Psychology of Spending: Where Does Belt-Tightening Begin?
The Psychology of Spending analyzes consumer’s ideals of the scarcity principle – in which, consumers are mentally forced to buy certain brands as they have before. The high costs of their choices make no difference even after their economic status is not as unique as it was once before. For example, the Water-Diamond scenario in which we will pay thousands of dollars for a diamond, but we will not pay thousands of dollars for a bottle of water.
Our mental state of underestimating its value because it is a ‘need’ makes us consider it invaluable by numbers. Every consumer has encountered these kinds of thoughts pertaining to their buying habits in different perspectives. We could also address the issues of supply and demand. Luxury goods are in demand because of the advanced technology we are experiencing in our New Economy. We have found ourselves trapped in securing the newest trend because of the gadgets, computers, cell phones, and other accessories around us everyday.
You can notice these triggering children to purchase their own cell phones because it is now a need – not a want. Cell phones have trampled into the same estate as water in the water-diamond scenario. We consider cell phones as invaluable goods for keeping in touch with our friends and family around the world. The ultimate ‘need’ comes from feeling inadequate or isolated without one so our demand increases to where we must purchase accessories as well. According to the article, the high-end wants are really needs now due to the vanity and exposure to as many choices as possible. Consumers have more than enough to consider when they want to buy products. Generic products are slowly, but surely losing the interests of these buyers.
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The marginal utility of large net worth has declined as more and more luxury goods are being produced. As aforementioned earlier, the demand for luxuries has increased and the suppliers are interested in increased sales – so they have given the strength of the ‘scarcity’ rule away to growth. For example, they could increase the price of their merchandise if every high-end retailer produces no more than 40,000 units of their product.
The product’s marginal utility will remain at its best possible light to the consumer’s eye. A well-known factor, which was mentioned in The Psychology of Spending, is the wealthy household’s attempts to buy large amounts of land no matter what the economic status is. Other issues arise in comparison to their counterparts in the luxurious industries.
Some indirect factors that corner the marginal utility of luxury goods is the quality of the resources used to produce the goods. If the quality of the resources is reduced, the probability of increased sells could remove the ‘high-end’ aspect of the products. We will be used to the products and then ‘anyone’ can get it so it will not be considered high quality or high-end anymore. Properties over the $10,000,000 are probable to a decline in net worth if more products are created with their same unique characteristics.
More interest rates will appear viable to the consumers, but their efforts in securing the products will increase due to their ideal of ‘scarce’ resources available. A discontinuation of a certain production will and could, harness the power for its collectibles to cost more. According to the Psychology of Spending, the monetary means or sense of superiority means a lot to the public. We are more than anxious enough to buy the newest trends without a second thought. If the new trend costs more than our capabilities, we will have to worry about the possibility of not ‘being in style’.
The article’s outline of the economy during 2000 would be changed in today’s time. Our nation is experiencing a new, inaccurate development in which prices are increased due to the war. We, as consumers, have changed our buying habits a little bit but not much compared to the purchases made in 2000. Newer, faster, and cheaper products have caught our attention and the internet’s flourishing marketplace has given all consumers – wealthy and lower income- the same opportunity to buy these goods.
As a mechanism to the psychological attachment to more money means more power, we can conclude that all high-end products are being purchased about 2% from the higher-income families. A majority of these implications can trigger a more thorough understanding of why the lower-income families are attempting to buy these products as well. None the less, their ability to manufacture or overproduce these products has lost its initial marginal utility it once had.
In today’s society, these products do not create a ‘high’ as they once did. The consumers know that anyone can buy it at any price. Discount retailers have placed some sophisticated names on the shelves to attract their income counterparts for more information. We can expect this to continue until many consumers decide that their labels mean nothing – naturally.
Some of the best products are left to the generic manufacturers whom will need those materials for a competitive advantage. As remarkable as this change is to our society, the distinctive features of these high-end products are slowly leaving the market. Imitative strategies have stripped the meaning of ‘brand’ and consumers are still buying these products without regard to their tastes. More than enough companies are losing the whole perspective of re-establishing their economic strategy to remain at the top of their industry. We can only wish for our buying habits to sway into finding a more distinguished product to assist in our highs.
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Psychology of Spending: Where Does Belt-Tightening Begin?. (2017, Apr 06). Retrieved from https://phdessay.com/psychology-of-spending-where-does-belt-tightening-begin/
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