Is Luxury Expensive?

13 Pages Posted: 17 Sep 2018

See all articles by Michel Gutsatz

Michel Gutsatz

China Europe International Business School (CEIBS)

Klaus Heine

East China Normal University (ECNU) - School of Business

Date Written: January 2018

Abstract

Although pricing strategies have significant effects on brand performance and have been growth drivers of the luxury industry for decades, there is only little research on luxury pricing strategies. Most academics and managers believe that there is a ‘democratization of luxury’ since the 1980s. Today, luxury is regarded as accessible for almost anyone. On the other hand, researchers and consumers still consider ‘high prices’ as one of the most important luxury characteristics. To resolve this paradox, this paper analyzes ‘expensiveness’ as a key feature of luxury products: Is luxury expensive or has it really democratized? It outlines the different types of luxury with reference to their ‘expensiveness.’ Based on a literature analysis about research on pricing in luxury marketing, the paper presents eight indicators of ‘expensiveness.’ After discussing how the Veblen, Snob and Bandwagon effects break the law of demand, analyses of real data follow with some case studies about the price development of luxury products in different countries and product categories. They show that the method of price comparison by Fourastié can provide brand managers a more realistic picture about the ‘expensiveness’ of their products for their target customers. The paper concludes with some major lessons learned.

Keywords: Luxury branding, Pricing strategies, Prestige, Conspicuous consumption, Veblen effect

Suggested Citation

Gutsatz, Michel and Heine, Klaus, Is Luxury Expensive? (January 2018). Journal of Brand Management, Vol. 25, Issue 5, 2018. Available at SSRN: https://ssrn.com/abstract=3245119 or http://dx.doi.org/10.1057/s41262-018-0089-1

Michel Gutsatz (Contact Author)

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Klaus Heine

East China Normal University (ECNU) - School of Business ( email )

Shanghai 200041
China

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
63
PlumX Metrics