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Socioeconomic significance 18 or more karat gold jewelry is an example of a luxury good. Several manufactured products attain the status of "luxury goods" due to their design, quality, durability or performance that are remarkably superior to the comparable substitutes. Thus, virtually every category of goods available on the market today includes a subset of similar products whose "luxury" is marked by better-quality components and materials, solid construction, stylish appearance, increased durability, better performance, advanced features, and so on. As such, these luxury goods may retain or improve the basic functionality for which all items of a given category are originally designed. There are also goods that are perceived as luxurious by the public simply because they play a role of status symbols as such goods tend to signify the purchasing power of those who acquire them. These items, while not necessarily being better (in quality, performance, or appearance) than their less expensive substitutes, are purchased with the main purpose of displaying wealth or income of their owners. These kinds of goods are the objects of a socio-economic phenomenon called conspicuous consumption and commonly include luxury vehicles, expensive watches and jewelry, designer clothing, yachts, and large residences, urban mansions and country houses. Market characteristics Some luxury products have been claimed to be examples of Veblen goods, with a positive price elasticity of demand: for example, making a perfume more expensive can increase its perceived value as a luxury good to such an extent that sales can go up, rather than down. Although the technical term luxury good is independent of the goods' quality, they are generally considered to be goods at the highest end of the market in terms of quality and price. Classic luxury goods include haute couture clothing, accessories, and luggage. Many markets have a luxury segment including, for instance, automobile, wine, bottled water, tea, watches, jewellery, High fidelity and chocolate. Luxuries may be services. The hiring of full-time or live-in domestic servants is a luxury reflecting disparities of income. Some financial services, especially in some brokerage houses, can be considered luxury services by default because persons in lower-income brackets generally do not use them. Luxury brands Armani is an example of a luxury brand for clothing. A luxury brand or prestige brand is a brand for which a majority of its products are luxury goods. It may also include certain brands whose names are associated with luxury, high price, or high quality, though few, if any, of their goods are currently considered luxury goods. Another market characteristic of luxury goods is their very high sensitivity to economic upturns and downturns, high profit margins as well as prices, and very tightly controlled brands. For example, following a nearly crippling attempt to widely licence their brand in the 1970s and 1980s, the Gucci brand is now largely sold in directly-owned stores. The Burberry brand is generally considered to have diluted its brand image in the UK in the early 2000s by over-licensing its brand, thus reducing its cachet as a brand whose products were consumed only by the elite. LVMH (Louis Vuitton Moet Hennessy) is the largest luxury good producer in the world with over fifty brands, including Louis Vuitton, the brand with the world's first designer label. The LVMH group made a profit of 2bn on sales of 12bn in 2003. Other market leaders include PPR (after it purchased the Gucci Group) and Richemont. A rather small group in comparison, the wealthy tend to be extremely influential. Once a brand gets an "endorsement" from members of this group, then the brand can be defined as a true "luxury" brand. An example of different product lines in the same brand is found in the automotive industry, with "entry-level" cars marketed to younger, less wealthy consumers, and higher-cost models for older and more wealthy consumers. The least expensive Mercedes-Benz sold in the United States is the C300 sedan at $32,000, and the most expensive model is the Mercedes-Benz SLR McLaren coupe at $497,000. Market size The luxury goods market has been on an upward climb for many years. Apart from the setback caused by the 1997 Asian Financial Crisis, the industry has performed well, particularly in 2000. In that year, the world luxury goods market which includes drinks, fashion, cosmetics, fragrances, watches, jewelry, luggage, handbags was worth close to US$170 billion and grew 7.9 percent. The largest sector in this category was luxury drinks, including premium whisky, Champagne, Cognac. This sector was the only one that suffered a decline in value (-0.9 percent). The watches and jewelry section showed the strongest performance, growing in value by 23.3 percent, while the clothing and accessories section grew 11.6 percent between 1996 and 2000, to US$32.8 billion. North America is the largest regional market for luxury goods: unlike the modest 2.9 percent growth experienced by the Western European market, the North American market achieved growth of just under 10 percent. The top ten markets for luxury goods account for 83 percent of the market, and include the U.S., Hong Kong, Japan, China, Germany, Italy, France, UK, Brazil, Spain, and Switzerland. Market trends The three dominant trends in the global luxury goods market are globalization, consolidation, and diversification. Globalization is a result of the increased availability of these goods, additional luxury brands, and an increase in tourism. Consolidation involves the growth of big companies and ownership of brands across many segments of luxury products. Primary examples include LVMH, Richemont, and PPR, which dominate the market in areas ranging from luxury drinks to fashion and cosmetics. Leading global consumer companies, such as Procter & Gamble, are also attracted to the industry, due to the difficulty of making a profit in the mass consumer goods market. Luxury Shopping Another phenomenon of the luxury market are "Luxury Shopping Avenues". Certain Streets like the Paris Champs Elysees or the New York 5th Avenue become global shopping windows and places where the luxury brands want to be represented. These retail districts concentrate luxury-type stores that are managed by large corporations, while conventional and independent retailers are pushed out because of increasing rent and real estate prices. See also Commodity fetishism Designer label Wealth effect References ^ he World Market for Luxury Goods. Global Market for Luxury Goods. Nov 1, 2001, March 5, 2007. <http://www.library.yorku.ca/eresolver/?id=984257> ^ isit 5th Avenue. <http://www.visit5thavenue.com> v d e Types of goods public good - private good (includes household goods) - common good - common-pool resource - club good - anti-rival good (non-)rivalrous good and (non-)excludable good complementary good vs. substitute good free good vs. positional good (non-)durable good - intermediate good (producer good) - final good - capital good inferior good - normal good - neutral good - ordinary good - Giffen good - luxury good - Veblen good - superior good search good - (post-)experience good - credence good merit good - demerit good damaged good - composite good - intangible good Categories: Goods BrandingHidden categories: Articles to be merged from December 2009 All articles to be merged All articles with unsourced statements Articles with unsourced statements from May 2009 Articles with unsourced statements from December 2009 We are high quality suppliers, our products such as China Removable Wall Stickers , Car Body Sticker for oversee buyer. 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