Journal of Business Research 63 (2010) 11561163

Contents lists available at ScienceDirect

Journal of Business Research

Co-creating value for luxury brands

Caroline Tynan , Sally McKechnie, Celine Chhuon
Nottingham University Business School, UK

a r t i c l e

i n f o

Article history:
Received 1 July 2008
Received in revised form 1 January 2009
Accepted 1 August 2009
Keywords:
Value
Co-creation
Types of value
Customer value framework
Luxury brands

a b s t r a c t
The global market for luxury brands has witnessed dramatic growth over the last two decades but the
current challenging economic environment contributes to the difculty brand owners experience in ensuring
that customers perceive sufcient value in their luxury brands to compensate for the high prices. According
to recent service-oriented research, customers and suppliers co-create value as a result of a shift from a rmand product-centric view of value creation to one that focuses on personalized brand experiences. In this
paper, the authors develop a theoretical framework of types of value for luxury brands, and use case study
research to identify processes of value creation in this particular setting. The ndings highlight the variety of
interactions taking place between luxury brand owners, their customers and members of their respective
networks, which help to differentiate luxury brands and co-create a superior value proposition.
2009 Elsevier Inc. All rights reserved.

1. Introduction
The global market for luxury brands has grown rapidly over the
past two decades. Estimated to be worth $263 billion in 2007 which
represents a 31% increase over the past ve years, predictions indicate
a 71% growth over the next ve years, largely fueled by high demand
from emerging economies (Verdict, 2007). In Britain, consumer
expenditure on luxury goods increased by 50% between 1994 and
2004 compared to a 7% increase for non-luxuries (Keane and
McMillan, 2004) whereas in France the luxury fashion sector alone
is the fourth largest revenue generator (Okonkwo, 2007, p.1). This
phenomenal rate of growth and challenges inherent in marketing
luxury brands ensure that practitioners and recently academics regularly examine and analyse the marketplace. Although luxury consumer demand in the West appears to be waning due to the credit
crunch, property crash and a slowing world economy (Teather, 2008),
the appetite for luxury brands is growing elsewhere in the emerging
economies of China, India, Asia, the Middle East and Latin America
(Verdict, 2007; Chadha and Husband, 2006).
The marketing of luxury goods requires a ne balancing act to satisfy
the increasing demand in the global marketplace, while safeguarding
the brands' cachet and exclusivity in the face of challenges from the rise
of counterfeiting (Bian and Veloutsou, 2007), parallel imports, brand
overextensions, and adoption by members of inappropriate subcultures
(Bothwell, 2005). Luxury goods marketing is complex and frequently
counter-intuitive to the extent that Bastien and Kapferer (2009, p.2)
state that classical marketing is the surest way to fail in the luxury

Corresponding author. Nottingham University Business School, Jubilee Campus,

Nottingham NG8 1BB, UK. Tel.: +44 115 846 6978.
E-mail address: caroline.tynan@nottingham.ac.uk (C. Tynan).
0148-2963/$ see front matter 2009 Elsevier Inc. All rights reserved.
doi:10.1016/j.jbusres.2009.10.012

business. Successful luxury goods marketing requires the customer to

perceive sufcient value in the luxury good to compensate for the high
price charged, particularly in times of recession. Therefore, understanding the types of value sought and the processes of value co-creation is
important.
In light of the above, this paper addresses the nature of value for
luxury brands and the ways in which value co-creation takes place.
The authors seek to explore conceptually the meaning of value for
luxury brands, and empirically investigate how rms and consumers
co-create value in the luxury market. The paper proceeds rst by
reviewing the conceptualization of brands in general and luxury
brands specically, then developing a theoretical framework of types
of customer value for the luxury market. Next, the authors outline the
research methodology employed and discuss key ndings from the
empirical analysis of types of value for luxury brands, the nature of
the value creation network and processes of value co-creation. Finally,
the paper draws conclusions, considers managerial implications and
offers suggestions to enable luxury brand owners to keep in tune with
their customer base and differentiate themselves more effectively.
2. Conceptualizing the brand
Although the academic and practitioner branding literature is
extensive, nding a universally accepted denition of the term brand
remains elusive. As a result of the multifaceted nature of the concept a
multiplicity of denitions and contextualized understandings of its
operationalization exist (Gabbott and Jevons, 2009; Jevons, 2007;
Brodie et al., 2006). The recent developments of two classication
schemes for brand conceptualization using historical analyses (Jevons,
2007; Stern, 2006) form the basis of further work (Buchanan-Oliver
et al., 2008). By applying the historical-analysis method to multiple

