The Value of Diluting your Brand

When I was a kid, there was one student in our class who always wore those Ralph Lauren polo shirts. Every single day. Everyone knew his family was rich.

Fifteen years later my not-yet wife and I were talking about the brand for some reason and found that she had assumed shirts with the little horse on it were cheap because all the people she saw wearing them were graduate students.

I also remember a time when Coach purses were kept behind glass cases at the fancier department stores. There was a “Coach” edition Lexus whose interior was presumably Coach appointed.

A decade later, when I went back to graduate school, Coach purses were standard issue for undergraduate students. If you were a woman and you carried a purse, it was a Coach purse. I knew this because Coach had started imprinting their “C” on everything. Classy.

Nowadays, even the Dooney & Bourke purses are outside of the glass cases. Not only that, I saw them stuffed rather compactly hanging from a steel display at Macy’s. These brands are certainly not being presented with the same level of pretentiousness care that they once were.

Something similar seems to be happening with Porsche. Enthusiast Jack Baruth issues a rant against Porsche’s recent product strategy that would make Al Sharpton proud

With the introduction of the Audi Q5-based Macan, the Porsche lineup for most of the world now looks like this:

  • An ugly RWD prestige sedan
  • A big SUV
  • A smaller SUV, still not cheap
  • A mid-engined, low-fuel-consumption supercar without a supercar badge
  • Two sporting cars that are basically the same vehicle once you get past the firewall

If that looks familiar, it’s because it was Toyota’s showroom lineup for 1987, minus the cars that anybody actually bought.

Porsche is like that one blonde white girl with the great figure and the good teeth and the icy demeanor and a slightly less trashy outfit, holding her nose up in the air and pretending not to notice the catcalls from the Monte Carlos. … But it’s just an act. You don’t go on the ho stroll because you are honestly choosy about how you make your money. If you’re copping an attitude out there, it’s just because you’re going to charge a little more than the rest of the girls. It ain’t because you won’t be flatbacking by the end of the evening. Honey, it doesn’t matter what you think, and it doesn’t matter what you say; once you step out onto the street, you’re no better than anybody else.

Is this criticism accurate? Partially. Ralph Lauren, Coach, and Porsche did sell out. They exploited their reputations to make a buck.

But does this criticism matter though? Is a reputation for building unaffordable sports cars sacrosanct in any way in a way that should prevent you from selling other kinds of vehicles?

No. “Selling out” is what companies are supposed to do.

Consider the alternative. Ralph Lauren never plastered its name on towels and bathtub curtains. Coach didn’t open more outlets than regular stores. Porsche never made the Cayenne. That would allow the (much smaller) customer base retain more of their pretensions of exclusivity, but would it actually have been better for the company? For towel shoppers? For society?

These questions answer themselves. The Cayenne is an unalloyed business success, and viewed through that lens, it was the right move for Porsche, enthusiasts be darned. Yes, brand dilution is a concern, but brands lose value when they sell bad products, not when they sell good products in an unexpected product category. The Cayenne was successful because it’s actually a pretty nice car for people who would like something sporty but need to stay practical. No one thinks any worse of Tiffany’s just because they sell those sterling silver heart necklaces for $100 so that your boyfriend can afford that magical turquoise box. If you are also interested in silver quarters , clink the link.

There is a reason that works for Tiffany. No one girl in history has been unhappy to get one of those necklaces. It’s as reliable as an AK-47. That heart necklace works because it isn’t a cheap version of an expensive necklace. It’s an expensive version of a cheap necklace. That makes all the difference.

Mercedes CLA photo

The CLA (pictured) is, to most everyone who has tried it, bad product. Image by M 93: „Dein Nordrhein-Westfalen“

The list of companies who met their demise through expansion is long, but common to these stories were bad product. Either they launched new products that were bad or they let their main product wilt into mediocrity. These failures have nothing to do with brand mismanagement. They are about selling bad product.


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Vikram Bath is the pseudonym of a former business school professor living in the United States with his wife, daughter, and dog. (Dog pictured.) His current interests include amateur philosophy of science, business, and economics. Tweet at him at @vikrambath1. ...more →

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85 thoughts on “The Value of Diluting your Brand

  1. That heart necklace works because it isn’t a cheap version of an expensive necklace. It’s an expensive version of a cheap necklace. That makes all the difference.

