art valuations from customers to artists - impresso

A Framework for Identifying Factors.... Marshall and Forrest

A FRAMEWORK FOR IDENTIFYING FACTORS THATINFLUENCE FINE ART VALUATONS

FROM ARTIST TO CONSUMERSKIMBALL P. MARSHALL, Alcorn State University

PJEORREST, Alcorn State University

While the fine arts are a multi-billion dollar business, marketing academicians have largelyneglected the visual fine arts market. This is unfortunate because the expressive nature offine art works provides an opportunity to extend marketing exchange theory further into therealm of symbolic and social values. This paper draws on marketing concepts, anecdotalevidence fiom art history, insights fiom art economics and aesthetics, and sociologicalperspectives related to social construction of reality, to develop afiameworkfiom which toview market valuations of fine art. Consideration is given to the artist, to visual fine artworks as products, to the industry and its intermediaries and facilitators including galleries,dealers, collectors, curators, and critics, to purchasers of art as consumers with diversepurchasing motivations, and to aspects of fine arts pricing. A model is presented tosummarize key potential infiuences on visual fine art market valuations and suggestions aremade for directions of future formal research in this area.

INTRODUCTION

Although the fine arts are a multi-billion dollarintemational business (Velthuis 2007; Clarkeand Flaherty 2002; The New England Council2000), business academicians have largelyignored the fine arts as an area of concentration.However, the expressive nature of fine artworks provides opportunities for marketingtheory to delve further into the realm ofsymbolic, social and subjective values (Aaker2009; Schroeder 2006; Solomon 1988;Hirshman 1983; Bagozzi 1975; Levy 1959), aswell as into pricing differences based oncharacteristics of marketing intermediaries(Velthius 2007) and to reassess the marketingconcept so as to embrace a role for marketers inleading, educating, and so creating markets(Fillis 2002; Voss and Voss 2000). Whereassymbolic and social values can stand alone inexchange situations, in fine arts marketing,symbolic, personal, and social values areintrinsic aesthetic aspects of the product from

The Mailetúig Management JournalVolume 21. Issue 1, Pages 111-123Copyright O 2011. The Marketitig Management AssociationAll rights of repioduction in any form reserved

both producer and consumer perspectives.Moreover, fine art works may involve twotypes of valuations in a single purpose, asubjective valuation of personal meaning to theconsumer, and investment potential in a broadermarket (Gutner 2005). From a marketingperspective, fine arts are not unique in theseregards, but, the fine arts do provide a fairlyfocused subject matter from which to explorethese realms. Sadly, while extensive work hasbeen done in the realms of aesthetics and artfrom philosophical and psychologicalperspectives (see for example Adomo 1997;Barilli 1993; Venkatesh and Meamber 2006), abroad but basic framework to guide marketinginquiry has been lacking (Fillis 2002).

For present purposes, "fine arts" will refer to apainting in all media including watercolor, oilacrylic and "mixed media," as well as sculptureand ceramic works including carvings, castings,and hand-constmcted objects. While werecognize that, in social terms, there aremultiple art worlds and multiple art markets, weare broadly defining fine arts and fine artsmarkets here as we search for general principlesof art valuation. The term is not here limited to

111 Marketing Management Journal, Spring 2011


works of well-known artist's, historical figures,or particular genres. The fundamental premiseof this paper is that the recognition an artistreceives, monetary or otherwise, is a socialdefinition and valuation of the artist's worksand is driven by marketing related socialprocesses. The objective of this paper is todevelop a conceptual framework from which topursue research into fine arts marketing. Indeveloping this framework, we draw onsociological (Burger and Luckmann 1966;Durkheim 1954), aesthetic (Adomo 1997), andmarketing theory (Aaker 2009; Kotier 2000)and illustrate resulting "principles" withanecdotal evidence. We conclude bypresenting in graphic form a basic "model" offactors that may infiuence valuations.

Consideration is given to the artist as aproducer in the sense that the artist is theoriginator of the core work, with recognitionthat many "top end" contemporary artists (andeven historic "great masters") do not producethe final work from their studios solelythemselves. Consideration is also given to fineart as a product with objective, cultural, andsubjective components, to the art gallery andrelated marketing intermediaries andfacilitators, and to the art buyer as a customer.All are viewed as representing potential sets ofinfiuences on monetary valuations (Aaker2009; Velthuis 2007). Thus the modelincorporates Artist Factors (The Artist), Product(Fine Art as a Product), Intermediary Influences(The Role of the Art Industry) and the Role ofthe Buyer (Purchaser Receptivity Factors). Themodel then describes the elements of eachfactor and their respective impact on price.

