September is a busy month for the smartphone industry since
many smartphone makers including those big names like Samsung, Apple and
Samsung, unveil their latest products in
September. Most companies have several product lines, even
Apple has created several iPhone categories, given it has a history of only
releasing one model each year. Why do smartphone companies release various
product lines? The answer is simple that they are doing this to discriminate
prices in order to capture more consumers and gain more profits.
Consumers have different needs and aspects for smartphones,
so the prices they can accept vary. Some people may be willing to pay awful a
lot to get a new smartphone as long as the smartphone is equipped with the most
cutting-edge technologies. Some people may be only willing to pay a significantly
lower price for a new smartphone due to various reasons. A smartphone maker can
certainly put all of their available cutting-edge technologies into one product
and set a very high margin for this product’s price, the first group of
consumers will be very likely to pay for this product willingly. However, the smartphone
company does not want miss out the latter group of consumers who are not ready
to pay high premiums for new smartphones, so the company provides this specific
group of consumers with a relatively cheap smartphone with moderate specifications
which they are much more likely to buy. By providing these two types of
smartphones, the smartphone maker can capture those tech enthusiasts as well as
ordinary consumers. In addition, some smartphone makers do not just stop over
there, they are providing more than two product lines to capture an even wider
range of consumers in the market. More levels of price discriminations these
smartphone makers can create, more profits they can earn.
Of course, there are far more industries using price
discrimination to gain greater profits; but the smartphone industry gives us an
observable and classic example of price discrimination.
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