Increase Price Increase Profits ! – We are Louis Vuitton

Louis Vuitton

 

For high end market with greater disposable income purchase decisions aren’t just about the functional requirements from the product but also its perceived market value or Brand equity.The luxury item adds to the buyer’s image based on the perceived value.

An assessment of what the customer gets compared with what the customer gives up – Value (Dr. Ho, Deakin)

Purchasing a product of higher cost (sometimes crazy ones) has two reasons

  1. Higher costs are associated with better quality
  2. A status symbol that signifies your ability to afford costly products which psychologically boosts self-confidence & ego adding to higher self-esteem.

This has been an accepted social norm since royalties and the basis for pricing strategies of luxury brands.

Way to create a luxury brand is very difficult. It requires huge investments in communications, excellent product / service quality and always being fashionable. However to maintain these elements at a high level is not easy. Gucci, Louis Vuitton and Chanel are considered three successful luxury brands in the fashion sector, which hit premium class customers.

Compared with other competitors, LVMH was founded early in 1854 with focus mainly on trunks and handbags. The turning point in the history of Louis Vuitton which made them become a luxury brand is the appearance of Monogram Canvas product line.  To face high competitive environment, famous brands need to adopt innovative marketing strategies to create the appeal. The traditional marketing mix strategies gradually transitions into experiential marketing to create emotional factors for customer. The luxury brands seem to focus heavily on creating for their customers a memorable experience when they are using the product, creating linkages in the emotions of users. These factors would help build customer loyalty to the brand. Like the group of luxury brands, Louis Vuitton focuses on providing this experience through product quality, the brand’s history, quality of service, pricing and their distinct packaging. There are many factors that are needed to ensure the success of the brand, however in the scope of this article we will only focus on Louis Vuitton pricing strategy which makes their success.

 About Louis Vuitton products, the high price of their products creates a high quality image and has be seen as a confirmation of product quality. These different strategies in pricing have helped Louis Vuitton attract high-end market. In the history of Louis Vuitton, sale prices were never offered. No one can see LV bag in reduced price, there are no sale periods! Same prices for all group which is considered as confirmation of Louis Vuitton.

Louis Vuitton products are extensively tested to ensure that our quality is always at the highest level and has no flaws. Their products are produced by a combination of manual and mechanized, retains the beauty of handmade products while maintaining high levels of product quality. Therefore, Louis Vuitton has overcome many peers to become one of the most luxurious brands in the world.

Louis VuittonFigure 1: Matrix describing luxury brand positioning

In fact, Louis Vuitton has become a popular brand in recent years. Their target group is not only limited to high-end client; many other groups have also become customers of this fashion brand. However, the question is how to LVHM can sell more products without becoming a mass-selling brand instead of a luxury label. One of the solution to handle this issue is price increasing strategy. Brands want to keep high-end customers and eliminate low-end platforms to enhance their brand image and hope can gain new customers on the top end. They are willing to reduce their profits from low-income group to maintain an image of luxury brand.

So far, Louis Vuitton is apparently following in the footsteps of Hermes on the way to become the most luxury brand. However whether these products having leather Monogram Canvas are worthwhile as the product of Hermes and could they attract loyal customers of other luxury brands to buy them?

Are premium customers going to spend few hundred dollars extra to buy high-grade leather products such as Hermes or buy the more expensive products of Louis Vuitton?

The loyal customer group of other brands would pay more attention to products as they continue price increasing campaign?

 Louis Vuitton

Written by Saurabh Pandit and Jacky

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52 thoughts on “Increase Price Increase Profits ! – We are Louis Vuitton

  1. Great article! I do agree with you that setting a high price for a brand does help in building the perception of a high quality it offers. But, along with that the company must provide good quality(AS YOU MENTIONED) in order to survive otherwise it can go out of business. i think perception is one of the most important driving force for increasing a brand’s sale and generating loyalty.

    Liked by 2 people

  2. @askamboj Thank you for the comment.
    Yes totally true. Perception is one of the most important driving force for luxury brands.
    But what do you think should be the maximum upper limit for price increase or there is nothing as such?

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    • I think there is certainly a limit enforced onto the companies by the customer which is, the maximum they are willing to pay for a product. The company cannot price the products higher than this.

