Vol. 7(18), pp.

1778-1790, 14 May, 2013

DOI: 10.5897/AJBM11.2113
African Journal of Business Management
ISSN 1993-8233 © 2013 Academic Journals
http://www.academicjournals.org/AJBM

Full Length Research Paper

Investigation of the effects of luxury brand perception

and brand preference on purchase intention of luxury
products
Kambiz Heidarzadeh Hanzaee* and Fereshteh Raeis Rouhani
Department of Business Management, Science and Research Branch, Islamic Azad
University, Tehran, Iran.

Accepted 13 July 2012

Conspicuous consumption is a fairly universal phenomenon although possibly more pervasive in

developed countries. It can be said, conspicuous consumption is more common in some cultures that
have a tendency to materialism. Every country in terms of political, technological, cultural and
economic environment is different. This paper deepens understanding of why consumers are willing to
buy the luxury high end, automobiles provide. The head of the country of origin influences evaluations
of how people tend to buy luxury automobiles are used and which of the demographic factors have
most influenced the understanding of the luxury brand. The populations of this study are the owners of
the automobiles Toyota, Hyundai and Kia Motors in Tehran. A comparison was made between German
made Mercedes Benz and Japanese made Lexus luxury automobiles brands. The final sample consists
of a total of 390 participants. Data analysis is used in structural equation modeling. The findings show
that variables of hedonic, unique, and quality value are significantly higher than conspicuous and
social values. They have more of a role in forming of luxury brand perception in Iranian consumers.
This study is useful for marketers to understand their target market and how their customers evaluate
products and make buying decisions. The five perceived values of luxury automobiles can be used as
guidelines for salesmen to sell successfully to customers.

Key words: Luxury brand perception, conspicuous value, uniqueness value, social value, hedonic value,
quality value, brand preference, purchase intention, country of origin, demographic factors.

INTRODUCTION

Veblan (1912) states that conspicuous consumption remained essentially the same, with the winners being
refers to the ostentatious display of wealth for the especially important to the study of the history of
purpose of acquiring or maintaining status or prestige. consumption because they play such an important role in
Spending money to tout one's success is not a new the growth of a consumer society" (Page, 1992).
phenomenon. The desire to conspicuously consume The luxury brands industry is unique and different from
dates back to tribal times when men possessed women other industries. The luxury market in Iran has grown
and slaves as trophies of their status. Since that time, quickly in recent years. There is a young population in
although the players and what is consumed have Iran, making it an attractive market for many foreign
changed, the game of ostentatious ownership has companies. For example, the price of luxury cars such as

*Corresponding author. E-mail: [email protected].

 Hanzaee and Rouhani 1779

Table 1. The existence of income gap in Iran.

Social affairs ► Income distribution ▼

Year
Gini coefficient Ratio of richest 10% to poorest 10%
2000 0.3991 15
2001 0.3985 14.4
2002 0.4191 16.9
2003 0.4156 16.2
2004 0.3996 14.6
2005 0.4023 14.5
2006 0.4004 14.9
2007 0.4045 15.2
2008 0.3859 13.5
2009 NA NA
2010 NA NA
Source: Iran central bank reports.

