When Should Luxury Brands Go On Sale?
Featuring Sarang Deo
Should luxury retailers discount or protect exclusivity? A study finds when markdowns help and when they hurt.
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Sarang Deo
Professor of Operations Management. He also serves as the Deputy Dean for Faculty and Research and as the Executive Director of the Max Institute of Healthcare Management (MIHM). His research focuses on healthcare delivery systems, with a particular interest in how operational decisions influence population-level health outcomes.
Key Takeaways
- Markdowns are most effective when exclusivity matters only to few consumers. When a large portion of the customer base values exclusivity, discounting can undermine the brand’s image.
- Keeping inventory low, even during high demand, can drive full-price purchases through the perception of scarcity.
- Strategic delays in buying are less harmful when exclusivity is highly valued, as 'snob' consumers tend to purchase early regardless of potential markdowns.