The SUV In The Driveway

Is that SUV with leather seats and separate front and rear climate control utilitarian, hedonistic or conspicuous? How about when it is parked in a off road trail leading up to hiking trails, when parked in a local mall parking lot, or when parked in your driveway?

This month’s (June) Harvard Business Review has a short piece by Dan Ariely and Michael Norton on conceptual consumption that says,

Conceptual consumption strongly influences physical consumption. Keeping up with the Joneses is an obvious
example. The SUV in the driveway is only partly about the need for transport; the concept consumed is status

As our conceptual consumption shifts from purely utilitarian to hedonistic, so does the price we expect to pay and willingly pay for the products. In the book Richistan,  Robert Frank describes pricing the luxuries for the  “Richistan” segment  as “pushing an open door – no pressure”. This is seen in the data of the prices of SUVs. For example, a VW Touareg is a luxury SUV and is priced more than a same sized Honda Pilot. But a more stark contrast is the price differential between   a Prosche Cayenne, which is built on the same assembly line as Touareg and has almost identical parts,  and Touareg.  While the Touareg could be called hedonistic, the Cayenne falls into conspicuous end of the consumption spectrum and hence provides the marketer with more freedom in pricing them.

The question is can we tease out consumer’s willingness to pay for the hedonistic and conspicuous parts of their consumption?

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