THE ARTIST

The marketing process of a work of fine artnaturally begins with the artist. As theproducer of art works, the resulting artwork andits valuation is intrinsically tied to the artist, hisor her reputation in the art marketplace, brandsfrength, technical skills and base priceexpectations. The artist's reputation will derivefrom the artist's credentials which may includesuch topics as formal education (although this

is not a determining factor as "outsider" and"primitive art" are often highly valued), awardsfrom and membership in artist societies, andmuseums and private collections which includethe artist's work. In addition, the artist'sreputation will also include records of past salesand prices of the artist's work.

The artist's "brand strength" may, theoretically,be closely related to the artist's reputation, butbrand strength, at least as used here, is adifferent concept. As used here the concept of"brand strength" relates to the celebrity statusof the artist and the "brand associations" whichare attached to this status. Celebrity statusrefers to awareness of the artist as a person ofnote outside of the immediate community ofartists. An example would be the broad socialawareness of such artists as Andy Warhol,Picasso, or Grandma Moses. Such awarenessbroadens the general market interest in andreceptivity to the artist's works, and so mayincrease demand outside of the artisticcommunity more narrowly defined. In additionto brand awareness, celebrity status alsoincorporates "brand associations," the imagesor value symbols the artist represents. As inother marketing realms, brand associations canbe positive or negative depending on the marketsegment to which the artist's work is directed.Andres Serrano, for example, came to beassociated with outrage and controversy overreligious sacrilege due to his depiction of acrucifix in a tank of urine, and Mapplethorpeelicited hostile controversy for photographs ofhomosexual and "deviant" forms of sexuality.These controversies, which still linger today,provided great notoriety but alienated bothartists from many art venues. The negativeassociations that resulted increased calls for artcensorship in the United States and stimulatedcalls for cuts in govemment spending on arts inthe United States. Controversy of a differentsort developed around the carefully cultivatedbrand of Thomas Kincade and created negativeassociations within parts of the art communitydue to both production and marketingtechniques that called into question theuniqueness of each piece (despite the historicalpattems of art production noted earlier).

Marketing Management Journal, Spring 2011 112

A Framework for Identifying Factors.... .. , \j- Marshall and Forrest

However, positive associations that attached tohis celebrity status as the "painter of light" andpeaceful woodland villages endeared him tomany retail art buyers outside of the artistcommunify.

The artist's conceptual and technical skills arenecessarily intrinsic to the products that will beproduced. Conceptual insight or technicalprowess may attract collectors, galleries, criticsand other marketing intermediaries andfacilitators. Layout design, sfyle of brushstrokes, color choices, color value, choice ofsubject, interpretation of subject, and so forth,might gain an unknown artist attention fromintermediaries and facilitators that mightotherwise not respond to an artist who has notyet achieved celebrity status, and theseintermediaries and facilitators can thencontribute to the development of celebrifystatus and market value and aid in the creationof positive brand associations. i

Finally, the artist's base price expectations mayinfluence a gallery's willingness to considercarrying the artist as well as consumerreceptivity. A high price, relative to the marketsegment to w^iich the work is to be offered andthe gallery appeals, might exclude potentialbuyers if it is not commensurate with theartist's reputation. A low price relative to thesame market segment might convey that thework of the artist is not to be taken seriously.

As depicted in Figure 1, these various "ArtistFactors" directly influence the product that theartist produces, potential intermediaryinfluences, and the purchaser's receptivity. Inthese ways the artist indirectly influences theprice the gallery asks, and the personal andinvestment prices the purchaser is willing topay.

The last "artist factor" included in Figure 1 isthe artist's motivation for producing works.This topic has been recognized by others(Hirschman 1983; Fillis 2002) and reflects theclassic artist conflict between creating for selfexpression and creating for market acceptance.In Fillis' view this conflict becomes a challenge

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and opportunify for the art marketer (the galleryor dealer intermediary) who may take on therole of the market educator and the creator ofnew art markets. We will see examples of thisrole later and discuss the implications of theartist conflict. For now we recognize thatartists may carry out their work purely for theirown fulfillment (what Hirschman referred to asmarketing to one's self), or may consciouslycreate works that will be well received and sellquickly on the market. As we will see later,artists often take a compromise position andmay create their own marketing distribution andcommunication channels in order to maintainartistic freedom while pursuing market success.Even so, the artist's motivations can beexpected to influence the nature of the art workas a product, the receptivify of intermediaries,and the fit between the artist as a brand and thepurchaser who may seek symbolicidentification with the artist and his or herwork.

