The Investigation on The Factors Influencing Lady Dior Handbag Consumption in China’s Luxury Market: Whether Price is The Dominant Factor

Gabelli School of Business, Fordham University, 150W. 60th St, NY, New York, USA

^* Corresponding author: schen440@fordham.edu

Abstract

The luxury industry is full of challenges especially under the COVID-19 pandemic, business has been struggling through, such as logistics problem. Despite the difficult economy background, China’s luxury market experienced a double-digit growth while Dior increased the price of Lady Dior handbag. According to the law of demand, quantity demand falls as price increases. Luxury goods are not necessities, thus in economics, luxury goods are defined to have an elastic demand. It is predicted that total revenue falls when price of Lady Dior rises. This is because of the elastic demand will lead to a fall in quantity demand but proportionately larger than the rise in price. However, the financial report of Dior has shown a rises total revenue and increase in demand for luxury goods. This paper explains why consumers are still willing to buy luxury goods even though price increases and the value of price elasticity of demand (PED) of Lady Dior handbag. PED is a numerical measure of the responsiveness of quantity demand of a product following the change in price of goods.