The rich no longer consume conspicuously

Only by grasping the dynamic changes of consumer psychology can we do targeted marketing. This article analyzes the different consumption consciousness of consumers from the leisure class to the aspirational class, from conspicuous consumption to non-conspicuous consumption. I hope it will be helpful to you.

The consumption patterns of the rich have quietly changed. In the past few years, the lifestyle of "coal bosses" and "local tycoons" wearing big gold chains, driving luxury cars, and wearing famous brands has become increasingly rare among the rich, and society is increasingly hating such acts of showing off wealth.

Today, as the middle class can afford to buy the same goods as the rich, and as the rich are wary of the "hatred of the rich" mentality, they spend less and less money on showing off their wealth and more on invisible things that can bring them long-term value.

Of course, this is a process, and the transition from conspicuous consumption to value-based consumption takes different amounts of time for different people. Some rich people have completed the transition, some are still in the stage of conspicuous consumption, and more people are in the process of transition, wavering between the two.

To understand how rich people consume, we still need to go back to the past and start with the consumption patterns of rich people in history.

1. Conspicuous consumption of the leisure class

More than a century ago, Veblen published The Theory of the Leisure Class, in which he coined the term "conspicuous consumption", a concept that has had a profound impact on sociology, economics, and consumption theory. In this book, Veblen conducted an in-depth analysis of the "leisure class" in society and revealed their unique consumption perspective.

Its features are as follows:

1. Consumption is to make others envious and jealous

Veblen's theory took a different approach. He did not analyze consumption from the perspective of supply and demand in economics, but instead delved into people's consumption psychology. He believed that consumption was to keep up with the consumption levels of friends and neighbors around them, and to make their friends and neighbors jealous.

This theory is the essence of the whole book.

For this reason, the consumption of the leisure class is "high-recognition" consumption. They spend money to buy high-end goods in order to be seen by others, especially those that are expensive, scarce, and highly visible, such as luxury brands, valuable jewelry, designer bags, high-end cars, etc.

2. The higher the price, the greater the demand

Conspicuous goods contain two kinds of utility, one is the actual use utility, the other is the conspicuous consumption utility, which satisfies people's psychological needs. The latter is determined by the price. The higher the price, the higher the conspicuous consumption utility, and the more popular the conspicuous goods will be in the market.

The Veblen effect means that the more expensive a product is, the more consumers want to buy it, and the cheaper it is, the less they want to buy it. This is because the more expensive the product, the more it can show one's dignity and taste, and the more it can make friends and neighbors jealous.

If a LV bag is placed on the desk, a colleague carrying an MK bag will be embarrassed to put his bag on the desk. A person wearing a Rolex watch will often roll up his cuffs, while a person wearing a Casio watch will not do so.

3. You can never buy too much

The amount of goods owned reflects the gap between people. Rich people will buy more goods to make themselves look rich. A has no other decorations except clothes, while B has a fine necklace around his neck, a Swiss watch on his hand, a diamond ring on his finger, and an exquisite brooch on his suit. When A and B attend a party at the same time, A will inevitably feel inferior and jealous when he sees B.

Here, conspicuous consumption is expressed as the things I want to buy, never having enough, but needing more.

Another manifestation of never buying too many goods is wasteful consumption, that is, consumption does not meet basic needs but causes waste.

It is said that Empress Dowager Cixi would have more than 100 dishes for each meal, but she would only eat two bites of each dish, which was of course a huge waste.

Today, when many people go to a restaurant to eat, they order dishes that are obviously larger than their appetite, because this makes them appear generous and builds a generous impression among their friends. With this in mind, they would rather order food that causes waste than order less than they can eat.

Think about how many times you have wasted your consumption? You bought a lot of clothes that you only wore once, bought a lot of books that you never read, bought e-books that you only used to cover instant noodles, and bought drones that you only used once and then threw aside.

Wasteful consumption is certainly irrational, but it also leads to showing off. When chatting with others, buying something, using it only once and then throwing it aside is obviously a way to show off one's generosity.

4. Less work, more leisure

As the name suggests, the most important thing for the leisure class is of course to have leisure.

