Products can be classified into necessity products (things we need) and luxury products (things we want). Consumers show different buying behaviour for each product type. If you take advantage of these behaviours, you can sell more products.
Things We Need
When people are buying necessity products, they become sensitive to product prices. In fact, when prices of necessity products such as gasoline or groceries go up, everyone hears about it on TV. However, when the prices of Ferraris go up, you rarely hear about it on the newscast. People don't want to buy necessity products. They buy them because they need them. People don't want to spend money on them and, as a result, become sensitive to their prices. We tend to think necessity products can be sold at rip-off prices. However, the truth is that you can't rip people off by selling necessity products.
Things We Want
On the other hand, people will pay big money for products they want. If people don't have money, they will even get a loan to buy them! Human desire plays a big rule in buying of luxury products. If desire is high, a person will spend money on products that are priced so high its criminal. For example, even if prices of Ferraris suddenly doubled (ridiculous to people who want a Porsche), if someone really wanted a Ferrari, they would pay twice as much. If you can peak buyers' desires, you can sell luxury products at high prices. You don't need to compete on prices against other stores. All you have to do is drive customers' desires!
The question is not whether necessity products or luxury products are easier to sell. The point is to understand what affects the ability to sell them. Then, you can use this knowledge to leverage sales. Neither selling necessity products at a higher price with added beneit nor selling luxury products cheaper than competitors is going to allow you to survive the competition.
© August, 2011