      Liked by 2 people

  3. Great post Sam! You’re both right it’s all about perception. Not just perception of the brand, but how people perceive themselves (Think, I’m worth it!) & how they want other people to perceive them & for these people brands & status symbols matter. I would have thought price tags did too, but given the level of credit card debt in this country, maybe not so much. And the price limit is certainly what ever the customer is prepared to pay for it.

    Liked by 1 person

  4. Great article Sam!
    One thing I found interesting in reading this is the fact that Louis Vuitton never has sale periods!
    Lots of less expensive brands and stores, when they have sale periods, only mark down the price of their seasonal garments and items – their bestsellers are never cheaper because they know people will buy them at their original price! To have no price drops for ANY items, to me seems ridiculous!
    LV would definitely be able to do this because of their reputation and, of course, no sales would reaffirm there exclusivity! Low income earners would have to save for ages in order to afford a bag or something, and sometimes would never be able to. Whereas with some other high-end brands, sales offer the opportunity to grab something high-end for a great deal!
    This forces people to buy poorly-make knock-offs or dupes produced by cheaper brands!
    Personally, I don’t think I would bother with LV products, regardless of if their prices weren’t as high. LV is to… common? I know that’s weird to say, but it’s so out in the public that it doesn’t feel like it’s in any way special, regardless of it’s reputation and pricing.
    But then, I guess, I’m not in it’s targeted market… Give me indie Melbourne designers over high-end international brands any day!

    Liked by 4 people

  5. Great reading! A huge problem that luxury brands such as LV and Chanel face is their brand is used in designer rip-offs that you can easily buy in Thailand, Bali, Hong Kong etc. where the laws on trademarks and passing off are almost non-existent or poorly enforced.

    How many of us are guilty of such purchases? I know I am – I have a lovely pair of ‘Chanel’ sunglasses that I adore wearing whenever the sun comes out!

    The problem is some of the infringing articles are so carefully made that it is almost impossible to tell a fake from the real thing! It causes brand dilution for high quality fashion when ‘anyone’ can afford their handbags, wallets and jewelry. Whilst efforts are being made by companies to reduce copycats from cheapening their brand, there is only so much that can be done.

    I know whenever I see somebody wearing a Burberry scarf or carrying LV luggage, the first question that enters my mind is always “Is that real or fake?”

    Liked by 1 person

    • The question of real or fake does now a days comes to mind when we look at Brands! But there is hardly anything these companies can do due to poor law regulations in the developing countries. Since their target market is developed countries if they maintain standards there then it will help them have sustainable business I think.

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  6. @lucindaowens & @jhoneyma
    Have a look at the following link:

    http://www.mondaq.com/australia/x/238348/Trademark/Getting+your+hands+on+a+fake+Louis+Vuitton+handbag+is+now+harder+thanks+to+changes+to+the+Trade+Marks+Act

    The above article by Nathan Mattock and Daphne Aung Koffel dated 11 May 2013 mentions the following in their starting quote:
    “Designer fashion houses like Louis Vuitton, Burberry and Chanel can now sleep tighter, following amendments to the Trade Marks Act*. But counterfeit importers should beware; it’s now harder for you to run and hide.”

    Just highlighting that new rules and regulations are making the law stricter in developed countries markets which these Brands target.

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  7. Are we brand conscious? I think the answer is yes. For some reason Dr Paul says he doesn’t believe in Maslow’s hierarchy of needs. But it still seems to be a very simple tool that helps us understand some of the reasons behind certain behaviors.

    If you are struggling to meet the very basic needs then you wouldn’t really bother about any brand or quality, but once you fulfill your basic needs then you start to think about better quality and good brands, relationships, recognition, etc. there comes the inner desire to build a social status, which will eventually leads to brand consciousness; even they will tend to associate with people who have a good social status (brand).

    Is there a price limit for top brands? I feel yes, every brand has loyal customers who are willing to pay a premium price for their favorite brands. The price can be increased in in a way that loyal customers wouldn’t mind keep going up the ladder, until such point they suddenly realize its not really worth the price and they might move on to a different brand which they may see worthwhile spending on, or they might see that a certain brand that they have been associating is coming very closer to a another top brand and some consumers wouldn’t mind paying bit more and jumping to the next level of brands. But that level will vary from customer to customer as each one will have different perceived values. That’s where the marketers need to play bit cautiously.