C. Tynan et al. / Journal of Business Research 63 (2010) 11561163

meanings of the term brand, Stern (2006) proposes a quadripartite

classication scheme which categorizes the construct according to
nature (literal and metaphoric), function (entity and process), locus
(world and mind) and valence (positive and negative). Jevons (2007)
alternatively traces the development of brand denitions through a
historical meta-analysis and identies six key components of brand
denitions in his review (i.e. identity, functionality, symbol(ism),
sustainability, differentiation, and value creation/delivery). He incorporates them into the following integrated denition: A brand is a
tangible or intangible concept that uniquely identies an offering,
providing symbolic communication of functionality and differentiation, and in doing so sustainably inuences the value offered.
According to Buchanan-Oliver et al. (2008), having so many key components renders this classication unnecessarily complicated and therefore they conate the classication to three components (i.e. symbolic,
functional and psychological). They also argue that Jevons' (2007)
classication does not satisfactorily capture the experiential component
of de Chernatony's (2002) brand denition. After applying a combined
classication scheme for brand conceptualization based on conated
Jevons (2007) and Stern (2006) to their own analysis of contemporary
brand perspectives, they conclude the need to address the experiential
dimension of the brand as well.

3. Conceptualizing the luxury brand

Traditionally, much of the academic literature on luxury goods
comes from a variety of disciplines such as history (e.g. Berry, 1994),
economics (e.g. Leibenstein, 1950; Veblen, 1899) and sociology (e.g.
Bourdieu, 1984). However, a growing level of interest in the marketing literature exists (Truong et al., 2008) across a variety of areas: the
nature and denition of luxury goods (Vigneron and Johnson, 1999,
2004; Catry 2003; Vickers and Renand, 2003; Dubois and Czellar,
2002; Nueno and Quelch, 1998; Kapferer, 1997; Dubois and
Duquesne, 1993; Veblen 1899); competitive structure of luxury markets (Chadha and Husband, 2006; Dubois and Duquesne, 1993);
issues relating to the democratization of luxury (Luxury Institute
2007; Twitchell 2002) such as extending the market while retaining
the luxury cachet (e.g. Giacalone, 2006; Catry, 2003; Silverstein and
Fiske, 2003; Dubois and Czellar, 2002; Nueno and Quelch, 1998) and
trading up for luxury goods (Silverstein and Fiske, 2003, 2007); market segmentation (Dubois et al., 2005; Dubois and Duquesne, 1993);
conspicuous consumption (Truong et al., 2008; O'Cass and McEwen,
2004) as opposed to prestige-seeking consumer behavior (Vigneron
and Johnson, 1999); online presence for luxury brand marketing
(Dall'Olmo Riley and Lacroix, 2003; Kapferer, 1997, 2000); counterfeiting (Bian and Veloutsou, 2007; Giacalone, 2006), and the meaning
of luxury goods. However, in spite of this broad literature on the
luxury market, researchers have yet to address the meaning of value
and the value creation process for luxury brands.
Understanding the nature of value for luxury goods requires consideration of what constitutes a luxury brand. Dening luxury goods
or brands is difcult (Vigneron and Johnson, 1999; Dubois and
Duquesne, 1993). Luxury goods exist at one end of a continuum with
ordinary goods, so where the ordinary ends and luxury starts is a
matter of degree as judged by consumers. Sekora denes luxury as
anything unneeded (1977, p. 23), which is set in the context of what
society considers necessary and is thus a relative and dynamic term
(Berry, 1994). The roots of the word luxury derive luxury from
luxus, which according to the Oxford Latin Dictionary (1992) means
soft or extravagant living, (over)-indulgence and sumptuousness,
luxuriousness, opulence, but the term luxury is currently and commonly used by marketers in most product or service categories to
communicate to consumers a particular tier of offer (Dubois et al.,
2005) in order to persuade them to trade up. In addition, new terms
are emerging in the practitioner literature such as old luxury being

