Changes in consumer behaviour determine brands’ marketing strategies. There is never any decline in interest in status brands. In categories such as televisions, watches and bags, consumers are prepared to pay up to 900 percent more and make themselves feel better by paying a price for status. Those luxury consumer brands which are aware of this continue to make investments in this area.
Marie France Pochna, who has become known for her studies on style, fashion and luxury brands, says that the global market for luxury brands has reached $100 billion. She says that status brands make people want products they could not even have dreamed of. Pochna says: “Status brands go beyond the label, they each become a comment.” She notes that in the past these kinds of brands were only targeted at the aristocracy. But she argues that today luxury brands have become democratised and that demand for them has begun to come from every section of society.
If you look at the results of the brands league published by Interbrand and Business Week every year it is clear that, despite all the crises in the world, luxury consumer products continue to maintain their high added value and to increase brand value. In the 2005 Interbrand global brand league Louis Vuitton had a brand value of $16 billion. While Gucci had a brand value of $6.6 billion, Chanel $4.7 billion, Rolex $3.9 billion, Prada $2.7 billion and Moet Chandon $2.9 billion. Even though these brands in sell for 400% to 500% more than other brands in their categories, consumers still want to buy them. Consumers regard this price differential as a ‘status cost’ and continue to make investments in this kind of brand.
Why do they pay more?
In fact, consumers prefer ‘status’ brands because they make them feel better. Statistics show that in the modern luxury goods sector it takes 600 hours to make a dress. In every Hermes bag there is a registration number which indicates where and by which expert it has been made. Louis Vuitton produces a specific number of different brands. Vertu mobile telephones, which are only made in a factory in the county of Hampshire in the UK, consist of 404 parts, unlike the 40 parts in a standard mobile. While it takes 10 minutes to produce a normal telephone it takes 26 hours to make a Vertu brand mobile telephone, which then sells for €5,000-20,000. This is what makes the consumer feel special. They are very happy to pay the difference in cost if it makes them feel they have a high status.
The special features of these products are not known
In recent years concepts such as DVD players, VCDs and home cinemas have increasingly become part of our daily lives. Particularly in televisions, there has been an increase in the range of status products. In the past televisions used to be divided into black and white and colour, whereas today they are offered to consumers with many different features. While a standard television sells for arounf YTL 500, the price of a large screen or flat screen television can rise to YTL 5,000.
Vestel Marketing Assistant General Manager Arif Sankur says that in recent years consumers have become very knowledgeable about this area, He adds: “Now they have begun to pay greater attention to sound and picture quality.” Sankur notes that in the last three years in particular large screen televisions have attracted demand from every section of society and says that now peripherals such as Playstations, cameras, DVD players and satellite receivers can be connected to televisions. “Customers prefer brand products in order to ensure a good performance from these appliances,” says Sankur and notes that consumers use these products to make a statement about their lifestyles.
What are the variations in status cost in the basic categories?