IS PAYING MORE EQUIVALENT TO BETTER PRODUCTS? PERCEPTION?

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Skechers : The brand that once was the main brand of shoes my wife and I wore; is now no longer the brand of footwear for us.

It was a brand that we could rely on for reliability, comfort and superior quality. Until about 10 months ago.

These shoes have become the cause for the many blisters on my feet, heels and surrounding areas. I have tried reaching out to Skechers both locally and at their headquarters in the U.S. but I have not got any response from them. It has been almost a year. Yet, even with these injuries(?), we still continued to use this brand of footwear.

It looks like their current model range of shoes don’t last very long – the most common problem being a tear at the front side of the shoe near the joint between the top (upper) and the sole. They tear quite easily. I believe Skechers are using different or lower-spec (sub-quality?) materials (at least for the Asean region) in their manufacturing process.

Skechers have been and probably is still a good shoe manufacturer. Now, with their “S” logo tearing off from the side of their shoes being quite a common feature, the question of the quality of their products is growing bigger.

One does tend to wonder if Skechers buys up a model range or several model ranges from other, smaller, not so famous, no budget for brand advertising, cottage industry manufacturers, and just slap their famous “S” logo with glue to the sides of these shoes and call them their own. There is absolutely nothing wrong with that. It is just that for the premium it prices its products at; the consumer will expect more.

So, for the first time in 6 years; I have chosen Timberland over Skechers. To be fair to Skechers, Timberland had the model that I was looking for. It was also a change from the black, blue and grey colours most common on Skechers men’s shoe lineup.

THE VEBLEN EFFECT

At 23, Julius Caesar was a junior politician on the way up – and he had substantial advantages: Confidence and Brains!
While sailing across the Aegean Sea, he was captured by Sicilian pirates. They demanded a ransom: 20 talents of silver. That is about 620 Kg, worth about $600,000 today.

Caesar told them they were being ridiculous. He couldn’t possibly allow himself to be ransomed so cheaply. The pirates hesitated; they were confused. Caesar insisted the ransom must be raised to 50 talents of silver –around 1,550 Kg, worth about $1.5 million.

Now the pirates had no idea what to make of this. Normally, their captives tried to escape as cheaply as possible. They didn’t understand what was going on. But, if he said he would double the ransom, why argue?

They let Caesar’s men go back to Rome to raise the money. And in Rome, in his absence, Caesar suddenly became very famous and well known. No one had ever been ransomed for such an enormous sum ever before.

People assumed he must be someone very special; he must be incredibly important. Thus did the demand for such an enormous amount of silver for ransom put Caesar on the political map and made him famous.

He had just invented ‘The Veblen Effect’. Although Thorstein Veblen wouldn’t give it that name for another 2,000 years!
Interestingly, the Veblen Effect is an illusory psychological strategy that has been in use for generations – for thousands of years. It describes the phenomena wherein consumers perceive higher-priced goods to have greater value and be much better than they actually are … simply because they cost more!

Ironically, despite all the knowledge, technological advancement as well as awareness and detailed understanding of it, the Veblen Effect continues to persist.

There are many examples besides Skechers… Rolex, Cartier, Bentley, Rolls-Royce, Aston Martin, Louis Vuitton, Christian Louboutin, Harrods, Cristal Champagne, etc.

These products may not be any better – functionally – than their cheaper alternatives, but their high prices alone make them seem better, more valuable and therefore much more desirable.

Caesar effectively made himself a Veblen brand. He placed a much higher value on himself than anyone in Rome. But, as far as anyone in Rome knew, it wasn’t he who had done it; It was an independent valuation, which made it credible and authentic. And because Caesar was now so highly valued, his men had little trouble raising the ransom. They returned to the island and freed him.

But Caesar wasn’t going to allow the pirates to keep that sort of money at all. As important and famous a man as he had become, it was easy to raise a huge force which he used to hunt down the pirates and take back all the money, plus everything else they had pillaged, and then execute all of them.

Thus, Caesar became both very rich and very famous.
In time, with that same combination of confidence and intelligence, he became the ruler of all Rome. And he presided over the golden age of the Roman Empire.

Expanding it from Spain to Germany, from Britain to the Middle East. Because Caesar understood that reality begins in the mind.

So, the most important piece of real estate in which to stake a claim is the human mind.
How you stake a claim in the mind is by creating a perception. And how you create that perception is by controlling the context.

Control the context and you control the mind.
Control the mind and you control reality.