    Liked by 3 people

    • @srupasi You have raised a very good point about jumping levels in a brand.. This is a good take on Price considerations and approaches to build value first and then increase price.

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    • you are quite right about this point, which we mentioned above. Higher price should come with better quality and more value added. If not, customer tends to pay extra money to get higher luxury brand ( in this case maybe is Hermes)

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  8. Even though I don’t get my bonus until August, I have already set aside some of it for a new LV handbag. I never used to be a “brand” person, in fact, quite the opposite. Your blog post got me thinking about when this changed, and I think that it boils down to two things – I can now afford these “luxury brands” and so can my close friends and the people I work with. Before I started working with my current peers, I had never heard of a Longines watch or noticed that someone was wearing Jimmy Choo shoes, and to be honest, I preferred it this way. There is something about these brands and when other people have them that creates this “want” to satisfy the ego and show people that you are also successful. As much as I hate to admit it, I never wanted a LV handbag until I notice that all of my female peers had luxury handbags, and now I feel to need to “join the club”. Is this what the marketers of these brands are aiming for? Our fragile egos and the need to belong? Now that I know this, it makes me less inclined to go and buy one, as it seems not only a shallow reason to have one, but I feel like I have been tricked! Your blog post may have just saved me a lot of money!

    Liked by 1 person

  9. Brand conscious is a very important factor affect decision making process, some brands can bring the good brand image to customers, although the price probably will higher than others, but customer still will go for this brand, this is called the brand premium. People would like to pay higher price to a product that has brand because they think it will have higher quality. A little scenario for you. You’re doing a bit of shopping. Let’s say you’re on the hunt for a necklace for that special loved one. You look in the window, and see two necklaces. Both are beautiful, sparkling and bedecked with sumptuous jewels that make your soul sing.The Tiffany is $500. The unknown is $300.
    You know deep down inside that logically you should go with the unknown and save yourself $200. Yet you feel strangely compelled to go with the Tiffany. After all, as they put it themselves:
    “Since 1837 the masterpieces of Tiffany & Co. have defined style and celebrated the world’s great love stories.”
    Well, of course your own love story is surely one of the world’s greatest isn’t it? And if it isn’t already, then giving your partner a masterpiece that is the very definition of style will almost certainly make it so.
    So you shell out the extra dollar and go with the Tiffany. And while doing so, you unwittingly contribute to the conceptual juggernaut that is Brand Equity.

    Liked by 1 person

    • @mengfeid You have very well raise two perspective points. Thanks for that.
      1. Premium Pricing
      2. Brand Equity / Value

      I think Premium pricing is along the lines of competitive markets and monopoly markets in economics or as mentioned in above comment as Maslow’s hierarchy of needs, level of Esteem that cause a person to pay higher price and associate themselves with the market perception of high quality and social recognition. I say perception because it is not necessary that higher price means higher quality always. Brands can exploit the brand value by keeping quality competitive and thus increasing profit margins.

      Thanks for the comment on the blog.

      Like

  10. Interesting article.
    Brands like Louis Vitton are obviously iconic and desirable. I wonder how the advent of such things as E-Bay selling ‘pre-owned’ bags has impacted such brands. Obviously most brand conscious people hesitate at this option but given the anonymity of such a purchase I wonder if a lot of consumers would not take the lower priced option in order to still own the brand. Obviously the second sale offers nothing to the Louis Vitton bottom line and hence they lose out on a sale.

    Liked by 1 person

    • @shaunbeirne I think when purchasing a Branded product the amount spend is also a big factor in the satisfaction and product value. The cost of the product also increases its perceived value for a customer and thus buying it second hand or ‘pre-owned’ takes away that factor. More over a ‘pre-owned bag’ may lack the quality and have defects. In such items the novelty value may increase costs as well, for example one of a kind, or used by a celebrity etc.
      I think rather though impacting the bottom lines marginally, the online shopping sites have increased the aggregate bottomline for big Brands. They also provide a platform for cheaper marketing activities like Branding and customer retention to build loyalty.

