Whats in it for the Elite?

I’ve been thinking about two sided markets a lot lately. Two sided markets are where two distinct customer groups are serviced by the same provider and the existence both customer groups provides value to the other. Eg Computer Games. Computer Game Developers need lots of consumers with a platform for them to be able to invest in game development, and, consumers with the platform need lots Game Developers to produce Games, for them to want to purchase the platform.

Conceptually this isn’t that hard. But what I have been trying to understand is the luxury goods market. Is it two sided? General consumers, where the sales and profits are, aspire to own the products because they value their “exclusivity” and the psychology of owning something that the likes of Brad Pitt and Angelina Jolie own.

What I don’t get is what’s in it for the “elite” that are the ambassadors for the luxury goods. I understand sponsorship deals like Tiger Woods recommending golf shoes. Sponsorships make up the majority of his income. But what happens when the sponsorship value is non-existent or immaterial? Certainly Brad Pitt doesn’t aspire to be Brad Pitt, and the sponsorship value is nothing compared to what he makes from one movie. Plenty of the elite also pay for their own goods.

Because this has been bugging me, I have designed a Churchill Club event for this Thursday to get people to talk on the subject. Note : Most Churchill Club events have a topic I want answered at their core.

My suspicion is that there is clear value to the “elite” in owning luxury goods, its just not obvious to me. When it does become obvious, I’m wondering where else the business model can be applied?

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