Xiaofan Chen wrote:
> I think there are quite some truths in what the processor says.
> Many companies will have such stratagies called something like
> market segmentation. Product Line A deals with the basic needs
> of customer, sells for $X. Product Line B adds some features
> so that cost increase is about $Y. The selling price of B is
> then $(X+10Y) or $(X+100Y).

Isn't that the same thing as saying "build what the market wants"? After 
all, you can't *force* people to buy any of the products at the price you 
set. So in effect, the market determines the price you can charge, and the 
quantity of each product you can build.

>> I'm joking of course, but you don't build minis or rolls royces, you 
>> build
>> what the market wants.
>
> The problem is that the people in the market may not know what
> they want. They trust the advertisement or the salesmen.

Xiaofan, how often do ads make YOU buy something you don't want?

> If Tata would be able to build Rolls Royce, they would do it,
> instead of Tata Nano.

Not true. In fact, I'm sure they have the technical capability and could 
produce a Rolls Royce if they devoted the resources to it. However, the 
folks at Tata know that they are better off selling millions of cheap, small 
cars to buyers in the developing markets.

>> More often than not, you just need to build something adequate. In such
>> cases, aiming for better performance or adding bells-and-whistles is a 
>> waste
>> of resources.
>
> Not true for the gadget business. The bells and whistles are what
> people want in that case.

In order to have a meaningful argument, please define "gadget".

> Or the cool factor like in the case of
> Apple.

I'm afraid you don't really understand why Apple products and marketing are 
so successful. I'm sure Mac and iPhone people on this list would be happy to 
explain to you the *real* reasons they bought an Apple product. :)

> For task A, product B and C both can do it adequately. But product
> C can do one extra thing that Task A does not need. Still many
> customers will buy Product C even though it costs a bit more.

It all depends on perceived customer value. Your statement above is true if 
the customer feels that he's getting more than he's giving up.

Vitaliy 

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