Toyota, Porsche, Hyundai, Kia Motors, or BMW can be loyalty. Feldwick (1996) and Chernatony and McDonald
about two or three times their original price from factory (2003) have distinguished six types of brand attributes:
due to tarrifs, but they are still in top demand in Iran. awareness, image, perceived quality, perceived value,
The income gap in Iran is one of the main reasons for personality, and organizational associations (Sadeghi
consuming luxury products. One of the best criteria for and Ghaemmaghami, 2011). It is well documented that
showing this gap is the Gini coefficient. The Gini consumers‟ perceptions of brands consist of brand
coefficient, which is a number between zero and one, is awareness and brand image (Keller, 1998). Awareness of
an important measure of inequality in distribution of a brand is not likely to be enough to ensure a brands
income. Zero indicates a society with absolute equality in success, as it is not in itself likely to be sufficient reason
distribution of income and one indicates a society with to purchase a product. Successful brands must offer
inequality in income distribution. Data on this indicator is superior value to consumers and differentiate an offering
available for urban areas on an annual basis. One of the from those of competitors (Kim et al., 2008). Researchers
measures of income distribution is the ratio of 10th decile have examined purchase intention frequently and found it
expenditures (the richest) to 1st decile expenditures (the to be an important consequence of value perceptions
poorest). The higher the ratio, the more inequality there is (Dodds et al., 1991; Hanzaee and Yazd, 2010).
in the society. According to Iranian central bank the Gini According to Vigneron and Johnson (1999) the term
coefficient has been reported during 2000 to 2010. As we "prestige goods" was more broadly defined as it includes
can see in Table 1, the existence of income gap in Iran is consumer motivations for pursuing uniqueness, technical
obvious (CBI, 2010). superiority, and aesthetic appeal as well as signaling
status and wealth. McCarthy and Perreault (1987) cited
that in marketing, the term "prestige pricing" is used when
THEORETICAL BACKGROUND a higher price is used to indicate high quality or status.
Veblen (1899) observed that consumers often use price
Brand perception as a surrogate indicator of prestige, because high prices
often have a positive role in determining the perception of
Over the past 20 years, the literature has consistently product value (Thuy, 2008).
highlighted the importance of brand perceptions and the For Solomon (1996) luxury items have a degree of
components of these perceptions, including brand image exclusivity, and are thus usually more expensive (that is,
and associations (Simms and Trott, 2006). Brand higher monetary risk) than necessities. The risk of a bad
perception is a consumers‟ ability to identify the brand purchase and the hedonistic value of luxury products are
under different conditions, as reflected by their brand characteristics of a complex task, such as purchasing
recognition or recall performance (Wonglorsaichon and luxury products (Piron, 2000).
Sathainrapabayut, 2008). Following the distinction between prestige brands and
Aaker (1991), in his seminal book Managing Brand non-prestige brands (Vigneron and Johnson, 1999), the
Equity, identified three key perceptual/cognitive variables: distinction between luxury brands and non-luxury brands
name awareness, brand associations, and perceived has been operationally defined as the distinction between
quality. All three are seen as key determinants of brand brands exhibiting five perceived values, contingent on a
1780 Afr. J. Bus. Manage.

particular socioeconomic framework (Thuy, 2008). Value products or services recognized within their own social
is one of the most powerful forces in the marketplace to group(s) such as conspicuousness and prestige value,
understand consumer behavior (Zeithaml, 1988; Dodds which may significantly affect the evaluation and the
et al., 1991; Holbrook et al., 1984; Irani and Heidarzadeh, propensity to purchase or consume luxury brands
2011). Value plays an important role in predicting (Bearden and Etzel, 1982; Vigneron and Johnson, 2004;
customers‟ choice and future repurchase intentions Wiedmann et al., 2007).
(Zeithaml, 1988; Dodds et al., 1991; Irani, and
Heidarzadeh, 2011; Holbrook, 1996).
Hedonic value

Conspicuous value A product's subjective intangible benefits clearly

determine the brand selection (Thuy, 2008). Its value is
In the early 1980s, a number of researchers carried out perceived through fun and pleasure as opposed to goal
studies, based on the original work of Bourne (1957), achievement (Irani and Heidarzadeh, 2011; Hirschman
focusing on the influence of reference groups on luxury and Holbrook, 1982). Previous studies have identified
brand consumption (Mason, 1981; Bearden and Etzel, and included fun, pleasure, recreation, freedom, fantasy,
1982). Findings revealed that the conspicuousness of a increased arousal, heightened involvement, new
product was positively related to its susceptibility to the information, escape from reality, and others as hedonic
reference group. Luxury goods consumed in public were shopping value (Irani and Heidarzadeh, 2011; Hirschman
more likely to be conspicuous goods than privately and Holbrook, 1982; Tauber, 1972). As Bloch and Bruce
consumed luxury goods and conspicuous consumption (1984) stated, consumers obtain hedonic value as well as
still plays a significant part in shaping preferences for task-related or product acquisition value during the
many products that are purchased or consumed in public shopping experience (Irani and Heidarzadeh, 2011; Bloch
contexts (Braun and Wicklund, 1989; Vigneron and and Bruce, 1984).
Johnson, 2004; Heidarzadeh and Teimourpour, 2011).
The consumption of luxury brands serves as a signal of
status and wealth. The higher price of the brands Quality value
enhances the value of such a signal (Thuy, 2008).
Luxury is partly derived from technical superiority (Thuy,
2008). This is congruent with the assumption in the field
Unique value of perceived quality that luxury brands offer greater
product quality and performance than non-luxury brands
If virtually everyone owns a particular brand, it is (Vigneron and Johnson, 2004; Heidarzadeh and
considered to be non-luxury (Thuy, 2008). Uniqueness is Teimourpour, 2011; Quelch, 1987; O‟Cass and Frost,
based on the assumption, demonstrated in research, that 2002). Aaker (1991) says that consumers may associate
the perceived exclusivity and rareness of the product luxury products with a superior brand quality and
enhances a consumer‟s desire or preference for it reassurance so that they perceive more value from them.
(Verhallen, 1982; Pantzalis, 1995). Furthermore, this In addition, high quality is seen as a fundamental
desire increases when the brand is also perceived as character of a luxury product in terms of a sine qua non
expensive (Groth and McDaniel, 1993; Verhallen and (Heidarzadeh and Teimourpour, 2011; Quelch, 1987).
Robben 1994). Therefore, the more unique a brand is Groth and McDaniel (1993) supported the assumption
deemed, and the more expensive it is compared to that an exclusive or unique perception of a brand was
normal standards, the more valuable it becomes also related to its cost. They stated that "brand exclusivity
(Heidarzadeh and Teimourpour, 2011; Verhallen and is the positioning of a brand such that it can command a
Robben, 1994). high price relative to similar products." They suggested
applying a prestige-pricing strategy to support the
marketing of luxury or high-quality goods. Bearden and
Social value Etzel (1982) concluded that publicly consumed luxury
goods were more likely to be conspicuous goods than
The role-playing aspects and social value of a brand can privately consumed luxury goods.
affect the decision to buy (Thuy, 2008). Thus, luxury In practice, Groth and McDaniel (1993) "high prices
brands may be important to individuals in search of social may even make certain products or services more
status and representation and means in particular that desirable." Rao and Monroe (1989), attest that because
the ranking in a society associated with a brand plays an people perceive higher prices as evidence of greater
important factor in conspicuous consumption. The quality. Veblen (1899) suggested that conspicuous
consumption of luxury goods appears to have a strong consumption was used by people to signal wealth and, by
social function. Therefore, the social dimension refers to inference power and status. Thus, the utility of luxury
the perceived utility individuals acquire by consuming products may be to display wealth and power and one
 Hanzaee and Rouhani 1781