1157

about the good itself and dened by the company and new luxury
being experiential and dened by the consumer (Florin et al., 2007).
Marketing academics are using luxury in different ways: for
example, Vigneron and Johnson (1999) use luxury to describe the
very top category of prestige brands, whereas Dubois and Czellar
(2002) view prestige to stem from a unique accomplishment in
the brand and luxury to merely concern self-indulgence. Economists
dene luxury goods as goods for which demand rises either in
proportion with income or in greater proportion than income (i.e.
where the income elasticity of demand is equal to or greater than 1),
but clearly the purchase of luxury goods is not governed simply by
economic factors (Dubois and Duquesne, 1993), as income is a necessary but not sufcient condition to explain purchase. By examining
the motivation for consumers to purchase luxury goods within a
socio-economic context, Veblen's seminal work (1899, 1994) proposes that individuals from the wealthy leisure class engage in
conspicuous consumption when purchasing high priced items in
order to ostentatiously communicate wealth and achieve social status
(Bagwell and Bernheim, 1996). This view is consistent with Leibenstein
(1950), whose examination of this phenomenon identies the Veblen
effect whereby demand for a good rises because its price is higher rather
than lower, plus two forms of interpersonal effects of conspicuous
consumption: the snob effect, where the demand for a good falls as the
number of buyers increases, since snobs desire to be different and
exclusive and therefore disassociate themselves from the masses; and
the bandwagon effect, where demand for a good increases because
consumers follow others in their reference groups who have already
bought the good. O'Cass and McEwen (2004) however voice concerns
over the interchangeable use in the literature of the terms conspicuous
consumption and status consumption. According to them, the former
relates to the desires of consumers to gain prestige by purchasing statusladen products and brands of public or private display, whereas the
latter refers to the visual public display or overt usage of products.
As a result of Belk's (1988) work on the extended self, which
highlights the importance of possessions in contemporary consumption and consumers' feelings about them as a key contributor and
reection of their identities, luxury goods researchers (such as
Vigneron and Johnson (1999)) recognise that consumers can derive
subjective intangible benets from these goods beyond their
functional utility, while additional motivations to purchase them
include their higher levels of quality (Garfein, 1989) and authenticity
(Beverland, 2006).
In Vigneron and Johnson's (1999) review of prestige-seeking consumer behavior they separate interpersonal effects on prestige consumption from personal effects, and conceptualize ve types of
perceived value for prestige goods: namely three types of interpersonal effects (i.e. the Veblen effect for perceived conspicuous value;
the snob effect for perceived unique value; and the bandwagon effect
for perceived social value) and two types of personal effects (i.e. the
hedonic effect for perceived emotional value and the perfectionism
effect for perceived quality value). Following further work, they revise
this classication by switching around the bandwagon effect to a
personal effect and the perfectionism effect to an interpersonal effect
(Vigneron and Johnson, 2004). The authors can see arguments for
both of these positions, especially in considering the behavior of
global consumers.
Catry (2003) argues for the possible replacement of actual scarcity,
once considered essential to the existence of a luxury good, by the
notion of perceived rarity maintained through rare ingredients or
components in the short term, or sustainably through strategies of
techno-rarity enabled by innovation, limited editions or information
based rarity.
An alternative approach to conceptualising consumer perceptions
of luxury goods from Vickers and Renand (2003) considers luxury
goods as symbols of personal and social identity and seems to fulll
calls from Jevons (2007) and Buchanan-Oliver et al. (2008) to take an

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integrative perspective on brand denition. They propose differentiating between luxury and non-luxury goods in terms of the mix of
their components on three dimensions: functionalism, experientialism and symbolic interactionism. Therefore, the key identiers of
luxury brands adopted in this study are high quality, expensive and
non-essential products and services that appear to be rare, exclusive,
prestigious, and authentic and offer high levels of symbolic and
emotional/hedonic values through customer experiences. In short,
evidence of luxury brand denitions from each of the four brand
perspectives (i.e. symbolic, functional, psychological, and experiential), which Buchanan-Oliver et al. (2008) identify, exists.

4. Co-creation of value
Authors such as Payne et al. (2009), Prahalad and Ramaswamy
(2004) and Vargo and Lusch (2004) argue that the rm does not
create and deliver value to the passive customer, but rather through
interaction and dialogue embeds value in the co-creation process
between the rm and its active customer. This moves the focus of
marketing to a process of co-creating value through the exchange of
knowledge and skills with customers and partners (Vargo and Lusch,
2004) to co-construct unique experiences (Prahalad and Ramaswamy,
2004), that is developing a service orientation predicated on
processes of joint value creation (Vargo and Lusch 2004, 2008).
Nevertheless, the academy does not yet understand the processes of
value creation and recent studies overlook the creation of the service
experience (Schembri, 2006). Pealoza and Venkatesh (2006)
recommend that researchers should study markets as social constructions to examine those multiple perspectives of meaning which
create value for the customer.
These new understandings emphasizing the importance of value
co-creation are particularly important for this study of value cocreation in the luxury goods market. While value is a central concept
in marketing (Payne and Holt, 2001), Woodruff and Flint (2006) call
for the development of a better understanding of customer value. The
focus of traditional marketing is the rm-centered notion of value in
exchange, that is making a value proposition for the passive customer
to accept or decline (Prahalad and Ramaswamy, 2004). Recent studies
however, emphasize the co-creation of value by the supplier and the
connected, empowered and active customer (Prahalad and Ramaswamy, 2004, p.8), who determines value uniquely and phenomenologically (Vargo and Lusch, 2008, p. 7) during consumption. Thus, the
concept of value-in-use supersedes that of value in exchange (Lusch
and Vargo, 2006) and suggests the use of marketing approaches,
which are experiential, interactive, progressive, evolving and exible
(Tynan and McKechnie, 2009).
The customer and the supplier co-create value at multiple points
of interaction (Prahalad and Ramaswamy, 2004, p. 13) through cocreation experiences which take place throughout the life of the
service and not just at the point of exchange. These value-creating
interactions can include other members of the customer's and the
supplier's network (e.g. members of brand communities, shareholders, or partners of the supplier). Prahalad and Ramaswamy
(2004) see the experience being the brand and identify co-creation as
taking place and evolving through personalized experiences in which
the customer is an active partner. By taking an experience-centric
view further, Schmitt (2003) asserts that Experience Marketing can
deliver sensory, emotional, cognitive, behavioural and relational value
to customers to which Tynan and McKechnie (2009) add social and
informational based value. To be successful, Poulsson and Kale (2004)
argue that a marketing experience should have personal relevance
for the customer, be novel, offer an element of surprise, engender
learning and engage the customer. This recognition that the brand
does indeed have an experiential component and that the experience
of the brand involves an interactive process between the customer,

supplier and their networks contributes to understanding of the cocreation of value.

