Which iPhone are you buying?
Yesterday my colleague and I were debating which iPhone version he should buy since he has finally decided to give up his old blackberry. With the launch of the 2 new models, his choice set included the earlier model iPhone 4S, the step-down model iPhone 5C and the most high end version iPhone 5S. While we were comparing the three models, the iPhone 5c quickly went out of favor and the debate centered around the other 2 models.
This anecdotal experience, however, seems to be a representative of the market. While Apple continues to break all the records in iPhone sales, an interesting pattern has emerged. Analytics research suggest that the 5S model is outselling the 5C model by a margin of more than three to one in US. In Australia, this seems to be as high as eleven to one.
Why would a higher price model outshine a cheaper version by such a large extent? Lets try to explain using the concept of Context Effects. People’s preferences are often uncertain and are constructed dynamically in response to a choice set. This dynamic nature can thus be influenced by the format and the manner of the presentation.
There are multiple Context effects that influence consumer’s choice behavior. Attractiveness effect is a key one that is relevant in this situation. In an expanded set of choice, the similarity between certain options can make one of them appear more attractive. This will happen if one option makes the other one look superior. For example, in a choice set with two options X and Z, introducing a third option Y which is similar but inferior to option Z, leads to an increase in the preference of the superior option Z.
The iPhone 5C and 5S models have many technical similarities in terms of display, memory options, ports, thickness etc. iPhone 4S seems more different. In fact, introducing both the new models as part of the iPhone 5 series, ensures that iPhone 4S stands out as a separate evaluation option. The low price difference between 5C and 5S coupled with the faster processor and a slightly better camera in 5S, establishes the superiority of 5S over 5C. As consumers, when we compare the 3 models – 4S, 5C and 5S, 5S comes out as the most favorable option.
iPhone 5C works like a decoy by letting 5S come out as a clear winner. In other words, iPhone 5C may be key to the success of iPhone 5S.
So, which iPhone are you planning to buy?
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