However, the artist's conflict mentioned earliermust be explored if one is to understand therelationship of the artist to the marketplace.Fine art artists differ from many producers ofproducts in several ways. First, the fme artartist is involved, initially, in the creation of asingle unit of production in which each initialproduct is unique, although if successñil itsmarket potential may be extended greatly viavarious forms of reproduction. Even before theartwork has received widespread exposureplans may be in place to provide reproductionsof various types, and such reproductions mayeven be in production. However, while theartist as artist may go through artistic stagesduring which many similar original works areproduced, the artist's intention is not toreplicate products but to experiment withseveral - even many - variations in theme, sfyleand technique. Violation of this principle withrepresentations that works are "original" hasinvolved artists in much controversy. Therecent controversies surrounding Kincaid are anexample (Schroeder 2005, 2006). Second, theunderlying motivation of the fine art artist is toproduce works of art that are satisfying to theartist herself or himself (Hirshman 1983).

Marketing Management Journal, Spring 2011


Figure 1The Flow of Influences on Fine Art Buyers' Valuation of Art

Artist Factors- Artist reputation

- Accreditation- Past Sales

- Artist brand strength- Celebrity status- Brand associations

- Technical skills- Base price expectations- Artist motivaticMis

\

Purchaser Receptivity (Demand)Factors

- Symbolic identification- Purchase motivation- Artist brand awareness- Artist brand associations- Economic constraints

The Product-Technical features

-Media, size- Expressive Symbols

GalleryPrice

Intermediary Influences- Galleries, collectors,

dealers- Reputation- IMC efforts- Reputation of other

gallery artistsFacilitator Influences

- Critics and curators

Personal Price

InvestmentPrice

PurchasedPrice

Extemal MarketDemand

- Art in General- Ec(Hiomic Environment

While monetary rewards and recognition bycolleagues might be desired, the purity of thecreation process expressed by the phrase "artfor art's sake" is often offered as a paramountconcem and the artist may even hold andexpress disdain for the commercial aspects ofthe art industry. Even the notion of art as anindustry is believed to be repulsive to thededicated fine arts artist. However, this may bea relatively recent ideal, and even today isfrequently violated, blurring the distinctionbetween "pure art" and "commercial art."There is substantial evidence that many

historical figures in art, such as Rembrandt,actively pursued both market acceptance andproduction workshops with apprentice staffs toincrease output (Alpers 1988). Today a body ofwork is developing which assists the artists inmarketing themselves (Smith 2011).

Regardless of social definition in themarketplace, the fine art artist highly valuesskills in design and technique, and the freeexperience of art (Alpers 1988). The artistexists in a constant position of tension betweenwhat Durkheim (1954) referred to as the worlds



of the sacred and the profane. Without at leastsome level of reward fi-om the profane world ofthe marketplace, the artist cannot survive as afull time, dedicated professional able to bedevoted to the experience of his or her art. But,exposure to the art marketplace and marketsuccess may be feared because the artistbelieves the marketplace may constrain fiitureartistic development and because it may lead tosuspicion by other artists on whom the artistdepends for self-defmition and socialbelonging. This is what Hirshman (1983) hasreferred to as "peer-oriented creativify." Ineffect, the artist resists what Marx (1962)referred to as the "alienation of man from hislabor" while still seeking economic and socialsustenance fi-om the marketplace. As noted byBradshaw, McDonagh and Marshall (2006) intheir study of musicians, "artistic alienationremains relevant as part of a complex balancingact between art and commerce..." This may beas tme for the fine arts artist who achievessome degree of celebrify status or endorsementand support from dealers, collectors,independent curators, and galleries.