      What do you think?

      Saurabh Pandit
      Thanks for the comment on the blog.

      Like

  11. What an interesting article it really enforces the power of brands over the mindless masses. The only time brands matter to me is when quality is called into question. I will often review an electrical appliance in order to find the best product in regards to longevity or value for money and will purchase accordingly. However I’m still amazed at people who will flock to fashion brands simple because of a label. Come on now we all know that a lot of fashion is made in the same third world sweatshops with the labels being the only thing that changes at the end of the production process.

    A story that always makes me cringe when I think about brands and greed was when the North American Free Trade Agreement was enacted therefore removing tariffs between the US, Canada and Mexico. What did many US companies do? They closed up their US factories and opened the same factories on the Mexican side of the border, therefore slashing productions costs however still charging the same price. The only flaw in their plans was now their US customers couldn’t afford to buy their products because they were unemployed.

    Thinking about Maslow’s hierarchy of needs are you self-actualised when you don’t care about brands any more because you don’t care what people think about you? Was Maslow trying to help us reach a conscience level where we aspire to become immune to the manipulation of marketing and the power of brands?

    More reading:
    http://www.democracynow.org/2001/1/24/firings_and_beating_at_mexican_factory

    Liked by 1 person

    • @jfer1004 I like the way you have communicated a really hard hitting message that self-actualization is about not caring about the market manipulations and brand powers. Also thanks for raising a good point that it is the same garments factory that produces the brands.
      My friend owns a garments factory back home and produce clothes for big brands. The margins are exorbitant.
      Just think if you have seen 75% Sale on Clothes (that means they are still making profit at that rate) so originally they are making 300+% margins!!!!

      Like

      • Thanks Sam, it was a great blog that was very thought provoking. I don’t follow brands and find it hard to understand why people do. I feel that the desire to be accepted and fit in with the norms created by society and the marketing machine, is a major motivation behind brand loyalty.

        Liked by 1 person

  12. Personally i never quite develop a liking for a bag with its product monogram printed everywhere. i find it too loud and this is where LV is lagging now. The high class, which is the primary costumer of these products, is also divided into two classes, one which wants to go for a cheaper(?) and loud LVMH bags and a premium high class 🙂 which prefers hermes.
    Now is there any end to it? I don’t think so. The primary reason people buy these bags are not for their durability ( would you seriously consider transferring half of the useless junk from your usual carry bags to one of your prestige bag?) but for ego satisfaction and show-off and there could never be any end to that.
    So perhaps a segment of buyer who aspires to enter LVMH club, has money to spare and roams around in a circle where carrying a fake could be a serious dent to your image, would be willing to go for a higher price tag, unless of course the tag collides with Hermes, because then the choice would be to enter “the Hermes Club” 🙂

    Liked by 1 person

  13. I wasn’t a believer of brands that expensive, I always thought that people are paying their money to be allowed to carry the brand symbol around, and not for the product itself.
    But around 7 years ago I got an LV handbag as a present, and yes I was extremely impressed , and ever since then I’ve been carrying it almost 70% of the time, and to prove me wrong, with this heavy use , it is still in an extremely good condition and it reduced the number of handbags I used to purchase significantly .

    So I became a strong believer in the brand that keeps the promise of high quality , and their high price is justifiable to me as a consumer .

    Simple pricing calculation: if I have to buy let’s say 2 handbags a year, with a medium brand, I would pay around $500 , in 7 years I would pay $3500
    If I have an LV, I would pay $2000 ,could be more or less , perhaps an extra $500 for other handbags to support different colours ,that is a total of $2500

    I even saved some money 

    Liked by 1 person

    • I got the same experience like you. I always change my wallet per year until i saw my friend’s LV wallet. He got it 3 years ago and it still looks like a new. Therefore i treat myself with new wallet from LV and i have to say that its really high quality. One more thing, this is my story. I prefer the wallet which got coin holder. It is more expensive than others did not. And then the question appeared in my mind: who is target customer of this price strategy ? High end customers, who are willing to pay more than 500 bucks and often pay by credit card want to pay for it. Or the customer who usually pay by cash is target customer. Should I change my behaviour to pay everything by credit card to avoid carrying coin or I should pay extra money for the wallet which got value added to avoid losing coin. And why does not LV make different wallets with the same price ? They could but they don’t want to.