5. The framework development process
This current study specically addresses the gap within the literature on the nature and co-creation of value in the luxury market.
Having reviewed the literature on what constitutes a luxury brand,
greater attention is now required to understand how customers
interact with, and experience, the luxury brand. Smith and Colgate
(2007) offer an innovative and useful general theoretical framework
of customer value creation, which led to authors to explore the types
of value they identify. Their framework includes types of value (i.e.
functional/instrumental value, experiential/hedonic value, symbolic/
expressive value, and cost/sacrice value) plus sources of value (i.e.
information, products, interaction, environment, ownership/possession transfer), and as this framework is generic in nature its application for luxury goods requires further development.
Initially, to accommodate the types of value identied by Vigneron
and Johnson (1999, 2004) the authors classify Veblen, snob, bandwagon, and perfectionism effects as symbolic/expressive value, hedonic
effects as experiential/hedonic value and perfectionism effects as cost/
sacrice value. Next, the authors classify the work of Vickers and Renand
(2003) on personal and social symbolic meanings as relating to
symbolic/expressive value. However, to extend the framework for this
type of value in the luxury context, the authors believe that they should
draw a distinction between meanings of an outer- and self-directed
nature. Finally, noting that Smith and Colgate (2007) indicate how they
classify Holbrook's (1999) customer value types in the framework, and
consulting the original typology of consumer value (CCV) four particular
types emerged as appropriate for the context of this study. Two of them
are self-oriented: excellence (quality), which is a utilitarian value, and
aesthetics (beauty), a sensory value, which Smith and Colgate (2007)
classify as functional/instrumental value and experiential/hedonic value
respectively. The remaining two types are other-oriented: status
(impression management) which is a desired value; and esteem
(possessions) which concerns possession value. Therefore the authors
classify the self-oriented types as self-directed types of symbolic/
expressive value and the remaining other-oriented ones as outerdirected types of symbolic/expressive value.
Expanding the typology to encompass luxury grounded theoretical
sources of value requires the addition of a number of new sources of
value including craftsmanship (Kapferer, 1997) as a utilitarian value.
The symbolic/expressive category is expanded by incorporating bandwagon, snob and Veblen effects (Leibenstein, 1950), the notion of
signs (Kapferer, 1997; Levy, 1957), status or esteem (O'Cass and
McEwen, 2004), prestige (Dubois and Czellar 2002), social identity
(Vickers and Renand, 2003), uniqueness mentioned by Kapferer (1997)
and rst explored by Ruvio (2008), and authenticity (Beverland, 2006)
in the outer-directed category. Symbolic/expressive additions in the
self-directed category include self-gift giving behaviors (Tsai 2005; Mick
and DeMoss, 1990), nostalgia (Holbrook and Schindler, 2003) plus
internally focused aspects of uniqueness (Ruvio 2008; Kapferer, 1997)
and authenticity (Beverland, 2006). According to Schmitt (2003) and
others (Poulsson and Kale, 2004; Prahalad, 2004; Car and Cova, 2003;
Pine and Gilmore, 1998; Carbone and Haeckel, 1994; Holbrook and
Hirschman 1982) consuming the experience adds value in the
experiential/hedonic category. In addition to incorporating new sources
of value for luxury goods to the framework, the authors incorporate one
new type of value which Smith and Colgate (2007) did not consider,
which is value offered by the relationship with the brand (Fournier,
1998), the brand community (Veloutsou and Moutinho, 2009; Kozinets,
2002; Cova and Cova, 2001; Muiz and O' Guinn, 2000) and/or the
service provider (Grnroos, 2006), which is particularly important for
high value luxury goods where personal service and high expectations
are the norm. Finally, the cost/sacrice category is expanded to