could consider that luxury brands would dominate the the brand they have (Shukla, 2008).
conspicuous segment of the consumers. Han (1989) pointed out that the image from a particular
According to Twitchell (2002), luxury is a sign of status country would indirectly affect consumers‟ attitudes
and class in modern societies and the two reasons that toward the brand if consumers are not familiar with the
consumers buy luxury goods are to show that they country's products (Thuy, 2008). Thus:
belong to the higher class and to differentiate themselves H9: There is a direct relationship between brand
from those of the lower class. In Nia's (2000) study, the familiarity and consumers' purchase intention of luxury
results also indicated that consumers believe that automobiles.
ownership of original luxury brand products gives them
personal satisfaction and helps them to be admired, COO and purchase intention
recognized, and accepted by others (Thuy, 2008). Thus,
the following hypotheses: Wall et al. (1991) noted that, for luxury items, the COO
tended to have a stronger effect than price in product
H1: There is a direct relationship between conspicuous quality assessment (Piron, 2000). Bilkey and Nes (1982)
value and consumers' purchase intention of luxury showed that consumers' attitude toward foreign products
automobiles. or foreign brands could be influenced by consumers'
H2: There is a direct relationship between unique value image or knowledge about that country.
and consumers' purchase intention of luxury automobiles. In Lin and Sternquist's study (1994), the results
H3: There is a direct relationship between social value indicated that products from more developed countries
and consumers' purchase intention of luxury automobiles. usually gain more positive evaluations than products from
H4: There is a direct relationship between hedonic value less developed countries. Johansson et al. (1985)
and consumers' purchase intention of luxury automobiles. provided the evidence to support that stereotypes related
H5: There is a direct relationship between quality value to specific country of origin will affect the consumers'
and consumers' purchase intention of luxury automobiles. perceptions of attributes for some products. It means that
H6: There is a direct relationship between luxury brand a countries image becomes a bias and will influence the
perception and consumers' purchase intention of luxury purchase decision.
automobiles. Nigashima defined country of origin effect as "the
H7: There is a direct relationship between purchase picture, the reputation, and the stereotype that
intention and luxury brand perception of consumers' businessmen and consumers attach to products of a
luxury automobiles. specific country." This image is created by such variables
such as representative products, national characteristics,
Brand preference economic, as well as political background, history, and
traditions" (Thuy, 2008). It can therefore be hypothesized
According to Roth and Romeo (1992), the image of a that:
country arises from a series of dimensions that positively
qualify a nation in terms of its production profile. Such H10: There is a direct relationship between country of
dimensions include the following aspects: innovative origin and consumers' purchase intention of luxury
approach (superiority, cutting-edge technology), design automobiles.
(style, elegance, and balance), prestige (exclusiveness
and status of the national brands), and workmanship COO and brand perception
(reliability, durability, and quality of national manufacts).
According to Kotler (1980), a product is defined as The objective of Piron's (2000) study was to measure and
anything that can be offered to a market for attention, analyze the impact of country of origin on consumers'
acquisition, use, or consumption that may satisfy a need purchasing intention of products which are consumed
or want (Thuy, 2008). Therefore, we propose that: conspicuously. Although the results indicated that a
product's country of origin may not be a strong
H8: There is a direct relationship between brand determinant in purchasing products, it appeared that
preference and consumers' purchase intention of luxury country of origin would affect consumers' buying
automobiles. decisions more when buying luxuries rather than
necessities (Thuy, 2008).
Familiarity
H11: There is a direct relationship between country of
Alba and Hutchinson (1987); Kent and Allen (1994) origin and luxury brand perception (Appendix 1) of
demonstrated that brand familiarity is generally viewed as consumers' luxury automobiles.
a reflection of the extent of a consumer‟s direct and
indirect experience with a brand. Kent and Allen (1994) Demographic factors
found that the more consumers are familiar with a brand,
the higher the quantity of response and memory towards Dubois and Laurent, (1994), Tidwell and Dubois, (1996),
1782 Afr. J. Bus. Manage.

