What one person calls a lifestyle luxury another might call a utilitarian purchase. What may be an indulgence for one is an aspirational luxury for someone else. Where a particular purchase fits in the discretionary product matrix is dependent upon many variables, not the least of which are income, life stage, age, gender, and where the consumer lives. Even more individualistic is the individual's value system, passion, and identity.
An automobile purchase is highly dependent upon demographic factors. For example, if a person lives in a rural area, owning a car may be an absolute necessity, whereas for the city dweller well served by modern mass-transit systems, a car probably falls into the discretionary realm. Discretion also plays a role in what type of car to buy. Do you buy a new car or a used car? Do you buy a sedan, wagon, two-door, four-door, SUV, pickup truck, or four-wheel drive? Do you buy a Ford, Lincoln, Chevrolet, Cadillac, Honda, Lexus, Mercedes, Land Rover, or BMW? Who you are; where you live; your age, gender, and income; whether you have children; and what your friends drive all play a role in the decision that goes into purchasing a car.
Beyond demographics, a person's value system influences purchase decisions, as this respondent describes: "I don't need a Mercedes. I think a Mercedes is more than you need to get you from one place to another. It's about our belief system, which we talk about with our kids. We have tension there. On the one hand, we are embarrassed by what we have compared to some of our friends. On the other, some of my kids' friends get something and our kids come home and say, 'Why can't we get this?' That brand [Mercedes] is not me. I don't have that lifestyle. Some people do, but I don't."
A person's value system influences purchase decisions.
Let's look more closely at how a consumer's value system, her individualized judgment, and her self-identity influence her perception of her own discretionary spending.