why we buy stuff, luxury items and the everyday schmuck

“One generation’s indulgence becomes the next generation’s necessity.” – James Twitchell

So.

First. With higher unemployment and all the talk of recession and poor economy it is easy to forget a lot of shit is being purchased by people. And a lot of money spent buying stuff.

Second. A shitload of that shit being purchased is in the luxury category. The expensive stuff.

Third. Maybe 90% of what we call “fads” arrive on the scene from the Luxury category <note: I made up that %>. And because of that I almost called this post ‘fad to functional.’ Sometimes today’s fad does become tomorrow’s functional necessity. Sometimes. A lot of people make a lot of money figuring out which fad will become tomorrow’s necessity. By the way … most fads do not become anyone’s necessity.

Regardless.

I decided to write this to say you would think why we buy things would be simple <we like it>. Unfortunately it isn’t that simple. What happens around us and what happened to us in our youth impacts … well … what we like.

And, of course, we like what other people like.

And, of course, we like what the fabulously rich like <but they can afford it and we cannot>.

And, of course, we like the best. Having ‘the best’ excites almost everyone <I typed almost because I didn’t want to say everyone but I honesty cannot think of anyone who wouldn’t want the best>.

With that I will begin with the slightly odd relationship between luxury and value and how us schmucks who aren’t millionaires get led to purchasing behavior by the schmucks who are millionaires.

“The rich adopt novelties and become accustomed to their use. This sets a fashion which others imitate. Once the richer classes have adopted a certain way of living, producers have an incentive to improve the methods of manufacture so that soon it is possible for the poorer classes to follow suit. Thus luxury furthers progress. Innovation “is the whim of an elite before it becomes a need of the public. The luxury today is the necessity of tomorrow.” Luxury is the roadmaker of progress: it develops latent needs and makes people discontented. In so far as they think consistently, moralists who condemn luxury must recommend the comparatively desireless existence of the wild life roaming in the woods as the ultimate ideal of civilized life.” –  Ludwig von Mises

<note: that last sentence is priceless>

It may seem obvious to everyone (but just to be sure I am writing about it) but there has always been a relationship between luxury and value.

Not “in the moment” but rather as a future tend indicator.

A lagged effect.

Huh?

Well. Here is what happens (simplistically)

A luxury item or service is developed.

Only the richest (or those who decide to splurge) can afford it.

It gets a lot of press and people become more aware of the luxury items.

People desire it.

The item manufacturer recognizes one of 2 things:

1. It will become obsolete (or less desirable to the 1% who can afford it) as more people own it <and they then develop something new & different>
2. They can make a shitload more money by selling it at a lower price to the masses <once the 1% has moved on to another item they have just developed and are making a shitload of profit on>

All the everyday schmucks <that is you & I> then start buying it and everyone on the street has it.

There you go.

Now.

Some really savvy business people stare at the luxury category <sometimes even cross eyed> and try and make sense of which luxury products & services are likely to trickle down to the mainstream consumer … and even more difficult … when it will trickle down.

It is more difficult than you think it would be <note that this is different than ‘early adopters paying more to be the first’> … but if you know what to look for <and I am not one of those who knows what to look for> luxury is a pretty reliable indicator of what next generations will consider basic necessities.

“Luxury consumers are spending more, in many cases lots more, on life-changing experiences, while their need for luxury goods is waning. Spending on luxury experiences in the US, including travel, dining, entertainment, spas and beauty services and home services.” (source: Pam Danzinger, Unity Marketing).

So sometimes luxury is not just things and widgets … but also experiences.

Oh.

And then there are toys. A toy industry consultant said “the toy industry has always reflected adult culture.”

(I was sad just typing that)

Oh.

But it gets worse (for us americans at least).

Britain is Europe’s biggest toy market, followed by France and Germany, according to Frédérique Tutt, an analyst at NPD EuroToys. British parents buy an average of 41 toys per year, which is almost a toy per week.

In Spain, by contrast, children receive few toys outside the Christmas season.

Britons seem highly susceptible to marketing campaigns <but no one is more susceptible than American consumers>. Britain’s toy market is similar to America’s in favoring entertainment over education, says Gerrick Johnson, a toy analyst at BMO Capital Markets. About one-quarter of toy sales in Britain are license-driven, which means they are based on characters from Disney films or television series.

The proportion in Germany is just 14%.

German parents are bigger on engineering. Last year building sets accounted for 13.4% of German toy sales compared with only 8.6% in Britain. Germany is the biggest European market for Lego, the Danish maker of colorful bricks.

Oddly … even UNICEF has stepped in with an opinion:

UNICEF, a United Nations agency, slates British parents for encouraging “compulsive consumerism” in their children.

Ok. I apologize. Toys really don’t have shit to do with luxury and ‘fad to functional’ other than the fact we mostly buy toys for entertainment <fad> and not educational <functional>. But. It gave me a chance to throw around some research I actually did.

Anyway.

All the examples aside … there is a really odd <interesting?> thing happening in the middle <between luxury and what us schmucks are buying>.

The middle of the middle is disappearing.

The explosion of choices at the low priced <but with quality> and the high priced <with high quality> is leaving run-of-the–mill products in desperate straits.

In fact … no one is buying them.

Oh. How do you recognize the mediocre middle? They are the folks couponing like madmen and cranking out buy-one-get-one-free deals like shit through a goose.

This explosion is also making it more difficult to discern fad from functional.

Yeah.

Discerning what is fad <in other words … what will disappear over time> and what is functional <useful and/or humongously important> is really really difficult.

And becoming even more difficult in our world of instantaneous hype.

A combination of transparency online <and sometimes the transparency is bullshit but if you don’t invest the energy to discern between the bullshit and the truth it all becomes blurry> and the fact that the global entrepreneur business brain attacks high priced items thinking how to offer a designer/quality version at a lower cost <not by cutting corners but simply building it better & more efficiently> is making the luxury category a turnstile category.

Anyway.

This topic became a great excuse to highlight one of my favorite sites <and thinkers> … 50topmodels.

They have once again humorously <but smartly> mapped the hype cycle which tries to predict the beginning of corporate marketability of technological innovations.

They note that it maybe also predicts the time you will marry … but that’s their interpretation.

The model cuts a new technology roughly into five periods in its life cycle (although real time is phased differently and individually):

–          Technology Trigger — the product is on the market and you hear the buzz all over the place. Kind of a breakthrough in visibility.

Comes along with: “Have you checked this out? It’s great!“

–          Peak of Inflated Expectations — The hype is on top, but more and more people uncover that the product or services is just half-baked.

Comes along with: “It’s great, but…!“

–          Trough of Disillusionment — the technology fails to meet expectation and becomes boring for early adopters. There’s hardly any press about it, but still, people use it.

Comes along with: “It would be great, but they should change this and that!“

–          Slope of Enlightenment — press stopped covering the technology, but some businesses take time to experiment with it or they invest in it. The feature becomes more practical. Maybe 2.0 version.

Comes along with: “I use it, but in another way.“

–          Plateau of Productivity — now it’s a real benefit for the users. The technology is accepted and maybe even broadly spread (within it’s purpose to serve).

Comes along with “I knew it!“

The 50topmodels little drawing shows parts of the  2008 issue (german). Compared to 2006 (german), Web 2.0 went from “peak” to “disillusionment” – just as the market researchers of Gartner predicted.

Anyway.

It is more difficult to select that which is in luxury which will make it into the everyday schmuck’s home than you think.

But give it a shot.

Its fun to think about it.

The only thing you can be really sure of?

What looks like an ‘indulgence’ today … will be a ‘necessity’ tomorrow more often than you would like to believe.