Why some brands can charge more: Five elements of premium price advantage

David Gutting

Pricing power of brands is an equalizer in marketing. People overpay for Gucci and Chanel, that’s why they’re Gucci and Chanel – but they do also the same for everyday brands.

Recently, I bought a raincoat from Lululemon. It was a considered but irrational purchase. I was browsing the store near me in Northern Virginia and liked the coat, but the $298 price tag was ridiculous. About a week later, I put through an online order and picked it up from that same store.

Lululemon doesn’t do markdowns like J. Crew or Banana Republic, so, yes, I changed my mind. My elegant, stylish wife had convinced me that the garment reflected the price of quality, pointing out notable differences between the Lulu coat and something I might buy at Target.

Some...

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