Limited Edition Products Promote Sales or Not
There are limited edition goods everywhere. The packing of them is attractive, some of them are popular and some of them are not. “Steinway” offered a Limited piano with a special mahogany finish on its 140th anniversary. The quantity is offered was 140, and they sold all of them in hours (Balachander& Stock, 2008, p336). On November 23, 2010, H&M cooperated with Lanvin and offered a limited number of “Lanvin for H&M” in given stores in some Chinese cites (Cheng, 2010). Many consumers lined up the night before the stores opened. Contrastingly, many unknown chocolate producers offer limited edition candies for Valentine’s Day. After Valentine’s Day passed, those products are still in the stores, but on the “on sale” shelves. It may because the firms produce too many quantities, or the brands are not famous, or customers do not like their products. Companies could analyze consumer psychology and relate to their market conditions to decide whether to produce limited edition goods or not.
According to Dubois, Czellar and Laurent, customers buy luxury because of both “hedonic” and “symbolic”(2005, p120).People enjoy using luxury goods for their good qualities, features, and styles. On the other hand, the luxury goods can also show others who the owners are. Others may link the famous brand and high price to the owners and then get the conclusion that the owners are rich and have high social positions.As known,limited edition goods are relatively expensive and rare. The scarcity and the higher price can also make others know the standard of the owners. Meanwhile, owners enjoy the proud that brought by owning limited edition goods. So, many companies use producing limited edition goods to promote luxury buying. However, not all limited edition products can promote sell. Brands’ marketing positioncan determine the success of limited edition in two ways. Only monopoly brands, high-quality brands can get benefit through providing limited edition goods.
Monopoly brands can get benefit through providing limited edition goods. According to Balachander& Stock, price competition decide whether limited edition goods can promote sell or not (2008, p349). In the market, there are different brands of similar functionsof products. Consumers want to choose relatively better quality goods with lower price (Balachander& Stock, 2008, 339). For this reason, if the price of the goods is too high, those products will lose their customers. However, monopoly brands do not have this kind of pressure that brought by price competition. If those monopoly products are really needed, consumers have no other choice but to buy them. If the quantities that firms produce are “limited”, shortage will make the price goes up. For example Microsoft has monopoly of office software. Almost everyone who uses computers needs office software. Image if Microsoft limited the quantities of office software in the market,, but customers still have to buy the software no matter how expensive it is. Finally, shortage makes the price goes up dramatically.
In addition to monopoly brands, high-quality brands can also be better off through selling limited edition goods. According to Balachander&Stock, the key difference between competing brands is quality (2008, p349). If there is no competitors produce limited edition goods, the limited edition goods could help their firms to get more profits and market share. In addition, according to Amaldoss and Jain, the goal of firms to produce limited edition goods is to attract their high-class customers (2006, 941). High-class customers regard quality more important than low-class customers do. For this reason, providing limited edition goods would be an advantage of high-quality goods. If there is no significant difference inproducts’ functions, style design could also determine whether limited edition goods can promote sell or cannot. For example, according to Balachander& Stock the quality of clothes and shoes are mostly similar in functions. Then the style or design, which is regarded as an extra feature or quality, is the most important point that customers regard (2008, p349). If the extra feature is lower than the cost, consumers will not buy the limited edition goods. If the feature’s value significantly exceeds the cost, the limited edition products will be attractive.The LVMH’s ostrich-trimmed handbag,which is expensive, but still many customers want to buy, could be the example (Amaldoss and Jain, 2006, p941). There is no significant functional difference between LVMH’s ostrich-trimmed handbags and the others. Meanwhile, the extra feature that is made by ostrich skin cannot add more functions to the handbag. However, it just the extra feature which brings customers “hedonic” that attract customers. Customers regard the value of pleasure, which is brought by wearing handbag with special feature-ostrich skin, significantly exceeds $4000 gold (the cost of the handbag). For this evaluation, LVMH’s ostrich-trimmed handbag becomes “frenzy”. Brands can decide what kinds of limited edition goods can promote sell, and consumer psychology can explain why those limited edition brands can be success. Consumers can be influenced by reference groups. They can be divided into two groups: high-class consumers and low-class consumers. High-class consumers want to be unique while low-class consumers want to follow high-class consumers’ choices (Amaldoss and Jain, 2008, p933). High-class consumers want to be unique because they want to be known that they are better than masses. Limited edition products are not available for everyone. Having limited edition products can fulfill people’s vanity. Some limited edition products are sold on a first-come, first-serve basis, like Nike shoes. Some limited edition products only for their companies’ VIP customers. For example,La Mer will produce some customized cosmetics only for its VIP customers who have spent about $2,200 on its products within a year (translated from Chinese, Wushi, 2008). Some limited edition goods are only for the waiting list customers, like Hermes provides its Birkinhandbags only for the customers who are on the waiting list (Balachander& Stock, 2008, p349). By owning this kinds of limited edition products, customers can get more pleasure. Different from the high-class consumers, the low-class consumers want to imitate the high-class consumers (Amaldoss and Jain, 2008, p933). When buying a good, consumers would firstly judge what class they belong to. To be considered as high-class persons, they desire to imitate the high-class consumers and buy what high-class people buy. This kind of consumer psychology can be another reason why many customers want to buy priceless LVHM ostrich-trimmed handbags,though its function is similar to other ordinary handbags. Through the news, low-class consumers get to knowmany high-class people buy them, so they need to buy the bags as well. After that, by owning the ostrich handbags, others could classify them to high-class.
