While the global market for luxury brands faced a temporary decline of 8% in sales revenues to 153 billion Euros in 2009 (Bain & Company, 2009), the recent downturn in economy did not affect the big names of the luxury brands industry. Brands such as Louis Vuitton, Hermès, and Chanel increased their sales despite the recession (Forbes, 2009). As compared to the general downturn of sales of up to 31% in 2009, the sales decline of luxury brands is comparably low (Handelsblatt, 2010). Analysts base their reasoning on the growing claim for luxury brands in emerging markets and on the crisis-proof demand in Western nations. Interestingly, the demand for prominent logos on products has remained stable or even increased during the recession (Nunes, Drèze, & Han, 2010).
Brand consumption, and specifically luxury brand consumption, allows consumers both to express themselves (i.e., value-expressive function) and to present themselves (i.e., social-adjustive function) in front of others (e.g., Dubois and Duquesne, 1993 and Wilcox et al., 2009). Grossman and Shapiro (1988) define luxury goods as goods that people use to show prestige and status while the difference in functional utility over other goods is largely negligible. A luxury brand can be thought of as “the most selective in its distribution; the most image-driven; … and the most expensive” (Kapferer and Bastien, 2009, p. 313). The perceived degree of luxury, however, varies with product category. A luxury brand may be, for instance, associated with the higher end of luxury in one product category, and with the lower end of luxury in another product category (Vigneron & Johnson, 2004). As an example, consumers might perceive Burberry more as a luxury brand for apparel and leather goods than for perfumes. Premium pricing strategies as well as strong quality cues are among the most important defining characteristics of luxury brands (Keller, 2009). Interestingly, prices for female luxury brands are in most cases significantly higher than for male luxury brands. As Table 1 shows, a Boss Black suit for men costs around 400 Euros (retail prices in the German market), while that for women costs around 510 Euros, a difference of more than 25%. Table 1 shows additional examples in the product domains of perfumes, leather goods, and watches that show a similar pattern. The market, however, also provides (a few) examples of brands (e.g., Rolex watches), where the male product is more expensive than the female product. Nevertheless, the question arises why prices for female luxury brands usually are significantly higher than prices for male luxury brands. Does a gender effect exist?