The other day I finally got to trade in my slide phone that stayed with me all throughout high school for the more popular iPhone 6s. In rose gold, might I add. Now I'm happy.
As my family walked into Verizon, we were heartbroken to find out that our monthly bill would skyrocket an additional $50 to add the phone. Why? Because it was an iPhone. The latest and greatest.
There were some more affordable deals going on with Verizon with Samsung Galaxy and Droid phones. But they weren't "good" enough, at least for my preferences. Thankfully, we made a switch over to AT&T because of their Buy one Get one deal (offer lasts through August 31, so consider it!). And to think that I would be the cool one in the family because of my iPhone, now for a monthly bill of $230.00 we all get the iPhone 6s. Since my family is finally in the 21st century, I think we should celebrate by facetiming each other in the same room.
Now, if AT&T didn't have the relatively affordable plan going on, I would have settled with a Galaxy at Verizon, because aint nobody paying an additional 50 per month on an overpriced and overrated phablet. But it got me thinking as to why people still buy the iPhone, or more importantly why people buy because of the name.
You could argue and say that you choose the iPhone over the Samsung because of the "technology". Honestly, that's a load of BS. If the camera on your Samsung Galaxy S7 isn't producing images that are crystal clear enough, the problem is with your eyes not the damn phone.
The law of economics tells us that if the market deemed things to be too expensive, the price falls. If you've never taken a microeconomics class, fear not because the concept is very simple. Let's say that Farmer Joe is selling apples for $3 and Farmer Brown is selling apples for $4. Guess what? Farmer Brown and his family are going to starve because he's going out of business. Unless you're talking about organic apples vs pesticide apples, let's face it, an apple is an apple. You don't care where it's from. If the price of apples went up to say $10 regardless of where it's from people would stop buying them and instead get oranges or bananas. So why doesn't the price of an iPhone decline? Doesn't the market think it's too expensive?
Veblen Goods break traditional laws of economics. Veblen goods are luxury products that are in high demand because of their high prices. An increase in the price equates to an increase in status. The $849 price tag attached to the iPhone 6s is not stopping people from buying it. Popular Veblen goods include luxury cars, purses, diamonds, and perfume.
While the average person may not own a Mercedes or a bottle of DKNY Golden Delicious Million Dollar Fragrance (yes it costs $1,000,000), people are still attached to buying because of the name.
The issue with brands is not that you choose to buy because of the label, it's that you are putting labels on labels. Apple is better than Android. Nike is better than Skechers. Voss is better than Poland Spring. For crying out loud, it's a bottle of water. What's better about it?
The logic is straightforward, yet contradictory. People buy expensive "name brand" things because they feel a sense of pride and accomplishment. But when we see others driving a Mercedes, we associate it with greed and arrogance.
In the UK for example, more than a million people suffer from compulsive shopping disorder. If you have money to spend, buy whatever you please. In many instances however, even people in poor financial standings will splurge on the so called good stuff.
Buying the iPhone or a Micheal Kors purse is purely a want, not a need. There's no denying that. But hey, if doing so makes you happy, go for it.
