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The Secret of Luxury Goods: Why Do People Want More Luxury Goods When Their Income Increases?
In economics, "luxury goods" are defined as goods for which demand grows faster as income increases, making the individual's spending on these goods a more important proportion of overall spending. Relative to necessities, demand for luxury goods decreases significantly when income falls, which raises questions about the psychological and social motivations behind luxury consumption.
According to market research, the demand for luxury goods is highly elastic to changes in income, meaning that as people's wealth grows, they choose more luxury goods than usual.
Historical Background of Luxury Goods
The concept of luxury goods is very old, and it existed as early as the time of the ancient philosopher Plato. Over time, the definition and market scope of luxury goods have changed. Luxury goods today are no longer limited to physical products, but also include many services and experiences.
Some luxury goods consumers regard them as an important symbol of their social status and economic strength, which has given rise to a socio-economic phenomenon called conspicuous consumption.
The evolution of the luxury goods market
As income groups rapidly expand, the luxury market is evolving, and a new category of accessible luxury or “mass luxury” is emerging. These products are designed for the middle class and are no longer an option only for the wealthy.
On the other hand, the emergence of multinational corporations has made the globalization of luxury goods possible. New market opportunities are also emerging against this backdrop, particularly in places like Asia, where consumers in many countries are rapidly becoming wealthy, bringing new life to the luxury goods market.
Changes in consumer behavior
More than ever before, modern consumers’ purchasing choices are increasingly influenced by celebrity culture. The popularity of social media platforms such as Instagram and TikTok has significantly increased the exposure of many luxury brands. This exposure makes luxury brands more accessible and inspires consumers to buy.
The influence of celebrities is not only limited to their lifestyle, but also reflected in their preference for luxury goods, which has become a major driving force behind current consumer trends.
Open Questions and Thoughts
So, in the face of the increasing prevalence of luxury consumption, can every consumer rationally view the intrinsic value and symbolic meaning of these goods?
