The most expensive luxury is actually vanity.

In fact, in many countries, especially developed countries, people associate luxuries with waste and showing off.

One, luxuries are mainly to satisfy the vanity of the rich

Luxury and necessity are relative, that is to say, without luxuries, human life is not affected in any way.

We can divide consumption demand into two aspects: real demand and showy demand. Real needs are the goods or services that are consumed for one's physiological needs and social activity needs. The show-off demand is the consumption of goods or services that are beyond the real demand and are consumed solely to satisfy one's personal vanity.

For example, to eat is to meet the nutritional needs of the body, meals with reasonable, nutrient-rich, suitable for personal taste, such meals is the real consumer demand. However, if you have to have a meal over 100,000 yuan, such consumption is purely for showing off to satisfy vanity, because 100,000 yuan to eat a meal and 100 yuan to eat a meal for the individual's real needs there is no difference. It can be seen that the rich people consume luxury goods mainly to show the value of the wealth they possess or their earning power, so as to get the social recognition of their social status and identity.

The statistics of GDP includes both products and services, likewise, the luxury goods also includes both products and services, like hiring private drivers and servants, and consuming in high-grade hotels, hair salons, nightclubs, clubs, clubs and so on, which belongs to the consumption of luxury services.

The elasticity of demand for luxury goods with income is high, that is, the consumption of luxury goods is greatly affected by the level of income, and the consumption of luxury goods can be afforded only when the income is high. Demand for necessities is less elastic with respect to income, like flour, which is consumed regardless of income, and consumption does not vary much, and a high income is not enough to eat 10 kilograms of flour a day.

So, luxury goods must be priced so high that the average person can't afford to consume them. Luxury wallet prices are in the thousands of dollars on tens of thousands of dollars, handbags tens of thousands of dollars more than 100,000 yuan, or even hundreds of thousands of dollars, while the price of ordinary consumer products of this kind of product is also a few dozen dollars, a few hundred dollars can buy very good.

To the individual consumer, prices are high and low also have a different understanding. A person who earns 10 million yuan a year and spends 10,000 yuan on a bag may not consider it a luxury. However, since an ordinary bag on the market that can fulfill the loading function of a bag is around $100, spending $10,000 on a bag is already 100 times the price of an ordinary item in that category, and we still call this $10,000 bag a luxury item, even though this $10,000 is a drop in the bucket for someone with an income of $10 million.

With the development of society and economy, the role of luxury goods will also change, the luxury goods in the past may become necessities now, and the present luxury goods may become necessities in the future. In the 1970s and 1980s, the cell phone "Big Brother" was a luxury item that cost tens of thousands of dollars, which was the income of an average Chinese worker for more than ten years. With the advancement of technology, the price of cell phones has gradually come down, and cell phones have become a necessity and affordable for the toiling masses.

Two, the luxury industry is profiteering, and hunger marketing is popular.

The economic theory of demand tells us that the price rises and demand decreases. But luxury goods are contrary to this economic theory, the higher the price of these show-off goods, the better the sales.

There's a marketing story. A clothing spot put up a shirt with a price tag of tens of dollars that didn't sell for a long time, so the store owner changed the price tag to a few hundred dollars, and it sold quickly. This is to satisfy people's psychology of showing off consumption. This is the reason why luxury goods are so expensive. The price elasticity of the demand for luxury goods is reversed, i.e., the higher the price, the better the sale, and the lower the price, the worse the sale. In fact, many people who buy luxury goods do not know how to appreciate these exquisite goods, they only recognize the price.

So, different luxury brands have their own consumer positioning, Louis Vuitton and other European luxury brands are locked in the richest 3% of the family; and Coach in the United States is the potential customer base positioned in the richest 20% of customers, which is supposed to be a luxury brand in the "popular goods", the general middle class, the middle class can afford to spend money even if they bite the bullet. The middle class in general can afford to spend money even if they bite the bullet.

Hunger marketing. Generally speaking, the price of a commodity is positively correlated with its scarcity, i.e. the rarer the commodity, the higher the price. In order to ensure the scarcity of luxury goods, some luxury goods manufacturers have rationed their production, and even if the market demand is high, they will not produce more than one piece, so as to avoid letting their luxury goods become big street goods.

