The Effect of Clothing Brands on People's Consumption

Kayla Eady, Nicole Phillips, Oscar Galeana

Portland State University
May 4, 2016

Abstract:
In a rapidly growing, technological society where trends in fashion come and go, the need to
impress based on purchases and appearances has been higher than ever. Conspicuous

consumption refers to the ostentatious motivation to attain expensive merchandise in order to

display a higher social status from wealth and prestige. The concept of conspicuous consumption
came from the Veblen Effect which was made by the social-critic, Thorstein Bunde Veblen, who
stated that the higher the price of a good, the higher the demand of the good. The desire to
conspicuously consume has been most evident in the choices of clothing brands that young
adults choose to wear in the recent years. We are curious to see if the Veblen effect indeed alters
consumers decisions in Portland when buying clothes, such as choosing designer brands of high
fashion with favorable status associations attached to them (Saint Laurent, Gucci, Chanel) over
cheaper brands with less favorable status associations attached to them(H&M, Forever 21, Old
Navy).
After making an online survey that categorized the choices into three groups A-C (A: Basic
brand, B: designer brand, C: no brand/ control group), we concluded that the brand name does
have an affect on whether or not the person would be happy to receive a piece of clothing or not.
Our p-value for the basic brand resulted in 0.065, we fail to reject the null hypothesis . The
designer brand resulted in 0.022, we were able to reject the null hypothesis.

Introduction:
A study found in the journal Emerald Insight titled The Effects of Expert Quality
Evaluations Versus Brand Name on Price Premiums by Eidan Apelbaum, Eitan Gerstner and
Prasad A. Naik (2003) examined whether the prices of brands correlated to their quality, and
whether the higher priced brands are actually better than lower priced brands. The study focuses
on food quality, and compares store brands to what the authors refer to as national brands
(Apelbaum, Gerstner, and Naik, 2003, p. 154). The authors hypothesized that store brands,
though perceived to be of lower quality were better than national brands, and that the prices did

not determine the quality, as seen with high prices of lower quality national brands and lower
prices of higher quality store brands (Apelbaum, Gerstner, and Naik, 2003, p. 155). Apelbaum,
Gerstner, and Naik (2003) also add to their hypothesis that the power of the national brand image
affected the perceived quality and created the higher price margins (p. 156). To test the
hypothesis the authors have experts give a percentage on the quality of the tuna for each brand
and then they examine the price premium for each brand in terms of percentage and compare
those two numbers to determine actual quality versus price (Apelbaum, Gerstner, and Naik,
2003, p. 157). Apelbaum, Gerstner, and Naik (2003) found that the average lower priced store
brands of these and similar products are of higher quality than the average national brands that
are priced at higher premiums (p.159). These findings exemplify that brands are not always
proper representations of the quality received and that higher price premiums do not necessarily
correlate positively with better quality.
A related study Verban Effects in a Theory of Conspicuous Consumption by Laurie
Simon Bagwell and B. Douglas Bernheim (1996) examines the Verban effects or, the desire to
achieve social status by signaling wealth through conspicuous consumption (p. 349). Bagwell
and Bernheim (1996) hypothesize that in a system where there is a direct correlation between
status and conspicuous consumption consumers are willing to pay a higher price for items that
add to said status which is the Verban effect (p. 351). The authors examine three models within
society, Households, Social Contacts, and Producers where it is expected that the Verban effect is
present and in what ways it is present in those models (Bagwell and Bernheim, 1996, p. 353357). The study concludes through theorem testing that households do not purchase items at
quality-weighted prices and that it is feasible that Verban effects exist and do not exist but are
hard to observe as they happen (Bagwell and Bernheim, 1996, p. 364, 369). The theorems

