Someone read this article: Key theme is affordability (click to read) and said that luxury cannot be low-cost. Once it’s low-cost, then that luxury advantage is gone. Perhaps I share three examples instead to show the reason why low-cost is now the strategy because the world is now very much more connected and transparent than ever. Selling with super high margins in one market and way lower prices in another will not work because price comparison will happen and immediately the buyers paying way higher prices will be very angry and that’s the end of any further sales.
Property in hotspots. When it’s a hotspot, everyone knows that demand will be high. However, hotspots also meant that prices will be very high. Yet, majority do not earn very high salaries. Still, more than half of everyone who’s working may want to buy into that hotspot! So, instead of 1,000 sq ft @ RM1,500 per sq ft for RM1.5 million which majority could not buy anyway, the developer will now build 400 sq ft @ RM1,500 per sq ft and the price will just be RM600,000. This is still way higher than what majority could afford but hey, demand is now expanded to people who would otherwise be fully locked out due to the price being RM1.5 million.
Long Sleeve business shirts. I love buying shirts and have probably 40 plus of them. There are shirts of the same brand which are RM169.00 and those priced at RM89.00 If we just look at the design or even the colour, we may not feel a huge difference, then why the difference in price? Look closely at the stitching. The more expensive ones will have double stitchings while the lower-cost ones will have just one. The higher priced ones will have two buttons at the sleeve area while the lower-cost ones will usually have just one. Touch the materials and we will realise one may crumple easily while the other one is almost iron-free. Last but not least look at the chest pocket, usually the more expensive ones will have the logo of the brand stitched on while the cheaper shirts will not have the logo… There are more differences but you get my point…
“LEATHER” shoes. Look very closely at the shoes we buy. The design will be very attractive and the comfort may be similar. However, the same brand may have one at RM399 and RM119. Why the huge difference? Well, look very closely yeah. Any genuine leather shoe will write ‘Genuine Leather’ in the inner part of the shoe. The cheaper version from the same brand may not be leather but of synthetic material instead. By the way, no one can see whether it’s real leather or synthetic material just by looking at you wearing it yeah. The only thing we will know is that leather shoes are much more durable (many. many years easily) while the synthetic one will start to show the wear and tear after a while.
Actually, this is true even for travel tour packages yeah. We may be going to the same country (those seemingly expensive advanced countries and not some developing country) but the price difference could be huge. The difference? The hotels we stay, the flights we take, the food we are served, the transport (40-seater bus or 20-seater) and even the places the tour guide will bring us. These are why the SAME expensive country could be enjoyed by MORE people. Happy understanding that luxury does have a lower cost version because the target is both those who could pay a lot more as well as those who love the same thing but needs it to be cheaper.
Please LIKE kopiandproperty.com FB page or Sign Up for free to get daily updates about the property market. Else, follow me on Twitter here.
Next suggested article: What is B40, M40 and T20? Just do more