A very good example of ‘The Veblen Effect’ is Johnnie Walker Double Black Scotch whisky!
The basic JW Black is labelled as being at least 12 years old scotch. But JW Double Black has no age statement!
Nonetheless, JW Double Black is sold at a higher price than basic JW Black based on the perceived notion that ‘double black’ must be much better than just ‘black’, and that is reinforced by Double Black being much costlier than Black! That is how the human mind works.

In reality, no one knows what is so special about Double Black, except that the label claims it to be very smooth; Without actually saying it is smoother than Black!

Many believe that this is simply a marketing strategy to pass off un-aged scotch at a much higher price, through the Veblen Effect!

And that is how the Veblen Effect, when properly implemented, becomes a highly successful and profitable marketing strategy … to separate consumers from their hard-earned money while simultaneously leaving them feeling good about it –

Think about it. How profound these statements are:
The most important piece of real estate in which to stake a claim is the human mind. How you stake a claim in the mind is by creating a perception. And how you create that perception is by controlling the context.

Control the context and you control the mind. Control the mind and you control reality.

When this is put into perspective, advertising and marketing campaigns aim are designed to control reality. Or are they designed to deceive reality?

For almost as long as I can remember; I always believed that Rolls Royce and Bentley cars were always stately vehicles, remaining in showroom condition no matter what the age of these vehicles were and how they were used. Until about 6 years ago, I stumbled about the “graveyard” – the graveyard of Rolls Royce and Bentley cars in Bandar Sunway, Subang Jaya. (1) Here, there were at least 10 of these cars of various models in various stages of being scrapped, rusty or scavenged for parts. Windshields broken, parts of dashboards, meters, ornaments, the winged flying lady (Rolls Royce), parts of the engines, etc.; rummaged, removed, broken off, flicked (stolen) – all gone.

These “heavens” on the road were nothing more than heaps of junk now. This was a reality check for me. I have to admit that I am still guilty – I am still in awe when one of these opulent ornaments drive past me.

38 years ago, a friend let me “test-drive” his elder brother’s brand new BMW 520i (e28). Putting the 520i through its paces, it effortlessly moved up to the 70mph mark and cruised at that speed. And it still had 50% more power to tap. I was sold. I declared that when I have the money, I will buy a new BMW.

In February, 2000; I took delivery of my first new BMW 318i(A) with its tagline, “Ultimate Driving Machine”; stickered on the rear windshield. It was a premium price to pay for a car. It was a nice car to drive, but I didn’t go so far as to agree with that tagline. BMW – the brand; was touted as a performance car, with race bred credentials. Maybe, it’s big brother models were; this was more a smooth tourer. I was excited to having owned my first BMW.

One of the BMW distributor company’s top management executives said to me, “Now, you have arrived”. I took offence to that statement. I asked, “Why? Is it because I now own a BMW that I have arrived?” I corrected him saying, “On the contrary. It is because I have arrived that I have decided to own a BMW. I decided on purchasing a BMW because I am successful. BMW did not make me successful. BMW has arrived because I am successful”.

A few years ago, Malaysia invested (paid) about RM1 billion in the purchase of Russian military aircraft. Included in the deal was to send the first Malaysian man, an orthopedic surgeon (scientist?); to space, to the Russian space station. He was to carry out an unbelievable task – to test if nasi lemak (2) could be eaten in space (well, that was what was going around in the local buzz). And perhaps, some other less significant tasks.

On his re-entry into earth’s space, it was reported that the samples which he was bringing back, fell and broke. That was the end of that. But Malaysia “gained” its first cosmonaut. – The Veblen Effect?

Reflecting on the question, “Is paying more equivalent to better products? Perception?” Or the statement “Willing seller, willing buyer” the leverage in decision making?

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Having fun. Light moments. Questions, questions. Just pondering…

NOTES:
1. Subang Jaya is a city in the state of Selangor, Malaysia.
2. Nasi lemak is a dish originating in Malay cuisine that consists of fragrant rice cooked in coconut milk and pandan leaf. It is commonly found in Malaysia, where it is considered the national dish. It is also the native dish in neighbouring areas with significant Malay populations such as Singapore, Brunei, and Southern Thailand. In Indonesia it can be found in several parts of Sumatra, especially the Malay regions of Riau, Riau Islands and Medan. Nasi lemak can also be found in the Bangsamoro region of Mindanao, prepared by Filipino Moros, as well as Australia’s external territories of Christmas Island and the Cocos (Keeling) Islands. It is considered an essential dish for a typical Malay-style breakfast. Nasi lemak is featured as a national dish in most of the country’s tourism brochures and promotional materials. Wikipedia
3. “The Veblen Effect” section was written by someone else. I seem to have lost the citing for this section.
fig.1 examples.yourdictionary.com

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