Table 2. Variables, items and scale.

S/N Variables name Items Scale name References

1 Country of origin 7 5-Point Likert Yasin et al. (2007)
2 Familiarity (Brand) 3 5- Point semantic differentials Simonin and Ruth (1998) and Ruth (2001)
Costely and Brucks (1992)
3 Preference brand 3 100-Point summated scale
and Costely (1993)

Conspicuous value 4
Unique value 3
Luxury brand
4 Social value 2 5-Point Likert Wright (2005) and Thuy (2008)
perception
Hedonic value 5
Quality value 5

5 Purchase intention 5 5-Point ratings scale Dodds et al. (1991)

6 Demographic factors 7 ‫ــــــــــــــــــ‬

showed that the perception of luxury is influenced by Summated scale, 5-point Ratings scale (Thuy, 2008; Dodds et al.,
demographics, lifestyle, habit, social environment, and of 1991; Simon and Ruth, 1998; Ruth, 2001; Yasin et al., 2007;
Wright, 2005; Costely and Brucks, 1992; Costely, 1993). Table 2
course, the purveyors of luxuries, and the marketers. shows variables, items, and scales that were used in this study.
That means drastic cultural influences are reflected in Each questionnaire item was scored on a five-point Likert scale
the perception of luxury (Thuy, 2008). Accordingly: (1 = strongly disagree; 2 = disagree; 3 = neutral; 4 = agree; and 5 =
strongly agree). The questionnaire contained a few nominally
H12: There is a direct relationship between age and scaled background questions. These questions sought information
luxury brand perception of consumers' luxury on demographics (age, gender, marital status, monthly family
income, household size, monthly family cost, saving). The
automobiles. questionnaire has ten sections: brand familiarity, country of origin,
H13: There is a direct relationship between sex and conspicuous value, unique value, social value, hedonic value,
luxury brand perception of consumers' luxury quality value, purchase intention, brand preference and
automobiles. demographic factors.
H14: There is a direct relationship between marriage A total of 412 questionnaires were distributed between May 2011
and June 2011. The printed questionnaires were distributed through
status and luxury brand perception of consumers' luxury
personal visits to owners of luxury automobiles such as Toyota,
automobiles. Hyundai, and Kia Motors companies of different geography sections
H15: There is a direct relationship between family in Tehran. After distributing survey questionnaires, we asked the
monthly income and luxury brand perception of recipients for their email addresses or telephone numbers in order
consumers' luxury automobiles. to increase the response rate by making a call and sending an
H16: There is a direct relationship between household email to the participants who could not complete the survey.
To refine the measures and to assess their reliability and validity,
size and luxury brand perception of consumers' luxury the survey was conducted with strict guidelines. Each participant
automobiles. was requested to carefully complete the questionnaire. Twenty-two
questionnaires were eliminated due to invalid answers or a lack of
experience in brand preference, leaving 390 questionnaires for our
MATERIALS AND METHODS
empirical analysis.
Measurement assessments were used to validate our model. The
instrument for this study consists of the questionnaire proposed by Reliability and validity tests
this paper on demographic factors and brand perception on
purchase intention of luxury automobile in Iranian Consumers. In Validity test
this study Mercedes Benz and Lexus were selected as Luxury
automobile from other luxury automobiles, because of their Validity is often assessed along with reliability - the extent to which
presence in the Iranian market, different country of origin, and a measurement gives consistent results. An early definition of test
comparison between two products. validity identified it with the degree of correlation between the test
The questionnaire was first developed in English and then and a criterion. Under this definition, one can show that reliability of
translated into Farsi. Back translation and further testing were the test and the criterion places an upper limit on the possible
conducted to ensure consistency and reliability between the English correlation between them (the so-called validity coefficient). Validity
and Farsi version. The study is relying on proportional stratified of the structure is another important item in analyzing structural
sampling. Respondents mainly included Toyota, Hyundai and Kia equations and correlations among factors (Wikipedia, 2011).
Motors owners in Tehran. Face validity is a property of a test intended to measure something.
Face validity is very closely related to content validity. Face validity
describes to whether the test "looks valid" to the examinees who
Survey administration take it, the administrative personnel who decide on its use, and
other technically-untrained observers (Wikipedia, 2011).
The survey contained five sections totaling 44 questions on a 5- According to Anastasi and Urbina (1997) content validity is a non-
point Semantic differentials, 5-point Likert scale, 100-point statistical type of validity that involves “the systematic
 Hanzaee and Rouhani 1783

