Another Quiet Day

When Miss Rogue Witnessed the Death of Price Elasticity of Demand

Miss Rogue/Tara Hunt said this here thing:

God, it felt good. I was so excited. And you know what? It worked. Girlfriends came by and, post washroom visit, we talked about the products...exchanged stories ("I found the lipstick a bit too matte, I would try Chanel instead.") When I went to that dinner, I would pull out my compact and check the teeth and hear, "I loooove GoSmile! Can I have one?" The experience from the store translated beyond and I didn't regret spending that grotesque amount of money on makeup at all.

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Tara has run there smack dab into the New Luxury phenomenon. Essentially a bunch of companies have figured out that if they do the job right, flatter their customers and deliver a product that isn't crap, they can actually charge a much higher price (but still low enough to be affordable by the middle classes) and yet have higher sales, than their mid-list counterparts.

You can credit Michael Silverstein and Neil Fiske and their book Trading Up for this discovery.

It's very well argued in the book.

And, yes. It is very relevant to modern "web 2.0" companies and their business models and it is a wonder than none of them have applied the concept.

(Not that the companies that Tara and the crowd at the Citizen Agency need advice. The companies they consult are in good hands.)

Baldur Bjarnason – 19/8/06