The use of the Veblenian socio-psychological model for online marketing

Traditionally, consumer behaviour theories emerged from different psychological, anthropological and economic theories as marketers applied them to understand consumer wants. The Psychoanalytic theory classifies human psyche into three dimensions:

  1. Id,
  2. Ego, and
  3. Superego.

These dimensions drive consumer buying behaviour (Arunadevi, 2016). On the other hand, the Pavlovian theory of consumer behaviour focuses on drive, cues, reinforcement and motive which determines consumer purchase decisions. However, both of the theories lack generalisability as they overlook the social legacy factor for niche customers.

The Veblenian socio-psychological model states that consumers’ social and cultural backgrounds are important determinants of their buying behaviour. According to Veblen, consumer purchases are driven primarily by their need to maintain a social class and prestige rather than intrinsic needs. There are six important factors in this model:

  1. social class,
  2. level of income,
  3. culture,
  4. sub-culture,
  5. family and,
  6. the reference group.

Veblenian socio-psychological model

Thorstein Veblen had researched about the complexities of consumer behaviour in his research article on the leisure class (Jain, et al., 2017). The model helps marketers follow the demographic and behavioural pattern of customers to meet their expectations in online product or service offerings. The main purpose of the model is to assess the choice and preference of customers for delivering the product in that dimension (Yoo & Park, 2016). Studying and applying the factors of this model helps businesses to determine trends and preferences for enhancing profitability.

Social class

Social class refers to the division of society based on social and economic status (Woodward, 2003). Numerous studies have found that people from different social classes have different preferences, desires and purchasing patterns. This is due to their difference in purchasing power. Therefore most marketing efforts are tailored to suit the needs of different social classes. Today, people from all classes of society are making use of online shopping.

For instance, for a long time, Prada, the luxury fashion brand refused to sell its products online. It insisted that since it was an elite brand, selling online would diminish its social class.

However, it succumbed to the growing trend of online shopping particularly in countries such as China and India and launched its online shop in 2018. Six months following the launch, Prada’s profits rose considerably. Prompted by this change, Prada recently revealed plans to launch more product categories online and sell more through social media activities (The Fashion Law, 2018).

Level of income

Consumers’ willingness to explore the internet and make online purchases also depends on their level of income (Akman & Rehan, 2014; Hernández, Jiménez, & Martín, 2011).

For instance, income influences customers’ preference regarding the mode of payment (Bhatt, 2014).

Moreover, higher-income groups are shopping online more than the lower-income group. They also have more hesitation towards payment security. Lastly, people belonging to higher income groups will shop for expensive items more frequently than those from lower-income groups (A Upasana, Kumar, & Gupta, 2015). There are several tools available today which help e-commerce businesses to target different income groups.

For example, Facebook’s ad tool enables marketers to define its target segment as per the type of phone they own, how frequently they travel abroad, small business owned, residents of housing communities, or restaurant lovers (Poleschuk, 2018).

Such tools are specifically used by luxury e-commerce website such as Elitify.com to sell products online.

Culture & subculture

Culture has a deep influence on consumer buying behaviour. It consists of various features such as religion, nationality, geographical location, racial groups and ethnicity. Since culture is dynamic, marketers need to analyse it continuously to target consumers appropriately. Sub-culture also plays a crucial role in assessing the patterns of online buying behaviour.

For instance, the food delivery app Zomato have started using the tag ‘Halal’ for delivery of non-vegetarian meals in India.

This is one way of targeting and segmenting the customers who believe that Halal meats are safer to consume as it meets Muslim religious beliefs. Using the tags clearly entails and segments the population into two:

  1. the ones who do not want to consume Halal and,
  2. the one who wants Halal.

Family

Family background and number of family members also matter in the context of online shopping according to the Veblenian model (Eom & Seock, 2017). Buying behaviour depends on family roles, family dynamics, number of members and life cycle stage of the members. Kaur & Kochar (2018), assert that lesser the income of the family, lower will be their inclination to purchase online.