Table 3. Cronbach's Alpha. RESULTS

Scales Alpha In this research, we surveyed the relationship between

Total of Mercedes Benz 0.8540 demographic factors on luxury brand perception and also
Total of Lexus 0.8757 relationship between brand perceptions on the purchase
intention. Descriptive and inferential statistical were used
for the analysis of the questionnaires. Descriptive
statistical include frequency table and Mean, in inferential
examination of the test content to determine whether it covers a level use of SEM include CFA, Path analysis, variance
representative sample of the behavior domain to be measured”. For analysis and T-test.
example, does an IQ questionnaire have items covering all areas of
intelligence discussed in the scientific literature? Content validity
evidence involves the degree to which the content of the test Structural equation modeling
matches a content domain associated with the construct. Content
related evidence typically involves subject matter experts (SME's)
evaluating test items against the test specifications. Content validity As suggested in the literature (Bollen and Long, 1993;
requires more rigorous statistical tests than face validity, which only Joreskog and Sorbom, 1993; Kline, 1998), the model fit is
requires an intuitive judgment. Content validity is most often assessed by such indices as the comparative fit index
addressed in academic and vocational testing, where test items (CFI), the goodness of fit index (GFI; Hair et al., 2003),
need to reflect the knowledge actually required for a given topic the Normed fit index (NFI), and the root mean square
area (for example, history) or job skill (for example, accounting).
error of approximation (RMSEA) (Steiger, 1990). The
One widely used method of measuring content validity was
developed by Lawshe (1975). It is essentially a method for gauging comparative fit index is an index of overall fit (Gerbing et
agreement among raters or judges regarding how essential a al., 1993). The goodness of fit index measures the fit of a
particular item is. Lawshe (1975) proposed that each of the subject model compared to other models (Hair et al., 2003). The
matter expert raters (SMEs) on the judging panel respond to the Normed fit index measures the proportion by which a
following question for each item: "Is the skill or knowledge model is improved in terms of the fit when compared to
measured by this item 'essential,' 'useful, but not essential,' or 'not
necessary' to the performance of the construct?" According to him,
the base model (Hair et al., 2003). The RMSEA provides
if more than half the panelists indicate that an item is essential, that information in terms of the discrepancy for the degrees of
item has at least some content validity. Greater levels of content freedom for a model (Steiger, 1990). The accepted
validity exist as larger numbers of panelists agree that a particular thresholds for GFI, NFI, and CFI are 0.90; RMSEA is
item is essential. Using these assumptions, Lawshe (1975) recommended to be at most 0.05, and acceptable up to
developed a formula termed the content validity ratio: CVR = (ne − 0.08 (Gefen et al., 2000).
N / 2) / (N / 2) where CVR = content validity ratio, ne = number of
SME panelists indicating "essential", N = total number of SME The correctness of the research model was tested by
panelists. This formula yields values which range from +1 to -1; using structural equation modeling techniques with
positive values indicate that at least half the SMEs rated the item as LISREL 8.54. The Chi-square statistic of the Mercedes
essential. The mean CVR across items may be used as an indicator Benz model was 422.84 with 125 of freedom and the Chi-
of overall test content validity (Wikipedia, 2011). In this research, square statistic of Lexus model was 425.54 with 133 of
CVR was more than 0.90 for each item. So questionnaire has
freedom, thus indicating a good fit with the model (a ratio
content validity.
of less than 3). However, since the Chi-square test is
very sensitive to the sample size, we employed a number
Reliability test of other indices to further test the model fit. As shown in
Table 4, all the indices – RMR, SRMR, GFI, NFI, NNFI,
Reliability is determined by Cronbach‟s alpha, a popular method for IFI, CFI and RMSEA – are at acceptable levels. Overall,
measuring reliability (Mukherjee and Nath, 2003). Nunnally (1978) the results showed that our model provides a valid
suggests that for any research at its early stage, a reliability score
or alpha that is 0.60 or above is sufficient. As shown in Table 3, the
framework for the measurement of luxury brand
reliability scores of all the constructs were found to exceed the perception on purchase intention.
threshold set by Nunnally (1978); all measures demonstrated good In this research, SPSS and LISREL software were used
levels of reliability (greater than 0.70). The country of origin scale for data analysis. The LISREL is mainly used for analysis
achieved the largest reliability of 0.8592 for Mercedes Benz and of measurement and the structural models to assess the
0.8205 for Lexus. goodness-of-fit and explanation of the model. SEM
The first pilot study was conducted in the autumn of 2010 to test
the instrument among consumers in Esfahan and feedbacks from combines the factor analysis model and SEM can explain
the pilot study were used to revise and improve the questionnaire. the relationship among a series of interdependent
After eliminating the unusable, the procedure yielded a total of 53 potential variables. We also verify convergent validity and
from 73 respondents. The second pilot study was conducted in the the goodness-of-fit of our research model.
spring of 2011 to test the instrument among consumers in Tehran The modeling of structural equations means creating a
and feedbacks from the pilot study were used to revise and improve
statistical model for the study of linear relations between
the questionnaire. The data collection resulted in 30 usable
questionnaires from 31 respondents. Finally, after eliminating the latent (unviewed) variables and evident (viewed or
unusable, the procedure yielded a total of 390 from 412 observed) variables. In other words, structural equation
respondents. modeling is a powerful statistical tool that combines a
1784 Afr. J. Bus. Manage.