Bagwell and Bernheim (1996) tested in this study show that there is a possibility that people
purchase items at higher prices to identify themselves as of a certain status, even when that status
is not founded in reality and also when these items are not affordable to that household (p. 364).
Another research by Stephen S. Porter and Cindy Claycomb (1997) details a study about
how brands influence a retail stores image. Their study is concerned with the value a brand has in
relation to shoppers behaviors and choices and the value brand recognition can give to a firm in
terms of profit (Porter & Claycomb, p. 373, 1997). Retail image is defined as the personality of
the store and that this image creates perceptions amongst shoppers that influence their behavior
and therefore is highly important for profitability (Porter & Claycomb, p. 374, 1997).
Specifically, the study focuses on high end brands and whether they influence positive reception
amongst test groups while introducing made up brand names and attempts to find correlation
between brand image and retail image and how those then affect buying behavior of consumers
(Porter & Claycomb, p. 377, 1997). The authors initially tested whether the participants
recognized brands before the study and then identified which ones the participants regarded as
high end or very high end (Porter & Claycomb, p. 377, 1997).
Once data from the pilot study examining the already held perceptions of brands was collected
the authors conducted the next phase of the study that pertained to scoring each store based on
the brand and then compiling the data to rank the brands used in the study (Porter & Claycomb,
p. 380, 1997). The study results showed that using an anchor brand and a highly recognizable
brand provided enough evidence for a correlation between brand image and retail image (Porter
& Claycomb, p. 381, 1997). The authors conclude that, there is a relationship between brand
image and retail image and that this then in turn influences shopping behaviors (Porter &
Claycomb, p. 383, 1997). At the end of the article the authors provide recommendations based on

these results, which include, retail stores using an already established brand with a strong image
into their merchandise to improve their own image, (Porter & Claycomb, p. 383, 1997). This
information is important for our study on brand recognition and if brands with a higher
perception of quality are chosen over similar counterparts, it provides background data to support
our hypothesis that there is causation if you change the perception of an apparel item by
changing its perceived brand.
In one study by two researches, Raghunath Singh Rao and Richard
Schaefer (2013) conducted an experiment involving the behavior of
consumers who purchase high end products along with the firm strategies in
creating these certain products influenced by social utility. In the article,
social utility is defined as a social benefit that "arises from the pleasure of
surpassing others in wealth or social rank" (Rao, Schaefer, pg. 786, 2013).
Consumers who usually purchase high end products typically enjoy the
acknowledgement from others about their wealth. They also get a sense of
pleasure knowing that they get greater benefits than others, and at the fact
that poorer people cannot afford the initial price of the products.
The experiment is set into three tables, each one of an important
variable in their study along with an equation for each. The first one is the
'market' in which monopolists sell durable goods of intrinsic quality. "The
seller markets its product to a fixed unit interval of consumers" (Rao,
Schaefer, pg. 788, 2013). They believe that the wealth of the consumer
corresponds perfectly to their social status.
The second variable is labeled as "Intrinsic Consumption Utility" which

is measured by a consumers willingness to pay (WTP). "If consumer i

purchases in period t, she incurs a price of Pt , implying a net intrinsic benefit
of v^iQ Pt...Each individuals purchase timing decision depends on the
products pricing scheme as well as her WTP" (Rao, Schafer, pg. 788, 2013).
This directly presents their income level represented by the marketing
equation above.
The third variable is labeled "status utility for buyers" which is the presentation of
the consumers social status. "This form of utility depends on two factors: (1) the consumption
choices of all and (2) each consumers sensitivity to others consumption choices...(Rao, Schafer,
pg. 788, 2013).
The results concluded a pattern in the consumers timing of buying high end products and
showed through different appendix equations to their variables that people who usually bought
products the day it came out were conspicuous.
Another stream of literature by Dmitri Kuksov and Kangkang Wang (2015) focuses
conspicuous consumption with haute couture products that young adults buy to present their
social rank or their desirable belongings to an "upper class." However, not all fashion products
are successful when presented to the public. The fashion market is a difficult thing to analyze
because it is continuously unpredictable and the failure and success of an item is by chance.
There are hardly any statistics to predict what consumers will want. However, the researches of
this article are determined to find the probability of how fashion products can become successful
during their release. "[A]lthough it is inherently random, the probability of a product becoming
the fashion hit is in equilibrium uniquely defined" (Kuksov and Wang, pg. 52, 2015). One way
that a product can become popular is by the advertisement from others. Specifically, when high-

