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Is luxury expensive?

Author

Listed:
  • Michel Gutsatz

    (EM - EMLyon Business School)

  • Klaus Heine

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.

Suggested Citation

  • Michel Gutsatz & Klaus Heine, 2018. "Is luxury expensive?," Post-Print hal-02312216, HAL.
    • Handle: RePEc:hal:journl:hal-02312216
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    Citations

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    Cited by:

    1. Daria Greenberg & Elena Ehrensperger & Michael Schulte-Mecklenbeck & Wayne D. Hoyer & Z. John Zhang & Harley Krohmer, 2020. "The role of brand prominence and extravagance of product design in luxury brand building: What drives consumers’ preferences for loud versus quiet luxury?," Journal of Brand Management, Palgrave Macmillan, vol. 27(2), pages 195-210, March.
    2. Sharma, Amalesh & Soni, Mauli & Borah, Sourav Bikash & Haque, Tanjum, 2022. "From silos to synergies: A systematic review of luxury in marketing research," Journal of Business Research, Elsevier, vol. 139(C), pages 893-907.
    3. Yi Xie & Siqing Peng & Daniel P. Hampson, 2020. "Brand user imagery clarity (BUIC): conceptualization, measurement, and consequences," Journal of Brand Management, Palgrave Macmillan, vol. 27(6), pages 662-678, November.
    4. Balabanis, George & Stathopoulou, Anastasia, 2021. "The price of social status desire and public self-consciousness in luxury consumption," Journal of Business Research, Elsevier, vol. 123(C), pages 463-475.
    5. Bindra, Sunali & Sharma, Deepika & Parameswar, Nakul & Dhir, Sanjay & Paul, Justin, 2022. "Bandwagon effect revisited: A systematic review to develop future research agenda," Journal of Business Research, Elsevier, vol. 143(C), pages 305-317.
    6. Yi Xie & Siqing Peng & Daniel P. Hampson, 0. "Brand user imagery clarity (BUIC): conceptualization, measurement, and consequences," Journal of Brand Management, Palgrave Macmillan, vol. 0, pages 1-17.

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