Friday, August 27, 2010
an article in which it was shown that fashion houses also send out their opponents’ products to sub-lebrities, that is, those people at the lower end of the celebrity spectrum with whom the fashion houses would rather not have their products associated in case it jeopardises their brand. You get your opponents' customers to see that some loser sub-lebrity has their branded goods, which makes those customers come and buy your goods instead. Eureka!
What do they need to do to get out of this situation? As someone who doesn't consume these goods, I don't really care, but the consumers of the goods should because the costs are probably going to be passed on to them (depending on the elasticity of demand for these goods, which might be quite great given that they are luxury goods). Anyway, I suspect that they would like to alter the game so that the incentive to anti-brand is removed. I suspect, though, that now all firms have done it, there is no credible way to get rid of it. All the firms will continue to do it, in the interests of attempting to get more market share, but ultimately damaging their profitability because if everyone does it, no single firm is likely to improve their market share. Doh! Did no one at Gucci or Prada study game theory? What's probably even more frustrating for a consumer of these goods is that the outcome is not like the breakdown of cooperation in a cartel in which consumers might eventually benefit from lower prices, here, instead, consumers may suffer. Poor fashionistas! Your Prada, Gucci and other famous brand's will cost more now.
Images: Gucci Bag from guccigoods.com, Snooki trio from americanchic.net