[Leica] Product price (was M9)

[lrzeitlin at gmail.com (Lawrence Zeitlin)]

"Inverse Price Elasticity" only works with ignorance - where the buyers have
no idea of quality, only prestige (Rolex, Montblanc, Glenfiddich, etc). I
have had several discussions in my time with luxury goods manufacturers and
marketers, and they come back with one thing every time - the customer they
really want is the one who knows what he is buying, and does so for his own
satisfaction, not to announce to the world that he has 'made it'. These are
the repeat customers who are highly sought after - they will stay loyal to
and buy multiple products from the same marque, provided the quality is not
compromised with (Patek, Pelikan, Lagavulin, etc).
Cheers
Jayanand
- - - - -
I partially agree, but not entirely. If a consumer has a good idea of the
true quality of a product, he chooses one with the highest quality at the
lowest offered price. This is normal marketing procedure. But for many
products, especially technical or luxury products, the consumer has little
direct knowledge of quality or suitability. Marketers search for a magic
number to tout their wares in the hope that it will convince the buyer that
their items are the best. For years digital camera makers hyped megapixels
as a magic metric. Computer manufacturers advertised computers in terms of
megahertz CPU speeds. Fabric manufacturers, in terms of threads per inch.
Even Leica talked about the little Black Forest Elves that made the
wonderful cameras the HCB used.

Numerous market research studies have shown that for complex products of
unknown or hard to determine product quality, most consumers use price as
the main quality index. How many times have you heard the canard "You get
what you pay for." Actually you do not.

The manufacturing and distribution price of a product has minimal
relationship to the retail price. Price is primarily a marketing decision.
The same medicinal drug you buy in India may cost ten times as much in the
US. The same drug, manufactured on the same production line, sold in Canada
costs half as much as in the US. Typically marketers increase the retail
price until demand falls off. In cases where the manufacturer has limited
production capability (Leica) the price is set at the point where demand
matches production.

So take the self serving comments of the luxury goods manufacturers with a
grain of salt. Few manufacturers are going to admit in public that their
products are no better than the competitions products but that they have
managed to convince the stupid consumer to pay twice as much. Of course from
the consumers point of view, if everyone knows the item is more expensive,
he gains prestige amongst his peers.

Conspicuous consumption anyone?

Larry Z