Intime of economic complacency, and austerity – the general public is veryparticular on what they should and should not spend on. During the economicrecession of 2008, many luxury brands reported a regression in sales andoverall business growth with the exception of few.
Hermèsand Chanel however, were two brands that continued to witness comfortablegrowth internationally, noting that the average Birkin (an Hermès signaturebag) starts to retail at AED 45,000.
So,we have to ask ourselves, what makes the consumer willing to splash out on oneproduct and not the other – if they’re both insanely priced? What motivates anindividual to purchase a Range Rover and not a Bentley, a holiday home in Dubaiand not in Spain – or a brand new Yaris rather than a second hand Camry? Whatdoes a brand’s value really mean in times of economic conservatism?
Inan article for The Economist, one of the world’s leading advertising firmsSaatchi & Saatchi was quoted as saying ‘loyalty is what excites marketers and advertising folk.So-called “lovemarks” such as Apple and Coca-Cola are trademarks that inspire“loyalty beyond reason”.
The firm runs a website that lists hundreds ofthem. They have legions of fans, command a price premium and, most importantperhaps, are forgiven when they fall short. The “emotional bond puts credit inthe bank,” says Mr Cooper. Brands are a promise to consumers, it is often said;they also serve as an insurance policy to cover the cost of breaking it.’
Whatwe see now is an alternate approach to spending one’s disposable income.Consumers are not opposed to spending big bucks in times of economic regressionif it makes sense to them. Looking for quality over ‘flashy’ and long termsustainability, rather than current availability.
Thisstatement may hold some weight in the Middle East, where visitors seldom noticedecreased spending. Everyone (mostly) drives something foreign and expensive,eats gold dusted sushi and buy designer bags in bulk- (for everyone that liveshere, we know that’s nonsense!)
Stronglaunches of brands such as Tesla, increased interest in making homes Solarpowered and environmentally sustainable, and even an increase in onlineshopping shows us that the local market is experiencing a significant shift inhow , where and why their money is being spent in the way that it is.
Doyou, dear reader agree or disagree? Please tweet me your thoughts @BusIslamica-and #BusinessIslamicaBlog.