    That is just genius. That line made my day. However, it should be said that this also works because Tiffanys have not over-diluted their brand. That same girlfriend knows that Tiffany carries a certain cache that you can’t get anywhere else. As soon as Tiffany becomes commonplace, this will not work anymore and it will just be another cheap, silver necklace.

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  2. There are numerous Ralph Lauren brands.

    The polo brand is relatively affordable. Probably around the J.Crew price point level.

    Ralph Lauren Black Label sells suits and formal wear in the several thousand dollar range.

    RRL sales variants of vintage American workwear and is usually more expensive than not.

    Here is an example:

    http://www.ralphlauren.com/product/index.jsp?productId=67070236&cp=11588650.58324576&ab=ln_men_cs_shopallrrl&parentPage=family

    Generally I think you are right and it makes good business sense for luxury brands to produce spin-off brands towards a more broad market but it can go too far. Louis Vuitton is probably not as associated with quality anymore because of their ubiquity.

    This is also a study in branding. There are some products/items/companies that are basically known through their logos like Prada, Coach, Gucci, Louis Vuitton, etc. The branding here is stamped all over the place and obvious. When you wear this stuff, you are saying “Look at me. I can afford an LV bag or Prada sneakers.”

    I don’t care for this. There is another kind of high-end product that makes its logo more sly if not present. There is a whole range of companies that produces very nice clothing and accessories and at pretty high price points but you need to know what you are looking for. Here is stuff like Maison Martin Margiella, Dries Van Noten, Engineered Garments, Marsell, Guidi, Henri Cuir, Henri Begulin, rby45rpm, Belvest, Brunello Cucenelli, Incotex, etc.

    Now of course this raises an interesting philosophical and sociological question about what is real conspicuous consumption. Purchasing stuff that everyone knows is expensive or purchasing stuff that takes a knowledge to know what it is and is it really expensive.

    When I was in grad school, someone said this of me and a classmate in comparison. “Saul wears the type of clothing that looks nice and is nice. X wears the kind of clothing that is looks really cheap but is really expensive.”

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    • The expensive but not necessarily well known brands could not exist without a mass market for luxury goods. What I think happened is that as society grew more prosperous, the definition of conspicuous consumption changed. Veblen started writing about conspicuous consumption on the dawn of consumerism and shopping for entertainment in the West. Even in the wealthiest countries, most people could afford few luxuries. As more people could buy more luxury or consumer goods, the well off needed to get more obscure in their choices.

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      • Indeed. The really rich don’t wear brands. Brands are cheap.
        Custom tailoring is what the rich wear.

        The really rich know each other on sight, and spend entirely too long learning about fashion (not to diss fashion in general, but fashion purely as a signal of how much money you’ve got). Of course, they’re also into body modification…

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  3. What’s the difference on the margin between the one and the other?

    Let’s say that I make one of those $300 shirts that looks exactly, and I mean *EXACTLY*, like a $30 shirt. (SAUL, I AM LOOKING AT YOU HERE)

    While I am more than willing to believe that the $300 shirt is of a higher (perhaps even a significantly higher) quality than the $30 shirt, even if the margin on the $30 shirt is 90%, that’s “only” $27.

    If we assume, because why not, the margin is also 90% on the $300 shirt, that’s 270 bucks right there.

    If you get 9 people to buy your downmarket $30 shirt, that’s awesome. Woo! But if those 9 people are enough to get one person to say “you know what, I think I want a shirt that is a little less… common” about your $300 model, you’re losing money.

    But, of course, if you get 11 people to buy the $30 shirt, you’re ahead of the game.

    Temporarily.

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    • — I know this, if I go into Nordstrom and browse around in their plus-sized section, I’ll usually manage to find one or two shirts that both 1) fit me, and 2) look good on me. They usually cost about $80 – $100 dollars. I can go down to Macy’s and find a similar number of shirts that fit me, for usually $30 – $40 dollars. I have plenty of both. Does the quality make a difference?

      Well, that’s a complicated question, and I’m not sure if I can break it down quite that way. How do you measure the quality of a garment? Length of life? But some of the expensive clothes are not machine washable, thus I wear them less. They are “special.”

      I have quite few shirts that are machine washable (on delicate!), but don’t put them in the dryer. That’s kind of a pain.

