important in evaluating consumer responses to pricing. In the case of luxury
brands, customers generally accept the premium pricing strategy.
Secondly, pricing has to be checked against those of competitors. For exam-
ple, the classic Hermès Birkin bag retails for approximately €4,000 while its
considered equivalent at Chanel costs about €2,500. For some customers, this
could mean that the Hermès bag has more value than the Chanel bag while
others might perceive the Hermès bag as overpriced. Thirdly, the overall costs
of obtaining the product must be evaluated. In addition, the pricing strategy
could be utilized as a publicity generation tool. An example is the one-off
Eunis bag produced by André Ross, which was sold for US$88,888
Another important factor in pricing decisions is analysing the external
market demand factor. This involves the responsiveness of the level of
demand to changing or increasing prices. In technical terms, it is done
through checking the price elasticity of demand. This is a measure of the
degree of change in demand for a product when the price changes. If the
change in demand is high in proportion to the change in price, demand is said
to be elastic. If the change in demand is low in proportion to the change in
price, demand is said to be inelastic. In order to implement an effective pric-
ing strategy, these essential factors including costs, customers, competitors
and demand ought to be thoroughly evaluated.The place of distribution
The place of distribution refers to the channels that are used to make products
and services available to customers. Retail channels are most effective when
they meet the consumer’s expectations in terms of location, convenience and
product assortment. For luxury brands, there’s the additional task of brand
protection in the distribution channel choice. This is because one of the impor-
tant features of luxury brands and any brand that desires to maintain an exclu-
sive brand aura is a tightly controlled distribution channel. This means avoiding
or minimizing the use of middlemen and licences or franchises in order to retain
control of where the products are sold. For example when Gucci and Burberry
licensed their brands to multiple manufacturers and distributors, their brand
values plummeted downwards. However, the buying back of the licences led to
the increase of the brands’ strengths and appropriate brand positioning.
Tightly controlled distribution is nonetheless not a magic formula for the
success of luxury goods distribution. There are other relevant calculated
factors that have to be considered in the design and implementation of distri-
bution strategies. Luxury brands currently utilize four broad strategies in
products and services distribution:1 Directly Owned Stores (DOS), which could be in the form of stand-alone
stores or retail spaces within high-end departmental stores.142
luxury fashion branding