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encompass exclusivity and rarity (Catry, 2003). Table 1 shows

reclassications and extensions of Smith and Colgate's (2007) original
types of value and additions to the theoretical sources in order to
provide a framework for understanding types of value for luxury brands.
6. Methodology
The research utilized a multiple case study approach to investigate
the nature and co-creation of value in the luxury market. The authors
focused on three luxury brands for this study because of the advantages of allowing the investigation of a contemporary phenomenon in
a real life context where the boundaries between phenomenon and
context are not clearly dened (Yin, 1984). They collected data for
each of the chosen brands over a fteen-month period using several
methods of data collection including interviews with senior practitioners, analysis of ofcial brand websites, a netnography of brandrelated blogs, together with a limited number of customer interviews
and some retail observations in order to understand the dynamics
of value creation in this market. Not only can the resulting data
yield useful managerial and consumer insights, but also the uses of
netnography (or online ethnography) and other participative
approaches to data collection are more appropriate at a time when
latest thinking indicates that the nature of customer involvement and
engagement with rms and their goods is changing (Bonnemaizon
et al., 2007; Pealoza and Venkatesh, 2006; Vargo and Lusch, 2004;
Prahalad, 2004).
The choice of the three case companies was guided by a number of
criteria including their global iconic status as well known, aspirational, luxury, British, heritage brands (in spite of foreign ownership in
one case): Brand X is an automotive company, Brand Y is a designer of
fashion clothing, and Brand Z is a department store. Gaining access to
senior managers proved highly challenging and so the Walpole Group
(2007), a UK-based trade association of British luxury brand owners,
initially mediated contact.
The authors undertook four in-depth interviews with senior practitioners, which lasted thirty minutes on average using an open-ended
style of questioning. Eight face-to-face interviews with customers of
two of the selected brands took place outside agship stores lasting
fteen minutes on average. The researchers followed these with a
retail observation at each store, which consisted of eld notes being
audio-recorded of their description of the store and multisensory
impressions of the retail environment upon entering each store and
walking all around it. Given the low footfall at UK-based luxury car
showrooms for the remaining brand and the fact that most of its
customers live overseas, the authors sent a short postal survey to
members of a club of brand enthusiasts instead.

1159

Since many luxury brands are now focusing on developing an

online presence, the authors considered the examination of ofcial
websites for each of the three brands important. They also undertook
a netnography in order to explore the attitudes and behavior of online
market-oriented communities (Kozinets, 2002; Fller et al., 2007).
The advantage of this nal form of data collection is that it provides
marketing researchers with a window into naturally occurring behaviors, such as searches for information by and communal word of
mouth between consumers (Kozinets, 2002, p.62). Thus, the
researchers examined both unofcial websites and blogs dedicated
to each of the brands and more general websites dedicated to luxury
automotive and fashion clothing brands. The netnography was conducted in the third and twelfth months of the study period, and its
scope is indicated by the number of sources referred to for each brand:
Brand X brand-related websites (47), brand-related blogs (4), luxury
car-related websites (6), and luxury car-related blogs (6); Brand Y
brand-related website (1), fashion designer-related websites (7),
brand-related blogs (8), fashion-related blogs (8), designer-related
blogs (7); Brand Z brand-related websites (2), brand-related blogs
(11), luxury fashion websites (14), and luxury fashion blogs (5).
Each interview discussion was audio-recorded and transcribed
verbatim. The text was analysed independently by the authors following the generalized sequence of steps of data reduction and
transformation, data display and conclusion drawing/verication
(Miles and Huberman, 1994, p. 10), which was then discussed, initially on a within-case basis and then on a between-case basis. Using
a similar process for analysis of the online material, the authors
approached the data from a holistic perspective and undertook data
triangulation to improve the internal validity of the work. By employing what can best be described as dialectical tacking (Geertz,
2003) the authors continually referred back and forth between the
literature review and the data gathered through the various multiple
methods, to enable us to incrementally generate deeper understandings of the nature of value and its co-creation for luxury goods.
7. Findings and discussion
This article now presents and discusses the ndings below
according to the emergent themes with some exemplar quotations
provided.
7.1. Types of value delivered and sought
Customers identied a wide range of values that they sought in
luxury goods and highlighted how the brand delivered value. They
considered money no object due to their status as ultra high or high

Table 1
Customer value framework for luxury goods.
Source: Developed from Smith and Colgate (2007).
Types of value

Theoretical sources

Utilitarian
Symbolic/expressive

Excellence (Holbrook, 1999), craftsmanship (Kapferer, 1997)

Conspicuous consumption (Veblen 1899); bandwagon, snob and Veblen effects (Leibenstein, 1950;
Vigneron and Johnson, 1999); perfectionism effect (Vigneron and Johnson, 2004); signs (Levy 1957;
Kapferer, 1997); status/esteem (Holbrook, 1999; O'Cass and McEwen, 2004); prestige (Dubois and
Czellar 2002); social identity (Vickers and Renand, 2003); uniqueness (Ruvio 2008; Kapferer, 1997);
authenticity (Beverland 2006).
Bandwagon effect (Vigneron and Johnson, 2004); personal identity (Vickers and Renand, 2003);
aesthetics (Holbrook, 1999); self-gift giving (Mick and DeMoss 1990; Tsai, 2005); uniqueness Ruvio,
2008; nostalgia (Holbrook and Schindler 2003); authenticity (Beverland 2006).
Hedonic effect (Hirschman and Holbrook, 1982; Vigneron and Johnson 1999); aesthetics (Holbrook,
1999); the experience (Holbrook and Hirschman, 1982; Carbone and Haeckel, 1994;
Pine and Gilmore, 1998; Schmitt 2003; Poulsson
and Kale, 2004; Prahalad and Ramaswamy, 2004; Prahalad, 2004: Car and Cova, 2003).
Consumerbrand relationships (Fournier, 1998; Grnroos, 2006; Veloutsou and Moutinho, 2009);
brand community (Kozinets, 2002; Cova and Cova, 2001; Muiz and O' Guinn, 2000).
Perfectionism effect (Vigneron and Johnson, 1999); exclusivity (Catry, 2003); Rarity (Catry, 2003).

