Comment by nine_k
3 days ago
> A OnePlus Android phone is considered an inferior good; an iPhone (or a Samsung Galaxy Android phone) is considered superior. Both are of excellent quality
No, the inferior good is a device with 2GB RAM, a poor quality battery, easy to crack screen, a poor camera. poor RF design and thus less stable connectivity, and poor mechanical assembly. But it has its market segment because it costs like 15% of the cost of an iPhone. Some people just cannot afford the expensive high-quality goods at all. Some people, slightly better-off, sometimes don't see the point to "overpay" because they are used to the bottom-tier functionality and can't imagine how much higher quality may be materially beneficial in comparison.
In other words, many people have low expectations, and low resources to match. It is a large market to address once a product-market fit was demonstrated in the high-end segment.
I mean "inferior good" as a macroeconomics term: https://www.investopedia.com/terms/i/inferior-good.asp. And the point of my comment is to show that product quality alone doesn't determine whether it's an inferior good.
I see your point. But the choice between an iPhone and a Galaxy is mostly the ecosystem. And the choice between OnePlus and a Galaxy S is mostly about the quality of the camera. And the choice between a Galaxy and a Xioami is mostly about trusting a Chinese brand (not for its technical merits; they make excellent devices). The real quality / price differentiation, to my mind, lies farther down the scale.
That is, the choice between a $10 organic grass-fed milk and $8 organic grass-fed milk is literally a matter of taste, not the $2 price difference. The real price/quality choice is between the $10 fancy organic milk, $4.99 okay milk, and $2.49 bottom-shelf milk. They attract materially different customer segments.
There are many behavioral economics ideas about smartphone choices. There are various psychological aspects, such as lifestyle, status, social and personal values, and political influences. That is all true.
The strongest decider for whether a good will show positive or negative elastic demand (and be considered superior or inferior) is probably how it's branded, pricing strategy included. For example, wealthy people shop in boutiques more than large retail centers, though the items sold are often sourced from the same suppliers. The difference? Branding, including pricing.
You're right about basic goods, such as groceries. Especially goods that are almost perfectly identical and freely substitutable, like milk. What's a superior or inferior good becomes hard to guess when there is a high degree of differentiation (as you say, ecosystems, cameras, security). It's easier to measure than predict.
Anyway, this is all a "fun fact." My original comment really does make the assumption that software, which is relatively substitutable, is like the milk example — the price and the inferiority/superiority are strongly correlated. And the entire expensive software market has collapsed like the expensive secondary market for used cars.