Snob Effect

Posted in Marketing and Strategy Terms, Total Reads: 1010

Definition: Snob Effect

Snob effect is the situation where the demand for a product by a high income segment varies inversely with its demand by the lower income segment.


Unlike normal products whose demand increase as price decreases, goods with snob effect have the opposite effect. The graph shows the demand curve for a normal product, whose demand keeps decreasing as price increases. However, after a point the demand increase when price increases and these goods are the snob goods and this phenomena is called snob effect.

The situation arises with a desire to possess unique, expensive or unusual goods. These goods generally have high economic value but low practical value.

Example: example of “snob” goods are branded accessories like Rolex watches or Louis Vuitton bags. These accessories are priced at a very high premium and such products are brought by the rich because of its expensiveness and exclusivity.



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