Many consumers buy limited edition goods because they think limited edition goods represent good taste and quality. Consumers think the scarce products “are of better quality” (Dubois et al, 2008, p934). Most of these high quality limited edition goods are luxury, so they have relatively better quality. The design of them is also much better. According to Dubois, Czellar and Laurent’s research, most people strongly agree that luxury goods can bring “pleasant”, they “buy (luxury goods) for pleasure”, show “good taste”, and they think they are “better quality” (2005, p121). On the other hand, through regarding a person’s appeal and the products he or she uses, people could roughly get to know his or her tier. In addition, limited edition products, which are only provided for their VIP customers, can show their owners’ status. Everyone wants to be considered as a good taste person. So, if the money permitted, people want to buy limited edition goods to show their taste.
However, it is often the cause that there is almost no significant functionaldifference between limited edition goods and regular ones, so limited edition products are less attractive. However, for collection is one of the reasons why consumers want to buy limited edition products. According to “Made with Love: the enduring power of the limited edition”, Customers buy limited edition products are for collection (2010, p25). Some collectors are the fans of the brands or the products. They usually do not much care about the price. Furthermore, many limited edition goods are produced to memorize special events, or persons. So, they have historical meanings and are valuable to collect. Though limited edition goods are expensive, collectors store them, and after several years later, they can sell them in higher price. On the other hand, artists could get more profits through producing limited copies of their pieces of works. Art products are usually considered to be unique and valuable. But it may happen that many customers like the same piece of work. At that time, artists could use technology to produce limited numbers of copies. They could sell the manuscript with higher price and the several copies with relatively lower price. Then, more customers could enjoy the art (Symonds). Artists can also get more profit through producing limited copies than just sell the unique manuscript. By knowing under what kinds of circumstance that limited edition products can make profits, and why customers want to buy limited edition goods, firms could make good decisions whether to produce limited edition goods. Different firms’ target consumers are different. Luxury firms target high-class consumers.For this reason, luxury firms can exploit the psychology of consumers that high-class people want to be unique from the masses to produce limited edition goods to identify their high-class and low-class consumers. The ultimate goal for limited edition goods is to create a “buying frenzy” which people desperately want the product and it soon runs out. One example is “Hermes”, whose customers need to be added to the waiting list and wait about two years to be able to buy the handbags.
On the other hand, ordinary firms target low-class consumers. Most ordinary customers would choose to buy famous brand products to follow high-class people. Then, those firms whose consumers’ desire to assimilate with high-class people is high should offer their products to masses and not produce limited edition goods. Vera Wang is a good example who evaluates its target customers very well. With low marginal cost, Vera Wang decides to face to masses. It opens stores in ordinary shopping malls, and let everyone can access to its products. The market proves that Vera Wang’s market strategy, which is facing to the masses, is correct (Amaldoss and Jain, 2008, p941). Customers buy luxury and limited edition products for pleasure and for others’ high evaluationof them. However, consumers do not favor all limited edition products. They only like the brands, which are monopoly, high quality, or the brands whose extra features are higher than the cost. Both consumers and firms should know about their position, and then to value the limited edition goods.For companies, the principle to produce limited edition products is to “preserve brand equity by controlling unit sales” (cited by Amadoss an Jain, 2008, p941).

Reference:
Amaldoss, W. ,& Jain, S. (2008). Trading up: A strategic analysis of reference group effects. Marketing Science, 27(5), 932-94.

Balachander, S. ,& Stock, A. (2009). Limited edition products: When and when not to offer them. Marketing Science, 28(2), 336-355.

Cheng, Yongming. (2010). People Lined Up at Night for Limited Edition of H&M, translated form Chinese. <http://xiaofei.tbshops.com/Html/news/57/28320.html>.

Dubois, B. ,Czellar, S. , & Laurent, G. (2005). Consumer segments based on attitudes toward luxury: Empirical evidence from twenty countries. Marketing Letters, 16(2), 115-128.

“Made with love: the enduring power of the limited edition. Marketing. October 6, 2010.

Symonds, Michelle. The Adavantages of Buying Limited Edition Art. <http://ezinearticles.com/?The-Advantages-of-Buying-Limited-Edition-Art>.

Wushi, Nunu (2008). What’s the Secret of Being La Mer’s VIP Customers, translated from Chinese.
<http://hi.baidu.com/%CE%E4%CA%BF%E0%EF%E0%EF/blog/item/72e71723c7138041ac34de60.html>.