Along with economy and technology are all developing rapidly in recent years, it is significant that globalization has become an overwhelming trend in all walks of life. Benefit from this process above, the global markets can be bounded together in multi-cultural environments and become more complicated than ever before (Park and Reisinger, 2009). Thus, it is important for companies to conduct accurate market segmentation before access to a new market nowadays (Schmitt, 1997). The research aims to find out the differences in customers’ attitudes to luxury brands in China and UK, under various cultural backgrounds. To be exact, as cultural diversity will lead to differences in consumers’ needs, consuming behaviour and values, I decide to write the research proposal in view of culture segmentation.
In terms of religion and country, objective factors such as various geographical environments, the heritage of history and culture, the outside culture and so on, all of these will bring about cultural difference (Schmitt, 1997). In addition, from a social perspective, cultural differences will be caused by people’s occupation, education and economic status, etc. As the largest developing country, China has become a huge potential market. Besides, since China is a vast country, itself has the character of cultural diversity. In addition, the effect of foreign culture to China has been for a long time, Chinese cultural constitution is much more complicated. Generally speaking, have a right reorganization of the customers’ perception differences between China and UK will be beneficial to British luxury brands enter Chinese market.
Since there is a wealth gap between inland and eastern region in china, and the latter has a stronger economic strength, it will be the major luxury goods market (Schmitt, 1997). Therefore, this research will be conducted at several main cities in eastern China and costal areas, they are Beijing, Shanghai, Hangzhou, Guangzhou and Shenzhen, separately. In UK, we will launch the survey at five cities in England, they are London, Birmingham, Manchester, Liverpool and Sheffield. The informants who are selected should match several conditions, for instance, on the one hand, the respondents’ minimum annual income should above 40,000GBP/400,000CNY. They should be 35 years old to 40 years old, on the other hand. In this proposal, I will apply the method of combining qualitative research and quantitative research.
Before quantitative research, I have to know luxury market situation in these two countries and relevant theories and fundamental conception about cultural diversity in segmentation, demographic segmentation and so on. First of all, I should collect and analyse existing relevant document and data, it mainly consist of micro-economic environment, industrial policy and social environment. To be specific, first, micro-economic environment includes several sections such as the operation of national economy (GDP), households’ incomes and Engel coefficient. Secondly, the policy of luxury industry has a direct effect on the ease or complexity of luxury market entry.
Therefore, I should analyse industrial policies, the situation of market regulation and the last part, the systems of customs and tax. Thirdly, social environment is influenced by regional culture, thus, cultural context analysis is critical. Moreover, the analyses of demographic environment, education environment and consuming concept are integral parts, too. Then, as qualitative research method has clarified the research question, quantitative research will be carried out by 1000 copies of questionnaires, both China and UK have 500 copies of questionnaires each, and every city share 100 copies of questionnaires. The questionnaire will be launched in the form of network, which is efficient, convenient and low-cost.
By comparing these two countries’ customers’ perception degree of luxury goods and other aspects such as their education level, the purpose of purchase and customers’ preferable buying channel, we may find that the Chinese consumers’ consuming behavior of luxury have some more significant characteristics than British customers’. To be precise, a lot of Chinese customers buy luxury goods may have three reasons basically. The first reason is flaunting their rich. They want to show their sense of identity and social status by wearing luxury clothes, bags and shoes.
The second reason is following the crowd. Due to various factors, for example, literacy level, most Chinese consumers have low cognitive degree of luxury goods and low sensitive to fashion trend. They always buy luxury blindly and without thinking independently about how to mach clothes, colours and choose accessories appropriately. The third reason is characteristic consumption. Luxury clothing brand usually have unique brand concept and distinctive brand image. Beside, luxury clothing brand has excellent design and high quality, so it can show amazing tastes of wearers. Furthermore, as its high price positioning, luxury clothing brand has less awkward situation of outfits clash.
All in all, after the research, we will have a clear understanding of the different attitudes to luxury clothing brands of consumers in China and UK. Due to this, British luxury clothing brands can know target market well and regard this as reference when they formulate marketing strategies.
2. Literature review
In recent 20 years, global luxury markets are getting more considerable, because of this, luxury brands have drawn a lot of researchers’ attention (Atsmon et al., 2011). In this section, there are several parts as below. The first part is general backgrounds. The second part is a review of theories on segmentation and motivation. The third part reviews those documents which from different perspectives to compare consumers’ different attitudes to luxury brands in China and UK and conclusion at last.
2.1 General backgrounds
Along with the gradual development of luxury markets these years, a mass of luxury brands are growing rapidly and have a share in markets. They have established corporate image and brand conception in the public. This can be clearly illustrated in a research which was conducted by Verdict Research (2007), as the largest and most mature luxury market, Europe would experience a growth of $ 62bn from 2007($ 101bn) to 2012($163bn). Followed by America–the second largest luxury market would be replaced by Asia Pacific region (exclude Japanese luxury market) in 2012. What is more, Asia Pacific area would be the luxury market which developing the fastest, and the Middle East would come the next. Before study the luxury market, it is necessary to have a clear understanding of luxury concept.
