Kartik Gupta

IR2/10GT
1/7/18
Psychological Marketing Factors on Consumer Decision Making
Introduction

I. Vodka, considered a luxurious spirit due to its recognizable brands, Grey Goose,

Smirnoff, and Chopin, lightens the wallets of many through high costs. However,

America’s most desired spirit has alternative brands such as Costco Liquor, selling for

less than half of their luxury counterparts’ vodka, yielding a better size/value ratio for

potential consumers. Nevertheless, Grey Goose and Smirnoff remain far more successful

than their generic counterparts, averaging 1.5 billion dollars in annual sales while Costco

Vodka’s sales were merely 950 million dollars in the same fiscal year of 2016. (Smith,

“Costco’s Private-Label Booze Helps Warm Spirits During Dry Spell”) These luxury

brands use psychological and sensory marketing to create a perception of uniqueness

resulting in their goods and services, to be more desirable. The overall problem at hand

appears to be the lack of a steadfast marketing techniques with valid results which can be

implemented in businesses that are struggling to market their goods or services and

falling behind their market competitors as Costco Liquor is. As the luxury brands present

the most success with marketing while facing the grisly obstacle of undesirable prices,

modeling a luxury brand-based marketing technique would pose helpful and most

rational for uncompetitive luxury brands. Such a marketing tool could be utilized by a

number of organizations and startup businesses which need a base to start their marketing

at. ​A marketing technique for an everyday good or service; incorporating the base

principles of focusing on brand narratives and reciprocity or the consumer’s sense of

belonging paired with reciprocity of the consumer’s loyalty mimicking those of veblen

brands; will yield significant sales and increase a consumer base in most cases.
 Kartik Gupta

II. Background Section

A. Veblen goods are dictated by certain guiding principles which separate them from
their counterparts on the market. (Felix, “It's expensive, so it must be good”)
1. These include, exclusivity, having a cheaper alternative, and oddly having
a direct correlation between its price and consumer demand.
2. Veblen goods are marketed differently than their more affordable
alternatives to make the consumer disregard the high price.
B. As 40% of all luxury goods purchases are heavily influenced by online perception
of the respective brand, more than half of targeted consumers are still swayed by
tangible marketing. (Honigman, “How Sephora Integrates Retail & Online
Marketing”)
1. Examples of this tangible marketing are based on the physical or
emotional relationship between the consumer and the product or the
person selling the product.
2. This relationship between consumer and retailer can be highlighted by the
high customer satisfaction rate of luxury brand retailers.
C. These brand narratives, reciprocity, and sense of belonging instituted by the
marketing techniques used by these brands maintains loyalty from consumers and
that loyalty is rewarded. (Parvatiyar and Sheth, “Relationship Marketing in
Consumer Markets: Antecedents and Consequences”)
1. The validity of the effectiveness of the reciprocity of consumer loyalty is
corroborated by a study conducted by Brigham Young University
sociologist, Dr. Philip Kunz, who explained greater return and loyalty
from a consumer is expected if their previous actions are rewarded. (Kunz
and Woolcott, “Season’s Greeting: From my status to yours”)
2. All of these techniques revolve around the ideas which circulate the luxury
brand and generic brand marketing worlds but it should be considered that
marketing is not a steadfast operation and will no doubt fluctuate in
differing instances.
First Main Idea

III. Luxury brands target what notions or perceptions their audiences are most susceptible to
and then ally their products with those ideas, generating greater sales.
A. LVMH, the most prominent and successful multinational luxury brand
conglomerate, utilizes the narrative of rags to riches and familial bond to
 Kartik Gupta

