ECONOMICS

Economics

Economics

Question 1)

Why people pretend to buy luxury products than high street brands?

However, there is no accepted definition for luxury goods in the academic field, different academicians attributed individual definitions to luxury goods. As early as 1776, Adam Smith (2003) described the definition of luxury goods in his classic work The Wealth of Nations. In this book, he divided consumable into two categories: necessities and luxuries. He gave the concept of necessities as which not only includes those commodities which are essential for keeping the pot boiling, but also those goods relate to decent custom and keep people's lowest class, and then he ruled out those kinds of goods and defined those consumable which did not belong to the necessities for the luxury goods.

Wemer Sombart considered that luxury the connotation of both the quantity and quality: the quantity of luxury refers to the waste of goods, the quality of luxury means the use of goods which is relatively good. Wolfgang Reitzle (2003)figured that, luxury is considered as an extravagant way of life in whole or in part by their own communities, which is mostly decided by the product or service. Hu Yijian (1996) pointed out in Tax Study, luxury means a kind of goods which the general public can not afford in a certain historical period, and only a small number of people can. Nueno and Quelch (1998) analyzed the 10 characteristics in traditional view of luxury goods and summed up that, luxury is an affordable enjoyment (such as Haagen-Dazs ice cream) and the mainstream merchandise with high quality and price. Through the variables and data analysis, Through analyzing three dimensions: functionalism, experientialism and symbolic interactionism, which are related to luxury goods, Jonathan S. Vickers and Franck (2003) argued that, the fundament of luxury is an identity and social status symbol.

U.S. economists, Thorstein Veblen (1899) mentioned the concept "conspicuous consumption "in The Theory of the Leisure Class. He pointed out, the reason why people owned property was that it could prove that the property owner took a higher status than others. On basis of the psychological point of showing their own superiority and honor, the dominant class in financial terms would engage in conspicuous consumption.

Today's universal concept of luxury is, it is an unique, rare goods which is beyond the scope of the needs of a people's survival and development, it is intituled as non-necessities.Observing the consumer groups of luxury goods, the main luxury buyers includes: affluent population, which is divided into "old money" (Aldrich 1988) and "nouveaux" (Lararbera, 1988). Traditionally, the classification of luxury goods market takes the level of wealth as an index, those who can not afford or do not interest in luxury goods are "exclusive" (Dubois and Laurent, 1995). For a long time, luxury goods is available to the rich of the richest class, however, with continual introduction of new brands and new product lines, the middle class has gradually been ranked as target ...