Luxist Guest Post: Dr. E. Isaac Mostovicz on Theta-Lambda Luxury

by Deidre Woollard (RSS feed)
Mar 31st 2010 at 8:01AM

Dr. E. Isaac Mostovicz heads Janus Thinking LTD. His research investigates the link between people's choices and their worldviews. Isaac's interest in human choice covers a wide array of topics, among which are marketing, leadership, CSR, ethics, strategy and politics. He has published over 20 articles, conference presentations and book chapters.

Did luxury really take nosedive during the last downturn? Is it rebounding? Have people's tastes changed? What is luxury at all?

The Janus Thinking blog has been covering the state of luxury and luxury consumers now since 2006. It has told the story of luxury's evolution since then – its peaks, dips and shifts – not merely tracking them over time or based on economic trends but analyzing them through a close look at consumer behavior.

Janus Thinking has a unique approach to luxury; it argues that luxury is affected by the psychological mindset of the consumer. Luxury is a behavior that can manifest itself in scenes and products of any kind, not just the ones we typically think of as luxury.

At its essence, luxury is overspending on something unnecessary. We might not really need it, but we somehow feel that special tinge of excitement or satisfaction afterward. It is impossible to explain such behavior with logic unless we understand first what luxury implies and how important this "needless need" for luxury really is.

At the end of the 19th century, a sociologist called Thorstein Veblen wrote his book The Theory of the Leisure Class to present his interpretation for why this luxury behavior exists. He introduces what later became known as "Veblen effects", namely conspicuous consumption to gain and signal status, and pecuniary emulation, or the effort to equal or surpass someone else's wealth. However, such a cynical criticism cannot explain why we all are after luxury (presumably including Veblen and his followers as well).

Satisfying the Needless Need

The need for squandering assets is biological. Amotz Zehavi, the Israeli biologist, calls it the "handicap principle". Zehavi argues that people show off their wealth by squandering it. For example, peacocks grow beautiful tails and deer grow impressive antlers just to show off that they are so fertile that they can waste excessive energy on something that they really do not need.

But while animals are ruled by hereditary, humans, on the other hand, enjoy a unique asset – we have choice. Driven by biology, peacocks cannot stop growing tails but humans can choose whether and how to spend on luxury.

Before trying to understand how we choose luxury, let's first go back to why we need it. Man is constantly busy with activities aimed at enhancing his self-esteem, everything from a quick look in the mirror to purchasing a mammoth yacht or private jet. All these activities send one message: I am worthy.

We can get this message most profoundly from items that have one particular quality, that we do not actually need it. Animals have basic needs – they graze and live in stables. However, man needs to satisfy higher and more important needs. If we are not worthy, what value do our lives have?

What Kind of Luxury Shopper Are You?

When we at Janus Thinking examine how people choose and perceive luxury, we have found that people can be divided into two groups or two worldviews – Lambda and Theta – which explain how different personality types influence our choice of luxury. What characterize these worldviews? How do they think? And, perhaps most interestingly, how do luxury marketers appeal to them?

Lambdas seek challenge and distinction; they are the kind of people who are motivated by their own instincts. They seek achievement and uniqueness as an ultimate end goal. They are more likely to interpret products based on their individual responses to the product, how it helps/prevents them to stand out, and how the product benchmarks against their regular consumptive patterns.

Thetas, on the other hand, seek belonging and control, and they accomplish this by bonding or affiliating with a group of people whom they admire. Because of this, they loom to fit in or contextualize themselves within a desired group and use socially derived understandings of product characteristics as a basis for their consumption.

The Theta-Lambda worldviews are particularly applicable to luxury since it is here that we tap into our desire to reflect externally how we see ourselves inside. When viewed this way, the motivations of individuals who enjoy luxury become clearer.

Lambdas and Thetas may buy the same thing, but he will likely appreciate it for different reasons. The Lambda personality will see an item's value not in terms of price, but rather, in terms of craftsmanship. Did the item take someone a long time to make? Is it unique? What is the story behind the item's creation?

Thetas, however, will seek luxury items, which help them be seen as part of a specific social class. The item is attractive. The Theta personality will buy it because they see the luxury item as helping to establish them within their preferred social class. Thetas seek acceptance, and their purchases and personal interests will reflect that.

Differentiating between Theta and Lambda Luxury

It should be stressed that Lambdas and Thetas are interested in many of the same things, ideas, concepts and luxury items. Their core differences come down to reasoning. The items hold different meanings and are assigned different values.

This is critical in order to understand how to market items to either personality. A Lambda personality and a Theta personality will both walk into a Mercedes-Benz dealership interested in buying a new car. But their reasons for wanting the car are likely to be different, according to their worldviews.

A Lambda will see any prospective luxury item in terms of personal achievement - is this item a symbol of his own achievement? In seeing the item that way, he also attaches a back-story to the item, giving it added meaning to him.

While the luxury industry recovers and buyers begin to return to their pre-recession buying habits, now is a good time for luxury brands and retailers to learn about who their core customers are, and understand how their belief system of luxury impacts their buying habits.

The better that is understood, the more success retailers and luxury brands will have in connecting with the right customer and effectively speak their language of luxury. Still, many questions remain: is luxury truly used for self-esteem enhancement? If luxury is a behavior, what is the role of products and brands? How else are Theta and Lambda manifested in our lives? These are questions for further columns.

Tags: janus thinking, luxury, theta and lambda luxury

Filed under: Wealth

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Reader Comments (Page 1 of 1)

reallytorkedoff Apr 1st 2010 12:57AM

There are more than two types.

Some people reject luxury and prefer to deny themselves even the simpler luxuries. Some of these people take it to an ascetic level.

Some buy only the luxuries that can justified as useful. For instance a person may only own one watch, but prefer it to be a Rolex, even if no one else knows they have it. This is similar to the Lambda, but not quite the same.

Minimalists may own almost nothing, but spend a huge amount of money to reach that state.

A much more extreme form of the Theta type may also be seen in the old practice of the Pacific Northwest Indians called a potlatch. In the potlatch, an Indian would throw a huge feast where they would give away a large portion of their net worth, sometimes all of it. Status was gained by the volume and value of goods distributed. Apparently, this would show that they had the ability to regenerate their worth due to their skills. This is an extreme form of the "handicap principle".