Academic journal article Academy of Marketing Studies Journal

The Effect of Luxury Product Pricing on Consumers' Perceptions about Csr Activities

Academic journal article Academy of Marketing Studies Journal

The Effect of Luxury Product Pricing on Consumers' Perceptions about Csr Activities

Article excerpt

INTRODUCTION

There has been a growing consensus in both academia and industry that consistent activities based on public relations and authenticity through corporate social responsibility (CSR) are critical factors for companies' brand reputations and their long-term growth (Edelman, 2013; Porter and Kramer, 2011).

Especially in the academia, CSR has been considered an important research topic, and it has received research attention in various fields (Malik, 2015). There are two main streams of research concerning CSR: research focusing on firm characteristics and research focusing on consumer characteristics.

An example of CSR research focusing on firm characteristics is Plewa and colleagues' research (2015) that focused on nonprofit CSR. Their research found a relationship between corporate volunteering and consumer loyalty and word-of-mouth communication, which was mediated by consumers' perception of CSR image. Another research focused on size of firms. Lakshman et al. (2014) studied the relationship between downsizing and CSR perceptions and found that when a firm's top management was responsible for downsizing, perception of the firm's CSR activities was negative. In addition, Tewari and Pathak (2014) studied the need for CSR activities for micro, small, and medium enterprises (MSMEs) and argued for collective corporate social responsibilities (CCSR) activities that several MSMEs can take up as a unit.

In contrast, another CSR research stream focused on consumer characteristics. Mazereeuw-van der Duijn Schouten et al. (2014) investigated the relationship between Christian religiosity and attitude toward CSR and found that intrinsic religiosity and extrinsic religiosity affected CSR attitudes positively and negatively respectively. Finally Kim et al. (2014) found that consumers' level of self-monitoring influenced CSR beneficiary positioning and purchase intention. As discussed above, the vast amount of CSR research suggests its importance for firms.

This tendency to use CSR as a tool to enhance reputations has been more evident among luxury brands. At the same time, public media has criticized luxury brands for focusing exclusively on profits while neglecting socially responsible activities (Kim, 2014; Seo, 2014).

Following this trend, several luxury brands have engaged in authentic CSR activities to earn consumers' trust. For example, GUCCI launched Green Carpet Challenge handbags, made of leather sourced from cattle ranches that had caused no deforestation. Along with the handbag, GUCCI gives out a passport that traces the history of the handbag's production (Karmali, 2013). Another luxury brand, BULGARI, launched Save the Children Rings in 2009 and has donated 20% of the profit (Kim and Moon, 2013).

However, many consumers do not perceive companies' CSR as authentic. The 2012 study jointly performed by the East Asia Institute and the Research Institute for Social Enterprise showed that about 80% of respondents agreed that the purpose of CSR is to improve reputations.

Luxury brands' low CSR activities are justified by previous research suggesting that CSR activities lower evaluation of luxury brands (Torelli et al., 2012). Although there is a positive correlation between CSR and evaluation of firms (Brown and Dacin, 1997; Sen and Bhattacharya, 2001), CSR activities do not positively affect consumers' luxury brand evaluation because luxury brand and CSR are conceptually at odds with each other (Torelli et al., 2012). According to Torelli and colleagues, luxury brands promote self-enhancement and symbolize power, wealth, and ambition that suggest superiority. However, CSR essentially transcends individual's self-interest and promotes social justice and environmental protection and symbolizes egalitarian values. Therefore, when luxury brands engage in CSR activities, the two conceptually contradict each other, lowering cognitive fluency, which in turn leads to lower brand evaluations. …

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