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CHAPTER 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the literature and related studies in connection to the research. This

chapter will also provide a number of studies that will be essential in limiting the coverage of the

topic. It will include academic journal articles and books which will be helpful in the

development of the study. In addition, this chapter will contribute to the prior knowledge of the

researchers and future readers. Lastly, it is beneficial in molding the effectiveness of the study.

Cosmetics

In India, one of the fast growing businesses is cosmetics. Cosmetics are perceived as a

daily use type of product rather than a luxury item. Firms study the different consumer behaviors

which may affect in purchasing the products. Moreover, these companies consider the purchase

decision thinking of customers between alternative products, how the environment affects their

purchasing power, the behavior of consumers while shopping, the effect of consumer motivation,

and the improvement of current marketing strategies of companies.

Cosmetics or in layman terms, make-up, are products used to enhance the facial features

of a person. The commonly known products are lipstick, eye shadow, mascara and foundation. In

this field, make-up is divided into two- drugstore and high-end. Drugstore products are those

which can easily be purchased in groceries or pharmacies. On the other hand, high-end cosmetics

are defined to be luxurious and perceived to have a higher value and classification than its

cheaper counterpart. In general, according to the economist.com, the make-up industry earns 18

billion dollars per year.

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MAC Cosmetics

In its humble beginnings in 1984, MAC Cosmetics was established due to the

exasperation of Frank Toscan and Frank Angelo of the lack of colors that would fit their shooting

photography well. Due to this, it has convinced them in creating their own make -up line suitable

for their necessities through cooking. The brand became famous due to the colors, information in

magazine and word of mouth. Thus, having them open their first counter store in a department

store in Toronto, Canada (MAC Cosmetics, n.d).

MAC Cosmetics offer a range of product wise materials which was an innovation in the

field of make -up artistry. They became popular to the mass market because they offered a

different approach wherein the company focused more on honesty and fairness when it comes to

the making of the product line. Additionally, the make -up company received an award due to its

connection with the mass market and professional make -up artists. In present time, the

mentioned make-up brand continues to provide the needs of the people through the development

of various products in the make -up category.

Luxury Brands

According to an international survey, MAC Cosmetics ranked 4th as the most expensive

make -up brand in the world, thus it is considered as a luxury cosmetic brand. As defined by

Chevalier and Massalovo (2008), a luxury brand is considered to be high-class and selective in a

sense that it is not general or to be used by many which adds a creative and emotional value for

its consumer. Connecting a brand to its consumer through a common example is effective in

which it may lead to purchase (Woodside, 2010). In connection with this, an interview was done

with branch managers of luxurious brands and found out that they focused on quality,
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craftsmanship, design signature or uniqueness, premium price and others (Fionda & Moore,

2009).

According to Dubois & Paternault (1995), luxurious products are known for its

uniqueness, rareness, and the inability of the masses to obtain it. Many of the brands are

extending their limit on access to luxury by selling big amounts of the products (Catry, 2003;

Okonkwo, 2009). Silverstein & Fiske (2003) states that classification focuses on “luxury for the

people” or products and services that contain a higher levels of quality, taste, and aspiration

versus the rest their choices and command a bonus over ordinary products but are priced well

below ordinary luxury goods. This study focuses on how people buy them; these “between the

mass and the class” luxuries, which is compose and focus of the present study, are brought “in

large block,” and they were the subject to bandwagon effects (Amaldoss & Jain, 2005).

From the same study, Vigneron and Johnson (2004) created the Brand Luxury Index

(BLI) which consists of qualities in an overall index of luxury. Some examples given were non –

personal qualities like conspicuousness, uniqueness and quality, and personal qualities like

hedonism. Moreover, Husic and Cicic (2009) stated that the main purpose of luxury brands are

associated with the social standing of a person. In relation to what Vigneron and Johnson stated,

the main qualities that should be considered are value, quality, uniqueness, self – identity,

hedonic, materialistic, conspicuousness and prestige.

