The Effect of Brand Loyalty through Advertising of Luxury Goods on Demand Elasticity and Sales of Products Sold

The market for luxury goods is a rapidly expanding sector of the economy. Sales of goods from the top 100 luxury companies contributing an average of over $2.1 billion USD to the global economy annually. The prices for luxury brand prices are known to be inelastic, with expensive price tags for goods sold contributing to a neutral or positive impact on the brand’s image. Quality of production and prestige help to keep luxury goods popular among a limited consumer-base that can afford the exorbitant costs of purchase, yet this doesn’t explain why sales continue to accelerate in brands like Balenciaga, Gucci, and Supreme. How do such luxury companies continue to grow their sales?

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