Luxury Advertising - An Oxymoron: A Quantitative Study on the Negative Signalling Effects of Advertising on Luxury Brands through Third-person Effect

Abstract: This thesis evaluates the advertising contradictions about marketing strategies in luxury branding. Although it has been discussed that marketing of luxury goods are anti-laws of marketing, the advertising expenses are billions and billions of dollars in an industry worth 1.08 trillion in 2016. This thesis shows that luxury is incommensurable with normative advertising. Through an experimental research (n=150) with stimuli of advertising respectively no advertising on the prestigious luxury and connoisseur brand Goyard - that has never used advertising as a strategy - presents that the overall luxury perception of conspicuousness and uniqueness as brand signal decreases with advertising for all consumer groups. One of the causes for this decrease in luxury perception is due to the third-person effect, where female participants rated lower values of positive characteristics of the brand's customers with advertising. The findings show that luxury brands cannot be successfully advertised in a mass- communicated way. In line with a previously posed communication paradox, an increase in brand awareness did not increase the demand for Goyard, as the purchase intention did not increase. However, there are positive practical implications for managers suggesting that advertising messages could be successfully managed within the brand's self controlled new media channels. These findings show that it might be better for luxury brands to save all these billions in advertising expenditures and just whisper the word 'luxury' into the right ears.