sympathize with their consumers, along with allowing their separate brands to
retain their specific cultures.
1. In order to gain the sympathy of his audience, Bernard Arnault, the
founder and CEO of LVMH, never fails to mention his start as a
“Roubaix-born son of a civil engineer” who endured numerous hardships.
The billionaire accredited a portion of his company’s ability to attract
customers to his feel-good, rags to riches story. (Walden, “Bernard
Arnault: 'I don't like women who try to dress too young'”)
a) This directly supports the importance given to the storytelling
involved with the brand’s creation by the executives at LVMH,
proving how narratives help bring consumers to retailers
consistently.
b) As Arnault repeatedly associates his brand with how he overcame
the odds and to create such an empire, customers feel the need and
obligation to support him.
2. “In 2011...LVMH had 65 brands, all with different cultures. Creativity
was considered a key element in the company’s success, and therefore
LVMH strived to let brands keep their own cultures and maximize
differentiation and uniqueness between the brands.” (Burgelman and
Schifrin, “LVMH in 2011: Sustaining Leadership in the Global Luxury
Goods Industry”)
a) Mentioned as a ‘key element’ in the text, the brands throughout the
conglomerate have different creative cultures attract separate
audiences.
b) This uniqueness allows for LVMH to extend its grasp to
consumers who sympathize with differing ideologies, making the
vast amount of narratives available to LVMH one of their strongest
points for marketing.
B. Even Warby Parker Eyewear, a brand less associated with the properties of veblen
goods, used the narrative which promoted the idea of a successful underdog.
1. Profiled by “60 Minutes,” Luxottica is the world’s largest eyewear retailer
and Warby Parker worked around Luxottica’s high prices and opened an
online store to make their product over $600 cheaper than their
competitor. However to make their product known, a co-founder, Dave
Gilboa, repeatedly talks about how they were initially doubted, going
against such a superpower. (Carlozo, “Moscot and Warby Parker: How
two small eyewear companies saw their way to success”)
 Kartik Gupta

a) Gilboa relied on promoting the notion of an underdog and

associate that with the brand of Warby Parker so they could gain
the sympathy of the public to try their product.
b) Even though they were unlikely to be successful, Warby Parker
was able to better expose their product than Luxottica with a more
appealing connotation.
2. Neil Blumenthal, co-founder of Warby Parker, explains how the reason
their brand was consistently successful and retained their consumer base
as they scaled up from ten to thirty to fifty stores, was due to their steady
narrative. (Bertoni)
a) Creating a company that combated the biggest of its kind in the
world brought a rebellious nature to the company.
b) Battling against the odds, Warby Parker attracted the attention of
an audience interested in that notion.
c) This proves that the brand narrative marketing technique can be
implemented in non-veblen brands and still yield significant
results.
C. Bvlgari, among the top ten luxury brands in the world, commiserates with the
narrative of a good samaritan through donations and charities.
1. “Bulgari supports Save the Children's strategic areas of intervention,
including emergency relief, with a targeted focus on education. It is the
company's bold belief that no lasting development is made without
education and learning.” (“Bvlgari”)
a) This statement regarding their support of the charity depicts
Bvlgari as an organization who works tirelessly for
underprivileged children’s education.
b) This allows Bvlgari to widen their consumer base to those who are
loyal to the Save the Children charity.
2. People feel an inherent obligation to support any organization associated
with charity. They feel “warm glow” when they donate and conversely,
they feel bad when choosing not to donate. (Gloor, “Splitting II: Feeling
good about doing good”)
a) Therefore, when Bvlgari allied themselves with charities such as
Save the Children, their customer base grew from just the elitist,
interested in Italian Jewelry, but also the people who sympathize
with the cause. (Clay, “Advertising as science”)
b) Bvlgari is able to ride the narrative of charitable and good-doing to
a wider customer range.
Second Main Idea
 Kartik Gupta

IV. Using reciprocity or a consumer’s sense of belonging, luxury brands can increase their
consumer base and making their products and services seem more appealing.
A. In any type of business or professional setting, an aspect of give and take exists
which fuels a sense of obligation to give back to someone whose services have
been used, displaying reciprocity’s underlying influence on human decisions.
1. In a study in a restaurant performed by Cornell University, reciprocity was
highlighted as the waiter who offered the check to his customers along
with a piece of chocolate received a higher tip than the waiter who offered
the check without candy. (Rind et al., “Sweetening the Till: The Use of
Candy to Increase Restaurant Tipping”)
a) As explained by the study, the customers were more prone to
tipping a more generous amount if they had been exposed to a sort
of physical generosity.
b) Therefore, if customers are provided with an extra incentive to
indulge in a brand, they will be more likely to do so.
2. A study conducted by Brigham Young University displayed how
reciprocity holds an extremely influential place in the human mind. The
“BYU sociologist Phillip Kunz sent Christmas cards to 600 completely
random strangers. He received an astounding 200+ Christmas cards back
in response.” ​(Kunz and Woolcott, “Season’s Greeting: From my status to
yours”)
a) The BYU professors expressed surprise to the result of their
experiment as more than two thirds of the strangers they contacted,
replied.
b) This displays the effect of reciprocity and how even a mere gesture
can cause potential customers to conduct business with a brand.
B. Consumers feel more comfortable in a setting in which they feel they belong to.
Pairing this sense of belonging with a ‘foot-in-the-door effect’ allows brands to
attract and retain a consumer base.
1. LVMH locates their stores at complete opposites of the spectrum of
desirability for a conventional luxury store. They are located in the top
locations of the world’s biggest cities and also in the less desirable
locations. (Secher and Horley 45)
a) By placing their brands’ physical stores in unconventional
locations, sometimes where they are the only luxury store, along
with their stores in the world’s biggest cities, they promote their
smaller stores’ importance and widening their customer range to
include those in the less conventional areas.
 Kartik Gupta

