The weird world of aspirational goods
Seriously, 12,500 euros? For a phone? Ah, welcome to the world of aspirational economics, where people want things to project an image of wealth, and in effect, keep up with the Joneses. Think of it like this - you've moved, and are having a party where you invite your neighbors. Not only do you clean up the place, you project your lifestyle as just a wee bit above what it actually is. Thats entirely in keeping with the human condition, and is something that all of us do.Vertu, started by Nokia Oyj (NOK1V)’s then-chief designer Frank Nuovo in 1998, has sold more than 300,000 phones in the last decade and seen “high double-digit sales growth” since the start of 2010, President Perry Oosting said.[...] success is largely due to surging demand in the Persian Gulf, Russia, China and other status-conscious emerging markets,Bloomberg Businessweek reports in its Oct. 3 issue. The phones sell for an average of more than 5,000 euros ($6,800), but top-end models, such as those in Vertu’s Signature line, cost as much as 12,500 euros.
Whats fascinating about aspirational goods though, is that, by definition, you can never be satisfied! No matter how much you make, and what you get, there is always a new peer group for you to compare yourself to. When you made $50K/year, you wanted a 3-series BMW. Now that you make $100K you want a 5-series. At $300K, the BMW is passe, but you need to fly business-class all the time. And so on, and so forth.
And oh, don't think that Billionaires get some sort of free pass - have you seen the sort of insanity that they get up to? Think insanely expensive yachts, custom jets, etc.
Note that Veblen Goods (also called Snob Goods) are classic examples of this type of thing.
And that brings us back to the Vertu phone - something that makes absolutely no sense from any perspectve, except the one that sez either of
- I have one too, or
- I have one and you don't
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