Luxury Goods – What Makes Them Luxurious?
Luxury goods are those items of personal and private interest to the buyer that can afford to pay a higher price than other similar items. In economics, a luxury item is an item of great value to which demand increases more quickly than proportional to income, which means that expenses on the item to go up more quickly than income from it. For example, the price of gold has been increasing steadily year after year, but the income it brings in has not been growing at the same rate. In such cases, the price of gold is seen as a luxury good while the more essential things, like food and shelter, are seen as necessities.
Luxury goods can be divided into two broad categories: brand luxury items and brand name luxury items. Brand-name luxury items are luxury brands or lines of products owned by one company, usually a designer or manufacturer who also sells under its own brand name. Examples include Gucci, Louis Vuitton, Apple and Tiffany & Co. These brands command a higher price from the general public than their less famous competitors, because they command a unique position in the market. In most cases, luxury consumers are willing to pay more for these brands than for lesser known brands, especially if they have a high perceived quality.
On the flip side, brands within luxury lines tend to command lower prices than competing brands of the same luxury line. In this case, the consumer’s willingness to pay more may be dependent upon whether or not the brand has been granted a high enough status within the market, and how long its presence within the marketplace has been established. Most luxury consumers are likely to seek out the luxury brands that have been proven to be sustainable and ethical, and they will search for products associated with those companies. If consumers find products that they consider to be good enough within these parameters, they will almost certainly consider them to be luxury items of interest.