Today I came across Bling H20. Bling H20 is a brand of bottled water that is quite clearly on another planet. A typical 1 litre of bottled water will set you back £37, simply by placing Swarovski crystals on the bottle they have been able to create a brand aimed at the super rich (that clearly have more money than sense).
Bling H20 Is a positional good. Defining the brands position by its value, customers are able to perceive a status of luxury and exclusivity associated with the brand. (Fred Hirsch), 1977.
It still does not stop the fact that even Grey Goose vodka is less expensive and water is available from a tap!
Similarly another great example of a positional good is Chanel No.5.
Here’s an interesting fact for you. You will NEVER. I repeat NEVER see a Chanel No.5 bottle be sold in a sale. In fact every year when shops need to clear their stock, hundreds of bottles of Chanel No.5 are passed onto industrial waste disposal units. I know this because a friend of mine works at a industrial recycling plant and every so often a batch of Chanel No.5 is delivered to be destroyed. (Tragic, I know).
You could say this is a waste, however a brand like Chanel which recently employed Bradd Pitt to advertise their perfume, would not want to be seen dead being sold on sale.
The reasons are symbolic but are grounded in good marketing. So let’s look at the four symbolic reasons an individual buys Chanel
1.) Self-image enhancement
A brand like Chanel is not just there to make you smell nice, it’s their as a statement of who you are and you place in society. If people know you wear Chanel, the idea is people will think more highly of you.
2.) Ego identification
You think you are a well off, high class individual and for this reason buying Chanel No.5 will provide you with the identification to your self image
3.) Belongingness and social meaningfulness
You hang around a social group of well off upper class individuals, by wearing Chanel No.5 you are identifying yourself as part of a social group that you wish to belong to.
4.) Affective fulfilment
Simply knowing that you can wear Chanel No.5 as and when you like provides you with a cognitive fulfilment that you associate with the high class stature of a perfume brand like Chanel conveys to you.
Research has also shown simply by having a greater price you will drive consumers to purchase the product as it is now perceived as a ‘Veblen good’, it has been shown that some people have a greater preference to purchase products as the price increases. Wood, John C. (1993).
We are surrounded by luxury goods, Rolex watches tell you the time, but are priced in the £Thousands, (even though the time on your phone will do the job for no extra cost). Rolls Royce cars do the same job as a Nissan Micra, (it takes you from A-B), however a Rolls Royce is priced often 10 times the price of a Micra.
Clearly luxury goods have their place. I however can do without the Swarovski encrusted bottled water. Tap water is just fine.