Liability of Localness and Cross-Cultural Variance in Conspicuous Consumption: The Case of the Global Automotive Industry

Abstract

Conspicuous consumption, a term coined by Thorstein Veblen in his celebrated treatise The Theory of Leisure Class (1899), refers to consumers’ extravagant spending on brands, products, and services which primarily, if not solely, aim to confer wealth, and thus signal status. Consumers are willing to pay prices for premium brands, even if their functionally equivalent and cheaper counterparts are widely available, since they covet the status associated with them (Bagwell and Bernheim 1996). Conceptualizations of conspicuous consumption are distinguished from, and hence sometimes are at odds with those of mainstream consumption as they go beyond explaining material needs and address consumers’ satisfaction of social needs (e.g., prestige and social status). In effect, studies on conspicuous consumption expand our overall understanding of consumer expenditure and decision making process by examining the atypical, “irrational” nature of such extravagant spending, which falls beyond the scope of “rational” theories of consumption such as the neoclassical theory of consumption (Trigg, 2001).