Frequent Price Rises Stimulate The Purchase Of Deconstruction Of Luxury Goods Pricing Ciphers

What is interesting is that no matter how the luxury goods go up, their consumption is still hot, so why high-end?

The above doubts and problems are all related to the "pricing strategy" of luxury brands.

If we can plan to deconstruct the "pricing code" of luxury brands, then everything will be relieved.

Value pricing

Pricing strategy is a key component of marketing mix.

Price is usually an important factor affecting the success or failure of a paction, and it is also the most difficult factor to determine in a marketing mix.

Obviously, the pricing strategy of luxury goods is not based on the cost of products themselves.

"The price of luxury goods is based on value pricing," Michel Gutsats, director of MBA and EMBA of Marseilles School of Commerce, France, pointed out that "value oriented pricing" is based on the customer's perception of the value of the company's products to determine the price.

The value of luxury lies in their exclusiveness.

Michel Gutsats has organized a study on luxury price changes in Europe and the United States for thirty years in Europe.

Research shows that over time, the hours spent on luxury production are not fixed or increased, unlike products in the mass market that will decrease over time.

The 35 working hours required by the Hermes scarf are the same as those in 1968.

This is also one of its values.

Globally, luxury brands usually develop retail prices based on three different regions in Europe, the United States and Asia.

The price differences in different regions are also very large.

According to the statistics of the Ministry of Commerce, 20 brands of high-end consumer goods, such as watches, bags, clothing, wine and electronic products, are about 45% more expensive than Hongkong, 51% higher than the United States, and 72% higher than France's.

Michel Gutsats analysis: "luxury goods imported from many countries need to pay consumption tax, which sometimes reaches 100% of the export price.

In some cases, VAT (including retail price) and local taxes (usually not included in the retail price, plus at the cashier place) are also required.

At the same time, the cost of opening stores in different places is different. In Tokyo, the cost of running direct shops and labor is usually 2~3 times that of Madrid, which to a certain extent will be reflected in the final retail price. "

But how do the luxury retailers in each district make the final retail price?

Michel Gutsats, for example, in Europe where luxury brands are mostly of origin, the price index of luxury goods is set to 100. For New York, companies usually set a retail price slightly higher than their origin, such as 105 or 110.

The price of New York will be regarded as the reference price of the American region, and the price of New York will be unified in the United States. But in the region of Argentina, for example, there is a 30% consumption tax, then the price of Argentina will theoretically be 105 x 1.3=136.5 or 110 x 1.3=145, and the final price will be 130, which will not be much different from the theoretical price.

If Mexico's consumption tax is 10%, the final retail price may be 120.

"The price index in Asia Tokyo can reach 145, which is due to Japan's consumption tax and higher operating costs in the region. China's consumption tax is also very high."

Michel Gutsats added.

According to this calculation, even if China only calculates tariffs, VAT and consumption tax according to the price index of European origin, if the total tax rate is 50%, the price of Chinese luxury goods will be 50% higher than that of Europe.

Price increases are normal.

Based on the above pricing framework, if the US dollar weakens against the euro, the price index of New York will be reduced to 90 or 95, which is lower than that of Paris's price index 100. "At this time, the retail price of the United States will of course rise in price," Michel Gutsats said. "Such a price increase usually happens 2~3 times a year, for example, when the new product catalog comes out.

Since American brands do not need to rise in price, European brands will be very careful not to let prices rise too fast to remain competitive.

The change of the luxury brand on the basis of the euro exchange rate is the basis of the price increase. Its rule is also a normal price adjustment, and it is the opportunity for the luxury goods merchants to adjust the price before the new products and new products fall in the spring and summer.

Since the beginning of July, luxury brands have launched a new round of price surges in China.

Brands like Cartire (Cartier), Rolex (Rolex), Louis Weedon (LV) and Prada (Prada) are all rising in price. Previously, luxury brands had already raised their prices in China.