Table 4. Indices of fit and comments for model analysis.

Indices in SEM analysis Mercedes Benz Lexus Data fitting of the model
RMR (Root Mean Square Residual) 0.12 0.13 Good fit (should be near the zero)
SRMR (Standardized Root Mean Square Residual) 0.04 0.06 Good fit (should be near the zero)
GFI (Goodness of Fit Index) 0.92 0.90 Good fit (should be greater than 0.90)
NFI (Normed Fit Index) 0.97 0.94 Good fit (should be greater than 0.90)
NNFI (Non-Normed Fit Index) 0.97 0.94 Good fit (should be greater than 0.90)
IFI (Incremental Fit Index) 0.97 0.94 Good fit (should be greater than 0.90)
CFI (Comparative Fit Index) 0.97 0.94 Good fit (should be greater than 0.90)
RMSEA (Room Mean Square Error Approximation) 0.075 0.077 Good fit (should be less than 0.08)

Table 5. Hypotheses-testing of the research model.

Path coefficient
Hypothesis Structural path t-value
Mercedes Benz
H1 Conspicuous value  purchase intention 0.50 7.78
H2 Unique values  purchase intention 0.78 10.09
H3 Social value purchase intention 0.01 0.69
H4 Hedonic value purchase intention 0.44 6.52
H5 Quality value purchase intention 0.89 16.03
H6 Luxury brand perception purchase intention 0.57 6.12
H7 Purchase intentionluxury brand perception 0.62 8.28
H8 Brand preference purchase intention 0.79 10.15
H9 Brand familiarity purchase intention 0.41 5.19
H10 Country of origin purchase intention 0.51 7.89
H11 Country of originluxury brand perception 0.39 4.45