In addition, the design of luxury goods is often very unique, which aims to be "new" and "stand out from the crowd", and make itself distinctly different from the necessities and even other brands of luxury goods. Luxury goods are made of high quality materials, durable and with excellent performance, but no matter how good the quality of luxury goods is, they are not hundreds or even thousands of times more expensive than the necessities. So luxury goods are generally priced at a windfall.

While luxury goods are profitable, the accounting statements of several luxury goods manufacturers show that their profits are not particularly high, and their pre-tax income is about 30% of their turnover, mainly because luxury goods have to invest a lot of money in advertising and promotion, and to hire models and to organize exhibitions, which require a lot of money to be spent. In addition, they have to spend a lot of money to fight against counterfeiting. For example, Louis Vuitton has 12,000 intellectual property rights for trademarks, designs and copyrights***, has recruited 250 people around the world to be in charge of intellectual property rights protection, and launches tens of thousands of anti-counterfeiting raids every year. 2012, Louis Vuitton launched 13,800 anti-counterfeiting raids around the world, filed 33,258 legal actions, more than 2,000 fake Louis Vuitton websites were closed, and more than 100,000 online auctions were held. More than 100,000 online auctions were stopped.

Three, Chinese people buy nearly half of the world's luxury goods

Luxury goods consumption changes with the market trend. In the good years, the consumption of luxury goods is high; in the bad years, such as economic crisis, the consumption of luxury goods will decline. 2000 was a good year for the consumption of luxury goods, and the total sales of luxury goods in the world amounted to 170 billion US dollars, and alcohol accounted for the bulk of the sales, including whisky, champagne, and French brandy.

The world luxury market has continued its upward trend over the past few years, but 83 percent of luxury goods are consumed by China, Japan, the U.S., Russia, Germany, Italy, France, the U.K., Brazil, Spain and Switzerland. The luxury market in 2015 is expected to be $290 billion.

Mainland China, which overtook Japan as the world's largest luxury market in 2012, is expected to generate $27 billion in luxury sales in 2015, accounting for a quarter of the world's total luxury sales. When Hong Kong, Macau and Taiwan are added, Chinese purchases accounted for one-third of the total luxury goods sold in the world.In 2019, China accounted for more than 40 percent of the world's total luxury sales.

According to a report by McKinsey & Company, about half of the luxury goods consumed by Chinese people are purchased outside China. The luxury goods that Chinese people buy overseas are mainly bags, cosmetics and watches. The survey showed that only 3 percent of respondents in Hong Kong, Macau and Taiwan said they went to Europe to buy luxury goods in 2009, and the percentage increased to 20 percent in 2012.

Fourth, the control of luxury consumption in various countries

Many countries regulate and restrict the consumption of luxury goods, such as the U.S., Australia, Vietnam, Chile, Azerbaijan and other countries on luxury cars, yachts, jewelry and other luxury goods to impose a luxury tax (some countries call the "Some countries also prohibit the advertisement of luxury goods or the sale of certain luxury goods.

In 1992, the United States introduced a law banning the sale of luxury showerheads within the U.S. Showerheads required by U.S. law must dispense no more than 2.5 gallons (9.5 liters) of water per minute at a pressure of 80 pounds per square inch in order to reduce consumption of water and energy.

In November 1991, the U.S. federal government's Luxury Tax Act went into effect, which was designed to reduce the tax burden on the poor and cut the deficit by taxing luxury goods. The tax is levied on high-end watches, furs, yachts, private jets, jewelry and luxury cars. For example, a 10% luxury tax is levied on yachts selling for more than $100,000, cars selling for more than $30,000, airplanes selling for more than $250,000, furs selling for more than $10,000 and jewelry. Because the tax law didn't reach the expectations of Congress, it has since been adjusted and now imposes a 10 percent federal luxury tax only on automobiles that exceed $30,000

Fifth, the control of luxury goods consumption in various countries

1, China's Beijing Association of Industry and Commerce also issued a ban:

From April 15, 2011, outdoor advertising is prohibited from appearing in "luxury

Beginning on April 15, 2011, outdoor advertisements will be prohibited from using the words "luxury," "royal," "superb," and "upscale," or the companies involved will be fined 30,000 yuan. The Association for Industry and Commerce believes that such advertising encourages an "unhealthy" culture.

2. In February 2013, Chinese radio and TV stations also banned advertisements for expensive gifts (luxury goods).