9 CHAPTER II THEORETICAL FOUNDATIONS 2.1. Luxury Goods In 1996, Kapferer introduced the semantics of the term 'luxury', asserting that luxury encompasses aesthetics and represents the application of artistic elements to utilitarian objects (Kapferer, 1996). Researchers from other fields also possess a fundamental comprehension of luxury, defining it as something that is beyond mere necessity (Bearden & Etzel, 1982). In the past, the term "luxury" was used to describe products that were rare, limited in quantity, and accessible exclusively to a privileged group of people (Nueno & Quelch, 1998). Thus, luxury goods can be characterized as products that, aside from any practical use, bring prestige upon the owner through the mere usage or exhibition of a certain branded item. Therefore, luxury goods allow buyers to fulfill both psychological and functional desires, and it appears that these psychological advantages are the primary component that sets them apart from non-luxury items or counterfeits (Judith & Zaichkowsky, 2000). Bearden and Etzel (1982) have categorized luxury products into two distinct groups: 'public' luxury goods and 'private' luxury goods. Moreover, Kapferer and Bastien (2009) underscore the distinction between luxury 'for others,' serving as a symbol of social status, and luxury 'for oneself,' driven by personal pleasure and hedonic indulgence. Luxury consumption may serve the purpose of social recognition, status, and elitism (Nelissen & Meijers, 2011; Vigneron & Johnson, 2017), or cater to personal hedonistic desires (Hagtvedt & Patrick, 2009). The landscape of the luxury goods market has evolved significantly, with accessibility expanding to the middle class. For instance, middle-class consumers in the United Kingdom experienced a notable 50% increase in their purchasing power for luxury goods (Ahmad et al., 2014). However, it remains challenging to anticipate how middle-class buyers discern which products qualify as luxury items (Hauck & Stanforth, 2007). The rise in demand for luxury items is a result of both business and social issues (Ahmad et al., 2014). 10 2.2. Luxury Brands Brands are perceived as mental representations in the minds of consumers and other target audiences (Esch & Möll, 2012), created by corporations to distinguish their products (Kotler, 2009). Thus, luxury brands can be described as mental representations held by consumers that encompass perceptions of elevated price, superior quality, pleasing aesthetics, scarcity, uniqueness, and a significant presence of non-functional attributes (Heine, 2012). Luxury brands possess distinct characteristics, including emotional connection (Hagtvedt & Patrick, 2009), conspicuousness (O'Cass & Frost, 2002), exclusivity, high value in transactions, status, workmanship, and other features (Cristini et al., 2017). The dimensions of luxury brands can be categorized into three aspects: experiential value refers to the personal significance of the brand to an individual, symbolic value refers to the perception of the brand by others, and functional value refers to the tangible characteristics and features of the brand (Berthon et al., 2009). When purchasing luxury brands, buyers place a higher value on the product's brand than on its real attributes (Kempen, 2004). By definition, luxury brands are required to provide high-end products. A premium brand image cannot be achieved without a product range that contains luxury products. However, it is important to note that the product range of a premium brand may include more than just luxury products (Kapferer & Bastien, 2009). Mercedes provides both luxury automobiles, like the S-class, and non-luxury cars, like the A-class, which can also be called masstige items. However, according to Heine (2012), all products from a luxury brand like Mercedes can be categorized as luxury-branded products. It is not unexpected that non-luxury brands are typically linked with non-luxury products. However, there are also several instances of non-premium brands that still provide high- end items. Examples of luxury products in the transportation industry include Blohm+Voss luxury yachts, Bombardier private planes, and first-class flights offered by Lufthansa. These brands that sell luxury products alongside their non-luxury offerings can also be called luxury product brands. This illustrates that determining whether a brand should be classified as luxury or non-luxury necessitates considering the brand's image, rather than solely assessing the luxurious nature (or even just the price) of some 11 things. A product that is exceedingly expensive and luxurious does not always originate from a brand that is considered luxurious. Conversely, premium manufacturers like Mercedes have a significant portion of their product lineup consisting of non-luxury items, like construction vehicles and trash trucks. Hence, when assessing the level of luxury of a brand, it is essential to consider the primary product category that the brand is linked to (Heine, 2012). According to the "World Luxury Brand Directory," it is logical to categorize luxury brands into the following categories such as: 1) Entry-level luxury brands: Due to their positioning slightly above the premium section inside the lowest tier of luxury, these brands are not typically acknowledged as part of the luxury segment. Notable brands include Hugo Boss and Mercedes. 2) Mid-tier luxury brands: These brands are widely acknowledged as part of the luxury market, but they are slightly less prestigious than the leading luxury brands. Some examples of fashion brands are Dolce&Gabbana, Escada, and Moschino. 3) Top-tier luxury brands: These brands have unquestionably established themselves as the leading names in the luxury industry. Some examples of luxury brands are Armani, Cartier, and Louis Vuitton. 4) Prestigious luxury brands: As exclusive brands in the highest tier of the market, these brands establish the standard for the utmost quality and exclusivity in their respective category. These companies cater to a clientele of connoisseurs, who not only have the required financial means but also possess intellectual culture (Lombard, 1989). The relativity of luxury dictates that a brand's ranking is determined by comparing it to other luxury brands. The classification of a high-end brand evolves throughout time (Heine, 2012). Furthermore, this study specifically investigates the analysis of these high-end brands, namely Louis Vuitton, Gucci, Goyard and Chanel, which are widely replicated as counterfeit luxury goods. Louis Vuitton is renowned for its robust brand image, which is exemplified by its longstanding connection to travel bags and cutting- edge designs in the high-end market. The brand prioritizes functionality and a contemporary reworking of its traditional characteristics in order to uphold its esteemed 12 reputation (Choi & Lee, 2016). Gucci upholds its brand identity by continually integrating timeless components and fashionable hues into its designs. The company is renowned for its dynamic and inventive strategies that appeal to a wide range of people, combining conventional elements with contemporary trends in luxury fashion. Chanel is characterized by its fusion of practicality with evolving femininity, providing top-notch luxury products that encompass versatility in design and a diverse range of materials. The brand is well-known for producing iconic fashion pieces that exemplify refined luxury (Choi & Lee, 2016). 2.3.