4 ms·
It's known as "market segmentation" and it's been around forever. Look at CPUs, car engines, smart phones - same hardware with different feature bits enabled al
by brtkdotse 3y ago
It's known as "market segmentation" and it's been around forever. Look at CPUs, car engines, smart phones - same hardware with different feature bits enabled allows you to sell the same widget cheaper to a different demographic without destroying the value proposition of the more expensive variant.
- em500 3y agoYeah, this sounds like textbook price discrimination via market segmentation to me. Producers do this to capture more of the consumer surplus value (willingness of some consumers to pay more than others). The alternative is to offer a single model for a price somewhere in between. Without the segmentation the richer / more willing to spend consumers save some money, but some of the poorer / less willing to pay consumers get priced out of the market. With effective price discrimination, the supplier gets higher profits, but there's also some cross-subsidy from bigger spenders to the more thrifty ones, so there's also some progressive redistribution.
- ilyt 3y agoWell, if there was a proper competition the "cheaper but better performing model" would capture some of the competition market, but headphones are bit too subjective market for that.