Friday, October 18, 2013

Slow Down to Show Off

Luxury segment retailer Hermes wants to peddle their newly introduced item all over the world and for you to pedal it all over town. A possible limitation is that the item costs about $11,000. That’s a lot for a bicycle, even a handmade one.
     Bloomberg Businessweek finds significance in the name Hermes has bestowed on the bike: Le Flaneur, which translates to “the stroller” or “the dawdler.” No sweat. Slow down. Show off.
     Researchers at University of Pennsylvania and Southern Methodist University note how consumers of very high-end products often prefer subtle, not obvious, signals in their purchases. Consider sunglasses. The researcher’s tally found that about 20% of sunglasses selling for under $50 included a brand name or logo easily visible to others. This increased to about 85% when the retail price was between $100 and $300. But for sunglasses selling above the $500 mark, the percentage dropped dramatically. It was about 30%.
     So Le Flaneur appears to be intended for the $100 to $300 sunglasses market, the consumers who say, “If you want me to buy merchandise from you, show me an item or two I can show off to others, or merchandise that lets me show off grandly when I give an item or two to others.”
     Being handmade, Le Flaneur should be of sterling quality. Still, you’ll have shoppers who prioritize impressive appearance over refined quality. Turn those shoppers into regular customers by continually having the right merchandise prominently displayed. Stauer, the print catalog and ecommerce retailer of luxury items, describes how to do it. Owner Mike Bisceglia is quoted as saying, “We buy large stones with less clarity but at a better price. Guys like being able to afford a big, beautiful 50-carat ruby necklace.”
     Claiming you paid a good price is itself part of the showing off—although not to the recipient of the gift. Mr. Bisceglia is also quoted as saying, “There are all different levels of pearls, but 99.9% of people can’t tell the difference between a string of pearls that goes for a couple hundred dollars and the thousand-dollar pearls.”
     Researchers at University of Alberta, University of Calgary, and University of British Columbia found that many consumers lie when asked by friends how much they paid for an item, and the lies are much more likely to be in the direction of claiming a bargain than inflating the actual price paid.

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Distinguish Show-Offs from Connoisseurs

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