This situation was underscored by a personalencounter between an artist and one of theauthors in a gallery in a popular tourist townthat also has a vibrant art communify. Theowner of the gallery was unusual in that he wasan artist whose works included paintings invarious media and photography. He devotedhis gallery largely to offering his own works tothe public although other artists wererepresented. In an informal interview, heoffered this advice to other artists "Paint whatyour customers will recognize and identifywith." On several occasions the author hasshared this advice with fine art artists and hasfi-equently had the advice rebuffed with suchwords and phrases as "crass," "exploitative,""commercial," "prostitution," and "That's OKif he wants to do it, but I am not going to giveup my art for money."

This tension places the fine art artist in theunusual position of being a producer attemptingto create without eoneem for the market whiledepending on the market for the abilify to

create. As a result, the artist is at adisadvantage in establishing a base for carryingout market transactions and becomes largelydependent upon marketing intermediaries suchas galleries that represent the artist's work andinsulate the artist fi-om the marketplace. This isnot to say that the artist is completely adversefiom participating in the marketing effort.Artists often attend their own gallery showings,especially opening nights, and even lookforward to these events as opportunities to hearand observe reactions to their work by artconsumers and other artists. As with mostpeople, artists appreciate social praise andacceptance although they may stmggle not tolet their "art" be influenced by suchmotivations.

To the extent that the artist desires to beinsulated fi-om the marketplace, whether topreserve his or her time for creative activities orto avoid the appearance or fact of marketinfiuence, the artist surrender to marketingintermediaries and facilitators the creation ofthe social definitions of his or her work thatwill influence the potential buyers' experiences.To this extent, at least, the artists surrendercontrol of the representation of the work tomarket intermediaries and facilitators. Theseintermediaries and facilitators include galleryoperators (broadly defmed to include both storeand intemet sellers [Clark and Flaherty 2002],dealers, substantial collectors who also sellworks, and other forms of sellingintermediaries) and art "critics" and other formsof facilitators who in one form or another offer"expert" opinions as to the value of the work orthe "importance" of the artist as a current orfuture influence. These intermediaries andfacilitators are, in effect, market makers whoseactivities greatly influence, if not establish, themonetary value of an artist's works and thecultural prominence and celebrify status of theartist in the "cultural constellation" of fine artsmarkets (Aaker 2009; Velthuis 2007; Joy andSherry 2003; Joy 1998; Becker 1982).

To the degree that the artist takes a purist"hands o f f position regarding therepresentation of his or her work, the galleries



which are motivated by monetary success are ina position to exploit artists with highcommission rates despite low levels ofmarketing services and expenses. The extent towhich this is done is an empirical question, butgallery commissions of forty to sixty percent ofsales revenues are common, and many galleriesmay require that the artist use the gallery formatting and framing services and pay marketrates for these services out of their remainingsales revenues (Cox 2001; Goodman 1978a,b).Moreover, galleries, by maintaining the primaryrelationship with the buyer, distance the artbuyer from the artist, often with the artist beingcomplicit in this distancing. The result is thatthe artist may not be able to identify his or herown best "customers" and thus loses to someextent the ability to capitalize on their psychicrelationship with the buyer who has purchasedthe work for the subjective experience.

FINE ART AS A PRODUCT

As depicted in Figure 1, the product has twoimportant dimensions, the technical featuressuch as media, size, and indications of theartist's technical skill, on one hand, and theexpressive symbolism (from which it mayderive symbolic value in the eye of thebeholder) of the artwork on the other. Much ofthe following discussion wall address the areaof expressive symbolism. As a physical object,the typical work of art carries little marketvalue. The costs of raw materials such ascanvas, paper, paint, and clay are usually smalland the materials have no salvage value. Froma functional perspective, most artworks alsoprovide no utilitarian value as a means ofmanipulating the physical world. Instead, awork of art as a product carries meaning onlywithin the realm of socially and personallydefined symbolic values. However, decisionsto purchase fine art may then be grounded inother considerations. One is the extemalmarket value of the work of art (depicted inFigure 1 as "Investment Price") (Gutner 2005).In this context, the extemal market refers topotential buyers other than the current ownerand the immediate potential buyer. This maybe thought of as the potential resale price

should the purchaser choose to sell the work atsome future point. In this sense, the artwork isobjectified as a potential investment or, at least,a safe haven for money. The secondconsideration on which a decision to purchase awork of art might be based is the value to theconsumer of the consumer's subjectiveexperience of the artwork (Depicted in Figure 1as the "Personal Price"). Only the consumercan establish the monetary value of theexperience.