Consumer Behavior

According to the book “The 21st Century Consumers”, buyers purchase products to

satisfy their needs which are divided into two- basic survival and for want. In the process of

buying, consumers first recognize the need to be satisfied, search for possible choices, evaluate

the different options in the market, purchase the selected products and use the purchased product.
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In order to fully understand the market, companies use consumer behavior as a tool in

understanding its consumers on how they choose between the alternatives and how the

environment influences numerous factors of the market. It is said that there are three influencers

in consumer behavior namely internal, external and marketing influencers. Internal influences

examine the inner self of the consumer which may include prior knowledge, personality, and

attitude. On the other hand, external influences are mostly based on one’s environment like

culture, purchase situation, and group membership. Lastly, marketing is focused on the

advertisements shown by the company to catch the attention of its market.

In relation, companies also study the consumer purchase decisions of the market which is

classified into four. First, minor new purchase is a purchase which is new yet not very important

this could be influenced by a status in a group. Second, minor re-purchase is a routinized

purchase wherein the market purchases the same product without considering its alternatives or

in others words, brand loyalty. Third, the most difficult purchase known as major new purchase

is when a person buys a product which is essential yet requires extensive thinking just like when

purchasing a car. Lastly, major re-purchase is defined as a purchase which is important but more

confident about buying the product since the person has an experience of purchasing the product

like when purchasing jewelry, gold and diamond. Through the different factors stated in the

previous paragraphs, it gives the marketers a clue in the different buying behaviors of its

consumers which may help in producing different marketing strategies for their products.

Lewin (1933) pointed out that that an environment may be thought of as the main nature

of a more or less permanent “situation”. A behavioral setting is not only bordered in time and

space, but also by a complete sequence of behavior or an "action pattern." A consumer situation

may be viewed as comprising” all those factors particular to a time and place of observation
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which do not follow from a knowledge of personal (intra-individual) and stimulus (choice

alternative) attributes and which have a systematic effect on current behavior" (Belk, 1974). The

greatest problem lies in defining all those factors. Several struggle have been made to develop

comprehensive taxonomies of specific characteristics. Using general guidelines suggested by

Sherif and Sherif (1956), Sells (1963) constructed a subjective classification of over 200

situational variables including group structure, role requirements. Unfortunately, from the point

of view of the current situation. Sell's classification also includes some characteristics of the

individual like age, sex, and environment. And eliminate certain descriptors of the physical

locale.

According to Rego (2009), a brand may influence customers’ insight and attitude in many

ways. Analysis of the advantageous components of this influence is possible through the

investigation of a complementary key issue: the functional dimension. The functional brand

represents the memory of a firm, which revolve in all the investments, activities, and process

technologies and feature that the firm carries out over the time. Nevertheless, consumers may use

brands as a mode of expression of attitudes and needs (Keegan, 1992). According to Keller

(2008), brands can simplify choices, by the level of quality, reduce risk and generate trust.

In relation to the previous studies, the factors that affect people when purchasing luxury

products is the benefit of knowing the owner’s identity in a way that the inner self is connected

to the environment (Belk, 1988; Jenkins, 2004). In addition, the research shows the demand of

luxury products in both local and international market which can be a source of desire to the

consumers and suppliers (Christodoulides et al., 2009; Danziger, 2005; Johnson and Nunes,

2002; Karpova et al., 2007; Silverstein and Fiske, 2003). Moreover, people who are socially –
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committed are those who purchase more luxurious brands to showcase their wealth and status

(Tsai, 2005).

Out of all the factors mentioned in the previous parts of this chapter, it is stated that in

consumer behavior, the most significant predictor are the consumer values and this is also the

reason why some researchers focus on studies about purchasing decision (Sheth et al. 1991;

Overby et al. 2005). Furthermore, factors that affect social and personal aspects have a great

impact on the decision – making process of a consumer. Focusing on the social aspects, it was

stated that it is one of the influential factor of consumer behavior and one example is the

bandwagon effect (Bearden et al., 1989). In line with this, people are mostly concern of what

others will think of them when it comes to purchasing various products.

