Contemporary Marketing of Tiffany and Co - Essay Example

Luxury goods have an income elasticity demand (YED) greater than 1, as indicated below.

Figure 1: The Income Elasticity Demand for Tiffany and Co. Products (BOONE, 47)

The graph above illustrates the behavior of luxury goods in relation to consumer behavior. As the consumers’ income increases, demand for the product increases; hence, a justification for the markup of the prices of Tiffany and Co.

            Additionally, Tiffany and Co. acknowledge customer service as a product. The nature of customer service matches the money spent on luxury products. The positive correlation between the markup of the prices and the customer service explains the nature of the goods. Luxury products are not similar to basic products whereby there is a need to create product awareness; hence, a perfect competition. For luxury products, there exists product knowledge for the consumers, and the products are more of a want than a need. The markup of the prices is justified because the target market is defined by their ability to utilize such products.

Work Cited

BOONE, LOUIS E. Contemporary Marketing, 2013 Update. S.l.: Cengage Learning Custom P, 2012. Print.