The Hindu Business Line : How fashion shows drive demand

My friend has always wondered about the rationale behind fashion shows. For one, the clothes and accessories are often not functional. For another, they are frightfully expensive. Logically then, these shows ought to be a waste of time, as few buy such expensive products. So, why then do designers spend so much money on such shows?

Suppose a fashion show introduces a designer handbag for Rs 30,000 — a price that will leave many shocked. It is not that the designer expects many to buy the product. But the fact is that the handbag is likely to have an indelible impression on you. You, therefore, want to gift the handbag to your spouse but are torn between affection and price. What do you do?

Shifting frame of reference

You settle for the next best handbag from the designer stable. And that may be priced at Rs 15,000. Now, that is also an awful lot of money for a handbag. But you reason that it is not as expensive as the Rs 30,000 bag. And that is precisely what the designer wants!

That is why fashion shows are economically meaningful for the designers. It is not about the less-functional more-expensive clothes that super models show-off on the stage. Rather, it is about shifting your frame of reference.

Think about it. If you were shopping for a handbag for your spouse, chances you would settle between Rs 3,000 and Rs 5,000. The fashion show most likely shifted your reference value to Rs 30,000. You, therefore, settled for a bag for Rs 15,000.

Decoy pricing

Behavioural psychologists call this decoy pricing. We fall for this strategy all the time — in the department store when we buy our monthly groceries and with car dealers, when we buy a new or a pre-owned car.

There is, of course, a difference with monthly groceries and designer clothes and accessories. The latter boasts of exclusivity; for not many will fall for Rs 15,000 handbag. And that is what makes you justify the price for the product.

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