slowboat wrote: ↑
Mon May 20, 2019 9:48 am
Those that price their products "too high" will not survive. The companies that are around and growing are the survivors.
Two things wrong with the above....
First, we still have high priced companies in almost every product offering that consumers purchase - especially the luxury ones. Thus the second sentence is not accurate. If you want to pay lots for a brand name, you can. And not only can you pay tons of money for something you could have purchased cheaper, there is often a huge selection of brands to pay waaaayyyyy tooooooo much for.
Second, in a free market, companies that succeed will cater to "want's" instead of "needs". No kiter "needs" a $200 pair of sunglasses for out on the water when $1 sunglasses work almost as well. But many kiters do "want" a $200 pair of sunglasses for a large number of reasons.
1. Perception of quality and function being related to price allows companies to actually sell more by increasing price. Remember Oakley sunglasses back in the day? Their sales model was built on building an expensive product, and then charging 4 times more than that additional construction price justified. This drove the consumer perception that Oakley sunglasses were "better".
2. When you have disposable income, most want to flaunt that. This is a completely natural human trait. A good example is when someone purchases a high end sports car, but does not have the skills to drive it. In the US, the trend is even moving toward pickup trucks falling into this category now. With these trucks base prices more than double that of passenger car, people who never haul anything (and would never let you put something in the bed of the truck because it may get scratched) are just buying them because of how expensive they are. The human desire to flaunt a status symbol is much like a peacock whose beautiful long feathers are for show, but can be detrimental to it's survival.
And there are many more reasons why people will spend more for a comparable product. But the underlying key to the success of high end brands is their ability to slightly differentiate the product so that they are recognized as "genuine". And in this case, the word "genuine" means "I paid lots of money for them because I can".
Overall, I do not believe that this is a bad thing. On a rare occasion, some innovation comes out of the desperation of "high end brands" to differentiate from economical alternatives. So I am happy that a free society works this way. Plus, those that will drop $200 on a pair of sunglasses are wearing a sign above their head that pretty much lays out what their values and/or personality is like.