Signaling Status with Luxury Goods: The Role of Brand Prominence (2010)
by Young Jee Han, Joseph C. Nunes, and Xavier Drèze
The article explores how consumers use brand prominence in luxury goods to signal status.
Brand prominence = the extent to which a brand’s mark is visible on a product. Products can
either have “loud” branding (highly visible logos and marks) or “quiet” branding (subtle or
hidden marks). Different consumer groups prefer varying levels of brand prominence based
on their social signaling motivations, such as associating with or dissociating from particular
social groups.
Consumer Taxonomy Based on Wealth and Status Needs: The authors propose a
taxonomy categorizing consumers into four groups based on wealth and need for status:
- Patricians: Wealthy individuals with low status needs, who prefer “quiet” luxury goods
to signal exclusivity without conspicuous displays.
- Parvenus: Wealthy individuals with high status needs, who prefer “loud” luxury goods
to signify wealth and separate themselves from the less affluent.
- Poseurs: Less affluent individuals who aspire to wealth and use loud, visible luxury
goods (often counterfeit) to signal status, although they cannot afford authentic luxury
items.
- Proletarians: Less affluent individuals with low status needs who are indifferent to
status signaling through luxury goods.
They conductent different studies within these groups:
1. Study 1 – Brand Prominence and Price: The relationship between brand
prominence and price in luxury goods like handbags, cars etc. The findings show that
products with less prominent branding tend to be priced higher (e.g., Louis Vuitton
handbags with subtle branding are more expensive than those with louder branding).
○ The study suggests that patricians prefer the quieter, subtle branding because
it allows them to signal status to other patricians without broadcasting their
wealth to others.
2. Study 2 – Counterfeit Goods and Brand Prominence: Counterfeit replicate louder,
more conspicuous luxury goods because they are easier to identify and appeal to
poseurs who seek visible status markers.
○ The findings indicate that counterfeit luxury goods are typically copies of
lower-priced, louder items in a luxury brand’s portfolio, aligning with the needs
of poseurs who want to emulate the parvenus’ visible status.
3. Study 3 – Recognizing Subtle Brand Cues: whether patricians are better at
recognizing subtle brand cues compared to other consumer groups (field experiment.
○ The results showed that patricians could accurately assess the value of subtly
branded products without the need for loud logos. In contrast, non-patricians
relied on more visible brand cues to infer the price and value of a product.
4. Study 4 – Associative and Dissociative Motivations: the role of social motivations
(association/dissociation with groups) in preferences for loud or quiet branding.
○ Patricians tend to seek association with other patricians, while parvenus want
to dissociate from poseurs and proletarians while associating with other
wealthy individuals. Poseurs aspire to associate with the wealthy but are more
likely to buy counterfeit goods.
○ The study confirmed that patricians prefer quiet luxury goods, while parvenus
and poseurs prefer loud goods to signal their status.
,Diaspora Marketing: Emerging Giants, Global Brands (2013)
by Nirmalya Kumar and Jan-Benedict E.M. Steenkamp
The article discusses a powerful strategy emerging-market companies can adopt to build
global brands. It outlines the challenges that emerging-market companies face in building
brands globally. These companies are typically late entrants in global markets, often
perceived as low quality or innovators in less advanced technologies. Despite these hurdles,
companies like Haier, Lenovo, Tata, and Mahindra have found innovative, resource-efficient
ways to challenge established multinational companies.
Diaspora Marketing Strategy focuses on targeting emigrant populations who maintain ties to
their home country. These groups, spread across various parts of the world, offer an
underserved market that is culturally connected to their homeland.