Outer-directed

Self-directed

Experiential/hedonic

Relational
Cost/sacrice

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net worth individuals. The cost/sacrice value category associated

with the perfectionism effect (Vigneron and Johnson, 1999) and
notions of exclusivity and rarity (Catry, 2003) appear to be irrelevant
to them. Money is a necessary but not a sufcient condition for the
purchase of luxury goods. According to one Marketing Director,
his customers are not interested in an invitation to come and drink
champagne as they can afford to have all that they wished and their
time is precious, but they do value something exclusive and tailored
for them. The utilitarian value sources of excellence (Holbrook, 1999),
quality and craftsmanship (Kapferer, 1997) are assumed and taken for
granted although still acknowledged as being valuable.

tronics); symbols of popular culture (namely an iconic 1960's fashion

model, a renowned musician, a photographer, a graphic artist), as well
as editors and journalists. According to Bastien and Kapferer (2009)
contemporary art is a source of inspiration for luxury brand designers
and helps to enable brand owners to maintain topicality and relevance
for their brands. Clearly seeking out fresh and varied collaborations
within the worlds of art, music and fashion such as promoting a number
of up and coming designers, serves as a means of enhancing the overall
value of the brands we examined. By comparison, the customer networks include ofcial and unofcial brand communities and social
networking sites.

Our customer is someone who has signicant amount of money and

someone who enjoys ne things. We have... some of our owners are
car collectors and they just love cars and they respect the Brand X for
what it is in terms of craftsmanship and engineering. And we have
customers who buy for what the brand stands for, the history and
heritage and the customers who buy it because it's just the best car in
the world. (Marketing Director, Brand X)
Using both contemporary and traditional patterns, Brand Z product is
known for beauty, luxury and uniqueness. (Brand Users' website,
Brand Z)
For me, the last thing I am concerned with is how much it is because
at the end of the day I'm paying for quality and that's what luxury is
about. (Brand Y customer, male aged 33)

..Brand Y has the ability to anticipate, and even spark off trends not
only fashion but in the wider context of popular culture. (Fashionista
Website)

Symbolic/expressive (e.g. Vigneron and Johnson, 1999, 2004),

experiential/hedonic (e.g. Hirschman and Holbrook, 1982; Holbrook
and Hirschman 1982; Schmitt, 2003) and relational sources of value
(Fournier, 1998; Grnroos, 2006) were all raised by informants, who
also provided evidence of the signs and symbols associated with the
luxury brands triggering pleasant and creative thoughts. Aesthetics
(Holbrook, 1999) are important to luxury goods customers and
recognised by practitioners, as is authenticity (Beverland, 2006) with
associated artefacts guaranteed through a combination of provenance,
certication, limited production and signed items.
So much effort is put into the design and manufacturing of the cars
that driving a Brand X, smelling the leather, sitting in the seat, is
equivalent to the pleasure of drinking champagne, eating caviar, and
having a back massage, all at the same time! (Member of Enthusiasts'
Club, Brand X)
Luxury brand means quality, originality, sense of scarcity. (Marketing
Manager, Brand Z)
Whenever I see his signature on product or paper bag, I feel naturally
connected to the brand itself. I am always mesmerized by his artistic
sophistication and creativity. I also feel lovable when I wear his suit.
(Blog: Carrie, Brand Y)
Customers discuss luxury goods in rich hedonic language describing
them as opulent, pleasing to the touch and eye and designed to
indulge and delight. Fashion bloggers conveyed their delight in
wearing designer branded clothing, which evokes status (O'Cass and
McEwen, 2004) or prestige (Dubois and Czellar, 2002), or helps them
express their uniqueness (Ruvio, 2008). All of these examples are of
value brought about during the customer's use of the luxury brand
rather than at the point of purchase.

