Economic worries will make pricing strategy even more critical this holiday season. Research by Chiara Farronato reveals the value that hip consumers see in hard-to-find products. Are companies simply making too many goods?
With record inflation, rising interest rates, and economic jitters weighing on consumers, pricing strategies could become more critical to getting customers to buy during the coming weeks and beyond.
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Do you have that one friend who seems to snag the coolest, most fashionable shoes, jewelry, or clothes?
Now new research shows that when luxury goods companies cater to these trendy consumers by controlling how rare certain items are—seeking to make them exclusive and sought after, but not too obscure—they may sell hard-to-get products at higher prices.
“There’s a balance between social influencers who want to be rare and unique, and the equally important goal of fitting in with the rest of society,” says Chiara Farronato, assistant professor at Harvard Business School. “Too much of a thing and it becomes a commodity, too little of a thing and it becomes something that’s not even recognized when you walk down the street.”
This article was provided with permission from <a href="https://hbswk.hbs.edu/" target="_blank">Harvard Business School Working Knowledge.</a>