Tuesday, November 19, 2013

Buying into the Price Tag

by Jesse Kim

One of the things I’ve been noticing during my bi-yearly visits back to Korea is the growing domination of high-fashion brands on the streets. It’s becoming just as common to see middle-aged women with Louis Vuitton purses as teenage boys with Gucci shoulder bags. Do Koreans just happen to be fashionistas as a collective nation, or is there something more to this phenomenon? To make matters more puzzling, those elite brand products, which already command an astounding price, tend to cost even more in Korea especially relative to their living costs. For me, a simple attribution to luxurious taste in fashion does not fare well in explaining why there are so many Korean eighteen year olds expecting a three thousand dollar purse for Christmas.  
Granted, I’ve always been aware that premium pricing is a huge part of the fashion industry in Korea. I even remember watching a news interview as a little girl that featured a storeowner who admitted that simply adding a zero at the end of the price tag of a dress boosts its sales. This excited me because she seemed to have just exposed a big secret: “price doesn’t always represent quality”; though I did eventually realize that most people were already aware of this fact. Then why is it that premium pricing continues to play such a potent role in increasing perceived brand value, especially for high fashion brands, and how come it’s more potent in some places, like Korea, than others, like Canada?

When considering brand equity as the difference in value of a product with a brand and the same product without the brand, the comparison between my trusty old fifty dollar purse and my cousin’s three-thousand dollar Gucci purse shows the brand equity of such high fashion brands to be enormous.  It’s obvious that brands such as Coach and Chanel enjoy considerable brand equity around the globe, but my experience tells me that it seems to be more evident in some places than others.  It could be that in some countries, fashion brands are simply valued more due to their country-of-origin desirability.  It might also be that some cultures value highest priced goods more as a symbolic device. In any event, the relationship between the brand and the high prices has some sort of equilibrium:  the high prices are imposed to help create the brand equity;  the intangible benefits of the brand justify the higher prices.
I still can’t shake the strange feeling that I get while watching a 9 year old Korean girl trot to school with her mini Louis Vuitton backpack and a Burberry scarf. But by accepting that different places may have different attitudes regarding brands, I can view these seemingly "wasteful" tendencies as an interesting cultural brand phenomenon taking place, rather than the result of the brands’ exploitation of superficiality.

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