measurement model (affirmative factor analysis) and the social value on purchase intention was not significant ( =
structural model (Figure 1) (regression of path analysis) 0.01, t = 0.69, ρ < 0.01), thus, Hypothesis 3 (H3) is not
into one statistical synchronic test (Heidarzadeh and supported. Our results indicate that hedonic value ( =
Sadeghi, 2010). 0.44, t = 6.52, ρ < 0.01), quality value ( = 0.89, t = 16.03,
The result shows in the model; Mercedes Benz x2 (125) ρ < 0.01), luxury brand perception (=0.57, t=6.12,
= 422.84, RMSEA = 0.075, CFI = 0.97, GFI= 0.92 and in ρ<0.01), purchase intention (=0.62, t=8.28, ρ<0.01),
the Lexus Brand x2 (133) = 425.54, RMSEA = 0.077, CFI brand preference ( = 0.79, t = 10.15, ρ < 0.01), brand
= 0.94, GFI = 0.90.
familiarity ( = 0.41, t = 5.19, ρ < 0.01), country of origin
on purchase intention ( = 0.51, t = 7.89, ρ < 0.01).
Hence, Hypothesis 4 (H4), 5 (H5), 6 (H6), 7 (H7), 8 (H8), 9
Hypotheses-path testing
(H9) and 10 (H10) are supported. On the other hand, the
effect of country of origin on luxury brand perception
This section presents the statistical results of the
measurement validation and hypothesis testing. The (=0.39, t=4.45, ρ<0.01) was significant; Hypothesis 11
effects of conspicuous, unique, social, hedonic, quality (H11) is supported.
values, brand perception, brand preference, brand As shown in Table 6, (Lexus) the effects of
familiarity and country of origin on purchase intention conspicuous, unique values on purchase intention were
were assessed through LISREL 8.54. Our empirical significant ( = 0.41, t = 7.06, ρ < 0.01 and  = 0.48, t =
results are shown in Table 5. 7.65, ρ < 0.01). Hence, Hypothesis 1 (H1) and 2 (H2) are
As shown in Table 5, (Mercedes Benz) the effects of strongly supported by the results. In contrast, the effect of
conspicuous, unique values on purchase intention were social value on purchase intention was not significant ( =
significant ( = 0.50, t = 7.78, ρ < 0.01 and  = 0.78, t = 0.04, t = 1.12, ρ < 0.01), thus, Hypothesis 3 (H3) similar to
10.09, ρ < 0.01). Hence, Hypothesis 1 (H1) and 2 (H2) are Mercedes Benz brand is not supported.
strongly supported by the results. In contrast, the effect of Our results indicate that hedonic value ( = 0.53, t =
 Hanzaee and Rouhani 1785

Table 6. Hypotheses-testing of the research model.

Path coefficient
Hypothesis Structural path t-value
Lexus
H1 Conspicuous value  purchase intention 0.41 7.06
H2 Unique values  purchase intention 0.48 7.65
H3 Social value purchase intention 0.04 1.12
H4 Hedonic value purchase intention 0.53 8.20
H5 Quality value purchase intention 0.87 15.67
H6 Luxury brand perception purchase intention 0.63 5.12
H7 Purchase intentionluxury brand perception 0.42 3.23
H8 Brand preference purchase intention 0.76 9.97
H9 Brand familiarity purchase intention 0.77 9.85
H10 Country of origin purchase intention 0.57 8.78
H11 Country of originluxury brand perception 0.54 5.05

Country of
Origin

H10

Brand
Familiarity
H9
H11

Brand H8
Preference

H6
Demographic Luxury Brand Purchase
Perception Intention
Factors
H:12-16 H7

H1

Conspicuous
Value
H2

Unique Value
H3

Social Value
H4

Hedonic Value

H5

Quality Value

Figure 1. Proposed structural model.

1786 Afr. J. Bus. Manage.

Figure 2. SEM model of Mercedes Benz brand.

8.20, ρ < 0.01), quality value ( = 0.87, t = 15.67, ρ < 0.54, t = 5.05, ρ < 0.01) was significant; Hypothesis 11
0.01), luxury brand perception ( = 0.63, t = 5.12, ρ < (H11) is supported.
0.01), purchase intention ( = 0.42, t = 3.23, ρ < 0.01), Figures 2 and 3 show a summary of our results for
brand preference ( = 0.76, t = 9.97, ρ < 0.01), brand each hypothesis in the research model. The hypothesis
familiarity ( = 0.77, t = 9.85, ρ < 0.01), country of origin of demographic factors (age, sex, marital status, monthly
on purchase intention ( = 0.57, t = 8.78, ρ < 0.01). family Income and household size) Hypothesis 12 to 16
Hence, Hypothesis 4 (H4), 5 (H5), 6 (H6), 7 (H7), 8 (H8), 9 was rejected with the exception that H15 was supported,
(H9), and 10 (H10) are supported. On the other hand, the indicating a significant relationship between monthly
family income and purchase intention (Mercedes Benz
effect of country of origin on luxury brand perception ( =
and Lexus). In the marital group with 65% having the
 Hanzaee and Rouhani 1787

Figure 3. SEM model of Lexus brand.

most of frequency, household size variable, 224 people income (Table 7).
of 390 respondents were 3 to 4 household size that it is
58%. In the age variable, the most of frequency related to
29 to 40 years old with 166 people, 43% of sample. The DISCUSSION AND CONCLUSION
variable of sex, 343 males response to questionnaire and
monthly family income variable with 119 people have 2 to In Usunier's interpretation, the perception of the country's
4 milliard riyal (2 to 4 million Toman) monthly family image is also influenced by cognitive components
1788 Afr. J. Bus. Manage.

