Why is iPhone X sold much better than iPhone 8?

The answer to the question that why iPhone X is sold much better than iPhone8 can be concluded by one simple answer, that iPhone X is much better than iPhone 8. However, I would like to answer this question from a different angle, consumption decision making (the demand side factor), rather than the quality differences of the products (could be seen as the supply side factor).

There are two main factors that consumers concern about when making their consumption decisions: one is the price, and the other is the utility. The prices between iPhone 8 and iPhone X are different; however, in my opinion, such price difference has not been significant enough to differentiate the two products’ target consumer groups. Once both phones target the same consumer group, the two phones compete with each other. Since the utility gained from an iPhone X is so much greater than the utility gained from an iPhone 8, consumers of course prefer iPhone X over iPhone 8, unless consumers are extremely inpatient that they could not wait for one more month after iPhone 8 is available (of course, the time could be longer as the consumers need to wait another several weeks after they place their orders for iPhone X). Therefore, when the demand for iPhone 8 is low, it also implies that the demand for iPhone X is much greater, as the total demand for higher-tier iPhone is relatively fixed.

In addition, the utility gained from buying a iPhone does not only come from the functions that an iPhone has got, but also comes from the signals sent from buying an iPhone. The signal effect of buying an iPhone is sometimes more important than the actual functions that the machine gives to is. Owning an iPhone can signal others that you are a fashionable, cool person from a good background (such as having relatively higher incomes, wealthy family backgrounds, being young and energetic). When consumers are trying to choose between iPhone X and iPhone 8, the effective signalling effect of buying an iPhone 8 only lasts for a month before iPhone X appears in the market, so the average cost of buying the signalling effect of an iPhone 8 is a lot more expensive than the average cost of buying the signalling effect of an iPhone X.

Therefore, from customers’ perspective, it seems more cost efficient to buy a relatively more expensive iPhone X, as the signalling functions gained from the two products are incomparable and the signalling function is the most important function for many consumers.