The Future Of Luxury Goods
In economics, a luxury item is something that is bought to a higher price than average because of demand. An excellent luxury item usually has high quality and/or rarity, and its price increases with demand. Luxury good has an inherent value or worth to its owner. It is not only bought for its aesthetic value but also for its potential to add to wealth. In short, luxury items are perceived as having a lot of value because of their exclusivity.
Luxury goods and services are generally perceived as having great worth in comparison with similar goods and services in the market place. They tend to be very desirable to consumers because they are perceived as being very rare and hard to obtain. In economics, a luxury item is a good to which demand increases proportionately as income increases, meaning that increases in demand reduce the cost of production and increase the value of the good. This means that as incomes rise, so do the prices of luxury goods and services.
For example, suppose you have a friend who owns a small and relatively poor quality car. This friend probably uses his or her car a lot and, as a consequence of this, the car gets used up very quickly. As a result, the cost of the car goes up, making it potentially out of reach for most consumers. If you were to buy luxury goods and services in this instance, your friend would be able to buy the car as well as still be able to drive it. In short, you would be helping the owner at the same time, by helping to reduce the supply of luxury goods.
Another example is the luxury brand names. Many luxury brands are perceived as being so much more valuable that most other brands, giving them a premium over similar products. This premium is not always fully justified by economic factors, but it tends to exist. For example, luxury brands such as Gucci tend to command a higher price than less famous brands.
But why do consumers perceive luxury brands to be more valuable? Perhaps it is because luxury brands tend to have a unique look, with a high level of craftsmanship. Maybe consumers feel they purchase luxury goods because they are more desirable than the alternatives – lower quality goods, with a lower perceived value. Whatever the reason, consumers will tend to perceive higher perceived values than lower ones, and as a consequence, will reward the brands that create these values.
One way that consumers can tell whether a brand is important and valuable is by how they value the items that they purchase. If consumers do not regard an item as being of value, then this can be a big problem for that brand. For example, Rolex began life as a luxury item’s item, but its perception has changed significantly since then. Most consumers would not value watches and shoes as highly as they did in decades past. However, just because consumers no longer see Rolex watches as being luxurious, does not mean that there are no high quality Rolex products on the market.
Luxury goods are perceived to be high-quality, exclusive and rare. They also create a feeling of superiority and power. As a result, they are the sorts of things that consumers are willing to pay money for – much more so than other, lower-end products. The luxury industry has always been a high-value market, and this trend appears to be set to continue.
In conclusion, we believe the future of luxury goods is looking very strong. We expect luxury goods to continue to increase in value and perceived value. As demand increases, we also expect increases in consumer income due to increased purchasing power. Luxury goods are likely to become the object of desire for most of the population, with very few people being able to buy the products that are considered to be in these luxury categories. With the right marketing and distribution strategies, this income increase will occur quite rapidly, which will fuel the growth of this sector for many years to come.