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What luxury marketers can learn from Coach’s mistakes.
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]Be honest: When was the last time you, or someone you know, had a Coach purse or wallet at the top of their wish list? It must have been around 1998, right? At one time, Coach handbags were all the rage. Yet, these days, amid competition from other accessible luxury retailers like Tory Burch and Kate Spade, Coach barely makes it onto the stage. That trend is backed up by some seriously scary numbers: Turns out, Coach’s stock price plummeted by 30 percent in 2014, leaving the brand to wonder, moving into 2015, how it might re-bag its once loyal customer base.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]So, how’d this happen? In an interview with Marketplace’s Tim Fitzimmons last week, Dorothy Lakner, Specialty Retail Analyst with Topeka Capital Markets, blamed Coach’s troubles on a gradual, self-inflicted devaluation of its brand. Coach lowered the price of its handbags, then drove a large portion of business to outlet stores and flash sites. The result: Though the quality of its products remained high, Coach became more synonymous with discount goods than with the high quality products it actually produced. As Coach lost clout, it also lost customers.[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” bg_position=”left top” bg_repeat=”no-repeat” scene_position=”center” text_color=”dark” text_align=”left” class=”no-labels”][vc_column width=”1/1″][vc_column_text]
[/vc_column_text][vc_column_text]Stuart Weitzman flagship store in Milan. | Courtesy of Zaha Hadid Architects. Find her at https://www.artsy.net/artist/zaha-hadid
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]Enter our knight in shining armor, Stuart Weitzman. Last Tuesday, Coach announced its acquisition of the luxury shoe brand for $574 million. The idea, according to most experts, is to attempt to re-associate Coach with the luxury status the Stuart Weitzman brand still enjoys (Kates Moss and Middleton are Weitzman wearers). Coach hopes coupling with a still-hot luxury shoe brand will bring discerning customers back to its stores.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]
What does this have to do with homes?
When it comes to home pricing, the same rules apply. If a home doesn’t sell, often, the first instinct is to lower the price to entice buyers. However, as was the case with Coach, lowering a home’s price too often and by too much has the opposite psychological effect of that which is intended. When the price of a luxury home is lowered, buyers begin to mentally devalue the property. They start to view it as unworthy or less desirable and, in so doing, decide not to buy.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]OK, true, this all sounds like speculation. But the phenomenon has been documented. Consider a case study found in Robert Cialdini’s popular book, Influence: Science and Practice, wherein a jeweler accidentally doubled the price of a line of Turquoise jewelry she was having trouble selling, only to see it fly off the proverbial shelves after the markup. By raising the price, the jeweler also raised the perception of the jewelry’s value, thus increasing the demand and the consumer’s willingness to pay. And voila! Not just a sale, but a sellout, ensued.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]The moral of this little tale is, when it comes to home sales, creating the right context around your home’s image pays off much more than price drops. Rather than lowering your price point, defend it. Don’t just list the home: Invest in the kind of high-end marketing strategy that elevates the home’s profile and reflects its value in the marketplace. Make sure the real estate agent you choose moves and shakes within the social circles your ideal buyer travels in. Defend your high price point to attract a discerning buyer willing to pay for quality instead of lowering the price to attract buyers swayed by discounts. The sooner you buy into the psychology of effective pricing (and price defense) the higher the payoff will be.[/vc_column_text][/vc_column][/vc_row]