What is Status Consumption and Why it is Important for Marketers of Premium Goods ?

With the advent of globalization, marketers have had the opportunity to market to a global audience from many countries and cultures.

Products are no longer the traditional goods and services and instead the emphasis is on brand building and marketing brands as part of a comprehensive marketing effort to reach out to consumers.

In this context, consumers consume products not only for their intrinsic value but also as status symbols that are supposed to confer perceived and notional benefits like increased social recognition and to move up the social ladder.

Hence, the concept of status consumption as a process of consuming goods and services by status conscious consumers has gained traction in recent years.

Though status consumption was always a trend, the fact that the advent of the global village with its mass manufactured visions of happiness has meant that brands and products that they represent can have uses other than the basic need gratification for which they are made.

This article looks at the concept of status consumption and how a marketer might be able to use status to market a product type or specific brand.

Consumption Motives

To start with, there are many definitions of status consumption. For the purposes of this article the following definition would be relevant: “Status consumption relates to the consumers’ behavior of seeking to purchase goods and services for the status they confer, regardless of that consumer’s objective income or social class”. It is worth noting that status consumption often involves expensive goods and services and that consumers use these goods and services on special occasions and events rather than on a regular basis.

One reason for the proliferation of goods used as status symbols is because of the mass marketing techniques of marketers, many products have become commodities, and hence consumers have an innate desire to consume goods and services that are perceived to be superior in value. This is the need that astute marketers tap into when marketing goods that they label as premium or exclusive.

To take this point a bit further, recent nomenclature in advertisements and marketing collateral for the so-called status products tends to highlight the “exclusivity” of a particular good or service and to connote that by consuming that good or service, the consumer is being conferred a special status in society.

It has been noted by many researchers that status consumption defies the concept of the rational consumer who buys goods and services for economic reasons alone.

Given the fact that consumption of goods and services for status purposes is intrinsically driven by a need to achieve superior status in society, there is no rational basis for the exorbitant premiums that consumers pay for these goods.

To take examples, the premium paid on Swatch Watches, Calvin Klein apparel, Johnny Walker Whiskey etc in no way justify the economic value of such goods. It is only in the minds of the consumer that the perceived social status that they confer can be felt.

Perceived Values

Another aspect of status consumption is that it follows the “trickle down” theory wherein people belonging to higher income levels consume products and services that reaffirm their standing in the society and to which people belonging to lower income levels aspire to.

The important point to note here is that the aspirations of the people in the lower income levels are to achieve the status of those in the higher levels and hence each class tends to emulate the ones above leading to a trickledown effect of the product or service on the class consciousness of the consumer.

Apart from the use of celebrities, marketers also rely on reference groups which portray an image for consumers to refer to as a benchmark that can be aspired to by consuming the product. Hence, marketers often use ads featuring settings of a particular class to signify that consumers in other classes can achieve this status in society.

Continuing in the same vein, it needs to be noted that a good that is perceived as a status good in one country may not be perceived that way in another country. This is the result of income disparities between countries which makes a good like GAP apparel a status good in countries like China and India whereas it is a mass market good in the US.

This is one reason why marketers urge governments in the developing countries to open up their markets as they can leverage on the income differential to market more of the goods that may be losing their appeal in their home countries (the developed ones).

Of course, one cannot extrapolate this trend to all goods since Johnny Walker Whiskey is as much of a premium product in the UK as it is in India. Similar is the case with Cigarettes which have some brands that are premium in all countries.

The point here is that a nuanced approach towards status consumption is needed to understand this complex and multifaceted phenomenon that is both fascinating to study and interesting to analyze.

It was mentioned in the introduction that status consumption defies the categorization of the consumer as a rational economic actor where rational buying behavior on the basis of economic value alone is the guiding principle.

Instead, the consumer of status goods is an individual who has either reached a position in the social hierarchy where economic reasons are not the sole criterion for spending or is someone who aspires to such position and hence spends accordingly.

It is this tiered classification of consumers that marketers reach out to with their goods and products and it is common to see status goods being marketed to each level of the marketing food chain.

A case in point would be the marketing of sachets of cosmetics in smaller denominations so that women who cannot afford the full size products can avail of the smaller sachets and yet participate in the thrill of status consumption.

As mentioned elsewhere, the field of status consumption is fascinating because of the contradictions living together with the commonality which is what human experience in this world is all about.