Two essays on power and luxury consumption
The first essay provides a theoretical explanation for some mixed findings on the extendibility of luxury brands: Some luxury brands succeed easily with brand extensions, while others fail miserably with similar efforts in brand extensions. I propose that consumers' power state is the key to understanding these inconsistent findings. Through five experiments, I show that powerful consumers tend to display a stronger preference for luxury brands with narrow extensions, extensions into adjacent categories (vs. broad extensions) than powerless consumers. Furthermore, the effect of power on brand extension is stronger when consumers are in a competitive mindset rather than in a non-competitive mindset. Additionally, this two-way interaction strengthens when the brand consumption is public rather than private.
The second essay explains the conflicting findings on the relationship between power and luxury consumption. Rucker and Galinsky (2008) proceeded from the compensatory hypothesis to discover that powerless consumers engage in the pursuit of luxury products more than powerful consumers, whereas the fashion theory (Simmel 1904/1957) suggests the opposite. I propose that desire for exclusivity is the key to reconciling the mixed findings: When desire for exclusivity is strong, powerful consumers evaluate luxury experiential products more favorably than powerless consumers, whereas when desire for exclusivity is weak, powerful consumers evaluate luxury experiential products less favorably than powerless consumers. Four experiments tested this proposition.