      My “favorite” shirts are among the nicer ones. I look really good in them. The fabric lays on me perfectly, emphasizes what needs to be emphasized, de-emphasizes what should not. They really are great shirts.

      Although, a few of the Macy’s shirts just work. I wear them a lot. They are cheap and sturdy and look good on me. I have several of them, although the last year or so, that brand has changed its fit slightly and they are not as good as they were. Which, pity. Women’s clothes are a bizarre world of longing and disappointment.

      For bottoms, I wear shorts over tights a lot. I love colorful, patterned tights, although they are hard to find in my size. Sock dreams helps a lot. But even then, I see a lot of really cool tights on other women, but that I can never find in my size. My jeans I buy at Torrid, which is the plus-sized brand for (I’m not kidding) Hot Topic. I also buy a lot of skirts there. They have my size. They understand that big women want fun clothes. Most of their stuff is pretty mid-ranged on price. They target the young adult market.

      The upscale skirts tend to either not fit me, or else to look really matronly. I would buy some designer skirts if they made my size, just to see if I liked them. Some really great fabric and a great cut. That would be amazing.

      If I were really-actually rich, I would hire whoever does clothes for Laverne Cox. We’re about the same size and damn she dresses well. (Plus maybe I could stand beside Ellen Page.)

      For shoes, I mostly wear Dansko sneakers. I like fancier shoes, but the high end do not exist in my size. (Prada doesn’t give a shit about large woman.) I’ve tried some of the cooler, youth oriented brands, who do support big gals — I’m thinking of things like Fluevog here — but they’re often (for me) rather uncomfortable. Although I have this amazing pair of platforms from them that just freaking rock! I wear them out dancing. They cost a lot.

      I buy designer handbags, mostly Balenciaga, although I have one Ferragamo. They really are quite nice. Note that the brands I choose do not have a big gaudy logo on them. I prefer that very much. (You might call that “counter signaling.” Maybe it is. I don’t know. I like the bags.)

      #####

      It’s tempting to abstract. It’s temping to treat people as if we actually are homo economicus, rather than people in a complex social space, which includes a market as a subset. It’s tempting to make everything look like the simple models from microeconomics. When people do this, they always say, “We need to make it simple so we can understand it.”

      It’s really cute when they do that.

      Fashion is probably not legible.

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      • some of the expensive clothes are not machine washable, thus I wear them less. They are “special.”

        I have quite few shirts that are machine washable (on delicate!), but don’t put them in the dryer. That’s kind of a pain.

        “This shirt is ‘dry-clean only’…which means it’s dirty.” – Mitch Hedberg

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        • — This is “hand wash” stuff, not “dry-clean only.” Mostly we just wash them in the tub every so often.

          For me it’s mostly lace stuff where I need to do this, like this one lovely skirt I own. The thing is, I don’t wear it a lot, and when I do it’s somewhere nice, so it really doesn’t get that dirty.

          I’m a software engineer, so at work I don’t really wear the “hard to wash” styles much. Those are for posh-gals. My coworkers would find it odd. (Although they find me plenty odd anyhow. I certainly dress better than most of them. But you know, male nerds are much like a clunky utility vehicle!) (’Cept . That dude’s a rocket powered funny car covered with day-glo skeleton decals!)

          (I’m going to try to make as many car metaphors about dudes as I can, cuz obvi!)

          (@glyph is one of those Toyota trucks that the fighters in Chad put rocket launchers on so they could blow up crappy Russian tanks. is a Prius.)

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      • The concept of “fashion” is an odd one. There are a lot of different kinds of signalling going on.

        There is, of course, the surface level signalling. If you look fresh and healthy in blue but red makes you look washed out and sallow, you’ll probably prefer to wear blue. And there’s the cut to the item (something that hugs in just the right places vs. something that hugs in places that would be just the right places on someone else).

        Sure. All that superficial “looks good” stuff.

        But, beyond that, there is the whole second-level stuff. What does this shirt say about me?

        I mean, I might find the *PERFECT* Ed Hardy shirt. Good color, good cut. I look taller in it and it looks cool with the beard and everything.

        But it’s an Ed Hardy shirt. People will see that I’m wearing an Ed Hardy shirt and make all kinds of assumptions about me because I’m wearing an Ed Hardy shirt. And it doesn’t matter that I look good in it.

