Having read over Stefano’s blog regarding certain phenomenon in which the demand for a product can be illustrated in a upward fashion, it really got me thinking about my economic class and many products that is associated with being prestige or luxurious. Although in his blog Stefano refers to the luxurious products as being a Giffen good, it is actually a Veblen good (a Giffen good is usually a staple product – i.e. rice, milk – that increases in demand as prices for other goods increases as people will need them for survival), nevertheless his idea is legit and presents an interesting question. As a marketing student, I wonder how can we market such brands to make it a luxury product in which the demand is pretty much inelastic. Is is just simply limiting its demand and make it a ‘rare’ item? Or is it just providing the product with excellence in every aspect (product, operational, etc.)? For example, a brand like Rolls Royce provides arguable the best luxury cabin but it also comes with an hand made engine and offers world-class repair services worldwide.
Secondly, I also wonder whether a single product can be both a normal good and a Veblen good. Looking at roses, many people will associate roses to being a normal product, however, during festive seasons such as Valentines, if we are to bring in rare roses and set it at a high price I am sure that it can turn into a Vablen good as well!
