“Psychological Games” in Luxury Pricing
The uniqueness in pricing is enough to increase the mystery of luxury brands to ordinary people, and those astronomical labels give consumers an inexplicable psychological satisfaction.
In the face of the crisis, luxury goods did not take “price reduction” as an option. “Even if you decently” dead “, you can’t achieve the” streaking “of the price, because that is tantamount to self-destruction.”
The situation in Hong Kong is even more exciting. “It’s not like waiting to spend money. It’s like waiting for a generous government relief.”-Huang Jianxiang described the long queues on the streets of Hong Kong at the end of the year.Famous brand people, and the background is ultra-low discounts given by luxury brands.
In Shanghai, a shopping mall has held several luxury brand sales events in just a few months, and many brands such as Burburry, Gucci and CK have arrived.
As long as news of discounts on luxury goods appears, some big-name fans will still follow them-it is not to be said that when people enjoy the discounts of houses and cars in this round of financial turmoil, they also hope that they can be cheaper.Price has luxury.
In the pricing of luxury goods, price is one of the key factors for positioning consumers. This leads to a paradox in reality: assuming that a low price can also buy the same product, then “luxury” will not be found.I feel it.
Fewer parties, fewer outings . The sales of luxury goods that used to symbolize status, status, and taste are bound to be directly affected by the financial crisis, and sales are declining.
Will they take the form of general consumer goods price reductions?
According to the judgment of Lu Xiao, assistant professor of marketing at the School of Management of Fudan University, Chinese director of the Fudan-Italy Bocconi fashion and luxury management project, and luxury brand management expert, although each round of the economic cycle will trigger a luxury brand survival的危机，可是他们面对危机时并没有把“降价”作为可选项，也就是说“即使体面地‘死掉’，也绝不能实现价格的‘裸奔’，因为那无异于自绝后路”.
He explained that although information on discounted sales of luxury goods came from all over the world, the current discount strategy was more related to emptying inventory than low-price strategies.
The “psychological game” of luxury pricing An American describes it in his blog: Whenever a friend comes to Los Angeles, he will take them to visit Rodeo Drive (the gathering place of all local luxury brands)-very few people will actually be thereSpend money, but some people will walk in curiously, and wonder why a Versace jacket can sell for such a high price of $ 3,000.
In this regard, the American’s explanation is that Versace, this brand alone is enough to show how they differ from GAP (another mid-range clothing brand), although the latter sells for only $ 100.
Unique pricing is enough to increase the mystery of luxury brands for ordinary people.
As a result, the question of “how much to spend on a suit is the answer” has puzzled Barry Schwarz, a psychology professor at Swarthmore College.
When Schwarz first saw a $ 3,000 Brioni (a supplier that supplies formal clothes to the upper-class American society, such as the Kennedy family) on the shelf at the Boyds men’s store in Philadelphia, the first impression was that the price was “really outrageous””.
That experience even triggered Schwarz’s series of studies on luxury pricing. He described those “high-priced products” as “anchors”, and it was they that set the price ceiling for some products that could not be clearly priced-this isThe usual pricing rules in the luxury and fashion industries.
”Suppose a consumer wants to try to decipher the pricing of luxury goods from the consumer goods themselves.
“Lu Xiao said.
Take a bottle opener as an example, the function of having a bottle opener is not enough for luxury products, because those high-priced products must meet people’s aesthetic needs, so from the design and concept, additional investment is needed;In addition, this bottle opener must become a symbol of social status and reflect a certain cultural taste.
Therefore, luxury manufacturers need to invest additional funds in order to meet the latter’s “spiritual level” needs.
Razler once pointed out in the book “Luxury brings wealth”: Luxury manufacturers will also try their best to maintain lower costs and avoid waste, but the issue of cost is generally second.
This brings the difference between brand-name and non-brand-name: the former always asks itself “what is the best thing I can use on this product”; the latter asks itself “the best thing that I can use within the prescribed costWhat is it. ”
”High price” pricing method: According to the popular “price pricing method”, product price = manufacturing cost + R & D cost + marketing expenses + sales expenses + management expenses + exchange gains and losses + reasonable profit + brand premium.
”But this pricing method obviously does not apply to luxury brands. Every company and every family business has its own completely different pricing law, and it is secretive.
One of the most important principles is to maintain the same price of the same product in different markets around the world.