        Presumably, there are shirts that work the other way. I might be a winter and I’m wearing a shirt that was specifically designed for an autumn and the cut isn’t right but it doesn’t matter because, hey, it’s an anti-Ed Hardy. People will make assumptions about me. All kinds of them.

        Where it gets interesting is in the clothing maker itself when they realize that they have something like a “relational good”. People don’t want this item because it makes them look good. People want this item because of the associations that other people have with this item.

        And someone who would never, ever, spend $300 on a shirt that inspires these associations might be willing to pay $60 for one that does and would leap at the chance to buy a $30 one… but part of the associations made about this shirt has to do with the fact that it’s a $300 shirt and not a $60 one (let alone a $30 one).

        And the second that the $300 shirt gets associated with the $30 shirt, you might as well be wearing Ed Hardy.

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        • People will see that I’m wearing an Ed Hardy shirt and make all kinds of assumptions about me because I’m wearing an Ed Hardy shirt.

          I won’t. I have no idea what associations I am supposed to take from an Ed Hardy shirt, or what an Ed Hardy shirt is and how I would go about identifying it.

          This is not merely snark. There is a point to it: not everyone is playing this game. It may be that people whose opinions you care about are in the game, and if so you have to play it, but for the rest of us a shirt is just what you wear to cover your upper torso.

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          • You will have no problem recognizing an Ed Hardy shirt, because it will say “Ed Hardy” in big letters across the top.

            Below this there will be the designers name, and tattoo art, usually with tigers or hearts or tigers and hearts.

            You will also get the vague impression that it is 2007.

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            • OK, you made me look (on Google Images, that is). I still have no impressions about Ed Hardy per se. I wouldn’t have pegged this as “2007.” Given the artwork I would have guessed the shirt was a remarkably well preserved artifact from an old Dead concert. Not that there is anything wrong with that.

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              • For a brief period in the mid-to-late aughts, Ed Hardy was everywhere on everything: t-shirts, hats, sunglasses, shoes, purses, school supplies, smelly stuff. And the people wearing it were pretty much the least likely people to have worn Grateful Dead t-shirts in their day(s). For example, if you went to a shot bar or dance club on a Friday night in 2007 or so, half of the people under the age of 25, men and women, would be wearing at least one Ed Hardy article of clothing or accessory.

                If I remember correctly, the company was started a couple years before that and nearly broke a couple years after. It was a real flash in the pan.

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                • You know how if see a word or name you’ve never seen before, you always see it again within 24 hours?

                  Ed Hardy was a new one on me too. Then on the way to work today I was reading an Elmore Leonard novel [1], and one of the characters [2] is described as always wearing Ed Hardy T-shirts.

                  1. Raylan, which is a spin-off from Justified. (Yes, Lenorard created Raylan Givens , but the book includes Art, Rachel, and Tim too.)

                  2. Coover Crowe, who sees to be more or less the same character as Coover Bennet.

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    • jaybird- my mostly under informed impression (from watching project runway and the news when that Bangladeshi garment factory catastrophe happened) is that the main difference between a 300 dollar shirt and a 30 dollar shirt and a 3 dollar shirt is the difference between a 60 year old Italian in Italy, a 40 year old immigrant from wherever in Queens, and a 14 year old south Asian in South Asia.

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      • @jaybird

        Not quite what you are talking about but I do remember a Planet Money story about how t-shirts are really easy to make and often a first step to Industrialization for many developing countries. I also heard that there is a paradox/problem of a lot of countries not quite figuring out how to make things that are more complex than t-shirts. This includes clothing and non-clothing. An button down shirt is much more complex than t-shirts because it involves patterns, buttonholes, design details, etc.

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        • Mostly that the difference in price points of garments (and just about anything else) is not a strict function of marketing to create mark-ups, but m mostly lies in production costs. Which, are as you say, determined by the skill level and productivity of the labor force.

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    • 1. Sometimes the difference is pure branding.

      2. There is a detail to attention in the 300 dollar shirt even if you think it looks like a 30 dollar shirt.

      2a. The detailing can be something that is somewhat naked to the eye like materials used. So the designer used cashmere instead of ordinary wool for example. Silk instead of cotton.

      3. More often than not, expensive stuff is made to last longer. Terry Pratchett wrote about this famously in Discworld:

      “The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.

      Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

      But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”

      For a more real world example, you can get a suit at H&M that is pretty inexpensive but it will probably be bursting at the seams within a year or so. I saw this happen to classmates from law school. They are not meant to last.

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      • Cheap clothes are not meant to last.

        I mean, there are exceptions. But they are exceptions. And the way branding works in the modern world, it can be really hard to be an “informed shopper.”

        Especially for the cheap crap. Sometimes it lasts. Sometimes it does not. No way to tell with an off-brand.

        I’ve bought expensive stuff that turned out to suck, often from the same store where I got something really good. Again, hard to be sure.

        On the whole, the good stuff lasts longer, fits better, feels better, has better colors, and so on.

        Length of life is not the only concern. How it looks matters. How it feels matters.

        Like, people understand that “length of life” is not the only concern regarding golf clubs or stereo equipment or whatever. But suddenly they become super-skeptics regarding fashion. I wonder why?

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      • As for the attention to detail, this assumes facts not in evidence. There might be some that cost more because, hey, they’re worth more. There are others that cost more because they signal that they cost more.

        An item that is not intended for weekly (or monthly) wear could easily last a lot longer than, say, the hoodie that gets worn three times a week. The hoodie gets hundreds (and hundreds?) of uses before it falls apart but the shirt that gets worn on the first Tuesday of the month might only get dozens and dozens before it does.

        But, hey, it was in your closet longer.

        When it comes to stuff like boots, this is something that I’ve experienced personally. My Docs or my Red Wings last years (and I got my Red Wings resoled until I could resole them no more). But there are also footwear items that are more accurately compared to the shirts above than to a good, solid pair of Doc Martens.

        Because, seriously, you shouldn’t use Docs as justification for suede Manolos.

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        • My ExOfficio clothes have been through hell and back.
          Washed in a sink and air dried while on my back
          (hey, it was vegas. they dried quick!)
          Through brambles and the Met, dirt and wine.
          And still look fine at the end of it all.

          Plus, convertible pants!

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        • I don’t know about the price point of Doc Martens but I do know that Red Wings tend to be pricey at full retail and are meant to last. FWIW I had a pair of Frye Boots that lasted for over ten years.

          On Martens v. Manolos you are talking about signalling and aesthetic preferences and this is something that everyone does. The woman who wears Doc Martens with a plaid skirt and a field jacket is doing just as much signalling as the woman in suede Manolos.

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          • A good pair of Docs will run you between $150 and $200. (I’m a 1460 man, myself.) My favorite pair of Red Wings was somewhere between $200 and $250 (but, keep in mind, I was periodically able to resole them for around $75 and extend that price out another couple of years).

            As for signalling and aesthetic preferences, well… yes.

            One thing that I feel the need to point out, however, is that “price” is one of the things that gets signaled, here. There are a non-zero number of people who would not purchase a $300 shirt if it presented identically to a JC Penney buy-two-get-two-free $30 special.

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      • Cheap suits aren’t clothing – they’re costumes. Like costumes, they’re uncomfortable. They don’t fit you, they fit an averaged you (if you’re not unlucky, in which case you get one that doesn’t fit anyone of your species). You wear them – once – to a job interview, funeral, wedding, etc. Then you put them away until the next occasion. I own one – worn it twice in a decade…

        Expensive suits are a uniform for rich people. They fit. They wear well. They allow you to move – you could play basketball in a rich person’s outfit (even the shoes, I’m told, although they might not be as grippy as you’d like and will mark up the floor). And you give just as much thought to it as you would, say, overalls.

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        • I think this depends on who you are and what your job is. Lawyers are still required to wear suits to court even on the casual west coast. I can dress casually and comfortably to the office but I need to be court ready. And there are times when a litigator might spend every day in court or almost every day in court. Trials at my firm tend to last for weeks and months instead of days. So good quality suits are justifiable.

          Now we can debate about how true this is in other parts of the country and/or for other professions. Generally the East Coast and Midwest seems more into the staying power of the suit than not. London is more conservative than the East Coast when it comes to suiting. In NYC, you can wear brown shoes with a dark suit. In London, this would be a fireable offense from what I hear.

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            • I suppose they might where cheap suits somewhere. ;) Lawyers like everyone else come in all forms. There are lawyers who really don’t seem to give a fuck and I have seen lawyers appear in court with rips in their clothing or rumpled. There are also lawyers who put a great deal of care into their personal appearance and this goes across genders and age groups. FWIW my dad (also a lawyer) puts a great deal of effort into his personal appearance.

              What is interesting here is that there can be tactical advantages at hand. A lot of corporate defense lawyers might put on a more rumpled appearance to show that they are men or women of the people instead of fancy corporate attorneys who bill at 500 dollars an hour or more. You might see a defense attorney with a battered old briefcase or a bus pass. Plaintiff’s lawyers generally seem to try and be more well groomed because they think it shows success and dignity and sets them apart from the stereotype of the ambulance chaser or the unsuccessful lawyer taking low-ball cases because he or she can’t do any better.

              A well-groomed appearance can also be a sign of respect to your clients which can be valuable for younger lawyers and lawyers who are members of minorities or any lawyer who comes from a different group than their clients.

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            • By ‘tailored’ you mean ‘altered to fit properly’ and not ‘bespoke’, right?

              Why wouldn’t you wear a tailored suit? The cost of tailoring is pretty low — I mean just adjusting the hem, waist, and shoulders makes everything look a lot better and it’s pretty cheap. Heck, every big ‘suit’ store (Men’s Warehouse or other chains) has it right there.

              I mean if it’s just a sport’s coat over khakis, I guess. But an actual suit? I’m not a clothes horse (I wear a polo shirt and jeans to work. I chose a job I didn’t have to dress up for. Or care if my shirt is rumpled. My suit cost less than 300, and I have just the one) but my one and only suit was tailored.

              Now bespoke, well….if I won the lottery I’d pay for that. :) Or maybe if I was VP of a big company or a really high end lawyer.

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          • True, and I remember when I was in a working group at Wright-Patterson AFB back in the 90s, the people from my company’s Beltway home office were distinctly more straitlaced than the WC people, who generally did the absolute minimum to comply with the dress code on-site. I didn’t even bring a suit jacket with me. But even to my eye, the suits they wore as daily wear were distinctly higher quality than the abomination currently in my closet (which is like Order of the Stick’s “Monster in the Darkness” only with less personality and more chaotically evil).

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          • When I was working for the state legislature, coat and tie were mandatory when the members or staff were on the floor (corresponds to being in court for lawyers, I suppose). Women had some leeway about the tie, but were still required to wear a dress jacket of some sort. As there is no air conditioning in the Capitol, the person with the gavel would sometimes relax the coat rule. The budget staff director always said that the coat rule was never relaxed for his people — as far as I could learn, it was a decades-old esprit de corps thing. Unlike the rest of the staff, the budget staff had offices in the building across the street. Late in the session, this led to the semi-regular sight of one of the staff sprinting across the street to handle an impromptu meeting on the floor, pulling their suit coat on as they ran.

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    • The main complication there – is that scale matters a lot in the “cost”.
      ( A secondary one is that nobody pays retail)
      The more volume you have to use as leverage with your suppliers, the lower the cost of everything you buy.

      We have a joke around my office that we can make 10,000 t-shirts for $1 each or we could make one t-shirt for $10,000.

      Behind a lot of the brand dilution talk in business is the drive for scale. The big name high-tier brands have fat margins, but the market is small. Their high cost of “product quality” is severely compounded by small scale – almost universally, the majority of cost difference between your $30 and $300 shirts is in efficiency/scale that the $30 shirt has that the $300 one does not.
      Brands know that you have to offer “quality” or “features” on top of the design to justify the higher ticket price that comes with the volumes at their price point, so they do choose expensive materials/processes as part of the brand differentiation, but it’s relatively small compared to the overall total cost of their product.

      Moving into a lower price tier market gives access to two things: additional scale, which helps them lower costs of their top end, and as access to sales from the people who don’t/won’t/can’t shop in their “main” market which nets them additional sales (and profits). As long as you’re careful not to let the more mass market stuff dilute the value of your premium stuff, it’s almost a virtuous circle for business.

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      • I question how small the market really is. In a democratic society, people have a full right to splurge their money how ever they want and there are plenty of people who seem to splurge money on one sort of luxury item or another even if they are otherwise moderate.

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        • Dollars-wise that depends on your perspective, and where you draw the line for “luxury” vs. merely upmarket brands. It can be a fair chunk in the upper tiers in apparel, definitely.

          But, however you define it, the actual volume moved by the highest-tier brands is usually relatively small, but they take up a much larger share of dollars, as their items sell for much higher prices.

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  4. The auto extremist summed up the Porsche brand issue as well.

    “Take Porsche, for instance. It’s no secret that Porsche has been savvy, shrewd and borderline brilliant in managing its brand, despite forays into unexpected product programs. The fact that Porsche has topped the Autoextremist Brand Image Meter for three straight years is no accident. And Audi, BMW and Mercedes have managed to hang on to, if not solidify, their brand images despite some questionable product programs, too, although they’ve been notably less successful at it than Porsche.”

    And speaking of Brand, here’s the autoextremists commentary on the recent VW situation:

    http://www.autoextremist.com/ To sum up: “It’s dead Jim”.

    http://www.autoextremist.com/current/?currentPage=3

    Personally, I find the whole concept of a 4 door Porsche or SUV a crime against nature, but I have to agree with the conclusion, and they do look pretty nice, just not for me. Of course it helps that I can’t afford any type of Porsche anyway. :)

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  5. Porsche is like that one blonde white girl with the great figure and the good teeth and the icy demeanor and a slightly less trashy outfit, holding her nose up in the air and pretending not to notice the catcalls from the Monte Carlos. … But it’s just an act. You don’t go on the ho stroll because you are honestly choosy about how you make your money. If you’re copping an attitude out there, it’s just because you’re going to charge a little more than the rest of the girls. It ain’t because you won’t be flatbacking by the end of the evening. Honey, it doesn’t matter what you think, and it doesn’t matter what you say; once you step out onto the street, you’re no better than anybody else.

    Who fucking writes like this? Like, is this ignorant-ass bro-dude central? Like, mr. fake-edgy suburban guy building metaphors from shit he’s seen in the movies, or the bogus scenarios he’s tells himself about the women who turned him down. What a turd.

    Women aren’t cars. If you think we make good metaphors for cars, that tells me a lot about you.

    And seriously, Vikram, can you maybe choose not to include the most idiotic possible quote? Would it diminish your point to leave that out?

    Yeesh.

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    • Frankly, I was expecting the blockquote to read very much like it did as soon as I saw the words “enthusiast Jack Baruth”…

      Baruth is to measured, informative, straight-to-the-point auto journalism what Jeremy Clarkson is to … um, measured, informative, straight-to-the-point auto journalism.

      When Baruth restrains himself to snark, he can be a useful source – he does know his stuff. But you know how dogs have that “radar” where they are sleeping peacefully then wake up and start furiously barking at something only they can see? Baruth does that too.

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  6. The assumption that higher costs = higher quality is a faulty one. Furthermore, the assumption that quality is directly proportional to cost is an even faultier one. An item might cost twice as much but be four times the quality. Or an item might cost one hundred times as much but be just twice the quality. It really, really varies.

    Of course, the question becomes how do we define “quality”. I tend to use a strictly practical definition. How many times/how long can item X be used to do what item Xs are meant to do? How many times can I cook with that pot before it is no longer cook worthy? How many times can I wear that shirt before I can no longer wear it?

    Even here you will have some disagreement. Is a shirt meant to provide one protection from the elements? Or is it meant to make one look fashionable? If it is the latter, than it is possible that a given shirt ceases to meet the latter criteria within months while still meeting the former for years.

    The problem I have is when someone (like my ex-girlfriend says!), “It is obvious that a Louis Vuitton bag will last longer than that unbranded one. How could it not? It costs $1000!” That is very faulty logic. It may be that the bag in question can provide $1000 of value to the owner. But more needs to be done to show that it will last longer than other bags than merely citing the price tag.

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    • Kaz,
      I think it’s a reasonable assumption, depending upon circumstances, that higher quality means higher cost. The reverse is most certainly NOT true, and I think you’re spot on about proportionality. I know that I have paid more, and continue to do so, for clothing that has colors I typically do not see or for those garments from manufacturers that fit me particularly well or I look good in.

      Pet peeve: folks who talk about buying something as an “investment”. Really, that hand bag is an investment? So you getting dividends or it’s an appreciable asset? Nah.

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  7. Pingback: A Defense of Fashion and Clothing | Ordinary Times

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