      Liked by 1 person

  14. Very interesting article! 🙂 I didn’t know that LV never has sale periods as well! Furthermore I can totally agree with the last comment. I think its all about communication and image and not just the quality. I don’t think that a bag which costs about $4000 must have a better quality than a bag which costs $200. But I think there are two different target groups of brands like LV. There are those customers who really have the money and want to buy a high qualitative bag. Those would not really have a pricing limit if it would not be too absurd. On the other hand there are those who actually don’t have any money and just want to be a part of a society they don’t belong to. I think for example that students who usually don’t have a lot of money don’t need to carry such an expensive bag or drive a Mercedes or anything like that. Because everybody should just buy products they can afford. And not just to feel more upper-class. And isn’t it much more cool to buy a luxury bag or other expensive products when you earn your first real money? 🙂
    All in all as everyone of you said LV did a very good job. And that’s why I think that fake brands, such as from Asia or Turkey aren’t really competitive to real luxury brands, especially related to the first target group.

    Liked by 1 person

  15. This is a very interesting article! I had no idea that LV does not have sales on its products, but then it doesn’t surprise me looking at it’s target group. They have too much money to worry about sales! I must say I find it interesting how as human beings we think if something is expensive, then it necessarily is of very good quality. It’s this same perception that encourages companies that produce popular brands to sale them at ridiculously high prices. Anyway at the end of the day, I think it’s just a status thing buying expensive brands.

    Liked by 1 person

    • you are right. they should not set ridiculous price because their brand is not like Roll Royce or Vertu. The gap between LV, Chanel and Prada is not far, that why they should forecast customer behaviour before raising price again. Do not have sale period also impact customer’s perception. The question is raised: why they don’t sell old-fashioned product with cheaper price to gain profit. The answer is no, they confirm that their product is high quality and fashionable. My last lecturer asked my: are you willing to buy a diamond if it’s price is as cheap as other stones ?. of course not, because everyone can have it and it is not valuable any more.

      Liked by 1 person

  16. Great article. I agree, it’s very interesting to watch these companies operate and attempt to distinguish themselves in the luxury market. I agree with the previous commentaries – At a certain point there is no tangible additional value for a leather bag – it is all branding. LV have had a particularly interesting ride as their logo bags have been so widely copied that to many people they are now associated with cheapness and illegality.

    I have been known to spend $200 odd on a Coach handbag – (on sale!) because I think that it represents quality for money. It’s well made, well designed, looks elegant and lasts a few years. I don’t see what additional ‘value’ I could ever obtain from a $10,000 Hermes bag – but then again – I don’t think I am their target customer!

    Now – Off to Aldi!

    Liked by 1 person

  17. Yes, LV has never had sale period. I did not know this up until when I was planning to buy LV bags during Boxing Day and I asked the sales people will they have any sale during that day? They said: we do not have any sale period, never have. When I read through your blog I agree with you what wrote as this is one of the example on how LV maintain their high class brand.

    Do premium customers care with product prices? They will still buy the new season products regardless. I don’t think they will notice the increase in price. This type of customers will buy both Hermes and LV bags.

    I agree with @lucindaowens’s comments, I will not bother to buy LV products because they are too common, there are so many people wearing this brand. When you go to China and Indonesia, you can find many fake LV bags and they sell them with different grades. They higher the grade, the higher the price and the higher the quality you can get. The price is almost 50% cheaper than the original bag, hence you will not know they are fake, it is unnoticeable. What’s the point of having expensive products that can be duplicated easily? Don’t you think paying higher price for products is the same as you are buy buying the exclusiveness of the products?

    Liked by 1 person

    • Good information Stijang. I also read a news wrote about fake LV leather good in Asian like: china, indonesia, Vietnam. They can buy any product of LV with different price, which is 80% cheaper than the original. People wear LV product everywhere on the street and make it become more ordinary. Even some customers are wearing LV bag, who don’t know what is that brand. In my opinion. these groups affect LV’s profit in case, High-end customer who want to stand out would choose another premium brands making them become exclusive. Therefore, the challenge is they have to provide higher quality product to keep loyal customer while they also need to upgrade product image to win back the richest customers who care much about unique label image.