“Lu Xiao said.
As an example, a famous GUCCI saying is “make a product scarce and hard to find, and you can sell it for a hefty price.”
Therefore, when the GUCCI boss bought YSL that year, most of the YSL stores were closed first, hoping to prove the possibility that high prices and less supply may trigger profit growth.
Sure enough, YSL’s profits did climb that year.
Therefore, these astronomical labels finally gave consumers an inexplicable psychological satisfaction, which eventually made Barry Schwarz, who regarded a suit with a price of 3,000 US dollars as a sky-high price, stunned and involuntarily raised his own acceptable psychological price.He chose a suit that cost “only” $ 800 and went out.
By making such an analogy, the psychology of consumers who buy LV keychains, Chanel sunglasses or Prada wallets is not difficult to understand-they have therefore justified the high price.
Assuming there is no worrying financial crisis, perhaps there will be less doubts about luxury brands’ high-price strategies.
However, the price of mass consumer goods is declining, and people cannot help but think whether luxury brands should also adjust their prices.
However, Lu Xiao believes that these questions are unrealistic, because from the perspective of price, there is not much room for luxury brands to “represent their original shape.”
In fact, even YSL, which artificially created a “scarce” scene, has only profited from 5.
6% to 8%, so Lu Xiao believes that the high price positioning has not brought the “big profits” imagined by the public to luxury brands. ”In the 1980s, many people imagined that family companies operating luxury brands are enjoying huge profits, so investment banks buy luxury goods companies, but they soon find that luxury goods have high operating costs, high risks, high technological content, and complicated management skills.
So they gradually gave up the operation of this category, and finally these brands were integrated by several large international luxury goods groups.
“Lu Xiao said.
The survival crisis behind Guangxian “Until now, we have not seen any structural problems in the pricing of luxury goods, and even in the face of the international financial crisis, these luxury brands do not have a price space in which they are” present. ”
Suppose that under such a fact, they “dead” because they maintained a high price and no sales existed. Then, the positioning of this brand still exists. Otherwise, what reason do they have to make a comeback?
“Xiao Xiao said to the” First Financial Daily “.
On the international level, these glamorous fashion brands have already experienced the cold winter this year.
In early October 2008, Bain & Company announced that after 10 years of steady development, the proportion of global luxury sales will reach 7% by 2009.
According to the latest data released by the Swiss Watch Industry Federation, the sales of high-end watches should continue in 2009, but the year-on-year growth will not exceed 5%. According to this, it reached 10% in 2008. 2007Even up to 16%.
At the same time, Richemont, the owner of Cartier, IWC and other famous watch brands, also warned about the uncertain future. Its CEO Johann Rupert said that Richemont’s sales growth in October 2008 slowed to one.
6%, sales in the United States and Japan fell by 2% and 7%, respectively.
Bulgari also had a hard time, and its watch segment saw its sales drop by 5 in September 2008.
8%, and it dropped sharply from July to September.
”You will see the stores in Hang Lung Plaza alternately in the state of renovation. This is because there are constant brand exits and new brands re-enter.
Because most luxury brands bear expensive rents without exception, according to the “guarantee distribution” method of rent payment, they need to pay a higher portion of the rent than other consumer goods.
Assuming they can’t sell a bag for the next day, it will mean that they need to pay the guaranteed rent themselves.
“Lu Xiao said.
His second-level Hang Lung Plaza is a high-end mall with the most international luxury brands in the core area of Shanghai.
On the one hand, the cost of imported luxury goods is high, and on the other hand, the purchasing group’s assets have shrunk due to the financial crisis.
According to the “Citibank Millionaires Survey Report 2008” survey, millionaires holding more than 5 million replacement current assets, measured in 2007, lost 36% of their assets; 2 million to 5 million millionaires emitting current assets, Asset loss reached 10%; while current assets were discharged from 1 million to 2 million rebuilt millionaires, asset loss reached 13%.
”So you will see that luxury brands empty their inventory through the off-season product sale. Often, the VIP customers who have accumulated their own first choose to buy and accumulate, and then the sales volume can basically be sold out.
But if there is no sales, they will withdraw from the market.
“Lu Xiao said.
But this does not mean that they reset the overall price reduction. In Lu Xiao’s view, that is tantamount to digging their own graves.
”There are so many examples-Pier, who once belonged to the big names?
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