Each of us probably came across small shops with a catchy signboard of a well-known brand and truly “cosmic” prices. Despite the fact that a product of similar quality can be easily purchased at a more reasonable cost, there are people who prefer to overpay for the useful properties of products sold in such retail outlets. Moreover, the desire to get a little thing in your wardrobe at an exorbitant price is sometimes so strong that people spend precious time waiting in long lines - how to explain this behavior?
Veblen effect: concept and essence
In economic theory, it is customary to divide the solvent demand for a product into two broad categories: functional demand and non-functional. And if the first group is directly determined by the consumer qualities of the product or service, the second depends on factors whose relationship with useful properties can be quite difficult to trace. Some people buy what their friends prefer to buy (the effect of joining the majority), others tend to stand out from the crowd (snob effect), while others want to increase their prestige and defiantly buy expensive things. The latter case was described in detail by economist T. Veblen, in whose honor the use of goods or services is not for its intended purpose, but in order to create an indelible impression, and got the name - "Veblen effect".
This American futurologist and publicist wrote a number of books, such as “Theory of Entrepreneurship”, “Theory of the Idle Class”, etc., thanks to which the concept of “prestigious and ostentatious consumption” was firmly established in the everyday life of sociologists and economists. According to Veblen, in modern society, demand is greatly influenced by how the "cream of society" lives. The idle class lifestyle is increasingly becoming the norm and benchmark for all other people. Therefore, many try to copy the tastes and preferences of the oligarchs, the "golden youth", stars of show business, etc. Well, marketers make great use of it.
The Veblen Effect: Case Studies
Status consumption can be observed at almost every step. It is enough to see how our deputies dress and what they ride. You can also go to one of the fashion boutiques for fun and ask about prices. The Veblen effect often manifests itself in the evaluation of works of art, it acts in expensive restaurants and hotels, often manifests itself in advertising on the pages of expensive magazines. And if you add that the Russian soul tends to go to extremes, it becomes clear why some believe that perfumes should be from Armani, clothes from Brioni, and watches from the Patek Philippe collection. The latter, by the way, are very popular among the Russian elite - the number of fans of this brand includes V. Putin, A. Chubais, S. Naryshkin, etc.
Features of domestic status consumption
The Veblen paradox has been known for a long time, and there are no countries that could be written as an exception. However, the way it works in the countries of the former Union differs significantly from its manifestation in Europe. If rich residents of highly developed countries give their preference to unique exclusive goods or a brand with a history of several hundred years, then the main indicator for our compatriots is nothing short of a high price. The higher the cost of the product, the more valuable and desirable it becomes for them. This must be borne in mind, if suddenly there was a desire to please yourself with some kind of "branded" little thing. Our marketers are cunning people, in their actions they do not disdain to use all sorts of psychological tricks. Knowing what exactly motivates us to purchase certain things, we will be able to more competently make our choice and not allow unnecessary spending of our budget.
