Parachutes never looked so good
This is the logic behind why people buy luxury goods: they don’t mind spending exorbitant amounts if it brings them happiness.
The Big Bertha golf clubs that Callaway Golf introduced in 1991 are good examples. Although the prices of Callaway clubs were three times higher than other brands, they were very popular among middle class customers. It was not long before Callaway Golf became the top ranking golf equipment manufacturer.
Boston Consulting Group described this consumption pattern of middle class customers spending more than usual on goods as “trading up” or “new luxury.”
The consumers of new luxury goods prioritize how they feel after buying something over analyzing the craftsmanship of a good. Psychologists call this “emotional consumption.”
When people buy merchandise, they consider their purchases a reflection on themselves. Therefore, they consider their own taste, personal satisfaction and cultural identity when making purchases. When Miuccia Prada came up with the parachute cloth bag, she wanted to produce luxury goods for herself, not others.
Consumers also consider how a product would affect their social lives.
Lately when Korean office workers gather together over drinks there are two popular topics that come up: “Avatar” and the iPhone. Both have to do with the new luxury consumption. According to the Korean Film Council, Avatar earned 101 billion won ($86.3 million) in Korea, easily putting Korea in the top-10 countries for earnings for the film. The new stereoscopic 3-D technology the film used attracted a huge number of viewers. They watched the film as if they were possessed by it. Koreans did not even mind paying twice as much for tickets to Avatar than they would for normal films.
The price of an iPhone is also quite expensive. Nevertheless, there were more than 300,000 iPhone purchases made in the past two months in Korea. People say that each iPhone is unique, because you can personalize it with over 100,000 different applications. How can a consumer resist the temptation to buy one?
Times have changed. There are even luxury cookies now. Market O, a premium cookie made by Orion Corporation recorded 50 billion won in sales in its first year on the market, a new record.
Jeong Jaeseung, a professor at Kaist, criticized Prada as “a trickster that sells nylon at the most expensive price in the world after coating it with culture and style.”
In this era of emotional consumption and new luxury, Korean businesses will certainly have a headache if they want to cheat their consumers properly.
*The writer is a culture and sports reporter of the JoongAng Ilbo.
By Ki Sun-min