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The more a product is differentiated along a dimension consumers care about, the higher price premium it can demand

The more a product is differentiated along a dimension consumers care about, the higher price premium it can demand The more a product is differentiated along a dimension consumers care about, the higher price premium it can demand
Source: Ugo Gattoni via itsnicethat
Playing to Win
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Differentiation between products is driven by the activities of the firm: product design, product performance, quality, branding, advertising, distribution, and so on. The more a product is differentiated along a dimension consumers care about, the higher price premium it can demand. So, Starbucks can charge $3.50 for a cappuccino, Hermès can charge $10,000 for a Birkin bag, and they can do so largely irrespective of input costs.

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When you fly, everyone knows that the dimension that makes us buy our 6 dollars bottle of water is that of distribution, that of the very moment I want to drink. I want to now. And I'm dying of thirst, no matter what the price of a bottle of water in everyday life, at 35,000 feets above the ground, I am willing to pay my beveraege six times the normal price.

By SourceL | 07/12/2019

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