Life

Unveiling the Veblen Effect: Decoding Consumer Psychology and the Allure of Affordable Luxury

The Veblen effect is named after the economist Veblen. It refers to the phenomenon that the higher the price of a product, the more popular it will be.
This is an irrational phenomenon from a psychological point of view.
Because if a piece of clothing of the same quality and style is placed on a street stall, its sales will be poor, but if it is placed in a counter in a shopping mall, it can sell for dozens of times the price.
How do people’s consumption needs change as prices change?
Standard life

Affordable luxury products are products between luxury goods and affordable products. In terms of price, affordable luxury products are generally US$300, equivalent to RMB 2,090. In other words, the price of affordable luxury goods is in the thousand yuan range, while the price of luxury goods is in the range of ten thousand yuan.

In terms of product quality, the current affordable luxury brands are mainly product sub-lines of first-line big brands, original designer brands and brands with main styles.

In other words, affordable luxury brands have the quality and fashionable style of luxury goods, but are not as expensive as luxury goods or as cheap as affordable products.
Affordable products are like the economy class of an airplane, and affordable luxury products are like the business class of an airplane.
Luxury goods are like first-class cabins on airplanes. They are also flying. Why are people willing to spend more money to choose different cabin classes?
The first reason why the Veblen effect is established is that:
Price is not just a price, but also a status symbol. The reason why people are willing to spend more money to buy a product is because the added value of the brand behind it is large enough.
Light luxury is prepared for the middle class that has been growing in recent decades.
It is a product of the middle class to separate themselves from the lower class. It can be said that affordable luxury products are products that define the identity of the middle class, so they are very popular with the middle class.
It is true that affordable luxury products cannot compare with luxury goods, but for the vast middle class people, it is enough that affordable luxury products can distinguish the people at the bottom.

In addition, people who work now cannot avoid interacting with others. A person’s clothing will reflect his social status, wearing clothes of different prices, and even the treatment he receives will be different.
Light luxury products are a basic configuration in many business situations.
Wearing light luxury products is a kind of business etiquette, which shows respect for the negotiation partner and positions one’s social status. Light luxury products can improve a person’s social status, which is one of the reasons why it is very popular.
Placebo Effect

The same bottle of red wine is sold in an ordinary supermarket for 2,000 yuan.

Consumers will feel that the bottle of red wine is not worth the price;

If a five-star hotel sells it for 2,000 yuan, consumers will think that the price of this bottle of red wine is very reasonable.

For a piece of domestic steak, if the merchant says it is imported from New Zealand, the higher the price consumers are willing to accept. The second reason why such a Veblen effect is established is that prices change people’s expectations.

Vitamins with high sales on the Internet are a very typical example.
Vitamin soft capsules selling for several hundred yuan are health care products, while vitamins selling for two or three yuan are medicines.
They are all made of the same ingredients, and even vitamin soft capsules add many harmful chemical ingredients, but people are only willing to buy more expensive vitamin soft capsules, not medicines that cost a few yuan.
The placebo effect means that a product does not have the effect it advertises, but because the person who uses the product has trust and expectation in it, the person who uses the product feels that the product is useful.
The higher the price of an item, the greater people’s expectations for it, and vice versa.
Often expensive food will not make consumers taste bad, because people have very good expectations for it, and no one is willing to admit that their decision is wrong, so even if the food they buy tastes bad, , they will also think it tastes good.

Marketing strategy

High price means high value, and those who understand people’s consumer psychology best are actually those in marketing.
I believe many people will have a question, that is why brands big and small like to advertise constantly?
Even if no one is going to buy their product because of this ad, it seems like a waste of money.
But basically the rise of every brand relies on advertising. Advertising will stimulate people’s associations. When people want to buy canvas shoes, they will think of Converse; when people want to buy toothpaste, they will think of black toothpaste.
If a brand wants to become a national brand, it has two ways. The first is to find well-known spokespersons, and the second is to continuously advertise.
The reason why people nowadays like affordable luxury products so much is inseparable from the previous advertising efforts of these affordable luxury brands. This is the first marketing strategy.
The second marketing strategy is that the slogans of affordable luxury products are often more stylish slogans, especially those starting with “I”, and the promotional images are relatively beautiful. Such advertisements will give you a sense of immersion. feel.

There is a consumer psychology called virtual ownership. Just like when you see an advertisement for a Casio watch, you feel that you have already worn the watch. This watch already belongs to you and you must buy it.
The third marketing strategy is to be good at using price.
If you want to sell a product at a price of 600 yuan, then you need to use 800 as the tag price, and then use 600 as the discount price. This will give consumers a consumer mentality that they have made money. Consumption utility is very high.
When it comes to pricing, affordable luxury products have natural advantages over affordable products.
Affordable luxury products often have very high prices, but they also have promotions, and each promotion can save you at least a few hundred yuan. This is a consumer benefit that buying affordable products cannot bring.
If you want to promote the Veblen Effect, you need to remember a very key thing, which is to create a high-value brand.

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