b) The customers who would not have otherwise considered their

product their product an option, become eventually loyal
customers.
2. A study conducted by two Stanford professors displayed the effects of the
Foot-in-the- Door technique in which they analyzed if someone who
agreed to a small request maybe more susceptible to agreeing to a larger
request of similar nature. A set of housewives were asked if they would
answer some simple questions regarding household items over the phone.
If they agreed, a few days later, they would again be called and a request
to interview them at their home was asked. 69% of the women who agreed
to the first round, also agreed to the second round of requests. (Fraser and
Freedman, “Compliance without Pressure: The Foot-in-the-Door
Technique”)
a) This technique was heavily supported by the Stanford study,
explaining that the human mind is prone to repeat an action if it
has a small taste of it.
b) If generic brands are able to get customers to their stores and
provide them with an ideal experience, they get their
‘foot-in-the-door’ making the customer’s more likely to return.
Third Main Idea

V. Even though the business structure for veblen goods differs from that of their generic
counterparts, both types of brands can benefit from using the marketing techniques of
reciprocity and promoting brand narratives.
A. Promoting a welcoming feeling will increase a consumer base, allowing for an
increase in sales regardless of the type of brand. ​(Pini 72)
1. “Consumers' and brands' personalities tend to merge...Brands stand for
deep and rich meanings and customers devote [themselves].”
a) Eventually the consumer’s ideologies become nearly identical to
those of the brand’s message.
b) This causes th​e the consumer to become deeply invested in the
brand, hence engaging in more business with the brand and
promoting it themselves.
2. “What luxury brands have in common with all brands is that their success
depends on inspiring a sense of ownership in their target demographic. All
brands, to some extent, are blank canvases, or rather templates, through
which consumers express their own interests and convictions. The more
engagement a brand can elicit from its target demographic, the better.”
(Hyder, “Luxury Brands: 4 Secrets To Marketing In The Digital Age”)
 Kartik Gupta

a) This directly proves how there is no difference between where the

base of success for both luxury and generic brands lies.
b) Making there be a sense of ownership to the target audience is the
heart of general marketing and taking into account the consumer’s
interests benefits both types of brands.
B. Generic brands have benef​itted by making their brand more personable to a wider
customer range through using brand narratives.
1. As explained in Forbes Interview, Neil Blumenthal, co-founder of Warby
Parker Eyewear, explained how the brand was having trouble expanding
to a more mature audience as the eyewear was initially being marketed to
be for a rebellious, younger audience. (Bertoni)
a) Creating a more mature narrative, detailing how the troubles faced
by the founders pertained to independent financial decisions and
the need for a better alternative, allowed for the Warby Parker
brand to become better known.
b) The narrow, concentrated audience that Blumenthal was initally
concerned with pleasing could not be expanded any further without
providing a backstory which a more mature audience can
sympathize with.
2. “Ralph Lauren brand represents a classic image, and a traditional
American Lifestyle...[he] himself, like Giorgio Armani for the Italian
fashion industry, has become an icon and living symbol of the lifestyle
that the brand represents.” (Pini 72)
a) As people inherently follow celebrities and icons, having one
representing the brand will no doubt promote it.
b) Comparing Ralph Lauren to Armani, the largest Italian fashion
house, displays the legendary influence Ralph Lauren holds on the
consumers in America.
Conclusion

VI. Once a brand promotes reciprocity or the consumer’s sense of belonging, their customer

base expands as their brand becomes more popular and appealing. By also promoting

both the narrative behind the brand, sales are increased as accredited by multiple luxury

brand’s executives. If implemented in the generic brands’ market, these techniques will

bear similarly profitable results even though the business structures and target audience
 Kartik Gupta

differ. This is because these techniques will only make their products more appealing,

causing more consumers to engage with their brand. ​All of these techniques revolve

around the ideas which circulate the luxury brand and generic brand marketing worlds

but it should be considered that marketing is not a steadfast operation and will no doubt

fluctuate in differing instances.