The relative importance of these twodimensions may vary from consumer toconsumer and this variation and its underlyinginfluences is a worthy topic of research. Touncover these influences we must consider thesocially and individually defined nature of fineart products. An artwork as a market product ishere conceived as having three dimensions.These include: 1) the social definition of thephysical product by the art industry; 2) theartist's experience in producing the work whichthe artist intends to share with the art consumer;and 3) the buyer's subjective experience inconsuming the work of art. The buyer'ssubjective experience might or might not becapable of being shared with others and mightor might not correspond to the experienceintended by the artist (Hirshman 1983).

Of the three dimensions of the artwork as aproduct, the first may most heavily influencethe extemal, monetary market value of a workof art. Art works are intrinsically risky from aninvestment standpoint. Market valuations arefraught with uncertainfy. Standards forvaluation are ambiguous and little consensusexists outside of the works of recognizedmasters. Operators of commercial galleries andauction houses, as marketing intermediaries(Dolan 2001; Goodman 1978b; Wilson 1970),facilitate tmst, reduce risk and enhance marketvalue by providing social definitions thatlegitimize artworks (Bumham 1975a, b).However, even then the notoriety of the artist isa product of the art industry's definition of theartist and his or her work. The marketing ofModernism at the beginning of the 20thCentury (Jensen 1994; Naumann 1996a,b;



Watson 1992) and the case of the legitimationof Picasso by Kahnweiler and Rosenberg(Fitzgerald 1995) is a case in point. Essentially,the market value of the artist and art productsbecomes a function of social definitions ofreality that are leamed and applied byindividuals to create the individual's perceptionof realify (Berger and Ltickmann 1966) as aconsumer. These social definitions become thebasis for "symbolic exchange" within thecontext of the culttiral meaning of consumption(McCraken 1988, 1986).

Bagozzi (1975) used the concept of "symbolicexchange" to refer to the "mutual transfer ofpsychological, social or other intangible entitiesbetween two or more parties." Bagozzi goes onto cite Levy (1959) in regard to symbolicexchange and emphasized Levy's words "...People buy things not otily for what they cando, but also for what they mean." In regard toart, the socially defined symbolic meaning ofthe work of art by the industry becomes a keysource of monetary value, and may be a basisfor the subjective experience of the consumer(Dewey 1934). A second set of meaningsaddresses the existential experience of thebuyer or consumer of the artist's work (Dewey1934), and this experience may be infiuencedby the social definitions provided by theindustry. However, it must also be rememberedthat the artwork originated in the symbolicrepresentation of an experience of the artist bythe artist and, often, primarily for the artist(Hirshman 1983) which the artist then chose toshare with the potential consumer in the marketby offering the work for display and, usuallybut not always, for sale. Thus, the consumer'ssubjective experience is infiuenced by the artistthrough the artwork, but also by the industrydefinitions of the artwork, and such industrydefinitions may distort the intention of the artistand undermine the symbolic exchange betweenthe artist and the viewer of his or her art. It isin this sense that the artist may suffer"alienation" from his or her labor in the senseof the term as used by Marx (1961, 1966) andthus from himself when offering artworks to themarket.

THE ROLE OF THE ART INDUSTRY -INTERMEDIARIES AND FACILITATORS

As depicted in Figure 1, intermediary andfacilitator influences are classified intoinfluences of galleries and dealers, art criticsand commentators. Galleries and dealers (asbroadly defmed previously) serve as salesvenues and as critics and commentators. Herewe will refer to both dealers and galleries bythe term "galleries" in the interest of parsimonyas both are sales agents. As tised here, theterms critic and cotnmentator refer to personswho are perceived to be independent of aformal association with a gallery.Representatives of the art "industry" - artcritics, galleries and artist's representatives andartists themselves - often classify works of artto develop a fi-amework for market order. Thisframework has the ftmction of providing meansof classifying, ordering and valuing art works inmonetary terms to exert social control of artmarkets. Such classifications become industrydefinitions of a work of art as a product andserve as a basis for assigning monetary value.The art community distinguishes products notonly on the basis of media and form, such aspaintings or sculpture as noted above, but alsoon the basis of the producer of the work, the"finished" nattire of the work, and the originalintended purpose of the artist's work.

