Two essays on the effect of power distance belief on consumers' status-associated consumption behaviors

This dissertation is dedicated to investigating consumer decision making on status-associated consumptions. Although numerous research in the existing literature has examined consumer responses to status-associated consumptions, the role of cultural orientation remains unclear. Given the development of globalization, studying the effect of cultural orientation on the important marketing phenomenon of status-associated consumption has great theoretical contributions and managerial implications. This dissertation consists of two essays that explicitly focuses on the cultural orientation of power distance belief (PDB) and examines its effects on status consumption and responses to customer status demotion. Experimental designs, field study, and cross-cultural comparison were used to test the proposed theory as well as the underlying mechanisms. More specifically, essay one approaches the topic through examining the relation between PDB and status consumption via a series of four studies. I propose that the effect of PDB on status consumption is not linear, but rather dependent on salience of others' status. That is, while high PDB consumers are more likely to seek status consumption when others' status is not superior, low PDB consumers are more likely to do so when others' status is superior. I further propose that signaling effectiveness, referring to the extent to which consumers perceive consuming status goods actually conveys higher status for them, and need for status, referring to consumers' motivation to increase their social status, as the mediators behind the interaction effect of PDB and others' status. Based on the theorizing, consumption situation is identified as a boundary condition for the interaction effect. Essay two investigates the effect of PDB on consumers' responses to customer demotion in loyalty programs through a series of six studies. Building on the recent literature on consumer social identity and self-threat, I propose that customer demotion could pose a threat to consumers' self-identity, which in turn jeopardize their loyalty intention towards the corresponding companies who own the loyalty programs and initiate the customer demotion. Then, given status is more important and central to high (vs. low) PDB consumers' identity, I further propose that customer demotion causes more intensive perception of self-threat, which in turn results in even lower loyalty intention for high PDB than low PDB consumers. In other words, I propose the asymmetric negative effect of customer demotion is more pronounced among high PDB consumers, and this effect is mediated by self-threat. Self-affirmation is identified as the boundary condition for the joint effect of PDB and customer demotion.