7.2. Processes of co-creating value

The networked nature of value co-creation was in evidence (Achrol
and Kotler, 2006) through a wide variety of interactions. For the
companies the constellation of individuals in these value-creating
networks is of high status and includes unofcial and ofcial brand
communities, experts including the curator of a national museum,
designers across a range of elds (e.g. fabric, transportation and elec-

In the luxury market interactions are multilayered and complex,

and not simply comprising interaction between the rm and the
customer. In addition, they regularly include interactions with other
luxury brand owners, the informed and partisan brand community,
opinion leaders, and the owners, employees and customers of other
non-competing luxury brands (e.g. luxury watch, yacht and car
manufacturers engaged in joint events). The customers favor interaction with high status individuals as this offers them privileged
access to information. In the case of Brand X, this relates to contact
with the Company Designer and an opportunity to tap into
knowledge or discuss new ideas and developments in a sector
that is of great personal interest to them. As for Brand Z, customers
highly appreciate introductions made to new cutting edge
designers in the art world rather than designers from the company,
since they can possibly use them to enhance their social capital
amongst members of their peer group. Of the three companies,
Brand Y creates value the most widely through public and private
events including exhibitions, book and album launches, dinner
parties, previews and limited edition releases. Clearly, co-creation of
value requires customer awareness of these events and interest in
participating in them. Much evidence indicated that customers of
Brand X were the most involved in creating events for themselves
through enthusiasts' international, national and regional events and
meetings.
It is all about providing the customer with an experience. Customers
no longer dene themselves by what they own or what they buy
because their wealth means they can acquire almost any assets but
they dene (themselves) more by experiences, whether it's a trip to
South Pole or it's a balloon ying over the Andes or it's to talk to the
designer of the Brand X. (Marketing Director, Brand X)
It is noteworthy that not only is the experience about facilitating
interaction between customers and the company and its employees, but
also the experience concerns interactions and experiences shared with
complementary and similarly positioned brands, and experiences with
other members of the elite. So in terms of the developing service
orientation predicated on processes of joint value creation (Vargo and
Lusch 2004, 2008) a network becomes important for luxury brand
owners in offering opportunities for co-creating value with other brands
in the network and other members of the brand community through
satisfying and tailoring brand experiences based on interactions with
brand staff, customers and their counterparts. In terms of co-creating
service, the multiple interactions between network members serve as
a basis upon which luxury brand owners can develop differentiated,
desired and difcult to copy aspects of their brand experience.
Our customers are very interested in who the other customers are.
They are quite competitive peopleand I think they're quite
interested in meeting their peers. We make these interactions
possible through our private events, and I think that's the primary

C. Tynan et al. / Journal of Business Research 63 (2010) 11561163

reason why they enjoy getting together because they get to know
other customers. (Brand Manager, Brand X)
... I think that when they buy into luxury they try to buy something
that makes them feel special or is specialit's almost like buying into
a club, you feel part of something that is exclusive, that is beautiful
quality, taking time to design, that is thought about. (Marketing
Director, Brand Y)
All the marketers spoke of listening to their luxury goods customers. They also keep up a constant stream of communication, both
on- and ofine, including blogs to provide information and new ideas
for their customers in real time. Celebrity endorsement through bespoke clothing for an Oscar winning actor and members of a premier
football team kept Brand Y in the news.
Many customers will come to (plant) to determine the nal specications of their car, and many will also come and see it during the
manufacturing process. So it is very much part of our strategy to deliver
an experience on a long term basis and also it would be fair to say that
it is something that our customers will demand from usthey want that
degree of involvement. (Marketing Director, Brand X)
Only Brand X demonstrates a sophisticated understanding of the
processes and benets of engaging in a dialogue with customers. They
focus on offering specically what the customer wants, and listens
and responds to customers effectively in order to co-create the
desired experience. By comparison, the other brands communicate
with their customers more indirectly through opinion leaders, the
media and staged events, which indicates that the two-way processes
that lead to co-created brand experiences and the co-creation of value
are not yet in place.
We try to create a one-to-one basis in stores so it will be up to each
store manager to develop their own customer base and work closely
with regular customers to build up regular relationships. So each shop
has its own data base and has to look after it. Mainly, customers will
receive invitations for previews or maybe Christmas shopping evenings
just for those customers, so we try to make them feel special. We don't do
a loyalty card, but who knows, possibly in the future, as technology
becomes more and more relevant. (Marketing Director, Brand Y)
We have a quite strong press team who are looking for editorial,
coverage and product placements in the right target publications. We
also conduct web or online communications, so e-communication,
and we have a big email database, and we also contact loyalty cards
regularly to inform them about new things happening in-store.
(Marketing Manager, Brand Z)
The overall luxury brand experience offers an important way of
enhancing perceptions of each of the ve types of value proposed
earlier in Table 1. The participants reported a broad range of personalized experiences including private and select dinner parties to meet
senior managers and inuential individuals in the eld, a bespoke
grooming service, a private book launch, and the opportunity to join
an exclusive members' club. Facilitating and participating in such
experiences with the customer is the process by which so much value
creation takes place (Schmitt, 2003).
For the case study companies these experiences offer an opportunity for some unscripted interactions between the brand staff and
customers in order to gather information, tailor the experience to the
individual or refresh its format. For the marketers they offer benets
for the luxury good consumer that literally money cannot buy, which
enhances brand exclusivity (Catry, 2003) and prestige (Dubois and
Czellar, 2002). For these reasons, the automotive plant and agship
store and outlets for the case study brands represent unique venues
and destinations in themselves: designed to facilitate a special experience for the luxury customer and staffed with well-trained and

