In this video, Alex Hormozi explores how the world’s richest man, Bernard Arnault, made his fortune through luxury goods and the psychology of the rich. Arnault owns companies such as Louis Vuitton, Christian Dior, and Givenchy, and his business model is recession-proof. The first lesson to learn from Arnault is to understand the psychology of the rich. This means recognizing that rich people think differently and want different things than the poor. For instance, the rich prioritize speed, convenience, and luxury, and they will pay a premium for products and services that meet their needs.
To create products that cater to the rich, businesses should study luxury brands and understand the four distinct positions in the market: bargain, best value, premium, and luxury. Luxury items have no price cap, and people associate their status with the purchase they make. This means that when you raise prices for luxury items, you can actually increase sales and profits.
The video also explains how raising prices can benefit customers by increasing their emotional investment, perceived value, and results. Higher prices can also attract less demanding customers, making it easier to manage the business. When a business has more money, it can deliver on its promises, improve its services, and attract better talent.
The video emphasizes that the key to selling is having full conviction that your product is the best and most elitist product in the market. To achieve this, businesses should focus on providing high-quality products and services, investing in good people, and reinvesting profits into the business. The goal is to create a snowball effect of positive testimonials, reviews, and momentum. On the other hand, charging too little can lead to a vicious cycle of unrealistic expectations, refunds, and chargebacks.
In summary, Bernard Arnault’s success can be attributed to his ability to cater to the psychology of the rich and provide luxury goods and services that meet their needs. To succeed in the luxury market, businesses should study luxury brands, focus on delivering high-quality products and services, and charge premium prices. By doing so, they can attract less demanding customers, increase profits, and create a positive momentum that can propel the business to success.