Cross-category indulgence: Why do some premium brands grow during recession?

Tanya Mark*, Colette Southam, Jan Bulla, Sergio Meza

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

Reports about luxury categories and premium brands growing during recession are multiple. This marketplace behavior, however, is counterintuitive to what traditional economics would predict. The authors propose and test a theory to explain why demand for premium brands may grow despite a contraction in the economy. They define cross-category indulgence as the strategy of moving across categories (in contrast to moving within category) to satisfy the desire to indulge while dealing with budgetary constraints. The authors test empirically for cross-category indulgence using a unique dataset that compares dining in with dining out. They find support for cross-category indulgence and rule out other possible explanations for the increase in demand for a premium brand. The authors discuss that premium brand managers that understand this marketplace behavior and create opportunities for their brand to be the leader in their category may alleviate a decrease in demand for their brand during tough economic times.

Original languageEnglish
Pages (from-to)114-129
Number of pages16
JournalJournal of Brand Management
Volume23
Issue number5
DOIs
Publication statusPublished - 2016

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