Table 7. Sample demographic factors-ANOVA.

Control variable Changing source SS (Sum of squares) Df MS (Mean squares) F Sig

between 2.464 4 0.616
Age Within 107.683 384 0.281 2.195 0.069
Total 110.247 388

between 2.464 4 0.616

Monthly income Within 107.683 384 0.281 2.192 0.03
Total 110.247 388

between 2.398 4 0.599

Household size Within 136.055 384 0.354 1.692 0.151
Total 138.452 388

(referring to social, economic, cultural and political generalize the results reveals factors that influence
characteristics), affective components (feelings towards Iranian consumer behavior. Other limitations, due to the
the country) and additionally by stereotypes (ingrained governing culture of the country, were that some of the
preconceptions) (Thuy, 2008). responses to questions such as social, hedonic, and
This study brings out several interesting results, either conspicuous values may have come from defensive
from a conceptual or an operational perspective that are posture and can be constituted as unreal.
outlined subsequently in this study. The main purpose of
this study was to investigate Iranian consumers'
perception about luxury automobile brands, compared SUGGESTIONS FOR FUTURE RESEARCH
between German luxury automobile Mercedes Benz and
Japanese luxury automobile Lexus. Further researches should examine other products and
Most of the participants in the study were familiar with, countries of origin relating to luxury consumption and
and liked these two luxury automobile brands. However, replicate the findings in this study. Also, this kind of luxury
the German brand was more preferred while the consumption should be compared to other demographic
Japanese brand was more familiar. Additionally, in characteristics such as education, location, rental, or
forming brand perception of luxury automobile Mercedes private home. Future research can investigate the
Benz, variables of hedonic, unique and quality value was relationship between education and luxury brand
significantly higher than conspicuous and social value. perception and also brand familiarity.
But, the Lexus brand showed that variables of unique,
hedonic, and quality value were significantly higher than
conspicuous and social value. They have more of a role MANAGERIAL IMPLICATIONS AND MARKETING
in forming of luxury brand perception in Iranian RECOMMENDATIONS
consumers.
The luxury brands industry is unique and different from
other industries. In order to succeed, it is important for
LIMITATIONS marketers to understand their target market and how their
customers evaluate products and make buying decisions.
There are limitations in this research; first, since the From this study, an automobile company can stimulate
research only focused on one German luxury automobile consumer purchase behavior of its luxury automobile
brand and one Japanese luxury automobile brand, it may through careful management of its marketing
not represent the overall Iranian consumers‟ perceptions communication mix by addressing specific factors and
of all German and Japanese luxury automobile brands. dimensions relevant for modern Iranians. The five
Moreover, the research only included a limited number of perceived values of luxury automobiles can be used as
product type (luxury automobile) and country of origin guidelines for salesmen to sell automobiles successfully
(German and Japan) in Iran. to customers in Iran. They can indicate the key selling
Second, social value is measured in two items. Third, this points of luxury automobile relevant for consumers.
study had practical problems for researcher because This study will also make a practical contribution to the
there was no internal investigation in Iran. Fourth, Culture management in luxury industry. In the international
and religion factors, especially in the luxury consumption, market, the expansion of luxuries not only presents new
with varying degrees in different demographic to business opportunities, but also poses enormous
 Hanzaee and Rouhani 1789

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1790 Afr. J. Bus. Manage.

Appendix 1. Survey questionnaire for Luxury brand perception items.

Variable
Items
Luxury brand perception
Luxury machines inevitably are very expensive.
Owning this luxury machine displays wealth.
Conspicuous value
Owning this luxury Machine displays social class.
Owning this luxury machine makes you conspicuous.

This luxury machine is unique.

Unique value This luxury machine is scarcity.
This luxury machine is distinctive.

Because others have this luxury machine, hence I would like to own one.
Social value
Seeking to imitate the rich and stars (celebrities).

This luxury machine has aesthetic appeal.

This luxury machine is fashionable.
Hedonic value This luxury machine has personal history.
This luxury machine makes life beautiful.
This luxury machine is your dream.

This luxury machine has excellent quality.

This luxury machine is functional.
Quality value This luxury machine is not mass‐produced.
This luxury machine has perfect shopping service.
This luxury machine has a perfect warranty.

The likelihood of purchasing this product is:

If I were going to buy this product, I would consider buying the model at the price shown.
Purchase intention At the price shown, I would consider buying the product
The probability that I would consider buying the product is:
My willingness to buy the product is: