CASE STUDY ON APPLE iPHONE: VEBLEN EFFECT

Dr.R. Satheeshkumar, Professor, Centre for Post Graduate Studies, Surana College, Bengaluru,
Karnataka, India.E-mail:satheeshk5282@yahoo.com
Dr.P.Ravichandran, Professor, Vivekananda Educational Institutions, Thiruchengodu, Namakkal,
Tamil Nadu. E-mail:mba.ravichandran@gmail.com
Sindhu K. K, Assistant Professor, Centre for Post Graduate Studies, Surana College, Bengaluru,
Karnataka, India. E-mail:sindhu.mba@suranacollege.edu.in
Abstract
This case study discusses on Veblen effect with respect to Apple iPhone. The consumption of
Apple iPhone is viewed as symbol of status & wealth and whose price is very expensive as
compared to normal standards that enhances the status and wealth. Apple iPhones’ object
properties includes iOS, App Store and 360 Web Browser. The iOS mobile operating system,
App Store  and 360 Web Browser are created and developed by Apple Inc and Digital Poke
for iOS operating system respectively. The demand curve of the Apple iPhone is inelastic
because of status attached to it due to high price. Customers of Apple iPhone measures the
satisfaction derived not by the utility value, but by the social status and value.
Key Words: Apple iPhone, Demand Curve, Value and Veblen Effect.
CASE DESCRIPTION
The consumption of Apple iPhone is viewed as symbol of status & wealth and whose price is
very expensive as compared to normal standards that enhances the status and wealth. If
virtually everyone owns an Apple iPhone, it is by definition not a prestigious good (Perceived
Unique Value).The role playing aspects and the social value of brands can be instrumental in
the decision to buy Apple iPhone (Perceived Social Value). Apple iPhone Products’
subjective intangible benefits such as aesthetic appeal clearly determines the brand selection
and in turn it satisfies an emotional desire of customers (Perceived Hedonic Value)
Apple iPhone is derived partly from technical superiority and extreme care that takes place
during the production process. Customers develop prestige meanings for brand based on
interactions with people such as aspired and /or peer group and consideration of its object
properties. Apple iPhones’ object properties includes iOS, App Store and 360 Web Browser.
The iOS mobile operating system, App Store and 360 Web Browser are created and
developed by Apple Inc and Digital Poke for iOS operating system respectively. The iOS is
the second most popular mobile operating system globally after android. The iOS user
interface is based upon direct manipulation using multi touch gestures that removed keyboard
and mouse. The App Store is a digital distribution platform for mobile apps on its iOS
operating system. The store allows users to browse and download apps developed with
Apple's iOS software development kit. BeeSafe is a security service that notifies family
members and friends in case the user of the app get in to danger. Face ID and Face Time are
the added features of Apple iPhone that fulfil hedonic needs.
The demand curve of the Apple iPhone is inelastic because of status attached to it due to high
price. Customers of Apple iPhone measures the satisfaction derived not by the utility value,
but by the social status and value.
QUESTIONS FOR DISCUSSION:
1. Do you think Apple brand is an example of Conspicuous Consumption of Veblen Goods?
2. Demand curve for Apple brand whether should be downward sloping or upward?
3. Is this an exception of law of demand? Why?
TEACHING NOTES:
1. Yes, it is an example of conspicuous or prestigious consumption of goods.
THORSTEIN VEBLEN EFFECT:
Few firms price their products above the ongoing or prevailing market price of the
competitive products. This pricing strategy is adopted when a seller intends to achieve a
prestigious position among the sellers in the market. This is a more common practice in case
of products considered to be a commodity of conspicuous consumption or a prestigious goods
or deemed to be a product of superior galaxy. Thorstein Veblen a noted Economist believe
that there are certain goods/commodities which are purchased by rich people not for their
direct satisfaction but for their “Snop-appeal” or Ostentation/Prestigious look-This shows the
symbol of status in the society.
2. The demand for such goods are slope upward because its price increases everyday due to
certain up-gradation in terms of design, technology and sophisticated add in features to attract
the more people to buy it.
Skimming Price Strategy: It is more suitable for innovative & luxurious products and firm
ensures the distinctiveness of the product.
 FIGURE NO:1- DEMAND CURVE FOR APPLE iPHONE

P3
P1 Price

Q1 Quantity Q3
3. It is an exception to law of demand because the consumption of Apple iPhone is viewed as
symbol of status and wealth and whose price is very expensive as compared to normal
standards that enhances the status and wealth.