Jil-Marie Dahm, M.Sc. THE VEBLEN EFFECT REVISITED Literature and Empirical Analyses Inaugural Dissertation for obtaining the degree of Doctor rerum politicarum (Dr. rer. pol.) at the WHU – Otto Beisheim School of Management Burgplatz 2 56179 Vallendar 20th October 2018 First Supervisor: Univ.-Prof. Dr. Martin Fassnacht The Otto Beisheim Endowed Chair of Marketing and Commerce WHU – Otto Beisheim School of Management Second Supervisor: Univ.-Prof. Dr. Christian Schlereth Chair of Digital Marketing WHU – Otto Beisheim School of Management I THE VEBLEN EFFECT REVISITED Overview of Content TABLE OF CONTENTS .......................................................................................................... II LIST OF ABBREVIATIONS .................................................................................................. VI LIST OF SYMBOLS ............................................................................................................... IX LIST OF FIGURES .................................................................................................................. XI LIST OF TABLES ................................................................................................................ XIII DEFINITION NOTICE .......................................................................................................... XV 1. INTRODUCTON ................................................................................................................... 1 2. QUALITATIVE PRE-STUDY ............................................................................................ 11 3. LITERATURE ANALYSIS OF THE VEBLEN EFFECT ................................................. 17 4. QUANTITATIVE PRE-STUDY ......................................................................................... 58 5. EXPERIMENTAL ANALYSIS OF THE VEBLEN EFFECT ........................................... 67 6. TRANSACTIONAL DATA ANALYSIS OF THE VEBLEN EFFECT .......................... 103 7. CONCLUSION .................................................................................................................. 137 REFERENCES ....................................................................................................................... 141 APPENDIX ........................................................................................................................... XVI AFFIRMATION – STATUTORY DECLARATION .................................................... XXXVI II TABLE OF CONTENTS Table of Contents TABLE OF CONTENTS ........................................................................................................ II LIST OF ABBREVIATIONS ................................................................................................ VI LIST OF SYMBOLS .............................................................................................................. IX LIST OF FIGURES ............................................................................................................... XI LIST OF TABLES .............................................................................................................. XIII DEFINITION NOTICE ....................................................................................................... XV 1. INTRODUCTON ................................................................................................................. 1 1.1 Background to the problem statement ............................................................................. 1 1.2 Objectives and outline of dissertation ............................................................................. 4 1.2.1 Chapter 2: Qualitative pre-study ........................................................................... 5 1.2.2 Chapter 3: Literature review .................................................................................. 6 1.2.3 Chapter 4: Quantitative pre-study ......................................................................... 7 1.2.4 Chapter 5: Main experimental analysis of the Veblen Effect ................................ 8 1.2.5 Chapter 6: Main transactional data analysis of the Veblen Effect ........................ 9 1.2.6 Chapter 7: Conclusion ........................................................................................... 9 2. QUALITATIVE PRE-STUDY .......................................................................................... 11 2.1 Methodology .................................................................................................................. 11 2.2 Results ........................................................................................................................... 12 2.2.1 The existence of the Veblen Effect ..................................................................... 12 2.2.2 The main luxury purchase motivation ................................................................. 13 2.2.3 Luxury price increase .......................................................................................... 15 2.3 Conclusion ..................................................................................................................... 16 3. LITERATURE ANALYSIS OF THE VEBLEN EFFECT ............................................ 17 3.1 Overview of Paper 1. The Veblen Effect and (in)conspicuous consumption – a state of the art article ........................................................................................................................ 17 3.2 Introduction ................................................................................................................... 18 3.2.1 Background and relevance of subject .................................................................. 18 3.2.2 Objectives and structure of the paper .................................................................. 19 3.3 Defining the Veblen Effect and (in)conspicuous consumption ..................................... 22 3.4 Review of the literature on the Veblen Effect and (in)conspicuous consumption ........ 24 3.4.1. Literature on the Veblen Effect .......................................................................... 24 TABLE OF CONTENTS III 3.4.1.1 Empirical papers on the Veblen Effect ................................................... 24 3.4.1.2 Non-empirical papers on the Veblen Effect ............................................ 25 3.4.2 Literature on conspicuous consumption .............................................................. 26 3.4.2.1 Empirical papers on conspicuous consumption ...................................... 26 3.4.2.2 Non-empirical papers on conspicuous consumption .............................. 37 3.4.3 Literature on inconspicuous consumption ........................................................... 40 3.4.3.1 Empirical papers on inconspicuous consumption ................................... 40 3.4.3.2 Non-empirical papers on inconspicuous consumption ........................... 41 3.5 Directions for future research and managerial implications .......................................... 42 3.5.1 Directions for future research .............................................................................. 42 3.5.2 Managerial implications ...................................................................................... 54 3.6 Conclusion ..................................................................................................................... 57 4. QUANTITATIVE PRE-STUDY ....................................................................................... 58 4.1 Methodology .................................................................................................................. 58 4.1.1 Product category selection ................................................................................... 58 4.1.2 Brand selection .................................................................................................... 59 4.1.3 Sample ................................................................................................................. 60 4.2 Procedure ....................................................................................................................... 64 4.3 Results ........................................................................................................................... 64 4.4 Conclusion ..................................................................................................................... 66 5. EXPERIMENTAL ANALYSIS OF THE VEBLEN EFFECT ...................................... 67 5.1 Overview of Paper 2. Growing luxury brands by increasing the price: does the Veblen Effect exist? ......................................................................................................................... 67 5.2 Introduction ................................................................................................................... 68 5.3 Conceptual background ................................................................................................. 71 5.3.1 The tripartite value of luxury goods .................................................................... 71 5.3.2 The Veblen Effect and luxury purchase motivations ....................................... 73 5.4 Research hypotheses ...................................................................................................... 75 5.4.1 Interaction effects of intrinsic purchase motivations: perfectionist and hedonist 76 5.4.2 Interaction