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Chapter 2: Literature Review

2.1 Introduction

A literature review is a significant part of the dissertation that helps the theoretical understanding of the research issue by reviewing the available literature.  For this, different books and journal articles are reviewed to develop the understanding of the theoretical and conceptual aspects of luxury brands and related issues in the Chinese market. In this study, the literature is reviewed to explore different issues and the marketing strategies of the luxury jewellery firms in the Chinese market.

2.2 Concept of Luxury

Lu (2011) defines luxury as the state of rich life style indicating high social reputation in the society. However, Tian and Borges (2011) classify the luxury as premium class, high visibility, dominance, and reputation. On the other hand, Shiau and Luo (2012) stated that luxury makes the people different from others based on different characteristics including premium quality, craftsmanship, brand identity, creativity and emotional appeal. It can be revealed from the research of Ngai and Cho (2012) that the economic perspective of the consumer buying behavior plays an important role in influencing the buying behavior of the customers towards luxury products. Regarding this, Heine (2010) also stated that the increasing income level and improving social status encourages the Chinese people to purchase the luxury products like jewellery. Relating to this, income theory of consumer buying behavior also holds that the consumption rate of the people depends on the income level that increases the demand for the products. However, Schultz and Jain (2015) had different views and argued that the use of luxury products assures the Asian people to develop the distinct social status in the society. To show only social status, the people are encouraged to purchase the luxury products in China. In support of this, Bilge (2015) also affirmed that people are encouraged to purchase the luxury products only for social status and comfort. Though, the findings of Okonkwo (2016) suggest that culture plays an important role in influencing the buying behavior of the customers towards purchasing of luxury brands. In this study, it is also revealed that the Chinese customers like to adopt the Western culture that influences them to live rich and prosperous lifestyle. Because of the influence of the Western culture, the Chinese people prefer to purchase the Western luxury jewellery to enhance their social status and life style.

2.3 Issues faced by Western luxury jewellery brands in China

On the basis of the study conducted by Degen (2009), it can be determined that the customers play a significant role in making the business successful and also cause challenges and issues for the businesses in a foreign country. Regarding this, Khare and Handa (2009) conducted a study on the issues and opportunities for the luxury businesses in China and revealed that price sensitiveness among the Chinese customers is a significant issue for the luxury businesses because they select the even luxury products after making a price comparison. However, Zhan and He (2012) depicted in their research that it is more significant for the customers to perceive the product value as compared to price while choosing the luxury products. Regarding this, marginal utility theory cited in Ngai and Cho (2012) also hold that the customers prefer the products which are offered with the most utility and higher satisfaction at relative price.

Besides this, Kapferer and Bastien (2012) highlighted in their literature about issue related to promotional technology. Based on this literature, it can be evaluated that it is not easy for the foreign luxury firms to promote their businesses online in China due to lack of common social media like Facebook, Twitter, Google, YouTube, etc. In relation to this, it can also be revealed from the findings of Sudhakar and Parise (2012) that the organizations can access to the Chinese social media platforms like Renren, Sina Weibo, Wechat, Youku, Baidu, etc. to promote their businesses. The need of development of these communication platforms increases the starting cost of business that may affect the profit margin for the foreign firms in China. But at the same time, the study of Tian and Borges (2011) reveals that there is large number of social media users in China as the local firms try to influence their buying behavior and determine the buying pattern through social media and meet their needs and requirements in customized way.  It is challenging for the Western firms to convey their marketing message to the customers as due to lack of online presence, Western firms are not capable of competing with the local firms having strong presence on local social media. However, it can be pointed out from the study of Yoo and Lee (2012) that Asian customers prefer both web-rooming and show-rooming as they search the product online and purchase from the store and also buy the luxury products from online store after reviewing on the store. Therefore, it is not sufficient to make the online presence as it is also crucial to make the luxury products available both online and offline stores. Supporting to this, Kapferer and Bastien (2012) stated that it is crucial for the customers to get access to the luxury products easily to get satisfied. 



Bellaiche, J. M., Mei-Pochtler, A., and Hanisch, D. (2010) The new world of luxury. Report, Boston Consulting Group, Boston.

Bhanot, S. (2010) Segmenting Markets along Multiple Dimensions of Luxury Value: The Case of India.

Bilge, H. A. (2015) Luxury Consumption: Literature Review.

Chevalier, M., and Gutsatz, M. (2012) Luxury retail management: How the world's top brands provide quality product and service support. USA: John Wiley and Sons.




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