Updated: Jan 16, 2021
EconWatch (11/01/2020)
Emily Liu
We’ve all placed our hands against the glass encasing our desired product. We’ve admired the quality of the item and allowed our hopes to soar high. However, one glance at its price immediately shattered any excitement we built. Generally, the costliness of the product is sufficient enough to deter us away from buying it. But, sometimes, the temptation to buy the item overwhelms us, and we end up overspending.
Many businesses provide both low- and high-end items to create profit. Yet, some stores such as Gucci and Apple only sell high-end items, relying primarily on that slim chance of letting our temptation take over. Despite the extortionate prices, many of these businesses prosper and dominate their area of the market. So, how are these businesses able to exploit our impulse temptations and make immense profits?
Buying the Brand
Regulars of buying luxury goods will likely justify their actions by arguing that the items are of considerable higher quality than others. Yet, in many cases, this fact does not hold. For example, Apple is notorious for selling its products at markedly higher prices than other competing brands such as Samsung and Xiaomi. However, after examining the quality of each of their products, we can find that Apple’s technology is not noticeably superior nor unique. Alternatively, rather than buying for quality, many customers buy for the brand. Analogous to when sports fans jump on the bandwagon and support only popular teams that are on a winning streak, consumers will purchase high-end items because, currently, its brand is the most prevalent.
Therefore, when building a business, it is not only important to improve the quality of products, but also to establish a trendy brand. The popularity of a brand is crucial to a business’s profits as it plays a large role in attaining and maintaining customers.
Source: Investopedia