The article highlights that not all immigrant groups are equally receptive to home country
brands. The authors segment the diaspora into four categories based on their relationship
with both their home and host cultures:
- Assimilators: These individuals quickly adopt the host culture and are less likely to
buy home-country products. (not ideal)
- Marginals: Immigrants who feel marginalized and do not strongly connect with either
culture. They prioritize functionality and affordability. (not ideal)
- Biculturals: Immigrants who manage to maintain both their home and host cultures
and are often more affluent, educated, and well-connected. This group is ideal for
emerging giants looking to expand internationally. (perfect target)
- Ethnic Affirmers: These individuals strongly retain their home culture and values
and prefer home-country products. Brands targeting must be culturally relevant.
Diasporas are attractive because they represent large, concentrated communities that
maintain strong cultural ties. This makes them ideal starting points for brand expansion. The
diaspora's socio-economic profile, higher levels of disposable income, and willingness to
maintain cultural traditions make them an ideal market for emerging-market brands.
Examples of Successful Diaspora Marketing:
- Tecate: A Mexican beer brand that successfully targeted Mexican-Americans, using
themes of blue-collar work and immigrant perseverance. Tecate became the top
imported beer among Hispanic-Americans in the U.S.
- ICICI Bank: An Indian bank that successfully used its ties with the Indian diaspora to
expand internationally, offering remittance services to immigrant communities and
subsequently gaining a foothold with the broader population
- PRAN RFL: A Bangladeshi company that leveraged the concentration of
Bangladeshis in the UK to establish distribution networks for its products. Over time, it
expanded its market by targeting other South Asian immigrants and then the broader
British market (example step 3).
Factors for Evaluating Diaspora's Potential: four critical questions:
1. Does the brand have universal appeal? Brands need to offer superior products,
compelling value, and a positive country-of-origin effect.
2. Is the diaspora large enough? The size of the diaspora relative to the host country
population is crucial.
, 3. Can the diaspora's distribution help the brand expand? The diaspora should be
spread across key regions for broader market penetration.
4. Does the diaspora's socio-economic profile align with the broader market?
Companies must assess whether the diaspora's characteristics are similar to the host
population's, making it easier to spread brand awareness.
When to invest in Diaspora Marketing:
Product characteristics
- Broad appeal: it should be attractive for both the immigrant and own culture.
➔ Example: crazy rich Asians movie → cast was all Asian, non-Asians were attracted by
the romantic comedy.
- Clear value proposition: have a clear reason to buy it for any consumer, not just
immigrant. You cannot just say: we sell this because it’s an ethnic and cheap product
→ instead: mention those that it is attracted for.
➔ Example: Lebara → not only attracted because its cheap or made for minorities, but
show them also the tariffs for students/ tourists.
- Country-of-origin effects: how compatible are the associations with the home country.
Some countries are not favorable.
➔ Example: Russian Kusmi Tea → don’t hide the home country, but also don’t make it
too obvious, make it neutral.
Market characteristics
- Immigrant population large enough (numbers and %)
- Geographic distribution of immigrant population→ spread of diaspora is better, more
socializing with mainstream customers
- Socioeconomic profile of immigrant population: similar to (potential) mainstream?
• Homophily principle: tendency to form network relationships with people similar of
us: similar sociodemographic, behavioral, and intrapersonal characteristics.
o Ties between similar individuals more likely to be formed.
o Ties between non-similar individuals dissolve at a higher rate.
o More ties with mainstream consumers.
Reverse Diaspora Effect: people often consume local products and brands during
vacations. If they enjoy the experience, they will try to replicate it when they return home.
Managerial Implications:
● Leveraging Cultural Identity: Emerging-market companies should align their branding
strategies with the cultural identity and values of diasporas to establish strong brand
recognition.
● Strategic Expansion: Targeting diasporas allows companies to build a loyal customer
base before expanding into the broader mainstream market. This strategy is cost-
effective and helps circumvent the significant financial barriers that typically hinder
global expansion.
● Segmenting the Diaspora: Companies must be strategic in choosing which segment
of the diaspora to target. Biculturals offer the greatest potential for wider acceptance,
while ethnic affirmers can serve as strong cultural ambassadors within their
communities.
