There is one thing that all people know: Women love purses!! And lately, the biggest fad across campus seems to be the infamous Coach Purses. Recently I read in an article that Coach is losing a ton of money in sales due to the economic downturn and peoples unwillingness to spend $300-$500 per purse. I dont blame them either. At the end of January, Coach announced that it was going to cut back prices on handbags and cut back store expansion plans as well. Over the Christmas holiday season, CEO Lew Frankfurt said that the 2008 holiday season "was the most difficult our company has seen in my 30 year tenure." Here is where an economic term comes in....Snob goods. Coach items used to be a status of wealth and class and "oh look, i have $400 to spend on a purse." Many people spend that kind of money on a Coach purse because it does show some sort of class level. The average joe can not afford to buy one of these expensive purses. NOW....if Coach decides to lower prices too much, I feel as though sales will still continue to decline. The rich/wealthy people who think Coach is unique and classy, will not buy it as much because now the average joe may be able to afford one. Coach purses seem to be a snob good and i'm afraid that the snob effect will take place if Coach lowers it's prices too low. Wealthier people who used to buy Coach will now turn to Louis Vuitton instead because it Louis's of course have wealth status symbols that come along with owning one. Of course, I am not bashing on Coach or their products. They do have quality purses that are extremely cute...but I'm afraid that now that everyone can afford one, the upper class who looked to Coach as a status symbol will back out in buying them. What do you all think? Is coach a snob good?
Only time will tell if Coach is a true snob good. I agree with you that many women wear Coach products to display wealth. Coach is not the only company to be faced with this dilemma. A few weeks ago I read in the WSJ that when Abercrombie's sales were doing so terribly the CEO said refused to cut prices because he didn't want to compromise the brand equity of the product. He felt that lowering the price would make it less desirable to those who do buy AnF clothing on a regular basis. It is interesting that the two companies are taking exactly opposite views about the future of their company.
ReplyDeleteThe concept of snob effect is rather easy to explain in theory but actually difficult to explain in reality.
ReplyDeleteIt may have been easier to apply the theory when production was difficult and there were significant class difference in culture and taste.
However, as the difference in cultural difference between classes is reduced because of cultural and economic changes, the application of the snob effect became highly difficult.
For one, even the upper classes are not immune to the consumerism and the effects its populist culture. And, because the snob effect is based on perceived image created by culture, one cannot be sure what changes the image or how much of the image is created by availability or simple price.
In the case of Coach Purses, it is not a simple snob effect good because the value is not the result of being a one of a kind. It is rather a consumer product based on the emotional need to look good and be fashions conscious generated by middle class or above women. So, it is more likely that bad designs will change the image rather than price reduction.
It is revealing that products such as Coach Purses frequently have sales which do not tarnish their images.
So, if the price reduction keeps the brand in the public consciousness and makes it able to continue in creating great designs, I do not see the snob effect taking place in a significant way that matters.
I think this largely depends on a person's degree of snobbishness. For example, a friend of mine who is obsessed with fashion had long-since written Coach off as cheap and too commonly known to be truly truly trendy or stylish. She would only buy other lines such as Marc Jacobs or Kate Spade.But, others still, even with a price drop, would consider Coach still a huge investment for a simple purse.
ReplyDeleteTherefore, I think the biggest snobs would continue to follow their snob effect, and potentially a smaller, lower tier of snob could be pulled in. On the whole, however, I doubt it would affect the bags' overall demand much, particularly with the decrease in prices offsetting any minor snob effect.
Returning back to the original question is Coach a snob good, I would agree with Yonghoon C and not consider Coach a snob good. Although, I do agree with the fact that many women (but not all) purchase a Coach purse because it shows a level of wealth, or because it shows the woman may have a sense of “style” because the brand is a commonly known brand. But because it is a commonly known brand that is not limited and because many women purchase this brand, I feel as though it can’t be considered part of the snob effect. When I read this blog I automatically thought of Samantha from Sex and the City in an episode where she was trying to purchase a Birkin handbag that was $4000. But because there was a waiting list for five years and the handbag was not available to just any ordinary customer, I feel as though it is definitely refers to the snob effect.
ReplyDeleteHere’s a clip that I think nails the snob effect right on….
http://www.youtube.com/watch?v=ItpUikcE22I
So now that I have Sex and the City on my mind, it leads me to thinking about Carrie’s addiction to expensive designer shoes. Here she is dropping four to five hundred dollars on multiple (I mean close to one hundred) pairs of shoes yet can’t afford to live in her one-bedroom apartment. Now I understand that were talking Manolo’s and Jimmy Choo’s here, but that’s over 40,000 on shoes! So going back to the snob effect and “high-end” designers; when the economy is struggling, are the retailers really doing as poorly as they are leading us to believe? Unless that Birkin Bag or the Manolo Blahniks are made of real animal skin or crystal diamonds, they are still making a HUGE profit from the merchandise. AND if these products have waiting lists and are in such high demand it would allow the snob effect to come into effect. Therefore the customers purchasing the handbags and shoes are most likely (unless Carrie) financially set that they don’t have to think twice about buying the handbag therefore these companies shouldn’t be struggling as they say they are.