Having just given a pair of Crocs as a birthday present, I began to wonder about their popularity.
Economics could have some answers.
The Economics of Crocs
We know that Crocs are “aesthetically questionable” and yet they just reported record annual revenues of $3.6 billion. A slew of economic ideas can explain why we buy them.
But first, some history…
The Crocs story starts during 2002 when a Colorado company introduced them. Marketed as “amphibious” like crocodiles, they made their debut at the Fort Lauderdale Boat Show in 2002. At the show, when people said, “Man, those are ugly,” the company founders said, “Just try them on.” In three days, they sold 1,000.
Reference Points
Called a reference point by behavioral economists, we just mean a comparison. For gasoline, the reference point could be a prior price that makes us feel what the station currently charges is cheap because the new price is lower. Resembling a Danish clog, the Croc immediately had a reference point through a precursor to which people could relate. Made from a patented material called Croslite, their light weight has the reference point of heavier more traditional clogs.
Utility
The shoe also generates considerable utility that can be defined as usefulness or satisfaction. The Croc is reputedly comfortable for people who are on their feet all day at work like hair stylists and chefs or waiters. They are also easy to clean and put on. Much less practical, celebrity endorsements from people like Justin Bieber (who also has his own Croc design) add to utility for some of us.
Complementary Products
Crocs got a boost from its purchase of Jibbitz in 2006. As the shoe charms that let wearers personalize their Crocs, Jibbitz was the perk that injected creativity and personalization. It was a complementary product that added to the Crocs’ appeal, especially on Instagram where that personal touch resounds far beyond your feet. Then, further adding appeal, we have the collaboration with products like Coca-Cola (shown below) and the Balenciaga Croc (shown in our featured image with its Jibbitz) that sold for $850.
Law of Demand
Finally we could cite the law of demand that expresses the inverse relatioinship between price and quantity. Because a lower price creates the incentive to buy more (or at least one pair of Crocs) I was willing and able to spend a not too pricey $54.99 on Coca-Cola Crocs.
These were the crocs:
Our Bottom Line: Economics is Everywhere
About much more than money, economics is a part of our everyday lives. When we need to understand our behavior, even more than psychology, economics has some answers. And, we can always start with the tradeoffs required by every decision. Buying Crocs means we did not spend that money or time on something else.
Why?
Because of the economic ideas that explain our preference for Crocs.
My sources and more: Thanks to my Axios Closer email for shifting my focus to the economics of Crocs. From there, the NY Times, the Harvard Crisson, and glam.com had some detail. Then, W Magazine had even more as did Fast Company.