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  18. It is standard practice for luxury brands to have a price increase at least once every year. Take Tiffany & Co. for example. They recently had a worldwide price increase of 10% and like Louis Vuitton, have never offered sales to maintain a luxury image. Although Tiffany don’t have seasonal pieces and can justify not having any sales whereas LV have seasonal products, especially in apparel that are sometimes difficult to justify why they aren’t on sale. Luxury brands are trending upward in Australia, with the mass tourism coming from neighbouring Asian countries. It is quicker to travel here and purchase rather than say Europe. Brand awareness with these luxury retailers is what will keep their sales trending.

    Liked by 1 person

  19. Sam , I am pretty interested in some comments mentioned related to perception, the maximum price and sales period above by other peers.

    Perception plays a key role on building a product or brand when consumers make the initial contract in the market. At this stage, all of senses of clients are engaged in receiving brand marketing communicate messages. LV products and services definitely have done pretty well in this areas.

    In the free market, no products or services can charge more than clients’ expectations , thus based on what the consumers are willing to pay , companies should consider the maximum charging prices, which is one of the critical pricing setting strategies called brand high(price = customer willingness to pay – markdown).

    I am a bit concerned about no sales period marketing strategy of LV, even though sales discount do affect brand image a little bit, in regards of LV high reputation and customer loyalty, I do not think reducing prices in non-peak seasons, as time is money and it is one of the most efficient marketing approaches to selling left stock or outdated products as well as providing benefits for their loyal customers.In my views, yield or demand management can still work well in LV once the company can balance their brand equity with marketing strategies well.

    Liked by 1 person

  20. I agree with the pricing and branding elements of this blog. The purpose of a brand is to convey information and status, signal consistent quality and make purchasing decisions easier (Iacobucci, 2013, p.78). LV is a highly recognised brand, commanding strong brand equity with a brand value of 19.4 billion in 2009 (Sherman, 2009). Brands can be represented through physical (logo, packaging, colour) and intangible (cognitive and emotional) characteristics (Iacobucci, 2013, p.79). And represent consumer’s perceptions regarding a product and its performance (Armstrong et al. (2012, p. 236), All these elements are encompassed in LV branding strategies.

    However, I make a distinction between mass luxury and luxury. I believe LV is a mass luxury brand, it conveys a sense of luxury to the mass public through clever brand positioning (perceived quality, lifestyle, instant recognition of the monogram, customer experience – mind you the latter is debatable, I have found LV service to be rather lacking on many occasions). Having worked in luxury goods for over ten years, the fundamentals of a luxury brand to me are: impeccable quality, excellent service, high priced products and a sense of exclusivity and prestige (through pricing strategy and personalized service). Duboise, Laurent & Czellar (cited in Wiedmann & Hennigs, 2012, p. 41) state that the six main facets of luxury are excellent quality, very high price, scarcity and uniqueness, aesthetics, ancestral heritage and superfluousness. LV produces high quality products in a range of prices from entry level to top of the range, their ubiquitous logo allows them instant recognition and mass sales but by doing so, doesn’t qualify them as being scarce or unique. However, LV have definitely marketed their brand and products to associate the brand with luxury.

    To answer your question, LV alongside other strong brands in the luxury sector can increase prices (as per default every year by many) and as long as prices are somewhat on par with inflation rates, then sales should not be negatively affected, after all prices are indicative of perceived quality and hence luxury.

    References:

    Armstrong, G, Adam, S, Denize, S, Kotler, P, 2012, Principles of Marketing, 5th Edn, Pearson Publications, NSW, Australia.

    Iacobucci, 2013, MM4, Cengage publications, USA

    Wiedmann, K-P & Hennigs‬, N, 2012, ‪Luxury Marketing: A Challenge for Theory and Practice‬, Springer Science & Business Media, retrieved 16 April 2015, . ‬‬

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  21. Thanks for your interesting post! Once I saw the question “Are you Brand conscious?” I know I have something to share. My answer is YES!!! Price often serves as a cue to quality (Iacobucci 2013). My experiences tell me that usually high price goods have high quality. Just a simple example to start here: when I was in secondary school, a pair of shoes from a normal brand with low price could only last three months but the one from a famous brand with expensive price could last five years. I am not joking, that’s true. The expensive shoes had much better quality. Moreover, for clothing I like CUE very much. CUE brand has meaning for me “funky, edgy, and modern”. CUE clothes are expensive but they mostly use quality imported fabric and made in Australia.

