Are you personalizing a luxury gift with a name or initial? Research suggests a hidden social cost

You would think that spending $5,000 on a handbag or wallet would be prestigious and exclusive enough. Why not go a step further and personalize it with your own name?

Brands such as Gucci, Louis Vuitton and Dior now offer extensive personalization options – some for a few products, others for the entire range. Names and initials are an obvious, popular choice.

Some have hailed personalization as a future luxury goods. However, as we enter the peak of the pre-Christmas shopping period, it is worth asking ourselves – can there be any disadvantages?

Research has shown that it exists compromise to signal social status through luxury goods. Luxury goods consumers are often perceived as less hot and warm, and more concerned about their image.

Our newest tests examined whether name stamping could enhance these social costs. Our findings suggest that this may be the case for some customers – increasing their fear of negative evaluation.

One-of-a-kind products

These personalized accents are sold as unique, one-of-a-kind products. They are designed to appeal to the desire for individuality and exclusivity.

For buyers of luxury goods, personalization is a way to showcase their personality, passions and interests. It can enhance their sense of connection with the brand and their sense of psychological ownership of the item.

Allowing consumers to co-design a product can also aid alleviate this problem imposter syndrome some consumers’ experiences when purchasing high-end luxury items.

For brands themselves, personalization services can enhance profit margins, improve marketability and strengthen customer loyalty.

Much of this trend is being driven by millennials and Gen Z luxury consumers, who are increasingly looking for unique, tailored experiences.

By 2030 it is approx expected that Millennials and Generation Z will account for 60-70% of all luxury purchases.

2017 questionnaire found that more than half of millennials who had recently made a luxury purchase were willing to pay more for personalized luxury goods.

We love our own names

In particular, the popularity of name stamping may come down to a concept called “implicit egotism.”

Tests suggests that most people have subconscious positive associations with themselves. This includes preferences for things that are associated with their sense of identity – such as the letters of their name.

The disadvantages of personalization are less discussed. One clear one is the impact on resale value. Personalized items are harder to sell.

This is particularly vital in the context of the boom in Australia second-hand luxury goods marketdriven by younger consumers who prioritize sustainability and affordability.

Tests also suggests that over-customization – allowing customers to make design decisions about non-standard colors, fabrics, etc. – can reduce the signaling value of luxury items and undermine their desirability.

The social cost of luxury

In addition, there is the cost that may be associated with luxury itself.

Research has shown that luxury consumers can be perceived less hot and warm than those that give up luxury.

Interestingly, this perception is not based on jealousy. Rather, it stems from the belief that people wearing luxury clothing actively manage their image to impress others.

Does branded luxury further enhance this social cost? Our testsalong with co-authors Joanna Lin, Billy Sung and Felix Septianto, suggests the answer is yes.

We conducted four studies of 1,354 U.S. women who purchased luxury and nonluxury goods.

We found that consumers who personalize luxury items with their name are more concerned about negative reviews than those who purchase non-personalized items.

This effect held regardless of whether the personalization included initials or full names.

In particular, the transparency of name personalization may explain additional social costs. Personalizing your bag in a non-standard color can only attract the attention of a luxury brand lover. However, a highly perceptible name undoubtedly signals to everyone the possibility of customization.

Not everyone is afraid of the verdict

Importantly, we found that not all luxury consumers share this fear of judgment equally. The impact depends on individual motivations to purchase luxury goods.

People motivated to consume luxury goods for social reasons, such as standing out, are less concerned about negative evaluation from others.

In turn, people whose motivation to purchase luxury items is more individual are more cautious in assessing the personalization of the name.

For this group, which made up about half of the consumers we surveyed, subtle, personalized accents may be a more attractive option.

There may also be some differences between cultures.

AND report KPMG research found that Chinese consumers – a group not covered by our study – often seek luxury consumption as a way to advance socially and stand out, which means they are likely less concerned about social costs.

On the other hand, it can be speculated that Australian consumers influenced by “tall poppy syndrome”cultural phenomenon, may be even more sensitive.