To illustrate, one distinction based on theproducer of the work is "insider" versus"outsider" art. In this distinction, insider refersto persons who are educated within theconventional art communify and institutionsand known within that communify. "Outsider"art is produced by persons who are notrecognized as formally educated or previouslyparticipating in the fraditional art communify.To illustrate, Picasso, Van Gogh and Daliwould be recognized as insider art, whereas theearly work of Grandma Moses was seen asoutsider art. One category within the outsiderclassification is "folk art" which refers to"outsider" artists who are not professionalartists but who develop pritnitive (i.e., roughand somewhat unfinished) works that areembraced by influential insiders. As "insiders,"



established critics and galleries in particular,embrace "outsider" artworks, the works and theartist are legitimated, although perhaps within anarrow sphere. A key role of galleries is thediscovery, legitimation and presentation to theinsider communify of folk artists as outsiders.In this process, the gallery increases themonetary value of the outsider art.

An example of a distinction made here on thebasis of the intended purpose of the work is"commercial" art, which would include"advertiser," and "barmer" art, which wasproduced for the original purpose of promotinga product or service. However, the commercialart versus fine art distinction is not rigid andmay be considered subjective. An importantexample is the "banner" art of contemporaryartist Johnny Meah whose banner art wasoriginally developed to promote circusperformances but has transitioned in the viewof many to be considered in the fme artcategory. Meah's work has now been shown innumerous galleries in such cities as New Yorkand Chicago and has, with the support of thatcommunity been socially recognized as fine artand has been assigned fine art prices. ForMeah, the transition from being sociallydefined as a "commercial" artist to a "fine artartist" included gallery definitions of Meah'swork as "folk" art and "outsider art," althoughthese labels are not appropriate given his formalbackground and training (based on conversationwith Johnny Meah, 1999). Galleries, for theconvenience of sales may have assigned suchlabels as a means of introducing Meah's bannerart to the fine art community. Such labels canenhance the acceptance of the new artist byeasing the traditional art consumer's "socialdefinition" of an unusual art form as valid art.Over time, greater exposure of such an artist tothe fine art community can lead to recognitionas a full member of the fine art set.

Such definitions of the art work do not affectgallery price or buyer perceptions in isolationfrom the gallery that offers the work. ThereforeFigure 1 includes under the influences ofgalleries the reputation of the art gallery andother artists that the gallery represents, and

integrated marketing communications (IMC)efforts that the gallery carries out to representthe artist. These wdll affect (although notdetermine) the success of the gallery inrepresenting the artist and will influence theoffered market price the gallery places on thework of art. Such activities from a reputablegallery may enhance the receptivity ofpurchasers.

From a strategic assessment standpoint, the artgallery as a marketing intermediary is in aparticularly sfrong position. Drawing onPorter's (1980) conceptual framework forassessing the strategic attractiveness of anindustry, gallery owners are in strong positionsin that their suppliers, the artists, have littlepower and are essentially disorganized, andtheir customers, art buyers, are alsodisorganized and have relatively littleknowledge from which to make valuationdecisions. In addition, there are few barriers toentry or exit, altihough some degree ofdemonstrable knowledge of art might beexpected to provide an advantage. Thereforeparticipants at both ends of art markettransactions are highly dependent on thegalleries; the artists to gain market exposurewithout sacrificing idealism and dignity, andthe buyers to establish appropriate financialvaluations for their investment.

To the extent that uncertainfy increases risk andrisk reduces monetary value, the art gallery as amarketing intermediary may substantially addvalue to a work of art by providing "socialdefinitions of reality" through which the workof art is "framed" in the buyer's symbolicuniverse. By facilitating and reinforcing socialdefinitions of works of art, the art galleryoperator can enhance the potential buyers'confidence in the monetary value of specificworks of fine art. The degree to which agallery effectively serves this market functionwill depend upon its ability to define its imageas authoritative in regard to the monetary andsymbolic valuations of art in the buyer's socialcontext. Galleries use several techniques toreduce uncertainfy such as classification of anartist's works into popularly recognizable



categories, providing educational informationto make consumers aware of specific featuresof good design, providing artists' credentials,efforts to provide the artist with "celebrity"status, and efforts to associate the buyer'sdecision with similar decisions by reputablecollectors and investors. Such risk reductionactivities may be especially important during"boom" periods in which one or another type ofart or artist is rapidly increasing in value, asoccurred, for example, in the early 2000s inregard to Chinese art (Peterson 2004). Or inthe field of art authentication, arbitrary andoften clandestine, a top authenticators signatureis the difference between a valuation of a pieceof art as worth millions or worthy only of thetrash bin. When top authenticators disagree, apiece of artwork can be consigned to purgatoryforever (Grann 2011). While marketingintermediaries typically perform similarfunctions in many personal selling situations,such value enhancing roles may be especiallyimportant in fine arts marketing due to tiie highdependence of the product on subjectiveexperiences and social definitions.

