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Luxury items and the high prices they command may make consumers think twice this holiday season about whether the cost is justified. But the decision to buy such items may be easier if they are linked to “doing good,” says a Carroll School of Management researcher.
Associate Professor of Marketing Henrik Hagtvedt is co-author of a study that found consumers are more likely to buy luxury brands that highlight partnerships with charity organizations at the point of sale. Hagtvedt and co-author Vanessa Patrick, a marketing professor at the University of Houston C.T. Bauer College of Business, based their study on three experiments with 342 college students and adults.
Like every holiday season, luxury marketers will spend millions of dollars this year on retail décor to help convert consumer desire into purchases. Since these retail spaces are designed to dazzle consumers with the luster of luxury, they aren’t perceived as a good place to promote partnerships with charity.
But in “Gilt and Guilt: Should Luxury and Charity Partner at the Point of Sale?” – to be published in the Journal of Retailing – Hagtvedt and Patrick contend that the cash register may in fact be the best place for a luxury brand to partner with charity.
“A lot of people like to buy luxury but feel a little guilty about it,” says Hagtvedt. “So what we found is that if there’s a way to remove that guilt, people will be more likely to go ahead and make the purchase. One way to do that is to collaborate with a charity.”
In one study, participants could purchase either a luxury brand (Godiva) or a value brand (M&M’s). Without any mention of charity, 47 percent chose to purchase the luxury brand. However, when participants were told that the Godiva chocolates were made and sold in association with the World Wildlife Fund, the choice of Godiva jumped to 78 percent.
Follow-up experiments demonstrated that the willingness to purchase luxury products increased because the association with charity diminished the participants’ feelings of guilt for purchasing a luxury product. The same pattern emerged whether the luxury products were chocolates, high-end jeans or Rolex watches.
The collaboration with charity allows consumers “the license to indulge” in the luxury brand they want to purchase, says Hagtvedt.
“At this pre-purchase stage of the decision cycle, consumers are often looking for a reason to buy or not to buy. Charity partnerships may not fit perfectly with a dazzling retail display, but they can help justify a desirable purchase.”