Due to the benefits of globalization, our society is more and more variety. We have different races live together, there are different kind of housing unit people can live, even for a single water bottle, we have a different brand and the different price for it. People can buy 15 dollars Hanes, and they can wear several thousand Burberry coat. People facing a choice every single day, but if a person has the enough financial situation, he/she may tend to buy the broad one even the thing he/she buy are almost the same. Why does this phenomenon happen?
According to Vanessa Page’s research, there are several reasons for why people tend to buy luxury goods. The first one is consumers are not always rational when they buy stuff! Some people wait overnight for buy an iPhone even Samsung have better feature and technology, even XiaomMi offered far lower price. XiaoMi and Samsung have all the functin iPhone do, but why people still buy IPhone, not Samsung or XiaoMi? People think the non-luxury goods are inferior. Other people concentrate on more money means better quality even it is not.
The second reason for this is Self-Esteem. In China, young people feel shame take a XiaoMi cell phone out; even the quality are the same as iPhone even better. But Xiaomi is not as expansive as iPhone do, young people think to take a Xiaomi is showed they are poor people. They loan money from the bank to buy iPhone that will makes them looks rich; even they know it may lower their quality of life. Also, that maybe the reason why rich people buy BMW, not Hyundai. Even these two brand have almost the same function. Ordinary citizens need a car to ride instead of walking, what is the difference of 20,000 dollars Hyundai and 100,000 dollars BMW?
Sometimes weather people financially comfortable or not, they tend to buy the broad one to show off, or get acceptance of others to make others think ‘Oh, this guy is so rich!’. To make them more trust they are a discerning buyer, they convince themselves that more expansive things have better quality.
I have a friend, his father loan money from the bank to buy a Porsche to show off. The reason his father said is Bentley is more comfortable, and the quality is excellent. If he buys a Hyundai, it may need maintenance all the time, and it cost a lot. But the truth is Porsche’s quality is worse than Hyundai, and the maintenance fee is a lot of higher than Hyundai. And this car makes his family’s financial situation worse, even affct their normal life. Is that worth?
I am not saying buy a luxury good means irrational consume, but if you overdrew your band account, which happens a lot in an Asian country, to buy luxury good it may be irrational consume.
Here are a Youtube video talks about what is irrational consumer behavior, it may help you understand what exactly is irrational consumer behavior.