Cartier and Mercedes-Benz: Luxury Pricing in Practice

Cartier

"The Jewelers of Kings and the King of Jewelers"

Cartier jewelry is often known as the king of the jewelry industry. The company was founded in 1847 by Louis-François Cartier in Paris, France. As a high premium brand, Cartier sells to royalty and those who seek to live like kings. In 1902, King Edward VII of England purchased Cartier for his coronation. The tradition of purchasing Cartier by members of the royal family has been continued throughout the last century. In fact, Kate Middleton wore a Cartier tiara for her wedding to Prince William in 2011.

The Cartier Price 

In 2006, Cartier is the company that generated the most revenue in the 50 billion pound jewelry industry. Their strategy is to set different prices to different types of customers. However, in 2001, Cartier made a mistake. They decided to drop their entry-level products which were priced around 500 pounds in order to increase the perception  of the Cartier brand. Unfortunately, this decision backfired on the company. Many of their customers were entry-level buyers. As a result, the company's revenue dropped by 10%. Cartier reacted quickly. The company introduced their new Trinity Ring, a new entry-level product. The Trinity Ring has been extremely successful among customers to this very day! 

Mercedes-Benz

Mercedes-Benz was founded in Germany in 1924. Innovative engineering features were the main reason the brand became popularized. Initially, as a pricing strategy, Mercedes-Benz decided to mark-up their prices in order to achieve premium brand status. However, by contrast to Cartier, Mercedes-Benz's strategic approach for expansion was to start targeting entry-level customers. For example, Mercedes-Benz introduced new A-class vehicles for entry-level buyers. Unfortunately, this decision diluted the Mercedes-Benz's brand which resulted in decreased revenues in the long-term.

As we can see from the examples of Cartier and Mercedes-Benz, setting the right price is essential to maintaining brand equity in the luxury brand industry.

Sources

• http://jill47.hubpages.com/hub/The-History-of-Cartier
• Get Cartier! Defending a Crown (Video)
• Matt Haig (2011), Brand Success: How the World’s Top 100 Brands Thrive and Survive, 2nd edition, Kogan Page (pg 25-27)
• http://en.wikipedia.org/wiki/File:Cartier_logo.png
• http://www.miamiweddingplannerblog.com/cartier-trinity-ring/
• http://lisawallerrogers.wordpress.com/2011/04/29/kate-wears-queens-tiny-tiara/
• http://upload.wikimedia.org/wikipedia/en/4/48/Mercedes-Benz_logo.svg