Conspicuous Consumption
Oct 23rd, 2010 by erickyao
What do they have in common? … They are all VERY expensive!!
Is it because the cost of manufacturing those products are high?
No, it is simply because their internal values are worth this price. Those companies have been able to create value related to their products.
This is rather interesting: the higher the price of those goods, the more consumers are willing to purchase them. If Louis Vouiton was to decrease the selling price of its handbags, its yearly revenue will drastically decrease because of a decrease in sales. In normal situation, one would expect that a decrease in price will lead to an increase in sales. In this particular case, customers are only willing to buy an expensive product. Why? Because they directly associate value with price. Owning a Gucci differentiates them from the rest of the population because not everyone is able to purchase such luxury goods. The product has given them a status difference in society.
I personally think that this type of marketing strategy is excellent to target higher class consumers. With all lower needs satisfied, rich consumers will naturally seek to boost their self esteem and conspicuous consumption can help them.