The Real Purpose Of Reducing Prices Is To "Save Themselves".

French luxury brand Chanel (Chanel) has announced a sharp narrowing of the difference between some high-end handbags in China and Europe (20% in China's price and 20% in Europe). The reason is to crack down on gray markets such as overseas purchasing.

Last year, a similar "narrowing price" approach focused on many advanced watch brands. LVMH's watch brand, Yu Po, has cut the price of all products in the mainland by about 15% in the name of "Hong Kong equivalent". Subsequently, the real force and the advanced production line of Heuer were adjusted accordingly.

In fact, the reason behind the narrowing of the price difference is that the Chinese market can be snatch by price cuts.

According to the global blue Union statistics, in 2014, the amount of tax rebate consumption for Chinese tourists overseas increased by 18% over the same period last year, while the growth rate was slower than 20% in 2013, much lower than 57% in 2012. The impact of overseas purchasing has been greatly reduced.

In the past, luxury brands often adopted unilateral ways to raise the European price to narrow the spread. They were cautious about lowering the price of the Chinese market. After all, the erosion of brand value by price reduction is obvious. It can be seen that cracking down on overseas purchasing is not the main purpose.

According to the 2014 China Luxury goods Market Research Report, in 2014, the mainland China luxury market for the first time negative growth, of which the wrist watch fell 13%, the largest category of luxury goods. This means that price cuts are only self rescue measures for luxury brands in the domestic market.

Most Chinese luxury duty rates are between 15%-25%, which does not explain more than 40%. Price difference 。 Even the duty-free port, Hongkong has a huge disparity with European prices. China's luxury price is much higher than overseas, though the tax factors are concerned, but most of them are caused by the partition pricing strategy of the manufacturers.

The demand elasticity of luxury goods is much larger than that of mass goods, that is, price adjustment will have a great impact on sales volume changes. And sales will also increase. brand Popularity and share. The advantage of appropriate price cuts is obvious in China's luxury market.

According to Bain statistics, the top brand of luxury goods and bags in mainland China last year was COACH, which could exceed GUCCI, HERMES, LV and PRADA.

In recent years, China's luxury market has been developing rapidly, including the consumption choices of the rich class, and the bubble of public consumption consumption. After a series of anti-corruption policies in Central China, the abnormal market is returning to reason, and the pricing strategy of luxury brands will also change.