A certain bag at Prada was once the fastest selling product and gave Prada the bulk of its profits. The then management decided to, at the peak of its success, increase the price of that product by 3 times the original price! Most people disagreed with the step and called it an immature decision. But it was implemented and the sales, by volumes increased by leaps and bound...so one can imagine what would’ve happened to the revenue.
... My take on this...
This may seem over-ambitious and impulsive to some, but to me it seems like the most sensible and thought through strategy. It is based on the principle of one of the most basic human needs, lust. Just like in a man-woman relationship, when you know that someone loves you... the harder you play to get, the more you are desired and the other person will try and do anything to have you. Or in the case of a child... you show him a candy, let him taste it and then take it away and ask him to finish his/her homework. Even if s/he hates it, they will finish their homework and do whatever you want to be able to have that candy.
In exactly the same way, the Prada bag, had reached a stage where it was loved by all and people really really wanted it. In such a scenario, when you know that people want you, if you hike up the cost, and play hard to get, it will entice the consumer even more. The consumer will then stop at nothing to have you. Because when the product seems unattainable, it’s even more desirable. There’s a saying in India... “magarmach ko khoon chatana”... it means that you let the crocodile taste your blood and then try to run away...well, there’s no way the crocodile will let you go! The Prada bag was blood that people has tasted, and now, they weren’t going to let it get out of their hands!
Hence, people will now spend even more to get that bag and if need be, will justify to themselves the price, by compromising a bit on some other purchase, in a different category. But this emotion of greed at a moment like this, is far more powerful than any rational justification and hence, price ceases to become a barrier.
