I have always wondered why
PC/Laptops prices dont come crashing down. Both products are in declining stage
in the Product Life Cycle, and have skimmed the market for a long time. The
Prices should be really low. This is exactly true of Mobile Phones too.
Instead, the manufacturers, add
unwanted features and keep the price artificially high, whereby inducing
'Solace Spending' by Consumers.
Why do people buy gadgets with
features that they don't need or will not be able to use fully?
For many years, marketers and
salespeople have realised there is money to be made selling people features
they do not need and may never use. Many people when asked about the
intricacies of their Mobiles or the complexities of their digital cameras are
not sure whey they did indeed buy. Most sport-utility vehicles with complex
off-road traction systems are rarely driven on anything but paved roads.
So if people don't use expensive
high-end features, why do they pay more to get them? A series of experiments
that explored this question found that people buy unnecessary features because
of two cognitive errors: 1) they overestimate the risk that a product without
such features will become obsolete, and 2) they overestimate the likelihood
that they will learn to use the new features.
Consumers, especially those
buying expensive electronic items, fear that if they don't buy this feature and
a new product launches on the market, then they may have to rebuy everything
again. Because features introduced more recently feel as though they are less
likely to become obsolete, consumers who buy them experience less anxiety. The
money they pay is really not for the feature but for the psychological solace
it purchases .
Another experiment found
consumers tend to think of new features as a kind of investment—something that
costs money but will pay for itself as they learn to use and love it. Of
course, most people never do learn to figure out the technology, meaning the
investment is largely a bust.
Cognitive errors, of course, are
not the only reason people buy things they cannot afford. A Sociological study
found that parents, especially poor parents, tend to buy products they cannot
afford because they are acutely focused on whether their children are fitting
into peer groups. Parents are acutely sensitive to how certain consumer
products influence their children's search for dignity.
There is one last reason people
pay more than they should for products: They mistakenly believe a product has
more value because it costs more money.
So the next time you buy a fancy
gadget at a premium price, reflect for a moment you are getting value for money