class consumers adopt or recommend the product. An example is the YEEZY 350 shoes Kayne
West. Because only a select amount of consumers have these shoes, they become more rare and
spark a tipping trend in the fashion market. The main focus on the experiment is based on
consumer coordination from recommendation and desirability from the higher class.
To further present this study, the researchers conducted an experiment which they selected
two competing fashion markets with two different types of consumers, the high-type and the
low-type. The experiment is set up as a type of game for the consumers. The game starts with
each firm introducing one product. Then the high-type consumers engage in coordination about
which product, if any, should be adopted. This coordination results in a recommendation of the
choice to make. The game resulted in the high-type group deciding which products would be the
most fashion forward, following by the low-type consumers conforming to the choices picked by
the high-type consumer. This study is relevant to show how consumers are attracted to products
in which there is desirability from higher groups (celebrities, models, magazine editors, bloggers,
etc). Since we provided our survey to mainly young college students, there was a pull towards
the higher end fashion pieces (mainly YSL). Saint Laurent is known to be one of the most
advertised designer brand as many celebrities and models show of off when they're out and about
or via social media.
The purpose of our research experiment, as previously stated, was to see if designer
products that are generally perceived as better had an effect in the overall choice and happiness
of consumers over perceived lesser brands. It's important to understand how conscious
consumption is changing society and has become a long-lasting and continually relevant part of
our culture. Our experiment is designed to test for a bias towards status-seeking consumption.

Method:
The experiment showed a series of clothing items (see appendix 1 for clothing provided) to
people to see which clothing item they choose. All clothing items were the same (simple white
tee, a leather jacket, and a unisex pair of jeans). The clothes were put into three separate
categories. One group was labeled as a more common brand, one group as a more exclusive
brand, and one group (our control group) consisted of no brand names.
The sample population were undergraduate students at Portland State University (43
students were surveyed in total). However, Portland State has a wide age range of students, so
the age limit was higher than a more traditional college population of about 25 and younger. The
distinctions between students were measured by the first question in which the survey asked how
old they were and if they were currently employed. The choices were presented in a small survey
and individuals were asked to rank the clothing on a scale from 1-10 on how happy they would
be if they received that clothing item for free (1 being disappointed or unhappy with the item,
and 10 being extremely happy). From this, the data showed what our study sample chose. If there
are more people who chose the more exclusive brand, then that meant that they didn't give much
thought about the clothing, but just the brand. They care about what that brand says about them
in society. The initial hypothesis was that people would choose the more exclusive brand item
since it gave people the perception of having a more higher status in society. Since this
experiment was about collecting the response of people, this was an observational study. In this
case, the response variable was the clothing brand they chose, and the explanatory variable was
the level the clothing brand was labeled in terms of exclusivity.

Data and results:

During the study 43 people were surveyed for test brands A and B and 43 were surveyed
for the control group, test brands C. Based on the 1-10 ratings available the average rating for
each group was calculated and used as the average likeness for that set of products identified
as either basic brand for Group A, high end for Group B or no brand for Group C. The results of
this survey are displayed in table 1.1 in the form of a graph with the X axis representing the
frequencies for each set of ratings per group along the Y axis. Group A consisted of JC Penney, H
and M, and Forever 21; Group B consisted of Gucci, YSL, and Ralph Lauren; finally, Group C
consisted of the control group which were a no brand shirt, no brand jacket, and no brand pants.

Table 1.1: Research Results

As seen in table 1.2 the means for Group B, the high brand, was 6.62, the highest of all
three groups. Group C was in the middle of the data set with a mean of 5.68 and the basic brand
category had the lowest mean of 5.02. The standard deviations for each group were 2.31 for
Group A, 2.56 for Group B, and 2.43 for Group C. The 95% confidence intervals for each set
were 4.32-5.72 for Group A, 5.84-7.4 for Group B using the standard error of the mean to show
where most of the population will lie based on the sample data. The absolute values of the Z
scores found in table 2.1 for each data set indicate the likely amount any piece of data is in
relation to the mean for that sample; the lower values for these z scores indicates that the data is
usually under 2 away from the mean, therefore the mean is a fairly good representation of the
sample data.