PURCHASER RECEPTIVITY FACTORS

Figure 1 depicts the factors that infiuencepurchaser receptivity as consisting of fiveelements: symbolic identification of the buyerwith artwork or the artist, purchase motivations(collector, investor or decorator, for example),the purchaser's awareness of the artist as abrand, the purchaser's awareness of the artist'sbrand associations, and the purchasers owneconomic constraints. Of these, it is the issueof symbolic identification that needs furtherelucidation here.

While industry definitions become marketdefinitions of an artwork as a product and somay underlie its market value and motivate abuyer for investment purposes, the second setof symbolic meanings that address theexistential experience of the observer of theartist's work may motivate the observer tobecome a buyer for symbolic purposes. Theseexistential experiences involve the socialsharing of symbols between the artist and the

observer. The resulting experience in theobserver depends on the observer's recognitionand definition of symbols provided by the artist.Such reactions depend upon the observer'sprior experiences with the physical and socialworld and with industry definitions.

Where prior experiences with the physical,social and industry realms on the part of theartist and observer lead to correspondingsymbolic definitions, the artist may succeed inan intended communication with the observerand the work of art produces the intendedexperience in the consciousness of the observer.Where such prior experiences of the artist andobserver do not lead to corresponding symbolicdefinitions, communication between the artistand the observer fails and the observer has anexperience different from that intended by theartist. In either case, the observer's experiencebecomes part of the art product and infiuencesmotivation to purchase the work of art. Whenthe observer believes that there is a sharedexperience, the buyer might identify with theartist and be further motivated to buy his or herwork, and might even develop a sense ofrelationship with the artist and follow theartist's career. In such a case an ongoingmarketing relationship may develop betweenthe artist and buyer, and the buyer mightbecome a collector of the artist's products.

Art buyers may be roughly classified into threegeneral categories. First is the buyer whosepersonal, subjective experience motivates thedesire to have a particular work to perpetuatethe experience evoked in him or her by thework of art. Second is the collector who seeksto accumulate an array of representative worksof a certain artist or of a certain sfyle or theme.The Ogden Museum of Southem Art (http://www.ogdenmuseum.org/) is an example of anextensive collection of art from the Southemregion of the United States, developedprimarily by a single collector. The third buyercategory is the investor who buys inanticipation of rising market value as the artistbecomes more widely recognized. Suchinvestors may be pure speculators, althoughwell informed regarding art markets, or they



may be collectors and market "manipulators"who, as well known collectors, purchase asignificant portion of an emerging artist'sportfolio and then use their reputations ascollectors to promote the artist and so enhancethe market value of their purchases. Aaker(2009) provides examples of such activities.

Elements of all three motivations may be activein all three types of buyers, but the labelsindicate the primary motivation. Given thecosts of fine art works, even the personalexperience buyer must be concemed about theproper market valuation of a work of art.Buyers, particularly personal experiencebuyers, must make purchase decisions underconditions of great uncertainfy regardingmarket monetary value. Except in the case oflong established artists, little is known abouteither the true current value of art works ortheir future value. While industry certifiedappraisers reference prices paid for works by acertain artist, or for works fi-om a certain genreor school or period, values are often veryuncertain (De Marchi 1999). Even collectorsand investors operate in very uncertain territorywhen considering new and emerging artists andthere do not appear to be firm mies by whichart may be evaluated before an artist hasdeveloped a documented reputation or salesrecord (Peterson 2004). Rules of traditionalartistic design may contribute to highervaluations if works can be said to representgood or bad technique, but while suchguidelines may prevent a purchaser fi-om losingmoney on "bad" art, they do not guarantee thatexamples of "good" art will hold value or growin value. Conditions of uncertainfy increaserisk and therefore reduce prices (Houston andGassenheimer 1987; De Marchi 1999).

