I’ve said many times over the years that I have built a career selling things that no-one really needs. Perhaps a strange thing to say but there are, of course, many factors to take into account with that statement.
In the high-end luxury market, ‘not needed’ could mean a villa or a private jet and it comes down to the psychology of the high-end buyer – be that based on desire, status, comfort and so on.
There have been plenty of studies into the psychology of purchasing luxury items. One by the California Institute of Technology (Caltech) and Stanford University found that people not only rated a wine more highly if they were told it was more expensive, but MRI scans of their brains found that they appeared to enjoy drinking it more.
Also, Michael Norton, a psychologist, professor of business administration at Harvard and author of Happy Money: The Science of Happier Spending, studied how price and perception influence our purchasing decisions. He surmised that if a luxury item is twice the price of a more mainstream product, they actually find the experience of owning it more than twice as pleasurable.
So, for example, a 10,000euro bottle of champagne would be more than twice as pleasurable as a 5,000euro bottle, though I’m sure a 5,000 euro bottle would be fantastic. We are motivated to spend because we are seeking this high experience. Just as with Caltech’s wine experiment.
And, by collecting memorable experiences like this, consumers establish a sense of accomplishment, progress and enjoy an enhancement in their sense of self-worth.
For me, a big part of the psychology of luxury car buyers is diversification; the desire to be different – and better – than the average person. They may want to be seen as having a higher status than their peers by being seen with a more expensive, more luxurious car, more unique car – a true one off. While some spend big simply to show others that they are rich and / or successful.
The other element could be a more pragmatic one, with the perception that a luxury car would be better looking than a normal car; it would have better technology, better safety, better comfort and generally be better in every way.
I think the biggest reason is the simplest of all. People purchase luxury goods because it makes them feel good – they believe it will make them happy. Although, once again, the amount of happiness one gets from spending money on luxury goods depends on how you spend it, not necessarily how much you spend.
Exactly when a customer decides to make a luxury purchase is also down to many factors. What makes him or her decide to finally take the plunge and buy depends on their mood, their environment, peer pressure or simply the level of desire they feel for the product.
At ARES, we have seen this in sharp focus during the last year. I have seen a direct consequence of the pandemic in terms of impulse buys. I think people are frustrated and annoyed at having to stay home, work from home, be restricted in their movement and restricted in everything, actually.
When we finally get the opportunity to go out and sit in a restaurant, we will go as soon as we can. Similarly, if there is an opportunity to buy something in these times, you simply buy it because you need a distraction, something different from the restrictions we are all currently under.
At ARES, we have seen an increase in sales during lockdown and I believe this is down to opportunity also – our customers simply have more time to engage with our sales teams, more time to consider what they want. And, when lockdown finally ends, our customers will also be able to visit us in the beautiful environment of our new salon showrooms, enhancing the experience of working with ARES even further.
Meanwhile, with spending in general difficult because of the restrictions of lockdown, their bank accounts may be relatively healthy and buying a luxury car is a way of using that bank balance to give a gift to themselves, offering them a respite from the boredom of lockdown.
Moreover, I think ARES benefits from the individuality I mentioned above. If you are wealthy enough, you can talk to the likes of Ferrari, Bugatti, Porsche etc any day of the week. These brands are already part of our everyday lives. But to engage with a lesser-known brand like ARES, you have to encounter it with a more personal experience.
That is exactly what we offer at ARES but, again, the psychology of whether or not you buy is down to many factors including mood, environment and the people around you. If we create the right experience – as I think we have done with the opening of our very special new salon-style showrooms – then the hope is that the customer buys something they desire, but that they don’t necessarily need.
Nella foto: the Elkhart private collection.
Dany Bahar – February 2021