I certainly don't claim to know much about wedding gowns, but I do know that Vera Wang has established herself as the preeminent fashion designer in this category.
The fact that I'm not Dennis Rodman and I've never been in the market for a wedding dress are important to note considering her name and brand should hardly come close to crossing my radar. Wang has done a masterful job over the years in promoting her brand and positioning her name as the wedding gown designer to the stars as well as an author of a wedding book, Vera Wang on Weddings. She also has a line of jewelry, fragrances, home collections and has made a number of appearances on television; all in a strategized effort to strengthen and promote her brand.
All in all it would appear that she has done everything right...until now. I read in today's Detroit Free Press that Wang has drastically slashed the prices of her gowns by a 30-50% as she introduced her Spring 2010 lineup. Of course, we're in a recession and people just aren't buying and spending like they did in the heyday. That affects everyone, even the Vera Wangs on the luxury goods tier.
But just like cutting marketing in a down economy, slashing prices is just as detrimental when trying to preserve a brand that identifies exclusively with the elite. It's hard to imagine that this price cut will do anything but hurt the brand long-term if only to move a few units during rougher period.
This drastic reduction only makes you wonder: is the Vera Wang brand just a status item or truly a luxury brand. True luxury brands carry clear value and can hardly be reduced under any circumstances. Status items, on the other hand, come and go and they ultimately go by way of red marker mark downs in a pile of wrinkled mess in the back of the store. Luxury is a fickle market to be in. One misstep and you're going from niche market to no market.
If you're selling a product or service today for less than you did five years ago, let me ask you a tough question: were you gouging the consumer during good times? Was your product really worth that price considering to you it carries the same value today as it did five years ago, what's the difference?
Luxury brands with staying power don't mess with pricing. They may tweak other things, but they don't touch the tag. It raises all sorts of questions you don't want your customers asking about your brand. Are they using cheaper materials? Is Vera Wang outsourcing the design to a cheaper apprentice? Why was the gown I bought in 2003 for $9000 now listed for $5500?
I don't mean to pile on Wang, but doesn't she feel she has a "must-have" product? Everything she's done up until now would lead you to believe that, but what happens when things turn around and now she's catering to the masses—trying to grab marketshare in a tough economy? Will her high-end clientele come back or will they flock to a fresh designer waiting in the background and ready to pounce that segment? Could she even consider moving her prices back up?
One of the biggest brand killers is messing with your pricing structure and I don't feel that's exclusive to luxury items. It happens a lot in fashion and it occurs quite often in beer. Believe it or not, Busch Beer used to be considered a premium beer in the late 70s. Sales go stale, drop the price and soon college kids and buying up the 30 packs for $12.99.
So have you considered dropping your prices in order to compete in a new world? Think carefully. There are many things that we should be doing in order to address the fact that our phones aren't ringing as much or the foot traffic in our stores has dwindled. But slashing prices isn't something I would ever consider doing if I wanted to maintain the integrity and value of my service or product.
If you must take a look at pricing, ask yourself: Is it the best decision in the short and long term and how do you plan on answering the questions from your most important critics—your customers?
