DETERMINANTS OF PURCHASING LUXURY HANDBAGS AMONG THE GENERATION Y

Abstract

New trend has emerged within the handbag industry due to the consumer demand for status-laden products. Generation Y has had exposure to high technology and economic independence since their upbringing days, a result of which their preference has always been spending on technology goods and brands perceived to quality and class. The purpose of this study is to investigate why Generation Y acquire luxury designer handbags either for mere use or just to show off apart from functional utility. Handbags have been selected the focus of this research because they are consumed visibly by individuals and have the ability to be used higher-level needs such as conveying self-image, investment items, and self-reward. The results reveals that, individual value is the critical dimension of Generation Y purchase intention of luxury branded handbags. In terms of relationships shows that there is a positive relationship between purchase intention and the independent variables; financial value, functional value, individual value, and social value. Among all the independent variables, individual value holds the strongest effect size with the purchase intention.

Full text

Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee (2015)
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DETERMINANTS OF PURCHASING LUXURY HANDBAGS
AMONG THE GENERATION Y
Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee,
Universiti Teknologi MARA (UiTM), Kampus Kota Samarahan Jalan Meranek, Kota Samarahan 94300, MALAYSIA
ABSTRACT
New trend has emerged within the handbag industry due to the consumer demand for status-laden products.
Generation Y has had exposure to high technology and economic independence since their upbringing days,
a result of which their preference has always been spending on technology goods and brands perceived to
quality and class. The purpose of this study is to investigate why Generation Y acquire luxury designer
handbags either for mere use or just to show off apart from functional utility. Handbags have been selected
the focus of this research because they are consumed visibly by individuals and have the ability to be used
higher-level needs such as conveying self-image, investment items, and self-reward. The results reveals that,
individual value is the critical dimension of Generation Y purchase intention of luxury branded handbags. In
terms of relationships shows that there is a positive relationship between purchase intention and the
independent variables; financial value, functional value, individual value, and social value. Among all the
independent variables, individual value holds the strongest effect size with the purchase intention.
Type of Paper: Research Paper
Keywords: brand equity, generation Y, buying purchase intention, luxury bags.
1. Introduction
Symbolic consumption is the process when individuals by using status goods as symbols
communicate meaning about themselves to their reference groups (Veblen, 1899). Luxury items such
as designer handbag is one of the symbolic consumption goods that have high relation with high
quality, exclusive, high price and social status. Casidy (2012) stated that Generation Y consumers’
shopping behavior suggested that personality traits perform an important role in affecting people’s
attitude toward prestige fashion brands. Nelson and Devanathan (2005) mentioned brand
consciousness like materialism, is not the same for everyone and should be regarded as an individual
difference variable. In fact, Jati Kasuma et.al (2014) also reveals their study result shows that there
is a significant relationship between Perceived Emotional Value and Status and Materialistic
Consumption towards intention to purchase a luxury brand of Sereni & Shentel headband among
adults’ women when just purchasing expensive headband.
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Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee (2015)
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Generation Y has had exposure to high technology and economic independence since their
upbringing days, as a result of which their preference has always been spending on technology goods
and brands perceived to have quality and class (McCrindle, 2006). The amount of consumption of
luxury handbags increased gradually since brands are seen as status symbols, further research is done
due to this extraordinary phenomenon. According to Grotts & Johnson (2013) new trend has
emerged within the handbag industry due to the consumer demand for status-laden products.
Numbers of handbag rental web sites are increasing due to the price of luxury handbags. Consumers
who are on a tight budget can rent a bag for a period of time they desire.
Due to the rapid increase in spending on luxury fashion branded products by young consumers, it is
necessary for luxury brands to understand what motivates these individuals towards their purchasing,
thus to communicate with them more effectively. The purpose of this study is to investigate
Generation Y members’ consumption for luxury designer handbags for which mere use or display of
particular branded products brings prestige to owners, apart from any functional utility. Handbags
have been selected as the focus of this research because they are consumed visibly by individuals and
have the ability to be used for higher-level needs such as conveying self-image, investment items,
and self-reward. This study intends to find out if Generation Y purchase intention is influenced by
factors such as financial value, functional value, individual value, and social value associated with
the consumption of luxury brand. The research objectives of this study are to examine the critical
dimensions and relationship between the dimensions of Generation Y intention to buy luxury
designer handbags and brand equity. Finally to examine the strength of the relationship between
purchase intention of luxury handbags and brand equity.
2. Literature Review
2.1 Financial Value
Luxury bags represent an extensive price range depending on the brand name, Coach to Hermes.
A Coach bag may cost around MYR500 to MYR2000 while a Hermes Birkin would cost MYR30,
000 depending on the colour, hardware fixtures, and skin. Prestige pricing-setting a rather high price
to suggest high quality or status (McCarthy & Perreault, 1987) - may make certain products or
services more desirable (Groth & McDaniel, 1993). Some bags may not be easily found in stores.
Interested buyers sometimes have to go through a waiting list in order to get a Birkin bag. This has
pushed the envelope further as not everyone can own and buy one. These designer bags not only
represent wealth and identity but also hold financial value. The price escalates with time; vintage
bags can be sold at a high price especially limited ones. According to Grotts & Johnson (2013), the
average price for luxury handbags increases from $600 to $10,000 in a four-year time span. Oil
paintings, 18th century French Bordeaux, Faberge eggs, coin collections, Louis Vuitton Luggage and
Hermès bags are alternative assets, which are called high-ticket pieces in the world of finance and
investment. Some buyers see this opportunity as a great investment.
2.2 Functional Value
Luxury bags hold functional value where they are perceived to be functionally better in the sense
of usability, quality and uniqueness. The guarantee function, understanding by this the promise or
guarantee of quality, is based on the appraisal that the brand is reliable, efficiently carries out its
performance qualities and meets the generated expectations. Similarly, it is fitting to associate this
function with the perception that the brand is linked to products with a suitable level of performance

Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee (2015)
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and is concerned about conveniently satisfying consumer needs, contributing variety and innovation
(Rio et al, 2001). Wiedmann, Hennings & Siebels (2009) explained that luxury goods are those that
have a high ratio of price to quality. When it comes to luxury bags, it always gives the impression of
high quality bag. Luxury designer bags are made to last long and durable. Different bags have
different quality depending on the stitching and material used. Each and every Hermes Birkin is hand
sewn, and passed through different artisan in order to finish. Material used should not possess
aesthetic value but also superior quality to ensure longevity. Gentry et al. (2006) found that one
reason consumers buy luxury brands is because of the superior quality reflected in the brand name.
Brand logos can be very memorable and provide a variety of appreciated meanings as it does not act
as a communication tool but also act as a symbol which represents luxury brand ideas which is
consistent with consumer perceptions Gobe (2001).
2.3 Individual Value
Individual value represents the aspect of consumer’s personal point of reference towards luxury
consumption as well as addressing personal value, Danziger (2005). This dimension also includes
self-identity, materialistic, and hedonic value. Sometimes, a bag is not used to carry personal
belongings but also works as an accessory which is basically to express one’s feelings or identity.
Puntoni (2001) confirmed the significant impact of self-congruity on luxury brand purchases. From
this point of view, consumers may use luxury items to integrate symbolic meaning into their own
identity (Vigneron and Johnson, 2004). Consumers might acquire luxury bags due to positive
emotional experience when they purchase one. This usually happens to a group of people who enjoy
shopping, also known as shopaholic. Emotional responses to luxury include aesthetic beauty,
enjoyment and sensory pleasure (Wiedmann et al., 2009). Others may purchase luxury bags due to
self-gifting behaviour such as rewards due to accomplishment or consolation for disappointment also
known as retail therapy. Hence, hedonism describes the perceived subjective utility and intrinsically
attractive properties acquired from the purchase and consumption of a luxury brand as arousing
feelings and affective states received from personal rewards and fulfilment (Sheth, Newman, &
Gross, 1991).
2.4 Social Value
Owning and carrying a MYR15, 000 Chanel 2.55 flap bag around town will leave an impression
to others. Possessions serve as a signal or source of communicating and portraying impressions of
who they are and what their status or position is (Douglas & Isherwood, 1979; Belk, 1988). Designer
bag is an arm candy and usually worn in public places or social events. In order to get notice and
accepted by the society or known as the elite group, consumers buy these luxury handbags to impress
them. Dubois and Duquesne (1993) studied that the reason of consuming luxury goods is primarily
for their symbolic value. Mason (1981) views satisfaction resulting from conspicuous consumption
as a being consequence of audience reaction to the wealth displayed by purchase and not from the
actual qualities of the good or service.

Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee (2015)
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2.5 Research Framework and Hypothesis Development
Basically, this research looks for empirical evidence that could be used to explain the relationship
between the factors and purchasing of luxury brand handbags. Thus, a research framework has been
developed and formulated. The research framework above represents on generation Y purchase
intention of luxury handbags which consist of financial value, functional value, individual value, and
social value which is adapted from Wiedmann, Hennigs, and Siebels (2009). Based on the research
problems and objectives, the following hypotheses were developed.
H1: There is a positive relationship between financial values on generation Y purchasing of
luxury handbags
H2: There is a positive relationship between functional values on generation Y purchasing of
luxury handbags
H3: There is a positive relationship between individual values on generation Y purchasing of
luxury handbags
H4: There is a positive relationship between social values on generation Y purchasing of luxury
handbags
3. Methodology
A quantitative-based research has been designed in order to collect the data as survey forms will be
distributed. This is in line with the aim of this research which is to investigate on the determinants of
purchasing luxury handbags among the generation Y in Kuching, Sarawak. The target respondent for
this research is Generation Y with the age between 20 – 38 years old. G-power analysis software
3.1.9.2 is used to determine the sample size of this study. Therefore, by using the effect size of f
square 0.15, α error prob 0.05, power Gf 0.8 with number of 4 tested predictors, therefore 85
respondents is the minimum sampling for this study. Convenience sampling method is used for data
collection. A total of 384 questionnaires were distributed among the target population, but only 200
were returned. Roscoe (1975) suggested that sample size larger than 50 and less than 500 are
appropriate for most studies. Likert scale from range 1 to 5 to assess respondents’ level of agreement.
Generation Y purchase
intention of luxury
handbags
Financial Value
Functional Value
Individual Value
Social Value
H1
H2
H3
H4

Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee (2015)
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Data were then tested using correlation and regression analysis using Statistical Package for Social
Science (SPSS) Version 20.
4. Findings and Discussion
4.1 Demographic Profile
Out of 200 respondents that were participated in this study, women participants contributed 56
percents to this study. Most of the respondents who are participated in this study are those who work
at public sector, followed by private sector and self-employed. The levels of income of the
respondents of this study are mostly above RM3000 and above. As shown in the bar chart below,
there are 25 top favourite brands as listed by the respondents in this study. The top favourite brand
that received highest rating was Louis Vuitton with a percentage of 17 percents. The details of the
favourite brand were presented in the bar chart below.
Figure 1: Top favourite brand as listed by respondents
4.2 Test of Hypotheses
Based on the hypotheses of this study, there is a positive relationship between purchase
intention and financial value, functional value, individual value, and social value. The finding
shows that the Pearson correlation values are in the range of 0.50 to 0.10 which means the
relationship is strong.
1
1
1
1
1
1
1
1
1
1
1
2
2
2
3
3
3
3
6
8
9
9
10
12
17
MCQ
Goyard
Ralph Lauren
Braun Buffel
Mansur Gravriel
Philip Lim
Burberry
Vivienne Westwood
Alexander Wang
CK
Lanvin
Kate Spade
Christian Dior
Celine
Fendi
Hermes
Givenchy
YSL
Prada
Balenciaga
Coach
Michael Kors
Gucci
Chanel
Louis Vuitton
Favourite Brand

Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee (2015)
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Table 1: Pearson Correlation Test
Financial
Value
Functional
Value
Individual
Value
Social Value
Purchase Intention
Pearson
Correlation
0.646
0.580
0.707
0.564
Sig.
0.000
0.000
0.000
0.000
In short, there is a significant relationship between the dimension of generation Y intention to buy
luxury designer handbags and brand equity. Thus, all hypotheses are accepted.
4.3 Regression Analysis
Table 2: Regression Analysis
Model
Predictors (Constant)
R
2
B
Sig.
1
Mean Financial Value
0.626
0.289
0.000
Mean Functional Value
0.141
0.042
Mean Individual Value
0.358
0.000
Mean Social Value
0.200
0.000
a. Dependent Variable: Mean Purchasing Intention
From the regression analysis in Table 2 above showed that the value of the R-square value
is
0.626 which means 62.6% of the variance in purchase intention is explained by the independent
variables. While the remaining 37.4% is explained by other factors such as purchase experience, the
origin of the bag and others. Based on the unstandardized coefficients, among all the independent
variables, individual value holds the strongest effect size with the purchase intention with the Beta
score of 0.358 followed by financial value, social value and functional value. The result indicates
that individual value is the most critical dimension that leads to the purchase intention among the
respondents.
5. Managerial Implications and Conclusion
This study is conducted due to the expanding business of luxury market as the demand for luxury
goods are increasing globally.The amount of consumption of luxury handbags increased gradually
since brands are seen as status symbols, further research is done due to this extraordinary
phenomenon. Throughout the studies, most of the respondents are women who lived in the urban
area due to the fact that modern women constantly acquiring designer handbags rather than men.
More than half of the respondents are single and have two or less household units with at least MYR
2000 to MYR 4000 income per month. Mostly the respondents are working in the public sector and
bachelor graduates. These people may own 1 or 2 designer handbags regardless of its authenticity. It
seems that Louis Vuitton is the most favourite handbag brand by the respondents. In short, the result
shows that functional value is the critical dimension as it has the highest mean value. In order to
determine the relationship between the dimensions of Generation Y intention to buy luxury designer
handbags and brand equity, correlation analysis was done. All of the Pearson correlation value shows
that there is a significant relationship between the variables. Thus, all hypotheses are accepted.
Regression analysis was done to examine the strength of relationship between purchase intention of
luxury handbags and brand equity and it can be seen in that among the independent variables,
individual value holds the strongest dimension with the purchase intention.

Jati Kasuma, Nurnazirah Jamadin , Yusman Yacob, Ahmed Sadeeq Shafiee (2015)
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Different luxury consumer may have different value orientations and brand preferences that may
satisfy their emotional and cognitive needs. Based on the results, functional value such as brand
names, quality, and exclusivity are important to meet superior standards such as signals of wealth,
power and status. To others, luxury handbags may be serving as investment items or work as
accessories to express individual self. The view of luxury value lies in financial, functional,
individual and social aspects and can be broadened as better understanding of conditions and drivers
of luxury goods are recognized. In order to elicit more sales of luxury handbags among generation Y,
marketers may be able to base their strategies on this model with regards to financial, functional,
individual and social value dimensions. This might help to improve efficiency of marketing efforts
for luxury goods. Consumers in other countries may buy, or intend to buy luxury handbags for many
reasons but they possess similar values and regardless of the country of origin, the basic drivers are
expected to be the same - among the financial, functional, individual, and social values. A
cross-cultural research with the collaboration among researchers from different places should be
done to identify other drivers such as purchase experience, handbags’ country of origin, and history
of a bag. And if a bigger sample size is covered and the data collection period was longer, the
respondents of this study can be improved.
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