1161

informed employees keen to assist customers rather than push them

into a purchase.
I also like the assistants in Brand Y, they're very courteous and they
don't push anything onto me. They don't seem to be there to sell but
to advise. (Brand Y customer, male aged 32)
The store is beautifully laid out and just a wonderful experience. This
is a store I couldn't live without. (Blog: Streetwise, Brand Z)

8. Conclusions and implications

This exploratory study examined how marketers and consumers
can co-create value in the luxury goods marketplace. So far, much of
the traditional marketing literature, plus that in this setting, takes a
managerial perspective and neglects to take into account the
consumer perspective. Examining this marketplace as a social
construction offers deeper insights into the nature and sources of
value both in exchange and use (Pealoza and Venkatesh, 2006).
The researchers have developed a theoretical framework of types
of value for luxury brands, and have used case study research to
explore the many types of value which customers seek and receive
from luxury brands. While a high standard of utilitarian value is
assumed as essential for all luxury goods and cost/sacrice based
value appears to be irrelevant to customers; the symbolic/expressive,
experiential/hedonic and relational types of value are the ones which
enable differentiation between various luxury brands. As Table 1
illustrates, the nature of these particular types of value is varied.
This study identies processes of value co-creation by rms and
customers. Co-creating the luxury brand experience involves dialogue
and complex interactions between the brand owner, employee,
customer and other social groups including the customer brand
communities, those experts or agencies who are part of the brand
owners' network and the industry itself. The experience only creates
value when the parties engage and market with each other, that is,
when no separation between production and consumption occurs,
which traditionally serves to divide the parties. Without a doubt the
interactive and networked nature of value creation is hugely
important, cutting across art systems, fashion systems, design systems
and integrated marketing communications systems which mediate
between the culturally constituted world and the consumer good
(Arnould et al., 2004) and also accommodates the latest developments in technology and innovation. So brand owners must establish,
develop and refresh their networks in order to access new ideas and
expertise, which will enable them to innovate continually in a highly
competitive marketplace and stay at the cutting edge.
Brand owners do not just offer value rather they co-create value
with inputs and inuence from customers and other parties to achieve
value sought in terms of exclusivity, recognition, access to privileged
information and prestige. The ndings indicate that the substantial
interplay amongst non-competing but complementary luxury brand
networks co-creates value. Interactions with high status individuals
have become a crucial differentiator and source of value for each of the
case brands. A huge range of public and private events was identied,
which were not necessarily brand owner-led or even controlled by
them. Certainly, the netnography revealed that the brandscapes are
rich and varied involving partners whom the brand sponsors but also
those who are completely independent of the brand. This conclusion
suggests that practitioners should monitor all channels of brandrelated communications (i.e. ofcial and unofcial), so that they can
respond to them exibly and interactively. Many opportunities exist
to engage customers usefully in dialogue instead of opting for an
extensive array of one-way communication. However, luxury brand
owners should also recognise that customers want different levels of
engagement with their brands ranging from minimal to highly
involved. Co-creating value for each of the case brands requires

1162

C. Tynan et al. / Journal of Business Research 63 (2010) 11561163

skilful and well-trained staff, who can successfully engage through

multiple channels in an appropriate dialogue with the ultra high and
high net worth individuals who constitute much of the market for
luxury products. Venues are also important, with each of the brands
having iconic destination outlets of high prestige and design content,
which add value for their customers. Whether changes in the
customer base for luxury goods generally or the emergence of the
online marketplace will change this need materially, remains to be
seen.
9. Limitations and future work
The ndings reported from this exploratory study are limited to
three case studies in one country and so may not be generalizable to
all luxury brands. Therefore, further research jointly examining value
co-creation from both a practitioner and consumer perspective should
consider a broader selection of luxury brands. The global nature of this
marketplace and the increasing importance of luxury goods in China,
India and Russia suggest that further research in other countries,
particularly in collectivist cultures, is needed as is work on the issue of
the disposal of luxury goods.
While the service-oriented, customer-focused approach has provided a fruitful lens to aid the conceptualization process in this study, the
emergent status of this work makes this approach challenging to work
with, particularly due to its continual evolution in language and
substance throughout the fteen months of the study.
Acknowledgement
The authors wish to thank the editors and anonymous reviewers
for their helpful and considered comments on this paper, as well as
acknowledging the nancial support provided by a bursary from the
Worshipful Company of Marketors and the assistance of the Walpole
Group in gaining access to senior managers for this study.

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