Sunday, October 16, 2011

Louis Vuitton Sales?

A luxury good is a good that does not apply to the law of demand. For "normal" goods, as the price goes down, the demand goes up. For luxury goods, the price never goes down, because the supplier believes that if it were to ever go down, the demand would go down as well. This is just a theory though, because the supplier wouldn't dare test it in fear of losing demand. Louis Vuitton bags are luxury goods, and according to this website, Louis Vuitton bags never go on sale. In fact, this author believes that "if these luxury, designer handbags were too cheap it would not appeal to them and they would place a lower value on these items.", them being the buyers. People who have these expensive luxury handbags believe that having these bags makes them more important. When people see others with this bag they immediately know that they have money and that they can buy something like it for themselves. Even if it isn't the best looking bag, it is still a recognizable status symbol. According to this article, "Wealthy people for the most part enjoy telling others how much they've spent on luxury items because it makes them feel good, important and rich." Even in this recession, Louis Vuitton bags stay at the same price, and they will as long as some people can still afford to buy them.

1 comment:

Blair S. said...

It is crazy, but true about Louis Vuitton and no sales. The company Louis Vuitton has made a name for itself as a luxury purse maker as well as other luxury items. It would hurt their name and reputation if they were to have a sell because people would start wondering if something was wrong with the bags or if the company started using lower grade material. It’s in the company’s best interest to keep the price the same or increase the price to keep up its reputation as being a “luxury good”. As you said in your post, people who buy Louis Vuitton bags will always buy Louis Vuitton bags no matter the state of the economy. It is a status symbol and wealthy people buy them not only for the purse itself, but also for the status that comes along with the product. As you said before, Louis Vuitton will not change the prices for their products until warranted. Who would want to make less money when people are willing to pay the price at its current level?

Blair S.