The law of demand states that the quantity demanded increases as price decreases. However, this might not be the same case in the real world especially in markets of some high-end products such as smartphones or luxury cars.

iPhone 5c with more affordable price

One of the examples is that Apple’s flashy flagship 5s outsold the cheaper colorful version 5c serves as much as 500% after the big launch. Some might assume that it was the competition between 5s and 5c resulted in the shocking low sale of 5c, so Apple，though fails to make 5c as popular as 5s, is still the ultimate winner. But whether the low price of 5c would damage Apple’s brand as a high-end tech product company is controversial.

Mercedes-Benz’s new launch—Sedan from BERFU’s blog also reveals the same concern as is illustrated above. The setting of low price of the new car aimed to attract younger customers but analysts were uncertain about luxury buyer’s reaction to the company’s new movement. Customers who value Mercedes as a luxury brand to raise their social status might turn towards other rival brands such as BMW.

Mercede’s New Launch—Sedan

Instead of blindly reducing price to gain more customers, the best option to grow the company is to recognize customer’s value proposition and satisfy their needs.

Reference:

IPhone5c. Digital image. Apple.com. N.p., n.d. Web. 12 Nov. 2013. <http://store.apple.com/cn/buy-iphone/iphone5c>.

Berfu, Apaydin. “Mercedes-Benz’s Lower Price Sedan.” Web log post.Blogs.ubc.ca/berfuapaydin/. N.p., 8 Oct. 2013. Web. <https://blogs.ubc.ca/berfuapaydin/2013/10/08/mercedes-benzs-lower-price-sedan/>.