Ever since humans came up with the concept of property rights, they have an instinctive tendency to create value without heavy labor. Veblen believed that these tendencies were government affairs, wars, sports competitions, and religious activities.

In ancient times, those who acquired wealth through war, plunder, and religion had a higher status than those who created value through labor. Today, those who create value through politics, capital, finance, sports, and technology also have a higher status than those who create value through labor.

From the perspective of historical progress, the culture of the lower class is hope, romance and struggle, while the culture of the upper class is eating, drinking, having fun, living an idle life, driving around, writing poetry and drinking.

The former's inspiration comes from the fields, workplaces, and homes, while the latter's inspiration comes from salons, high-end restaurants, concert halls, and opera houses. The latter was once called a bourgeois cliché, but who doesn't yearn for such a cliché?

II. The Aspirational Class: From Conspicuous to Inconspicuous Consumption

Elizabeth Creed-Halkett published the book "The Small Sum" in 2017, in which she coined the term "aspirational class". Although the book did not give a clear range of income for the aspirational class, generally speaking, they are a group of people whose income is far higher than that of the middle class. They are a group with pursuits and ambitions, and who work hard to improve their social status and quality of life.

There are several backgrounds for the emergence of the aspirational class:

First, industrialization and globalization have led to huge changes in the supply and prices of material goods. The prices of some high-end goods have been greatly reduced, making them affordable for the middle class. As a result, traditional conspicuous consumption has lost its function as a symbol of social status.

Second, postmodern values ​​were born, which emphasized individuality, diversity and self-realization, and opposed singleness, mainstream and authority. It affected consumers' consumption choices and motivations, making them more inclined to buy goods and services that reflect their identity and values, rather than follow the masses or obey authority.

Third, as the polarization between the rich and the poor becomes increasingly serious, especially the advent of the financial crisis in 2008, the lives of many middle-class people have been destroyed. Movements such as "Occupy Wall Street" have led to growing protests against social inequality. Open hedonism and undisguised luxury consumption have become the focus of debate. Therefore, the top income group has found new ways to spend money that only people in their circle know about.

In this case, the aspirational class does not only rely on material wealth to demonstrate identity and status, but also emphasizes "non-conspicuous consumption" of education, culture, social relationships, etc.

There are two forms of inconspicuous consumption: 1. High information cost inconspicuous consumption, such as symbolic consumption of specific cultural knowledge that is not so expensive and has little to do with money; 2. Super high cost inconspicuous consumption, such as extremely expensive consumption such as childcare, health care and college tuition.

The specific characteristics of the aspirational class's non-conspicuous consumption are as follows:

1. Low-key, luxurious and meaningful consumption

In terms of commodity consumption, the aspiring class avoids high-profile luxury goods with very eye-catching logos or marks, and chooses low-profile luxury goods with less obvious brand logos. They avoid international brands with high popularity and recognition, and choose niche brands that can better reflect their own taste and personality.

They pay more attention to taste than brand, and pay more attention to the emotional and spiritual value of goods rather than material and social value. They do not pursue popular and popular consumption trends, but choose goods that better reflect their unique style and taste according to their own personality and preferences.

At the same time, they do not need to gain recognition and appreciation from others through consumption, but rather to satisfy their own inner needs and values ​​through consumption.

To sum it up in one sentence, their consumption is "low-key, luxurious and meaningful."

2. Pursue conspicuous production and pursue nature

Products in the industrial age are all manufactured on a large scale and in a standardized manner. This approach pursues efficiency, but it also has certain negatives, such as the lack of unique characteristics of the products, the large amount of chemical raw materials used, and the possibility of unfairness in the production process.

The aspirational class does not pursue conspicuous consumption but conspicuous production. The so-called conspicuous production means that it has requirements for the entire production process of the commodity.

For example, they pursue healthy foods such as kale and broccoli, buy fruits and vegetables from farmers' markets, and try to make their food as natural and organic as possible. They drink specialty coffee from specialty coffee shops to distinguish it from the almost industrialized Starbucks coffee.

As Elizabeth Halkett puts it, “We eat those tinier, meaner-looking apples at the farmer’s market because we’ve met the farmer and learned that he doesn’t use any nasty chemicals on his fruit…We guzzle organic coconut oil instead of retinoic acid and spend $20 on mac and cheese at restaurants because they chalk up the original dairy farm that provided the milk on a simple sign outside the restaurant.”

