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Why We Pay So Much for Brand Names

When we could purchase something just as good for much less money? It's a good question to ask ourselves as Valentine's Day approaches.

Part of this has to do with how it makes us feel. There was a joke going around in newly-rich, post-Soviet Russia that went like this: One man shows another man his watch and brags about how much he paid for it. The other man replies, "I know where you can get the same thing for even MORE money!"

A young woman in Tokyo pays 243,000 Yen for a Louis Vuitton suitcase emblazoned with the company’s iconic monogram, while a continent away, another woman purchases the same suitcase at the company's store on New York’s 5th Avenue for the equivalent price in dollars, $3,000.

Psychologist Jaehee Jung thinks that in the US, it's all about hedonism rather than status-seeking. She says, "American consumers generally buy goods for self fulfillment, rather than to please others. In Western cultures, where individualism is valued, there is generally less pressure to fit in with groups, such as peers and co-workers, than in Eastern cultures where collectivism is valued."

In contrast to this, French consumers respond positively to statements like: "true luxury products cannot be mass produced" and "few people own a true luxury product," perhaps because, despite the egalitarian French Revolution, many luxury goods originate in France. Jung thinks that "cultural heritage and pride might have made them feel luxury is not for everyone."

Meanwhile, Germans focus on function, placing emphasis on quality standards over prestige, as do the Italians, Hungarians and Slovakians. 

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