will the fake luxury goods deter you
from obtaining a real one?
- Blackwell R.D., Miniard P.W., and Engel J.F. (2001). Consumer Behavior,
Orlando: Harcourt College Publishers
- M. Bouxirot, M. & Elena, S. (2005). A Little Emperor: an exploratory study on
consumer behaviour regarding luxury goods in China
- To see the influence of fake luxury goods on participants purchasing behaviour
87
Appendix 2
Backgrounds of Samples
Sample 1
Name: Heidi Chen
Age: 23
Education: MSc Statistics of The University of Nottingham, UK
Nationality: Beijing, China
Family Background: Middle class family. Parents both work for tele-communication
company. Only one child is in the family.

Sample 2
Name: Lucy Lu
Age: 23
Education: MA Marketing of The University of Nottingham, UK
Nationality: Beijing, China
Family Background: Middle class family. Father works for pharmaceutical company.
Mother is housewife. Only one child is in the family.

Sample 3
Name: Nichole Ong
Age 25
Education: MSc Entrepreneurship of The University of Nottingham, UK
Nationality: Guangzhou, China
Family Background: Middle class family. Father owns business conducting electronic
devices. Mother is housewife. Only one child is in the family.