“Conspicuous consumption and status-seeking are major drivers of the Asian market in particular, and are why Asians make up over 50% of the luxury market by nationality.1 In the case of handbags, you absolutely are saying something with your selection: a Louis Vuitton bag is many people’s first luxury purchase, and shows you have some means; a Chanel bag, on the other hand, signifies you are at least upper middle class, maybe even rich,” Ben Thompson writes for Stratechery. “At the top of the heap, though, is Hermès: sport a Birken bag and there is no question as to your status. A whole host of other brands – Prada, Céline, Balenciaga, and many more – say similar things about not just your status but also your taste and the kind of person you wish to be. And, not surprisingly, the most desirable brands are also the most expensive. Handbags are Veblen goods.
“The question for Apple is whether the iPhone is a Veblen good as well,” Thompson writes. “Make no mistake: there are a good number of people who will buy the 5.5″ iPhone because they truly want a big phone; moreover, these customers are probably more likely than any other group to have switched to Android simply for screen size. I think this phone will steal customers back from Android and really hurt Samsung.”
“However, I also think that this phone will cost $100 more ($750 to start), and that it will in some small ways be superior to the 4.7″ iPhone. And, the reason for that premium will be because the 5.5″ phone will be a Veblen good,” Thompson writes. “It will be the phone to have for anyone who cares to demonstrate just how well-off they are, especially in Asia – the Chanel to the 4.7″ Louis Vuitton (Vertu can keep the Hermès folks).”
Tons more in the full article – very highly recommended – here.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]
If Apple is a Veblen brand then raise the price of the next iPhone by $100 – April 15, 2014
Apple’s about to kill Android – April 15, 2014