Why do Asian consumers prefer luxury shopping?

Asia Pacific is the world’s largest consumer of personal luxury goods. Asian consumers shop at home and abroad in cities such as New York, Milan and Paris, contributing to the impressive growth of the luxury industry.

However, many Asian countries are deeply influenced by traditional values ​​and religions such as Confucianism and Buddhism that encourage simple and frugal living.

This contradiction intrigued Rajeev Batra, a marketing professor at the University of Michigan Ross School of Business. Batra and his colleagues investigated how these seemingly opposing phenomena coexist. Their research revealed that collectivism in these Asian markets actually boosts luxury consumption.

The study looked at seven understudied Asian markets, including Hong Kong, South Korea, Japan, Singapore, Indonesia, Malaysia and Thailand. Using data from over 3,000 consumers aged 18-64, it explored how the consumption values ​​of collectivism, religion/tradition, thrift and status/materialism influence consumption preferences in these markets.

The findings, published in the Journal of International Business Studies, suggest that among the four values, collectivism plays a key role. In collectivist societies, such as the seven Asian markets, religious and traditional values ​​are often emphasized, the researchers said. Increased religious and traditional values ​​lead to greater frugality, which in turn leads to less status and luxury consumption.

However, collectivism directly promotes status consumption, and this positive effect is so strong that it outweighs all opposing negative effects. As a result, say Batra and his colleagues, Asian consumers demonstrate a passion for luxury consumption while simultaneously endorsing the moral virtue of thrift.

In collectivist societies, people are often very concerned about the opinion of their social group, so they may purchase expensive or high-status items to impress their peers and fit in. Furthermore, unlike Western individualist cultures, where status consumption is viewed negatively as ostentatious and materialistic, collectivist cultures tend to support the consumption of luxury goods because they bring honor to valued groups.

“Luxury consumption is high and rising in Asia not because Asians are becoming more Western and individualistic, but because collectivists have their own reasons for placing importance on status consumption and are more likely to enjoy it,” Batra said.

Batra says it’s too early to conclude that only younger, more globally connected consumers should be targeted with status appeals: older, more religious and traditional consumers who are more closely connected to their social in-groups may also respond favorably to status appeals, contrary to conventional marketing wisdom.

Research also shows that the values ​​that consumers hold influence how they prioritize different features when choosing a product. For example, consumers who value status consumption often want their consumption choices to be noticed by others. They prioritize more publicly visible product attributes such as style, brand reputation and country of origin, and are less sensitive to price.

In contrast, frugal consumers value durability and value for money.

“This will enable marketers to prioritize which product attributes to highlight,” Batra said.