Table 1.2 Mean, Standard Deviation and Standard Error of the Mean

Group A

Group B

Control Group

Mean: 5.02

Mean: 6.62

Mean: 5.69

Standard Deviation: 2.32

Standard Deviation: 2.57

Standard Deviation: 2.43

Standard Error of Mean:

0.35

Standard Error of Mean:

0.39

Standard Error of Mean:

0.57

Table 2.1 Z Scores and P Values

Group A

Group B

Control Group

Z Score: -1.73

Z Score: -1.79

Z Score: -1.93

P Value: 0.065

P Value: 0.022

Is the Null Hypothesis

Table 2.1 displays that with a 95% confidence level, or alpha level of 0.05, the P Value is
0.065 for Group A and 0.022 for Group B. This means that compared to the null hypothesis with
regards to Group A there is 93.5% chance that there is a significant difference between Group C
and Group A (100-6.5); because the confidence level required to reject the null hypothesis is 95%
and the results were only 93.5% this data suggests we fail to reject the null. This means that we
cannot prove with this data set that the observed results imply a difference between preference
based on brand. In terms of Group B the P value is listed in figure 2.1 as 0.022, compared to the
null hypothesis there is a 97.8% chance that there is a significant difference between Group B
and Group C; because this percentage is higher than the required confidence level percentage of
95% this data suggests we can reject the null hypothesis and there is a significant difference in
preference between Group B and Group C brands.

Discussion:
The results could be caused by the vast difference between brands and possibly
preconceived notions about brands out of the tests control. These kinds of notions are
confounding variables that could affect the data and create the results making it appear the

experiment variables are causally correlated when in fact the confounding variable influenced the
data. Whether the opinions about the brands are popular opinion or knowledge that shifts favor
away from or towards a certain brand based on things like employee wages, environmental
damage, or connection with charitable causes that were not considered when selecting brands.
The experiment could be improved by collecting more data, especially in regards to the
control group and attempting to disregard or test the confounding variables. The current results
could be based on the population selected to answer the survey, Portland State Students, mostly
female. The test group could be broadened to get a better understanding and interest in fashion
could be surveyed beforehand to help put the results in better perspective and eliminate possible
correlations with variables not being tested and the resulting data. It is possible that there is little
to no difference between no brand and lower brands but that the higher brands symbolize higher
status and are therefore more desirable. The survey does not test whether participants would
spend the extra money to attain the designer brand clothing items and then seek out the purchase
of them but rather that given the choice all things equal what items they would prefer to receive.
This distinction is important when applying the data to the broader context of consumer culture
in America because the data can only provide information regarding preference not behavior.
This preference is possible to exist in the Portland State culture based on the hypothesis tests that
demonstrated the null hypothesis of the control group could be rejected in regards to the high end
products, or that the control group/no brand is not preferable if the option of designer brands is
available.
The studies examined in the introduction section supported the findings of the hypothesis
testing. The study performed by Aplebaum, Grestner, and Naik is closely related to the results
observed in this study. The study examined showed that price premium (perceived quality) was

not directly related to quality of the product when tested by experts. This distinction between
perception and reality can be applied to the idea of conspicuous consumption in this research that
status is more important in consumer culture than the actual quality or purpose of the product.

Conclusion:
Since the data shows a difference in people's preference over the clothing items with a
more exclusive brand over the clothing items that are identical to one another their is just a
difference in the brand name, our hypothesis therefore is supported by our research. The research
hypothesis was that people would choose the more exclusive brand item since it gave people the
perception of having a more higher status in society. What can be taken away from the research
and hypothesis testing is the perception that people have in society. People have a stronger
preference for items that can provide a perceived higher level of stature in society. This is a
potential problem that could play into how people in society treat one another based on outward
appearances and possessions in relation to status.

Appendix:

References:
Apelbaum, E., Gerstner, E., & Naik, P. A. (2003). The Effects of Expert Quality Evaluations
Versus Brand Name on Price Premiums. Journal of Product & Brand Management Jnl of
Product & Brand Mgt, 12(3), 154-165.

Bagwell, L. S., & Bernheim, B. D. (1996). Verban Effects in a Theory of Conspicuous

Consumption. The American Economic Review, 86(3), 349-373. Retrieved April 14, 2016.

Dmitri Kuksov, Kangkang Wang, (2013) A Model of the It Products in Fashion. Marketing
Science 32(1):51-69.

Peter, S. S., & Claycomb, C. (1997). The Influence of Brand Recognition on Retail Store Image.
Journal of Product & Brand Management Jnl of Product & Brand Mgt, 6 (6), 373-387.

Raghunath Singh Rao, Richard Schaefer (2013) Conspicuous Consumption and Dynamic
Pricing. Marketing Science 32(5):786-804. http://dx.doi.org/10.1287/mksc.2013.0797