In accordance with Phau and Prendergast (2000), luxury should be unique, outstanding, magical, and sensual. A more simple description of luxury was put forward by Mandhachitara and Lockshin (2004) that luxury stood for high price. While Danziger (2005) argued that luxury was ‘from class to mass’, which meant that the luxury goods would finally be popular and of civilian, though it used to be high-class. In a nut shell, it is important for companies to understand luxury concept and luxury market properly, and then they can find out the critical factors which will affect customers consuming behaviour of luxury goods.
2.2 Theories on segmentation and motives
First of all, the theoretical backgrounds of market segmentation. In contemporary market, Wedel and Kamakura (2000) argued that due to the diversity of consumer needs and the complication of marketing techniques, the mass marketing method can’t be applied in many market situations. According to Dibb and Simkin (1996), market segmentation could help marketers to cope with kinds of customer needs in a resource-efficient way. In accordance with Lindridge and Dibb (2002), the ultimate principle of market segmentation theory was that the discrimination of product needs and consuming behaviour could benefit from the possibility of ‘customers can be grouped using variables’. Second, the concept of market segmentation. Second, the original definition of market segmentation was put forward by Smith (1956), he argued that ‘a condition of growth when core markets have already been developed on a generalised basis to the point where additional promotional expenditures are yielding diminishing returns’.
In line with Kotler and Armstrong (1980, p291-306), market segmentation variables could be divided into four crucial fields—geographic segmentation, demographic segmentation, psychographic segmentation and behavioural segmentation. According to Beane and Ennis (1987), geographic segmentation referred to factors such as area, population density and climate. Besides, customer demands and requirements solutions would be different as a market was divided up geographically. Demographic segmentation included basic variables like ‘age, sex, size and type of family, income educational level, race and nationality’ (Beane and Ennis, 1987). In addition, Demographic segmentation could be applied excellently as the segments were obvious.
Third, the motive of consumer purchasing. In accordance with Leibenstein (1950), there were basically three kinds of motivations—mass psychology, uniqueness and exclusiveness. To be more exact, first of all, mass psychology means people who want to realize social value by trying to get the recognition of other people in the group they belong. Next, uniqueness means that individuals in groups want to be particular and outstanding, and can be easily discriminated from the crowds. In other words, everyone wants to be a Triton of the minnows. Finally, exclusiveness can be explained as people who like to flaunt their wealth, highlight the status and identity through wearing luxury clothing, bag and so on.
What is more, based on previous studies conducted by other researchers, Vigneron and Johnson (1999) considered that consumer purchase motivations could be distributed to five parts—mass psychology, uniqueness, exclusiveness, hedonism and perfectionism. Hedonic consumption is about the whole experiences in purchasing goods. Perfectionism is considered to have kinds of dimensions fundamentally. Additionally, Danziger (2005) carried out a luxury survey in American wealthy classes and labeled the consumers into four groups—‘the iconoclastic butterflies, the indulgent X-fluent (extreme affluent), the luxury cocooners and the luxury aspirers’.
2.3 Current researches about the similar topic of the proposal
As cultural difference has an impact on the way of purchased merchandise and how much money a consumer spend (Thomson and Cutler, 1997), the consumers’ purchasing behavior appears to vary from country to country. According to Schmitt (1997), he carried out a consumer behaviour survey in China which was based on demographic segmentation. The author considered age and sex as variables, divided the samples into four segments, namely, two female groups consist of women aged 19 to 25 and aged 30 to 45; two male groups consist of the same two ages as women’s. He found that in older groups, women tend to products’ ‘value and convenience’, while men bought goods they need or the requirements of family members. On the contrary, young females among young people had a poor concept with money, they advocate brands and over-spent. Besides, they are easily effected buy some fashion movies.
Another similar survey was launched by subsidiaries of Louis Harris in 2005 (Schmitt, 1997), three variables of demographic segmentation—income, educational level and occupation were considered. What is more, Hauck and Stanforth (2007) considered that the most potential consumers of luxury market in China would be those who were born in 1980s, and there might have 300 million rich men among them. Thus, the main force of luxury goods consumption should be at the age of 20 to 40 years old in China. However, the mainly consumers of luxury goods in UK were older than those in China, they were aged from 40 to 70years old. Beside, as young consumers, especially those who are rich and well-educated, tend to accept new goods more easily than older customers (Schmitt, 1997), Chinese consumers of luxury goods are more willing to try new products than British consumers relatively.
The cultural diversity will affect consumer’s different consuming behaviour, perception of luxury and so on (Park, Reisinger, 2009). As a large luxury market, China has attracted more foreign investiments as well as some British luxury brands. Theories of segmentation, motivation and consuming behavior are relevant to culture. It is important for British luxury brand to have a clear understanding of Chinese market and form feasible marketing strategies. However, there are several shortcomings in some existing studies.
