When I was living in Korea, one of my friend's dad was in charge of marketing for L'Oreal in Korea. When L'Oreal first arrived in South Korea, it faced poor sales and limited demand by the Koreans. This perplexed my friend's dad because there would be no reason for Koreans not to buy L'Oreal as it provided quality cosmetics as decent price.
So what's the problem with that?
Well, it turns out that the affordability was exactly what was causing the problem. Koreans place the quality of a cosmetic based on the price and will buy more of a product if the price is higher.
That's a bit different from what we all learn in ECON 101. I was always told that as price decreases, demand increases.....right?
As it turned out, as soon as the L'Oreal raised their prices, Koreans began buying a lot more of L'Oreal cosmetics. This strategy worked so well that L'Oreal is now one of the most frequently purchased cosmetic brand in Korea.
L'Oreal in Korea |
In addition, it is also important to look at all aspects of a product (remember the 4 P's!). Just because the Product itself appears to have a demand and all the changes have been made to the Packaging, the Price and Promotion also need to be considered as important aspects of the marketing.
What Do You Think: Can you think of any other products that as the prices increases, the demand also increases?
Without research, most would assume that the higher priced items MUST be better, especially if they have pretty packaging. I think as the price for most luxury items goes up people want it more!
ReplyDeleteWithout research, most would assume that the higher priced items MUST be better, especially if they have pretty packaging. I think as the price for most luxury items goes up people want it more!
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