    When we buy those luxury goods, we are not only paying for the high quality but also for the brand which has high-class appeal. As you mentioned, a status symbol that signifies your ability to afford costly products which psychologically boosts self-confidence & ego adding to higher self-esteem.

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  22. Nice article,I agree with most of your views.Only better quality to make customers think a higher price to buy.The luxury goods industry in a competitive environment, people are more inclined to buy an important factor is the high price of the product. People buy luxury goods mainly comparison with other people, a luxury in their minds just reflect the noble identity.If luxury low prices, although sales improved, but the masses are different levels of consumption may have grade products will fall, and over time people will forget about it, not even to buy.
    Finally, I think the most important thing is to raise the price of luxury goods on the premise that a certain guarantee of its quality and fashion.

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  23. I really interesting in your post and I agree with the price is relative with the brand. As we know that Louis Vuitton is a mass luxury brand, their target clients are some high-end personage, in other words, they are the potential customers for Louis Vuitton. these customers are very particular about their own image, so they pay attention on the brand, rather than the price of the product, so they have high loyalty to the product. Even if prices rise, these potential customers will be loyal to the brand, will not be reduced brand loyalty because of the rising price of brand.

    compared with those casual users, these potential users more loyal to the brand. for price rising, the casual customers will give up on this brand of purchase, turn to other brands instead of this brand, because the reason of their buy may be the impulse or imitation.

    For me, i really like the brand is COACH, so I have pretty high loyalty to the brand, regardless of price rising or price reducing. COACH is not a very mass luxury brand compared with Louis Vuitton, but i like this brand, this because I am student, I don not need the too expensive bag like Louis Vuitton, the brand of Louis Vuitton is too expensive for me. However, customers like these luxury brand not only can bring a status symbol, but because of high quality.

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  24. Hi Saurabh and Jacky,

    Very interesting read. Whether consumers opt for a LV product or a Hermes product is heavily dependent on brand perception and personal circumstance. For instance, some premium customers may be more inclined to purchase the more exclusive items from LV because of the social status attached to the particular product based on its monetary value and limited nature. Others may feel that in buying Hermes, regardless of the price point or product range, a superior product is being purchased simply based on how they feel the brand is represented among their peers (i.e. as a superior brand to LV). There are also those customers who seek recognition from ownership of such premium brands, but which may not be able to pursue them or become loyal customers to them in the event of significant price increases over time. Because of this, it is important for LV, Hermes and other premium brands to understand their loyal consumers’ needs, how to best maintain them in the long term and the associated costs involved with losing potential customers who feel their brands may no longer be attainable.

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  25. You can raise prices as much as you have people willing to pay for it. It is all about demand and, in this case, social pressure to have a exquisite purse made by Louis Vuitton, a dress by Valentino or a shoe with the red sole Louboutin. I will go further and would say that many of the luxury brands are surviving based on emerging markets’ demand for status and social acceptance. Consumers from countries as the four BRIC are spending large amounts of money on the stores in Europe and USA to ensure they will get the last LV trend to exhibit among their friends.

    Liked by 1 person

  26. High prices not always mean high ROI in less time and for sure. This is a very dangerous fact that can sink in some marketers perception. I think that having a product with a considerable expensive price should be synchronised with the positioning of the brand. Lots of products are launched to the market with great materials and features but most of them they just get lost towards another products that are already positioned in the market. A clear example of this can be the Microsoft product launched in 2006. The Zune was focused to replace and take a big portion of the iPod’s market. Unfortunately the product faced major challenges like the comparisons with the TOM product reaching the point that nowadays have disappeared from the market and most of the people reading this might don’t remember the product. According to Forbes.com “Microsoft said Zune revenues had decreased by 54%, or $100 million. Laermer blames the bust on several factors, including software that was constantly changing and iPod’s head start of several years in the market”. It is really hard to face high price products with a brand that it is not positioned in the market.

