Veen is a Finnish brand of beverages. Primarily, it is known to people because it sells bottled water at very expensive prices, so much so that a lot of interested individuals can’t help but wonder how its revenue-earning operations continue to run in spite of that fact. Why Is Veen So Expensive? Here are some reasons why Veen is so expensive:
Unsurprisingly, Veen claims that its bottled water comes from very exclusive sources. In short, those who are curious should know that some of Veen’s bottled water comes from a natural spring situated in Finnish Lapland, while the rest comes from a similar source situated in the Kingdom of Bhutan. This is important for understanding Veen’s prices because the increased production challenges make for increased production costs, with the result that some of that increase is passed on to consumers. For example, consider the case of transportation for the bottled water. Since Veen’s bottled water is produced in remote locations, this means increased transportation costs for bringing said products to a transportation hub before being shipped out to a wide range of retailers in a wide range of countries. In contrast, if the bottled water was produced at a transportation hub, the transportation costs would be lower because of the elimination of an entire step in the whole process. With that said, it is important to note that the increased transportation costs can’t even come close to explaining how Veen can survive by selling bottled water at more than $20 a bottle.
Brand building is one of the most important processes for a business. This is because a powerful brand makes it that much easier for the business to convince both potential customers and existing customers to buy its products and services, thus increasing its sales. Better still, the increased ease means a reduced need for the expenditure of time, effort, and other precious resources for each sale, meaning that the business’s marketing becomes more efficient as well. As such, it is no wonder that brands can have values in the billions of dollars, seeing as how they are more than capable of either making or breaking multi-national corporate titans.
Regardless, branding plays a huge part in how Veen can survive by selling bottled water at such high prices. Simply put, a brand is nothing more than the positive impressions that people have of a particular business, meaning that there are two important considerations. One, having an impression means that people are actually aware of the business, which in turn, means that said individuals can be considered potential customers. Certainly, it isn’t impossible for businesses to sell its products and services to people who are unwholly unaware of them beforehand, but the process tends to be much easier when said individuals come pre-informed because that eliminates a whole step in a sequence of events that can fall apart with incredible ease. Two, a positive impression is what convinces interested individuals to pay much higher sums for products and services. For proof, look no further than the huge differences that can be found in the prices for branded and unbranded products. Granted, some of the difference can be explained by material differences in the products and services that are being offered to interested individuals. However, there are plenty of examples in which material differences aren’t even close to being enough to explain the sheer gulf that can exist between the two categories.
With that said, conspicuous consumption might be the most relevant reason for Veen’s continuing existence. In short, there are a lot of people out there who should be familiar with the basic concept of demand, which tends to resemble a downwards diagonal line or curve on a Cartesian graph. Essentially, the idea is that the higher the price of a product or service, the lower the demand for that same product or service. Similarly, if this is true, then the reverse is true as well. However, it is important to note that the downwards diagonal depiction of demand is a generalization, meaning that there are definite exceptions to this rule.
For example, a product or service can be inelastic, meaning that the demand for it doesn’t change as much when its price changes. As such, the demand for such a product or service would look much steeper, so much so that a perfectly inelastic demand would just be a straight vertical line. Meanwhile, other products or services can have more elastic than normal demand because there are readily available substitutes for them, with the result that their demand looks flatter than the standard downwards diagonal line.
However, none of these cases are as striking as those of Veblen goods, which are a particular kind of luxury good. In short, luxury goods are goods for which the consumption increases at a more than proportional basis when income rises. Veblen goods take that even further by being even more in-demand when their price rises, which can seem like a violation of the very concept of demand until one remembers that reality can exist beyond generalizations.
In any case, people often believe that Veblen goods can exist because there are people who want to use their spending as a way to show their status. As such, a higher price doesn’t deter said individuals from consuming a product or service that has been branded in the right manner because that just makes it even more prestigious and thus even more desirable in their eyes. Due to this, while Veen’s bottled water might not actually be better than either other brands of bottled water or the other potential substitutes by a meaningful margin, the perception of luxury is more than worthwhile for said individuals.
Having said that, it is also interesting to note that there are some studies suggesting that people can actually get more pleasure from a product or service than is expensive than something that isn’t as expensive, meaning that for them, price is very much connected with the perception of quality and thus the collection of utility. As such, Veen’s bottled water really is better for some individuals, not so much because of its intrinsic value but because of the perception of intrinsic value, which matters a great deal when it comes to such topics.