Bandwagon Effect

It has been found out in the said study that buying counterfeit item has a positive impact

on consumers but low income especially in growing countries (Pau & Teah 2009). In addition,

the consumer’s ethical awareness is measured along two ways. The first is own judgment which

is shown by the feeling of the pride arising from the use of simulate products. The second is the

judgment of others which shows the negative and positive reaction of others. Social group

influence could have a negative or positive effect in consumer behavior. In connection, the

degree of consumer’s consciousness regarding safety is proven to influence behavior of the

consumer towards buying counterfeit products (Vitell et al., 2001).

Economists believe that consumers’ spending decisions occur in secrecy and act as an

independent for other actors in the market (Marshall, 1890). The bandwagon effect represents the

desire of people to purchase a product in order to get “into the trend of things”; in order to be

with the people they wish to be associated with; in order to be fashionable, stylish and to appear
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to be “one of the boys” (Leibenstein, 1950). Furthermore, the term “bandwagon effect” will be

used with the term “bandwagon consumption behavior”. Bandwagon effects happen in luxury

markets when consumers buy certain item of luxuries because of their popularity that triggers

further demand (Chaudhuri & Majumdar, 2006; Vigneron & Johnson 1999).

Overall, bandwagon expenditure of luxuries is a socially – directed consumers behavior

that, as far as an individual differences are shown. The avoidance of similarity and unpopular

choice is associated negatively to the bandwagon behavior. The value of luxury good disappears

when many people own this; that is when this luxury eventually becomes a mass symbol

(Leibeinstein 1950).

Leibenstein (1950) conceptualizes the snob effect as the exact opposite of a bandwagon

effect where they require for a consumer good “is decreased due to the fact that others are also

purchasing the same item or that others are increasing their consumption of that thing”, and

explains that this represents “the mind of the people to be exclusive; to be unique; to separate

themselves from the “common herd”.

Promotional Activities

Aside from the social factors of luxury brands that affect the people, another is the

marketing strategies of the various businesses. In order to effectively give out information about

your product and services one must use promotion as a tool (Shallu & Gupta, 2013). Promotion

is not only characterized by advertising but numerous tactics as well. Moreover, through

promotion, it may be how one perceives a product. In addition, the value of a product rises

depending on the perception of its customers. It has been revealed through a study that

promotional activities have an encouraging effect on consumer behavior (Shallu & Gupta, 2013).
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Furthermore, they have learned that promotional activities or advertisements are effective.

Advertisements shown in TV or newspapers are said to be vital. Also, the use of celebrities as

endorsers result to favorable advertisement rankings and positive product progress. Hence, it

showed that through applying these ways, it can create loyalty for the brand.

For luxury brands, a study showed that the rising technology is influential in reaching the

customers even through the Internet. Blogs use VNAs (Visual Narrative Art) as a conceptual

model in describing luxury brands (Woodside, 2010). Blogs indirectly promote or share more

about products especially luxury brands. It has been found in the said study that picture-form and

VNAs (Visual Narrative Art) are essential for luxury brands because it shows the advantage of

luxury brand in symbol form, thus affects the consumption of these high – end products. In

addition, the study also found out that VNA can be considered as an operative tool in thoroughly

understanding consumer behavior. Through this way, it allows market researchers to know the

reasons behind the purchase of luxury brands and the myth behind these brands. Therefore, VNA

can be considered as a tool to know the brand experience of its consumers and know the

advantages and disadvantages feedback of its audience.

When creating promotional activities for products, one must think of their viewers to

effectively create the advertisements that will certainly catch their attention. It is important to

consider the age group the advertisement will be directed to. Numerous advertisements tend to

focus on the adolescents due to their active presence especially in social media and television.

During adolescence, teenagers are engaged in transitioning period wherein there is change in his

biological, social and cognitive well-being. In addition, during this time, they prefer to make

their own identity while still being accepted by his group of friends (Gulland, 2006). To cope
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with these changes, there is a need of products to help them (Hartman, Shim, Barber, & O’Brien

2006).

Ethnocentrism

According to Moses (2000), teens prefer having the “right” brands to fit in the group of

their peers. Due to this, firms study teenager’s preferences and needs to create a consumer base.