First, a majority of current researches lack of data support. Second, though some studies have collected relevant data, the data is not reliable and scientific. Because luxury market survey needs a huge amount of data collection and its scale is large, most studies do not have enough data proving. This research aims to collect primary data by questionnaires and then analyse the differences of customer’s consuming behaviour between China and UK. Finally, a further theoretical study can be constituted.
3. Methodology and Feasibility
This section is divided into three parts. The first part is the introduction to the methodologies which is applied in this proposal. The second part relates to research procedure, description of sample and data collection. The last part is about proposal feasibility analysis.
In this study, I combine qualitative research method with quantitative research method to collect second-hand sources and first-hand data.
First of all, qualitative research. It derives from the social science, tend to study problems, recognize kinds of social phenomenon, analyse people’s behaviour and then give answers to those questions (Sandelowski, 1986). It is a way to definite an issue and address it. According to Shank (2002, P5), qualitative research is ‘a form of systematic empirical inquiry into meaning’. Moreover, quantitative research can identify intangible factors clearly, for example, social norms, gender roles and so on Sandelowski (1986).
In line with Mays and Pope (1995), the methods of qualitative research include focus group, in-depth interviews, Delphi technique, direct observation, case study, etc. In addition, there are three ways to generate data—individual interviews, group interviews and contextual data. Contextual data mainly consist of observations, reports and other written data and oral data. I apply the literature research method, namely, literature review, to set up framework of theories. As a result, I can have a clear structure of the research and better understanding of relevant theories.
Secondly, quantitative research. It can be described as a procedure about collecting valid data and analyzing valid numerical data scientifically. Then, we can get generalisable conclusions (Pekrun, et al., 2002). According to Luborsky, etc. (1971), quantitative research is suitable for survey about comparing two groups, thus, we can use it in the research. as the samples are large in the research, questionnaires should be a good method to collect original data which belongs to quantitative research method. Since I do the questionnaire survey on the internet, there is no time-and-space restriction.
3.2 Research design and data collection methods
There are mainly two data collection methods used in this research—statistical data (secondary data) and questionnaire. Reviewing previous findings by others are a low-cost way to information and get an entire understanding of the research field we work in. Questionnaire is a convenient and efficient way to get raw data from markets, as I undertake it via internet, the costs are low. Next, I will explain how these two methods are applied in the research.
As the research needs to compare the consumers’ attitudes to luxury in China and UK, the size of samples and the scope of survey are large. Before structure a questionnaire to collect first-hand data from potential target customers, we have to know what the problem is, what intangible influencing factors are and so on. Therefore, we need to look up and quote amounts of secondary materials from websites, books, journals and authoritative organizations. These academic data should relevant to existing correlation theories, luxury market environment both in China and UK which involves policies like tax and customs, income level, current purchasing channels, etc. It would be a strong support for further survey after the data are classified into categories.
The questionnaires can be constructed on the base of previous qualitative research I mentioned above. All the questions in questionnaire are based on two themes—the motivation of consumers’ luxury consuming, the pattern of consumers’ luxury consuming. In order to carry out the questionnaires, we follow the method of quota sampling to select samples by several variables as below: age: 35—40 years old
income: above 40,000GBP/400,000CNY
region: china—Beijing, Shanghai, Hangzhou, Guangzhou and Shenzhen; UK—London, Birmingham, Manchester, Liverpool and Sheffield
After the sample selection, we can conduct a hundred pieces of questionnaires in those cities separately，one thousand pieces in total. After getting the questionnaire feedbacks, the data need to be summarized and then, analysed by the software SPSS.
3.3 Feasibility Study
First, in terms of schedule, this research process consist of 12 sections which clearly be illustrated in table 1. In order to complete the whole research, I will take 4months long to run it. In terms of time arrangement, in particular, I set aside one week in case some of the twelve sections may not be finished on time. Besides, I will use the payback method in online questionnaire survey. Thus, respondents’ feedback can be collect in a short time.
Second, financial feasibility analysis. As I mentioned above, I will carry on a paid survey. To be specific, in UK, I will pay 1pound per questionnaire on the website ‘surveycompare’. In China, I will conduct the survey on the website ‘opinionworld’ and pay 0.6 pound each. All in all, the general expenditure is 800 pound.
Third, in terms of universal scope, as the 1000 respondents are selected from 10 cities in China and UK, the field of investigation is wide and the samples are dispersive. However, we do questionnaire survey online which is not limited by region.
General speaking, as China is the largest luxury market in Asia and going to be the core market in the whole world (Verdict Research, 2007), it is high time that British luxury brands developed Chinese luxury market. As analysed feasibility in schedule, expenditure and universal scope above, the research is worth being taken into practice.
This research project will last four months long to carry out a serious of activities. I build up a table as below to explain the research time schedule.
Table 1: time schedule for the research
As the table shows, there is a week time left before report submission, it is in order to avoid any previous sections running out of time.
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