​Luxury Vs Essentials Vs Necessity

 ​Luxury Vs Essentials Vs Necessity

All the goods that are manufactured, sold & used fall under these three categories, either they are luxurious items, or are essentials for a normal life or they are a must & a necessity to survive.

The economy of the entire world, irrespective of the nation, their ethnicity, GDP, economical evolution & per capita income, keeps revolving around these three categories.

Let us have some examples:

A) Mobile phones in today's time can be considered as an essential item but then top brands in the segment are luxuries, everybody wants to own one but hardly few can afford effortlessly, while there are those who still go ahead to own one such luxurious phone, even if it might be difficult for them to get one.

B) Clothes that we wear to protect ourselves from excess heat or cold are a necessity, but then the segment too has some brands that will be a luxury to be able to afford & use. Yet people keep dreaming & working toward getting ahead in their branded cloths acquiring for representation.

C) Food & travels for rejuvenation & vacation, we can take that as an essential and we also know that some dinners may cost over USD 1000 & some hotel stay for a night might be over USD 5000. So even if these might be essentials the segment is overwhelmingly offering luxurious options to pick from. 

Every items that may still fall in either of these three categories will have value added offerings in the same segments that will change those items into luxuries & fortunately enough it is this luxury segment that hold maximum capital turnover & profits as well, while those items falling under essential & necessity categories & are available at affordable & real price remains a business options that can hardly get any better.

The 80-20 principle is excellently applied across the board here, that is every luxurious product in every category will enjoy 80% of the capital for the entire segment. While only 20% out of all those in the same segment might be offering those luxurious products.

So this also means that the remaining 80% of the producers in the same segment will have to be in a cut throat competition with each other for the left over of the 20% capital.

Let us try to understand the same with an examples under:

Everyone needs a phone, a smart phone may be even better, 4G can be a least option with minimum 4gb RAM & 64 gb storage, now with this given configuration, if we check we might get a good deal starting from about USD 100 to USD 125 max in the essential segment, but then if one is die hard fan of luxuries they will start looking for options made available by some renowned brands, even though the technical configurations might only vary slightly, but the price may get around USD 200 to even USD 250.

So someone here is ready to pay 100% or even more as an premium to hold a branded phone in their hand while a similar feature phone is still available much cheaper.

What is that very human phycology that is playing so profoundly on everyone whereby they don't mind to get into an investment that is far beyond their reach & need both?

A) Hype, added features, strategized scarcity, and we can find more words from the dictionary, to emphasis on these facts, that masses continue to believe in all of it.

B) Competition is in our DNA, we get intimidated easily even when the other may not have any intensions to instigate us, we like to keep getting better when compared to others around us.

C) So the only definition we know about better than others is that ours must be always more expensive than theirs.

D) On another hand we do challenge ourselves to do better than what we did the last time, so obviously if we got an aphone 15 last year, than this year they must get at least aphone 15 Pro, indeed we are progressing, growing & getting better, this has become by large an principle of life in every purchase.

So with the given trend that everyone must remain relevant in the society by replacing their phones every year or two with then available costliest phone, we can understand that items falling under essentials & necessities will continued to get robbed as there will be shortage of funds or budget in hands of this man of the society.

A pack of milk that we 1 USD per pack will have to be made available at the very same 1 USD per pack, the only difference here is that then the pack was of 1 liter now it is of 750 ml.

The irony here will remain that essential & necessity products will have to continue to slash their prices or maintain the prices & reduce the quantities in order to survive with their business, and for those kind of products that cannot have reduced quantities will either fall to reduce the quality & march on segment displacement or will have to venture into R & D to offer more cheaper products to survive the cut throat competition.

How does the mobile phone phycology impact the buying pattern of the mass consumers?

Essential & necessary products may not actually enjoy the luxury of replacements like that of mobile phone, one they might not necessarily need that kind of technological upgradation or value addition.

The toilet brush we are using can utmost have a better gripped handle & more ergonometric brush design, so there isn't much innovation involved or even necessary hence it remains that essential product for daily use, yet cannot revolutionize the trend & market like that an aphone always tried to do. 

And that makes it even more important for these categories of product to get price competitive in its respective segment. Yes other application awareness campaigns can be organized but yet one can never convince any of their consumer to now start cleaning the toilet three times a day. But for sure it can be established that replacing that very toilet cleaning brush at least once in every three months in a must hygiene norm, and thereby a resale can be motivated.

Till then Luxurious products in every segment will continue to enjoy that 80% of entire worlds economy, leaving behind that 20% capital to be shared between the rest of the 80% producers of essential & necessary products to human survival & well being.

Where does your business & products stand in these 80-20 principle?

And while working for that segment of products that may fall under 20%, we keep dreaming & planning to continue patronizing that 80% segment of Luxurious products.