3. Use your time to buy services

According to research by Cornell University economist Robert Frank, wealthy men lost more leisure time between 1985 and 2003, from 34.4 hours a week to 33.2 hours.

For the aspirational class, time is a scarce and precious resource. They need to balance their time allocation among work, family, social life, entertainment, etc., while also ensuring their physical and mental health and quality of life.

Therefore, they are willing to spend money on services that can save or optimize the use of their time, such as hiring a nanny or housekeeper, buying direct flights or private jets, booking high-end hotels or resorts, etc.

Time is also a symbol of culture and society, especially for those members of the aspirational class who pursue individuality and value. They are not satisfied with passively accepting or consuming goods or services created or provided by others, but want to actively participate in or create the goods or services they want or need. Therefore, they are willing to invest the saved time in activities that can enhance or demonstrate their abilities and values, such as entrepreneurship, invention, writing, speech, art, etc.

4. More budget for education and investment consumption

Education and investment are typical non-conspicuous consumption. They are often difficult to see, but they play a very important role in the future of this class.

In terms of education consumption, the wealthy and aspiring class is increasingly inclined to provide their children with better educational opportunities. They will send their children to elite kindergartens and middle schools, and are willing to pay high fees for their children to participate in test preparation courses and extracurricular activities in order to make their children more competitive applicants.

These educational consumption behaviors reflect their emphasis on their children's future development and their pursuit of social status.

While overall education spending has increased by 60% since 1996, the share of spending by the top 1%, 5% and 10% of earners has increased by almost 300% over the same period.

It is worth mentioning that the middle class has been imitating the consumption patterns of the rich. When they find that the rich invest more in their children's education, many of them will try their best to follow suit, but the consequence is that they are under tremendous pressure and ultimately fail to achieve their expected goals.

For example, most middle-class parents let their children learn piano and violin, not because their children are talented, but to imitate the education methods of the rich. Although the children of the rich may not be talented, learning piano and violin is just a small expense for them to have fun, while for the middle class, they have to work hard (the price of a piano is not low).

Although it is highly likely that the children of both of them will not become musicians in the end, because the money spent on skills is wasted, this money is nothing to the rich, but it is a waste to the middle class.

The aspirational class also spends on investments for the future. They are willing to pay high personal insurance and retirement benefits to ensure that their families can maintain a relatively stable standard of living no matter what happens in the future, so as to avoid a sharp decline in their own family. These more expensive investments are intended to create life opportunities and intergenerational mobility, rather than simply showing off material wealth to show social status.

This is also one of the reasons why class stratification is becoming more and more serious today.

Since 1996, the top 1% of earners have increased their share of spending on personal insurance and pensions by 25% and their share of cash donations by 28%.

Accumulating cultural capital through knowledge consumption

A hidden characteristic of the aspiring class is that they use knowledge and culture to establish the threshold of their own circle, a circle that even wealthy local tycoons find difficult to integrate into.

The aspirational class usually has higher cultural capital and education. They are willing to invest money and time to buy books, magazines, artworks and training courses to improve their knowledge and skills.

Reading cultural reviews and paying attention to media, such as the New York Times or Financial Times, which have a certain threshold, have also become a way for aspirational classes to connect with each other, as they share similar knowledge systems and values.

For example, at a gathering of high-end circles, one of the topics discussed by the aspirational class is The Economist’s views on Obama’s health care reform, while those who talk about a popular variety show will be excluded altogether.

The formation of cultural capital is not limited to specific knowledge and skills, but also involves how to integrate this knowledge with social life.

Take the opera as an example. Simply going to an opera cannot reflect the cultural level of the aspirational class on its own. Instead, it requires incorporating it into the daily schedule, where to buy tickets, appreciation of music, the ability to quote opera information when discussing other issues, having friends who can share this experience - and ultimately understanding that going to the opera is a valuable use of time. These things together can establish the threshold of the cultural circle of the aspirational class.

5. Return to the inner choice

When the aspirational class no longer consumes for the purpose of conspicuousness, they will inevitably care more about their inner needs and seek and satisfy their inner needs through various means.