Ouyang Kun, chief executive officer of the World Luxury Association, said: "as far as I know, luxury brands must follow the principle of rising prices regardless of any reason. They are always going to be above the currency exchange rate and the purchasing power of consumers. In any case, they can not shrink as the currency depreciates, and in any case, they can not reduce the purchasing pressure with the increase of personal purchasing power of consumers."

Besides the change of macro exchange rate, the increase of cost will also reflect the final retail price of luxury goods, which is also one of the reasons for the price adjustment of luxury goods providers.

Francis Gouten, the chief executive of the Asia Pacific region and the founder of Gu Teng consulting, said in an interview with the newspaper: "the company raises prices to protect their marginal costs.

In the clothing sector, the cost of raw materials has increased a lot, and for jewellery and watch departments, rare metals have become more and more expensive.

Ouyang Kun said: "the pressure of China's supply chain is large, and the manpower cost of pportation and distribution is high. Luxury tariffs or reductions are also one of the factors of brand price increase, which advance the price up in advance, and reserve the price reduction space.

Even if the drop comes, there will be no influence. "

On the whole, the price rise of luxury goods is also a strategy that brands have to do.

"Luxury itself is a specific product of a few people. By raising prices, it can control the level of consumers and the market, retain their exclusive luxury attributes, thereby prolonging brand vitality."

Ouyang Kun said.

Since last year, the frequent price adjustment of luxury brands in the Chinese market has not weakened, but there are persistent signs.

Chen Zhilong, chief operating officer of A&H luxury group and chief operating officer of MATZO, China, said in an interview with "First Financial Daily": "if the market does not accept the raise, there will be feedback and correction, but sales after the price increase has not been affected, indicating that there is still market demand. Extravagant products continue to raise prices in the Chinese market, indicating that the purchasing power of the Chinese people has not been affected."

"It is the psychology of Chinese luxury consumers who are not afraid of raising prices in China and will continue to do so.

Now China's luxury market is growing rapidly, and European brands have absolute advantages in China. No matter what policies or competitors level, there are no factors that can hinder their price increase. In the current market environment, they are the best time to raise their prices.

Chen Zhilong thinks.

Analysis of consumption psychology of luxury goods everywhere

Europe: designer's consumption psychology.

Because most luxury goods originate from European countries, domestic consumers pay more attention to designers of luxury brands. According to the World Luxury Association survey, more than 75% of luxury consumers in France and Italy believe that the product designer's work determines the value of luxury goods, not because of the influence of the brand itself as a buying reason. Most of them focus on the combination of product design and their own professional characteristics.

The US: self consumption psychology.

In the United States, most people are self consuming, relatively pragmatic, and do not deliberately focus on what luxury goods can bring to their own sense of superiority. Instead, they are very casual and casual. It is a self trend. According to the World Luxury Association survey, more than 70% of luxury consumers buy for their favorite styles. Most Americans consume luxury goods and buy them in real need. They do not buy luxury goods as a show or buy them for their own sake.

Japan: consumer psychology of necessities.

In Japan, luxury goods almost have to be consumed. In this fast-paced country in Japan, many people are buying luxury goods to conserve themselves to prove their abilities and values. Japan is a brand name nation. Workers without luxuries will lose their competitiveness in the workplace. You can have no friends, but you can't have no luxuries. This sentence is the best way to describe the psychology of Japanese luxury consumers. According to the World Luxury Association survey, more than 85% of Japanese consumers believe that the days without luxuries will be short of personal competitiveness, so it is also an important factor for Japan to maintain the world's first luxury consumption country.

China: conspicuous consumption psychology.

In China, luxury goods pay attention to the brand value of luxury goods and do not pay attention to the value of goods themselves. From the analysis of consumer psychology, most Chinese consumers buy luxury goods to let others know their value, and compare and prove their wealth and social position with luxury goods. This is a major factor. Compared with the early luxury society in Japan, according to the World Luxury Association survey, 70% of Chinese luxury consumers consider luxury goods to be important symbols for social interaction and the necessity of comparing value.