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Monday, October 20, 2008

Will this crisis affect luxury products?

Investors worry that consumers and companies won't be able anymore to afford expensive products.
Most of the growth in the technology market is at the super-low-price end, and many companies still don't play there.
But in my opinion it would be a terrible mistake to try to compete on prices.
Many products on the market today benefit of the magical halo of quality and consumers well understand that quality has its price.
It is true that it will be more and more challenging to maintain growth and margins moving out of a small, passionate high-end market and into the mass market, but it looks like the mass market and consumers are sick of cheap products that do not work and do not last.
Besides, if history is a teacher, we do not see companies like BMW or Mercedes out of business every time the economy weakens.
So, what will happen?
If a company has no debts, high margins and fast growth rate in the industry, has not so much to fear.
Let the stock market crazily go up and down at the end mathematics will win.
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