For example, health insurance policy sellers determine the family life cycle stage such as marital status, parenthood, etc. to creative promotional campaigns.

Reference group

A reference group refers to a group or an individual who has a sizeable influence on the preferences and attitude of a consumer. They affect consumers in two ways;

  1. value expression and,
  2. information utility (Jindolya & Gopal, 2016).

According to (Bourne, 1957), the influence of reference groups manifests though public consumption. Thus, reference group influence requires the presence of social meetings or interactions. Therefore in recent times, virtual reference groups have emerged as a phenomenon, wherein reference groups affect Millennials’ decisions virtually. According to Pertina, Prybutok, & Zhang (2008), it is the want for stronger social identification that leads Millennials to seek the opinions of reference groups before making a purchasing decision online.

Tesla adopted the Veblenian socio-psychological model to identify its customers

The enhancement in the accessibility of online shopping helps businesses to target the middle-income citizens also. But the Veblenian model emphasizes that the buying behaviour based on class or niche is not relevant in online marketing (Miller, 2018). Veblen also argued about modernity as a concept of latter-day barbarism due to capitalism and feminism.

Tesla is a global brand of electric car production which is famous for its attractive look and performance (Tesla, 2018). The company had followed the Veblenian Social-Psychological Model to identify buyers. Tesla takes customized order to manufacture a car which is included as their unique selling proposition. It helps to attract the social class of celebrities, ministers and industrialists. Recently, Tesla is planning to shut all of its physical outlets and deliver car only through the digital medium.

Having a Tesla car enables a customer to show their class in their social circle. The company does not need to spend on promotional campaigns due to having favourable brand recognition. A reference group of the high profile customers also enables the brand to gain more customers without promoting, which fits with the Veblenian model (Lantos, 2015).

References

  • Aruna Devi, P., 2016. Consumer Behaviour towards Lifestyle Marketing–Issues and Concepts. Asia Pacific Journal of Research, 1(2), pp. 202-207.
  • Buckles, E. & Hudders, L., 2016. An experimental study to investigate the impact of image interactivity on the perception of luxury in an online shopping context. Journal of Retailing and Consumer Services, 1(33), pp. 135-142.
  • Eom, H. & Seock, Y., 2017. Purchase Intention Toward Luxury Fashion Brands from the Social Comparison Perspective. In: Cham, ed. Marketing at the Confluence between Entertainment and Analytics. London: Springer, pp. 1277-1280.
  • Jain, S., Khan, M. & Mishra, S., 2017. Understanding consumer behaviour regarding luxury fashion goods in India based on the theory of planned behaviour. Journal of Asia Business Studies, 1(11), pp. 4-21.
  • Lantos, G., 2015. Consumer behaviour in action: Real-life applications for marketing managers. 1 ed. London: Routledge.
  • Miller, H., 2018. Veblen online: information and the risk of commandeering the conspicuous self-information Research. An International Electronic Journal, 3(23), p. n3. Tesla, 2018. About Us. [Online] Available at https://www.tesla.com/ [Accessed 22 July 2019].
  • Voramontri, D. & Klieb, L., 2018. Impact of social media on consumer behaviour. International Journal of Information and Decision Sciences, 1(462), pp. 1-24.
  • Yoo, J. & Park, M., 2016. The effects of e-mass customization on consumer perceived value, satisfaction, and loyalty toward luxury brands. Journal of Business Research, 12(69), pp. 5775-5784.

Sayan Mitra

Research consultant at Project Guru
Sayan has pursued Mechanical Engineering and was a 3-months’ apprentices trainee in Indian Railways. Having a strong base in mathematics, he is also good with strategic management, human resource management and change management. He also has his expertise in literature review and research methodology which indicates his strength in research analysis. Apart from his technical interest, he pursues his hobby in sports.

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