For teens, branded products are more known to them and it serves as a symbol for their status; it

serves a great choice for teens (Bearden & Etzel, 1982; Wooten, 2006). It is said that consumers'

social motivation and materialism are factors that affect teens' purchasing decision toward high-

end brands. Also, the purchase of luxury products by teens is caused by teens' perception of

themselves and peer pressure (Heaney, Goldsmith, & Jusoh, 2005). In addition, the level of

materialism among adolescents is very high (Bristol & Mangleburg, 2005; Larsen, Sirgy, &

Wright, 1999; Roedder- John 1999). It has been determined in a study conducted by Gil, Kwon,

Good, and Johnson that materialism greatly influences the attitude of teenagers towards luxury

brands. However, the results of their study showed that self does not have any relation on

teenagers’ perception of high-end brands.

In a study, it has shown that consumers generally depend more on a belonging to a thing

by its very nature when forming their opinions. However, in certain circumstances, consumers

prefer extrinsic attributes, or a thing that is arising or originating from the outside finding them

more credible and reliable than their own assessment (Srinivasan et al., 2004). The use of this

can relate to situational factors, especially when status or image of it affects the purchase of a

product (Piron 2000; Quester and Smart 1998).

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In relation to the previously stated article, consumer behavior is more varied because of

the presence of different cultures in the world. Consequently, one’s culture must be studied and

understood to know its influence on consumer behavior. Moreover, knowing consumer behavior

is helpful in doing promotional activities for a product. In a study focusing the consumer

behavior of Iranian consumers conducted by Teimourpour and Hazaee (2010), findings show

that when evaluating consumer behavior, cultural difference greatly affects it. In addition,

religion also plays a role when purchasing products. These findings determined by the study are

found to be essential for businesses when aiming to know consumer preferences.

Consumers who buy domestic or foreign products will be influenced by the quality. It has

been determined in the study conducted by Klein (2002); a consumer with high ethnocentric

tendencies may not see the domestic products as being higher quality than imports, even though

she or he rejects foreign products. Consequently, the negative perception of domestic-made

products coupled with an admiration of imported products would lessen the effect of

ethnocentrism on intention to purchase former. In developed countries, consumers tend to have a

higher quality on domestic than foreign products (Ahmed & d’Astous, 2001 and Bilkey and Nes,

1982; Dickerson, 1982; Morganosky and Lazarde, 1987; Samiee, 1994). This favorable insight

would tend to increase the influence of ethnocentrism on both the buying of domestic instead of

foreign products.

In conclusion, consumers buy products in order to satisfy their needs which may aid

survival or please wants. In relation to our study, consumers purchase luxury goods to fit in their

group, to show off wealth and status and to create their own identity. When purchasing, it can be

influenced by internal, external and marketing factors like buying power, personality of the

consumer and advertisements.

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MAC Cosmetics is one of the well-known brands in the field of make-up industry. They

offer luxurious products compared to its cheaper counterparts. Majority of its consumers are in

the upper class. According to reviews, even though MAC cosmetics is considered expensive, the

products they sell are of high quality which is worth your money.
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Contributions

Name of Member Contributions (Page and paragraph number)

 Page 1, paragraphs 1 – 3

 Page 2, paragraphs 4 and 6

5 Balmaceda, Janelle Fatima A.  Page 3 – 4, paragraphs 9 – 10

 Page 7 – 9, paragraphs 19 – 22

 Page 10, paragraph 24

 Page 10 – 11, paragraphs 26 – 27

 Page 3, paragraph 7

 Page 4 – 5, paragraphs 11 – 12

 Page 6 – 7, paragraphs 15 – 18

 Page 9, paragraph 23

30 Pacayra, Nicole Cane G.  Page 10, paragraph 25

 Page 10 – 11, paragraphs 26 – 27

 Page 1, paragraph 1

 Page 2, paragraphs 4 – 6

 Page 3, paragraph 8

 Page 5 – 6, paragraphs 13 – 14

 Page 8, paragraph 20

33 Salvador, Kyla D.  Page 10 – 11, paragraphs 26 – 27

 Overall editing and compilation