DR. PRADEEP SALGAONKAR explains the difference between conspicuous consumption and competitive consumption
It is very interesting to note how people are consuming ‘competitively’ to keep up to the standards with other people around. Irrespective whether they can afford or not a type of consumption, people resort to all sorts of means to fulfill their need of consuming that product to keep up with other people’s consumption patterns.
With no prejudices towards anyone, here is a classic example of competitive consumption. A woman who works as domestic help at few houses, originally from Karnataka, has two sons, elder one studying in XIth std and the other in IXth std. The demand came from the elder son for a two wheeler, because many other boys and girls go to college by bike. To fulfill this demand of son, barely 18 years and not in possession of a valid driving license, and to match her standard with neighbours whose children own bikes, this woman took a personal loan of rupees eighty thousand, encashed her only savings in postal scheme prematurely and purchased a bike costing around Rs. 1.25 lakhs. This, to my mind, is purely to keep up with the neighbours, or to be different among others in the locality by purchasing a higher end bike. The struggle of this woman is to stay relevant or be different among the reference groups to which she belongs, primarily the neighbouring community. This type of consumption is ‘competitive consumption’. It happens among people irrespective of socio-economic class, chiefly driven by the demonstration effect by comparison with other members of the community, or the workgroups, or driven by media and advertising or simply put, it has a lot to do with who the person is in contact with and gets influenced by.
The overall trends in consumption among Indian consumers are changing owing to rising income and amount of exposure that leads to changes in attitudes, coupled with easy access to information that aids in quick decision making. People are over buying and over-consuming to simply stay trendy and relevant. If one looks around in their house or office or on self and observe carefully, how many items would be there that are really not required by the person? How many people purchase products and they are lying unused for a long time? How many people buy products only to find that they already possess a similar one or the same thing? How many people buy products just for the love of shopping? The numbers of such customers are huge And that is a good sign for businesses.
The obvious question then is ‘why do people shop in this manner and over-consume’? According to me, there are four main reasons for this, one – higher disposable income, two – competitive consumption, three – fear of missing out, and four – more numbers, variety and easy availability of products. All these things lead to a higher consumerism and consumption among people, irrespective of socio-economic class and whether they can afford a product or not, they want to consume the same.
Conspicuous Consumption v/s Competitive Consumption
Sociologist Thorstein Veblen in his book The Theory of the Leisure Class (1899), discusses how the pursuit and the possession of wealth affects human behaviour, and he mentions and critiques ‘conspicuous consumption’ or ‘wasteful consumption’ by wealthy people. The term conspicuous consumption describes and explains the consumer practice of buying and using goods of a higher quality, price, or in greater quantity than practical, in a public display of economic power, income and accumulated wealth, through acquiring of luxury commodities. It is same as having diamonds studded on your shoes or sandals, owning a fleet of luxury cars etc.
In my opinion, there is a distinct difference between ‘conspicuous consumption’ and ‘competitive consumption’. These two types, though similar in nature, are practiced by different socio-economic classes, and the reasons for consumption too are not the same. While conspicuous consumption is to display wealth, competitive consumption is a struggle to be one with or different among the reference groups to which the person belongs, inspite of not having the necessary resources and at times spending money they don’t have. Consumption of products – goods and services, provide well-being, and people want to maximise their well-being and be equal among others, even if it means at the cost of future liability.
Competitive consumption is a spending that is largely driven by a comparative process (the people we try to compare ourselves to and try to match up to their standards), or competitive process, in which people struggle to keep up with the standards of the social group with which they identify themselves or consider it as a reference group. In the above cited case of the lady, the reference group could be the neighbouring community or the people at whose houses she works as domestic help. At times such people buy things that they really don’t need, with money that they don’t have, only to impress those people that they really don’t like. In general, those people who tend to have reference groups that are wealthier than they are, get into competitive consumption more and thus tend to spend more and save less, whereas those people who have more modest or similar reference groups, tend to be more controlled in spending and save more, even if they may have comparatively higher income and wealth.
Implications to Marketers
Both conspicuous consumption and competitive consumption are important from the business point of view, as more consumption means more earnings. However, taking into consideration the market size and the potential it has, especially in the country, what is really important in present times from the business point of view is competitive consumption.
Businesses are using varied techniques like phygital modes, omni-channel marketing and individualised targeting to influence competitive consumption and they are successful, too. However, more needs to be done by marketers in this direction, targeting different socio-economic classes and reference groups, to entice them for competitive consumption. Marketers should devise specific strategies to scale up this competitive consumption, if they wish to sell more of their products. The emphasis of all marketing communication should be not on competition among brands, but on promoting competition among consumers. They should make consumers more aware about not what they need, but what they want in comparison to their neighbours, co-workers, or the people they follow, be it in real world or on social media or other media. Competitive consumption is powerful and it is here to stay.
