Distrubutive and virtual rarity
Luxury goods are not subject to typical customer behavior also because they are social status symbols. People who buy luxury goods are buying them for others and showing off their membership in an exclusive club while others are not. Veblen refers to this behavior as "conspicuous consumption". On the other hand, if the price of luxury goods falls, the demand for them will also fall, because status-conscious consumers will perceive them as less exclusive and rare. The higher the cost of the product, the fewer people will be able to afford it, making it more exclusive. The validity of luxury goods as social symbols then increases.
“Virtual” rarity is used by Apple every time they launch a new product. They purposely limit the availability of the new product for the first 2 – 4 weeks in order to artificially create a backlog of orders and lines in front of the doors of the Apple stores, even when there are millions of units ready to be shipped from China.
Although traditional luxury items rely on scarcity in quantity, brands often need to artificially create a sense of virtual rarity to expand. Typically, brands play with this concept by manipulation of the communication channel and pricing strategy.
Enhance brand value by fostering a sense of distance between the brand and consumers through marketing strategies. For instance, narrowing the gap between luxury goods and art by defining luxury items as derivatives of art. The reason for doing so is precisely to leverage the enduring quality associated with artworks. By equating luxury items with art, brands elevate their perceived value and cultural significance. Just as fine art is revered for its enduring quality and aesthetic appeal, luxury goods are framed as timeless creations worthy of admiration and investment. This association with art imbues the brand's offerings with a sense of prestige and exclusivity, appealing to discerning consumers who appreciate the finer things in life.
Moreover, by aligning with the world of art, luxury brands tap into a rich heritage of creativity, craftsmanship, and innovation. This association lends credibility to the brand's narrative and reinforces its commitment to excellence and sophistication.
Create immersive and exclusive experiences around product launches or special events. One key aspect of this approach is the selective invitation of guests. Rather than casting a wide net, luxury brands carefully curate their guest lists, inviting individuals who align with their brand values, possess significant influence, or are considered tastemakers within their respective industries. This selective approach not only creates a sense of exclusivity but also enhances the prestige associated with attending the event.
Collaborate with renowned artists, designers, or celebrities to create special edition products. Increasing the scarcity of the product both in terms of time and quantity. The limited availability of these special edition products creates a sense of urgency among consumers, driving demand and enhancing their perceived value. By offering a unique opportunity to own a piece of fashion or art created in collaboration with a renowned figure, luxury brands cultivate a sense of privilege and prestige among their clientele.
Collaborations allow luxury brands to engage with their audience in a meaningful way, fostering a sense of community and loyalty. Consumers feel a deeper connection to the brand when they are able to participate in exclusive collaborations and acquire highly coveted products that reflect their tastes and interests.
Expanding on this pricing strategy involves deliberately setting prices slightly above what consumers may consider affordable, thereby imbuing each purchase with a sense of aspiration and fulfillment. This deliberate pricing tactic creates a perception of virtual rarity, wherein the act of purchasing the product feels like a realization of a dream or an attainment of luxury.
Setting prices higher than what consumers can readily afford elevates the perceived value of the product, positioning it as a symbol of prestige and exclusivity. Each purchase transcends mere acquisition and becomes a tangible manifestation of the consumer's aspirations and desires.
Ralph Lauren
Ralph Lauren's stores are adorned with black and white imagery, evoking a sense of heritage and longevity. Despite being founded in 1968, Ralph Lauren successfully portrays itself as a brand with a rich heritage, akin to that of an established luxury house. This strategy effectively creates a perceived distance between the brand and consumers, elevating its prestige and value.’
In addition, increasing Scarcity. Ralph Lauren's decision to increase prices by 80% this year to solidify its position as a luxury brand exemplifies the concept of increasing scarcity. By raising prices significantly, Ralph Lauren limits the accessibility of its products, making them more exclusive and desirable to a select clientele. This deliberate action enhances the perceived value and rarity of Ralph Lauren's offerings, further reinforcing its status as a luxury brand.
2024.3.27