The problem with that strategy is that, used at scale like it is, it just creates a perverse incentive to raise the prices on your crappy product, without chang

The problem with that strategy is that, used at scale like it is, it just creates a perverse incentive to raise the prices on your crappy product, without changing anything else. For example, in the liquor market, there are basically 4 price points for 750ml bottles: $20 and below is generally swill, but it's cheap swill. Companies here are competing on price. $40-60 gets you something worth drinking, but perhaps not prestigious. Companies here are competing on quality. $100 gets you something prestigious, and companies are competing on such, and the $200+ price point gets you something rare. If I buy a $30 dollar bottle, in a sane world it would be something with a middling tradeoff between price and quality. Instead what you get is something that is as bad, if not worse, than the $20 stuff, because the company is simultaneously failing to compete on price AND on quality. That leaves them in the hail-mary zone of hoping to offload their product on uninformed buyers, who typically would be in $20 range, but think they're splurging on something a little nicer. Same principle goes for consumer electronics, like headphones. There's the $20-ish range of cheap stuff, there's the >$100 range of good stuff (though less cleanly sorted than liquor, probably because people buy a lot more bottles over time than they do headphones), and no-mans land of $50 which suck and cost twice as much as the $20 pairs.