 Kartik Gupta

Works Cited

Bertoni, Stephen. ​Forbes Under 30 Summit: Neil Blumenthal​. 5.

Burgelman, Robert, and Debra Schifrin. ​LVMH in 2011: Sustaining Leadership in the

Global Luxury Goods Industry​. 2011,

https://www.gsb.stanford.edu/faculty-research/case-studies/lvmh-2011-sustaining-leade

rship-global-luxury-goods-industry​.

“Bvlgari.” ​Save the Children​,

http://www.savethechildren.org/site/c.8rKLIXMGIpI4E/b.8275777/k.CE0E/Bulgari.ht

m#celebrity​.

Carlozo, Lou. “Moscot and Warby Parker: How Two Small Eyewear Companies Saw Their

Way to Success.” ​Reuters​, 11 Jan. 2013.

Felix, Salmon. “It’s Expensive, so It Must Be Good.” ​The Economist​, 2 Sept. 2009,

https://www.economist.com/blogs/freeexchange/2009/09/its_expensive_so_it_must_be

_go​.

Fraser, Scott C., and Jonathan L. Freedman. “Compliance without Pressure: The

Foot-in-the-Door Technique.” ​Stanford University​, vol. 4, no. 2, 1966.

Gloor, Lukas. “Splitting II: Feeling Good about Doing Good.” ​Raising for Effective Giving​,

Oct. 2014,​ https://reg-charity.org/splitting-ii-feeling-good-about-donating/​.

Honigman, Brian. ​How Sephora Integrates Retail & Online Marketing​.

https://etailwest.wbresearch.com/how-sephora-integrates-retail--online-marketing​.

Hyder, Shama. “Luxury Brands: 4 Secrets To Marketing In The Digital Age.” ​Forbes​, Mar.

2017,
 Kartik Gupta

https://www.forbes.com/sites/shamahyder/2017/03/13/luxury-brands-4-secrets-to-mark

eting-in-the-digital-age/2/#34b6472d5fe3​.

Kunz, Phillip, and Michael Woolcott. ​Season’s Greetings: From My Status to Yours​. Sept.

1976,​ https://doi.org/10.1016/0049-089X(76)90003-X​.

Parvatlyar, Atul, and Jagdish N. Sheth. ​Relationship Marketing in Consumer Markets:

Antecedents and Consequences​. Journal, Emory University, 1 Sept. 1995,

http://journals.sagepub.com/doi/abs/10.1177/009207039502300405​.

Pini, Fabrizo Maria. ​A Narrative Approach to Luxury Brands​. Palgrave Macmillan, Cham,

https://doi.org/10.1007/978-3-319-41727-1_5​.

Rind, Bruce, et al. ​Sweetening the Till: The Use of Candy to Increase Restaurant Tipping​.

Cornell University, 2002,​ http://scholarship.sha.cornell.edu/articles/130/​.

Secher, Peter Zink, and Ian Horley. ​The M&A Formula: Proven Tactics and Tools to

Accelerate Your Business Growth​. Wiley.

Smith, Molly. “Costco’s Private-Label Booze Helps Warm Spirits During Dry Spell.”

Bloomberg L.P.​, Mar. 2017,

https://www.bloomberg.com/news/articles/2017-03-16/costco-s-private-label-booze-hel

ps-warm-spirits-during-dry-spell​.

Walden, Celia. “Bernard Arnault: ‘I Don’t like Women Who Try to Dress Too Young.’” ​The

Telegraph​, 26 July 2015,

http://www.telegraph.co.uk/lifestyle/11756408/Bernard-Arnault-I-dont-like-women-wh

o-try-to-dress-too-young.html​.