Would you have imagined that the cheaper edition of any product is what feeds a rich man's vanity?

I'm currently car-shopping, and I find that the features I want are frustratingly absent in the models I can afford, even if it doesn't cost the company much to put them into the entry-level versions. I wondered why, and my! it turns out that the answer lies in Cupertino, Tirumala, T. Nagar and Seattle.

When Apple announces a new product, it's a bit like Saravana Stores announcing a 75 per cent off ColorPlus sale with a buy-one-get-five-free offer, but on a global scale. You might point out that Saravana Stores does not sell ColorPlus, but then, as a columnist, I'm entitled to analogical licence. People who are loyal Apple customers (a demographic the Internet fondly calls Mactards) flock to the nearest Apple store or website to ritually lay down an offering of their credit cards to the deity of Cupertino, just like how the citizens of Chennai run their own physics experiment in T. Nagar by attempting to mass enough people to push Saravana Stores to the brink of gravitational collapse and the formation of a super-massive black hole.

The funny thing is that the cult of Apple is not that exclusive hippie commune in California anymore. It's a well-organised religion whose Pope announces products with religious fervour and the flock meekly obeys the commandment to “covet another man's smartphone” and more importantly, spread the word of the “Glory of The Product” as online missionaries of the faith. When Moses came down the mountain with his tablet, he managed, at best, to convince a bunch of people to invest in new real estate in the Israel area. When Cupertino introduced the iPad, people sold real estate to buy up a 10-inch computer without a USB port.

Truth be told, I'm a Mactard myself. A large percentage of the technology press simply doesn't understand why the lack of a USB port on the iPad does not matter. It's difficult to get into details, but there's something about the overall usability of their products that make it difficult for me to use anything else. Of course, I use an Android phone just to maintain street cred and avoid the Mactard tag in social settings. The smart missionary occasionally wears vibhuti to blend with the hoi polloi, you see.

The introduction of an iPhone also tends to socially de-value the hipster effect of owning the previous version. In fact, Apple now sells 3 versions. Good consumer product versioning is best understood by studying products of Tirumala. Apple's line or Starbucks coffee options are exercises in smart pricing. Once you study the fine differences between Brahmotsavam, Kalyanotsavam and Suprabhatam pooja, this will become quite clear.

Essentially, the problem statement is “How high do I price my products?” with the dilemma arising from the fact that if the prices are too low, margins will be low and if too high, not enough people will buy them. So the seemingly single Balaji product of Tirumala is still sold in several flavours, each of them at vastly differing price points, with the only differences being access time (function of queue length) and experience duration (inversely proportional to the number of jaragandis). It doesn't cost the temple administration more to offer a Kalyanotsavam over a Brahmotsavam, but rich people will not think twice about paying for the former simply because they get more bhakti bang for their buck.

Tim Harford, the economist, points out that in the early days of the railways, third class coaches came with no roofs because they had to artificially create a difference between first and third class! So, the next time you buy a cheaper edition of any product, be it a coffee from Starbucks, a laptop from Apple or a Brahmotsavam from Tirumala, remember that your suffering with an inferior product is what feeds a rich man's vanity, not the superiority of his choice.


MetroplusJune 28, 2012