At a more objective level prices may beinfluenced by the size of the artwork, themedia, the subject matter, or the genre. Amongartists who have not become widely recognizedthese factors may be very influential on price.Other factors that might influence price wouldinclude the reputation and location of thegallery itself. A gallery located in a historicallyrecognized arts district may command higher

prices for unknown artists as it benefits fi-om ahalo effect by location, whereas a gallerylocated in a suburban shopping mall might notbe able to command such prices for the sameartist.

The art buyer, then, operating in a veryimcertain realm of market valuation, andwishing to avoid being exploited, may seekextemal validation of the market value of anartwork. Even when the primary motivation isthe subjective experience of the consiimer, thebuyer may feel uncertain as to how to value theartwork. An empirical question is the degreethat buyers depend on their own valuation ofthe subjective experience when determining apurchase price, versus the degree ofdependence on extemal validation based onobjective factors such as size or media, orextemal factors such as representations by thegallery and its reputation, or prior sales by thesame or similar artists. Further empiricalquestions of interest are the degree to which theimportance of such factors may change with theeconomic or knowledge circumstances of thebuyer, and the degree to which buyers dependon galleries as their source of market oraesthetic information.

, PRICES

Such identification as discussed above may beinfluenced by brand awareness and brandassociations and will in tum influence what islabeled in Figure 1 as "Personal Price." Thisprice may be thought of as the price that thebuyer is willing to pay for the pure personalfulfillment that he or she gains fi-om possessingthe work of art and assuring that he or she willhave continuing access to the experience itengenders. This price will vary depending onthe consumer's economic situation and buyingmotivations. At some point the buyer mustconsider the extemal investment value of thework. The amount the buyer is willing to payover the value represented by the personal priceis treated in Figure 1 as the "Investment Price."In some cases the purchase price may be purelyinvestment. Recently investor art funds havebeen established to purchase and hold art works



for future retums (Gutner 2005). In any casethe investor price may be thought of as purelyspeculative. Although galleries carefully avoidany clear promises of future price increases fora specific art work, the potential for priceincreases is frequently alluded to. Where acertain artist's work has increased in price overtime as his or her reputation developed, thepattem of price changes over time may beprovided to the potential buyer.

CONCLUSIONS

This paper has considered the special situationof the artist as a producer, fine art works asproducts, the stmctural features of the artindustry and the roles of critics andcommentators as facilitators and of galleries asintermediaries, buyers as consumers of andinvestors in art facing exchanges that involvesubjectivify, uncertainfy and risk, and twocomponents of prices of art works from apurchaser standpoint. This discussion providesa conceptual framework from which to begin todevelop researchable propositions regardinginfluences on art transactions.

The previous discussion does not exhaust allissues in the promising field of fine artsmarketing. No single paper could do this, orattempt this. However, this paper does suggestseveral promising areas of research inquiry.Some have already been raised. Were a formalresearch agenda regarding the art industry to beproposed, a first important step would be todocument the size and stmcture of the industryin terms of numbers and types of participantsand, where appropriate, sales levels (Goodman1978a). The next step might then be todocument the distribution of artists on thecontinuum from pure art to an absolute embraceof the commercial market. This effort might bequite revealing and might modify the artisticstereotype of the artist as primarily self or peeroriented (Hirshman 1983). This effort mightalso explore the types of marketing activitiesthat artists do tend to carry out, and theirexpectations of marketing intermediaries (Cox2001), as well as their orientation to art criticsand art institutions that serve to "legitimate"

their work. A next step might be to study thebuyers of art themselves to determine helpfulsegmentation schemes based on theirmotivations for art purchases and other formsof art consumption, and the meaning of artexperiences to the consumer of art (Dewey1934). In this regard it is worth noting, asHuntington (2007) has for the performing arts,that often exclusivify assumptions are maderegarding the arts market segments that unjustlynarrow arts markets, and, as Petkus (2004) hassuggested, the potential value of experientialmarketing techniques in the arts.Segmentations research might be followed bystudies of art galleries, collectors, and relatedinstitutions as intermediaries to formallydocument the roles that these play in sociallydefming artists and their work, ascribing valueto artworks, and "educating the public"regarding the aesthetic, social and market valueof art. This area of inquiry would have to bebroad and incorporate the inter-relationships ofgalleries, collectors, appraisers, museums, artcritics, schools and artistic associations thatsponsor juried shows or otherwise establish thecredibilify of artists. Such studies wouldprovide a foundation for the development of abroad theory of fine arts marketing that woulditself generate further inquiry into the area ofsymbolic exchange.

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