More and more aspiring people are into fitness and yoga. In the past, the appearance of high-ranking people was characterized by a fair and flawless complexion, but now it is characterized by a healthy and muscular body.

Data shows that the top 20% of income earners spend six times more time on fitness each week than the bottom 20%. After all, people who exercise regularly need a lot of time, and to reach a certain level, fitness and yoga also cost a lot of money.

As more and more aspiring people return to their inner selves, activities such as meditation and mindfulness are becoming more and more popular among them. Meditation can help them reduce stress, enhance concentration, and improve self-awareness and emotional management. Mindfulness practice can help them pay more attention to the present, thereby reducing their desire for material pursuits and achieving inner peace and satisfaction.

The aspirational class gradually realized that the pursuit of material wealth and social status could not bring long-term satisfaction. Therefore, they began to shift their focus to personal growth, inner peace and spiritual satisfaction, trying to achieve a balance between the inside and the outside, so as to obtain a more lasting and deep sense of happiness.

3. Branding and marketing for the aspirational class

There are new market groups, and there are new products targeting these groups. There are also a number of brands that have tapped into the aspirational class and successfully occupied this market.

1. Tesla: Environmental protection, minimalism, technology

Tesla not only provides high-performance, high-tech, and high-quality automobile products, but also provides an environmentally friendly, avant-garde, and minimalist brand culture. Tesla makes consumers feel that they are leaders and changers in technology and environmental protection, rather than just car owners.

Labels and culture such as "trendy", "cool", "minimalistic" and "environmentally friendly" initially attracted a large number of newly wealthy people to become its customers, including cutting-edge executives in the financial and technology circles, well-known Hollywood actors who love environmental protection, etc. Its early typical customers include Lei Jun, Zhang Yiming, Leonardo, etc.

Before the Model 3 was even produced, Tesla made its owners part of an aspirational class and environmentally conscious trendsetters.

2. Lululemon: The rise of women

The success of lululemon has very clearly pinpointed one point in terms of cultural positioning - the rise of female consciousness.

Yoga has only been popular around the world for a short time, and initially there were no brands that made yoga clothes specifically for women. The only options for women were those that were made into smaller sizes of men's sportswear and changed to pink, which of course were not comfortable to wear.

In the late 1990s, more and more women graduated from college. They had a great job, their own apartment and pets, loved sports, travel, fashion, and were willing to pay for high quality.

Wilson saw this market segment and, in light of the rising consciousness of women, named this segment “Super Girls,” and the story of lululemon began.

lululemon provides a brand culture of health, happiness and balance, and increases the sense of belonging of these consumers by building strong communities and circles, as well as associations with sports, travel, fashion and other fields.

3. Whole Foods Market: Green, Environmentally Friendly, and Fair

The secret to Whole Foods Market’s success is effectively creating a compelling identity and story.

Shopping at Whole Foods Market means that you have a sense of consumerism, that you agree with animal rights and that you are environmentally conscious, and that you are a cultured and responsible member of society. The corporate values ​​that Whole Foods Market promotes are exactly what the aspirational class believes in and pursues. Simply walking into this supermarket represents a person's values.

When a person walks into a Whole Foods Market and buys humane beef from a Level 4 certified farm for $15.99 per pound, he or she feels that they have contributed to global fairness, and when he or she talks to friends about shopping at Whole Foods Market, he or she will feel proud of it.

IV. Conclusion

From the leisure class to the aspirational class, from conspicuous consumption to non-conspicuous consumption, it shows the changes in consumption of the wealthy class during social change. Although the rich as a whole do not account for a high proportion in society, their wealth is much higher than that of the middle class.

From the history of consumption, the middle class has always been imitating the consumption patterns of the rich. Whenever the middle class approaches the rich in consumption patterns due to the overall progress of society, the consumption of the rich will upgrade, widening the gap with the middle class.

Today, the aspirational class tends to engage in non-conspicuous consumption, on the one hand to upgrade their consumption awareness, and on the other hand to break away from the imitation of them by the middle class.

References

The Theory of the Leisure Class

The sum of tiny things

Author: Xunkong

WeChat Official Account: Xunkong’s Marketing Revelation