Title: The Psychology Behind Why People Buy Luxury Goods
Headings: The Psychology Behind Why People Buy Luxury Goods
The Psychology Behind Why People Buy Luxury Goods
Key Takeaways
Some Consumers Do Not Act Rationally
Are Higher-Priced Goods Really of Higher Quality?
Self-Esteem May Impact a Person's Purchases
Authenticity Matters
The Bottom Line

Content: Depending on how you look at it, this phenomenon may be evidence that many Americans don’t always act in their best financial interest. While a high-quality, durable handbag can be purchased for around $100, some people opt instead to spend thousands of dollars on a luxury-brand handbag that performs the same function and is of the same relative quality. Are Higher-Priced Goods Really of Higher Quality? One possible explanation for this is the human tendency to overemphasize the positive elements of a product and ignore its disadvantages. For example, in the case of Apple Inc. (AAPL), consumers wait overnight for new releases of iPhones, iPads, and Mac computers. This despite the fact that Apple products are not technologically unique or superior. In fact, Samsung makes phones with better features (compared to most models of the iPhone), and Microsoft Corporation (MSFT) and Xiaomi make phones that typically have a cheaper price point. Nevertheless, Apple experiences a high degree of brand loyalty and seems to break sales records year after year. Because some people perceive non-luxury goods as inferior simply by virtue of them being non-luxury (and not on the basis of their characteristics or qualities), they also come to the irrational conclusion that higher priced goods are of better quality. Contrary to the evidence, they may believe that you get what you pay for, regardless of whether the goods are actually better than their more affordable counterparts.