Why does Louis Vuitton not fit within the constructs of the economic Law of Demand?

Question

The law of demand states that the higher the price, the lower the demand and the lower amount of sales that the company experiences. This is to the contrary for luxury brands such as Louis Vuitton who charge so so much money for even the smallest items. Their demand is great because so many people want to buy their items. I even think that LV wouldn't even be so demanded if they were a cheap brand like Wranglers or something. Why is this so? The same dynamic applies to A Bathing Ape, Gucci, and other such brands.

Answer 1

Louis Vuitton is a luxury good, and yes, there is a another equation where it fits inside the law of demand. The Income elasticity of demand. When people get richer, or have increased income , they afford to pay luxury goods.

Let's assume that the market for Louis Vuitton is made up of rich people only-it's almost true.If the quantity demanded does not much change or remain the same, then economics call this phenomenon . No matter what happen to price, quantity remains the same.

Then I agree with some answer saying it's a lot about brand power, celebrity endorsements (marketing) and trendsetters.

Answer 2

You are making a very bad assumption in your question!

Your question says "The law of demand states that the higher the price, the lower the demand."

But the law of demand ALSO states (by inference) that as demand goes up, thus so does the price!

Now it of course would likely follow that this would mean supply goes up, and in the case of LV or others that is not the case.

But you aren't just paying for a handbag or some luggage when you buy LV. You are paying for quality, and yes, the name and the status owning their product gets you. You can't look at another analogous product from another company and just say "well that company has a bag for 100, why do people pay 1000 for LV?!" The thing you have to realize is that LV purely as a product starts out at a much higher price level, and then demand fluctuates *from there*. LV still responds to supply and demand just like any other company, but when youre making a bag out of much nicer materials, and having them handmade, etc. you set your price point higher to begin with...

Answer 3

Because people are consumers and there are a lot of dumb people that will pay any price for what is "popular". Most mass produced products are cheaper because the majority of people cannot afford the designer brands so there is a huge demand for the cheaper stuff. Therefor the cheaper they can offer it for with the highest level of consistancy the better. However, the designer brands are great con artists because they have managed to convince people that they are the trend setters (even though no one actually wears all that crap they show at the fashion shows with the big feathers and stuff made out of garbage etc...). Basically it is a big scam and people are too stubborn and/or dumb to see through it.

Answer 4

Products can be categorized as normal goods, substitutes, complementary and exemplary. Out of all this exemplary goods like Mink coat, LV, Gucci etc; have upward slopping demand curve which means the more the price the more of such items are demanded. It is the charecteristics of Exemplary products and LV happens to be one. All others have downward slopping demand curve.

Answer 5

Louis Vuitton and other designer producers do not fit because they set the trends that people follow. There is not an original demand for the product but because people trust the name, they trust the quality of the product they are purchasing.

Answer 6

Obviously the "law" did not take the hype and trendiness into the equation.