Segmenting Luxury Consumers and Characteristics of the Segments: Generational Differences
Authors:   Asia-Europe Perspective Association, Kim Jieun 
Published: June 2018

Understanding consumer behavior based on segmented consumer groups should be advanced in order to effectively target these specific consumer groups. However, there has been little effort to segment luxury consumers and reveal their behaviors even though the economic impact of this market has been increasing. Therefore, the purpose of this study was to discover different types of a luxury consumer group using consumer attitude towards luxury goods which identify “elitist” vs. “democratic” and other several factors (i.e., income, age, and List of Value). Furthermore, exploring characteristics of the segments was followed to offer additional ideas for the marketers to develop effective target marketing strategies.
Online survey was employed and total sample of 593 was used for analysis. Stratified sampling method allowed collecting diverse participants in terms of their income (i.e., less than $55,000, $55,000~$100,000, more than $100,000). Cluster analysis was used to find segments and finally three consumer segments were found based on the following variables: consumer attitude toward luxury, LOV, age, and income. As a result, three clusters were named giving consideration to generational characteristics since the three clusters seemed to represent generations such as the Me-generation, X-generation, and Baby boomer generation fairly clearly. Therefore, I named those three clusters using the name of their generation: “Gen-Me”, “Gen-X”, and “Gen-Baby Boomer.” The two younger adult groups, Gen-Me and Gen-X, were elitist in their attitude toward luxury and had high scores on LOV. The only difference between these two groups was income level. The oldest group, Gen-Baby boomer held a democratic attitude toward luxury, and demonstrated a low level of LOV and high incomes.
Next, the three luxury consumer segments were profiled on levels of shopping related variables (i.e., shopping frequency, shopping enjoyment, time to gather fashion related information, and media types influencing clothing purchase decisions) using ANOVA in order to provide practical information for luxury sectors. In addition, post-hoc analysis was conducted to investigate relationship between each group with respect to each variable.
Gen-Me and Gen-X groups were similar in level of shopping frequency, shopping enjoyment, and time spent on gathering fashion information. In terms of media types influencing clothing purchase behavior, the Gen-Me and Gen-X showed a similar pattern except for one item, “upper-scale catalog” (e.g., catalogs distributed from upper scale retailers such as Neiman Marcus or Saks Fifth Avenue). Gen-X participants was more influenced by this form of media (upper-scale catalog) in their purchase decisions concerning clothing than Gen-Me participants.
From this study, Gen-X appeared to be the most powerful consumers in luxury market for several reasons. First, they are high income and hold elitist attitudes toward luxury products. They also are materialistic. These characteristics imply that they may prefer to consume rather high priced luxury brands than affordable ones. Additionally, Gen-Me was also turned out to be a strong potential luxury consumers, while Gen-Baby boomers were not shown to be an attractive target market for luxury business sectors considering their shopping behaviors. However, affordable priced luxury brands may want to target this consumer, Gen-Baby boomer since they hold democratic attitude toward luxury which indicates opposite opinion about “luxury product is inevitably expensive.”