    Liked by 1 person

  27. I am brand conscious and happy to admit it. Mine stems though from quality. Proven time and time again that sometimes when you pay more it last longer. As a mum of 2 young kids, my hubby will have a go at my becuase I buy my 2 yr a pair of country road pants (not LV) but still at $40 a go…it lasts. He falls, jumps, rolls around and they last. To pay more does mean quality…

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  28. LV’s marketing strategies are unique indeed, as you correctly mentioned their pricing strategy that offers no discounts throughout the year. Their promotional strategies are also interestingly unique: LV did not have any TV commercial until late 2011, when they launched their first TV ad ever! When you think of it, it’s quite surprising for a brand that is about 150 years old! Such unique marketing strategies throughout their marketing mix are distinctive attributes of LV, assisting them in creating a distinguished brand image which appeals to certain individuals.

    In regards to your survey question, I too am a brand conscious person. However, the fact that LV does not use any machinery in their production as well as the image of luxury they project does not appeal to me personally. Nevertheless I do occasionally pay premium prices for brands such as Paul Smith, which I consider as a humorous and playful designer brand, cleverly mixed with classic british traditions..

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  29. LV has the good point on the pricing strategy. basically, pricing is the most important part in the whole marketing process and not just increase the price you will get the higher profit.
    LV as the most powerful luxury brand, they use their own advantage on the brand and the customer loyalty, they build their own unique brand image – the high classic and quality LV luxury world. When they making their own pricing strategy they consider lots of important factor, the whole market environment , customer need. and at the same time, LV also improve their own quality which is the key factor to the successful.

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  30. Interesting blog! Your blog illustrate very point of view in terms of setting a very expensive cost for the brand in order to build the perception of the costumers that they going to get a very good quality product in return. They are no longer to recheck the condition as soon as they see the logo of the brand like Chanel or Gucci. I think they also create an image of the brand to be very high level of the standard and not everyone could afford it. So it could automatically identify buyers. Therefore, this could easier for marketer to impose the strategy. However, In order to survive in the market the company needs to make sure their brand has enough quality that customers could rely on.

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  31. I think the most ironic thing about LV bag is the the logo is really ugly. Yes its all about the prestige but you’re spending so much money on a bag covered in ugly LV symbols. Still, as your article says, people are give up money for what they perceive as value.

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  32. Thanks for this interesting post. It let me know the luxury brands such as LV must have their own marketing strategic. I think the LV ever has sale periods strategic is fantastic. As i know some of my friends likes the classic style of LV handbag. No matter the new style of the handbag was product, the classic and traditional style is always popular. Nowadays some of the person who buy the luxury brands not only caused by the Brand loyalty. Some of my friends buy it just want to show their rich. And the LV brand are always the first brand for them to buy. It is so sad to see this phenomenon.

    Liked by 1 person

  33. Thank you for the article to share. I think the value of the product should be proportional to the product quality. If a product is expensive but the quality is not good, so even if there are a lot of customers buying in start, in the furture customers will drain slowly. LV’s design and quality of workmanship is the best of world. It improve the quality of the product in the first,and then slowly evolved into luxury goods. So the product quality should be an indicator to determine the price.

    Liked by 1 person

    • Thanks @huanong2015 for your comment. You have very well looked at cost via a reversed lens of quality first and then price. And comparing that with Louis Vuitton.
      Thanks for a different perspective.

      Saurabh Pandit

      Like

  34. An interesting and quite involving blog post. A person who sticks to a buying a particular brand obviously has a reason to remain with it because of a reason that it gives its quality. As long as the luxury brands provide that, people are ready to bear the exorbitant costs pertaining to it. But as the quality deteriorates, the brand further becomes mundane in the eyes of its own customers. Thus as @huanong2015 exclaimed, the price of the product should be directly proportional to the quality the brand provides.

    Like

  35. Great Blog. The use of the voting tool at the beginning is a good way of attracting attention towards the blog and providing a quick reflection of the samples results. Although many of us like to believe we are not brand conscious, the current results from your survey suggest that the majority of people are brand conscious. I guess this reinforces the importance of a products branding.

    Like

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