Luxury goods are those items that the majority of people find expensive to buy. In economics, a luxury product is one that has a high fixed cost and whose prices increase proportionately to the income of the buyer, so that expenses on the item become a larger percentage of overall income. Luxury goods tend to be highly desirable and people who can afford them tend to want others to have them. Thus luxury goods tend to be traded for high prices, which forces the market participants to offer large discounts to gain customers. The increased supply also drives down the price of luxury goods and this process has led to many retail products being sold at high margins.
The Internet has opened up a lot of new opportunities in the luxury sector, particularly for small and start-up brands. New businesses can take advantage of the low overheads that Internet marketing professionals have and start selling their products through online marketing and selling venues such as eBay. The Internet also provides a great forum for brand marketing professionals to showcase their brands to the masses, offering them an opportunity to talk to potential customers face to face. Luxury brands need to invest time and money in their brand images and promotion, however, if they want to sell their products at a premium price – then it is clearly important to use the Internet and other marketing venues to spread the word about their brands.
Luxury brands have traditionally been associated with high prices for something that is good value for money, but new technologies and the Internet have allowed luxury brands to start selling their products at other price points to capture a larger share of the luxury market. By doing this, the brand value of the brand can increase, and its true value decrease, meaning that the item is still relatively good value for money. Internet marketing professionals can help luxury brands to sell their products across different price points by creating a well-designed website, using effective search engine optimization techniques and using social media marketing strategies to spread the word about their brands. In addition, Internet marketing professionals can also utilise data tracking tools to monitor the interest in particular luxury brands, which could potentially help them to identify new trends and areas of opportunity to capitalise on.