Luxury vs. Utility

Luxury vs. Utility

There is a class of consumers in the world who buy from emotion: the elite brand, the top of the line, the luxury. This class of consumers is large and growing - we live in a prosperous society.

Another class, though, is utilitarian - they want stuff that is practical, functional, value-oriented. These people buy with logic and rationality dominating the emotion or feeling.

Of course, everybody is in both classes; and we vary our behavior by purchasing category. For car insurance I am utilitarian and for sneakers I am emotional.

My current cell phone business is built on the idea of that divide.

And here is a snippet from the coffee wars, identifying this very distinction. (When I shop at Starbucks it is for hard, practical reasons -- faster service, predictable product, stronger coffee -- that justify the higher price for me; and I don't care about/slightly resent the environment in the stores.)

WSJ.com - Dunkin' Donuts Tries to Go Upscale, But Not Too Far

Early research showed consumers wanted nicer stores, but revealed a potential problem: the loyal Dunkin' tribe was bewildered and turned off by the atmosphere at Starbucks. They groused that crowds of laptop users made it difficult to find a seat, Dunkin' says. They didn't like Starbucks' "tall," "grande" and "venti" lingo for small, medium and large coffees. And, Dunkin' says, they couldn't understand why anyone would pay as much as $4 for a cup of coffee.