The snob effect occurs when the demand curve is positive. That is, when the relationship between price and demand is positive. The curiosity of the snob effect is that if the price increases, the demand increases. And vice versa, if the price falls, the demand falls. Unlike normal goods .
The term snob refers to those people who imitate the behaviors of those people whom they consider superior or distinguished in some area. The etymology of the name from Latin clarifies the true meaning of the term. It is a reduction of Latin (site nobiliate). Words that in Latin meant ‘no nobility’. Therefore, the snob effect is the effect that is produced thanks to this type of behavior. People who are not distinguished, but who acquire exclusive or differentiated goods as if they were truly distinguished.
Example of snobbish effect
Below we will present a series of examples on products that are usually considered exclusive.
- Wines:It is usually considered that the higher the price of a wine, the higher its quality. In certain strata wines are consumed, the more expensive the better. The prestigious wine tasters can affect the price and demand of a wine.
- Brand clothing:There are certain brands, the price of which does not correspond to the materials used. A wool sweater without a brand will be much cheaper than a wool sweater from the Lacoste brand. If Lacoste lowered the price of its products, in the long term it would lose demand. Why? Because the appeal of brands like Lacoste, regardless of the quality of their products, is their exclusivity. It is not carried by everyone, because it is not affordable. If the price fell, I would lose that appeal.
- Luxury cars:The speed allowed on the roads is limited, so no matter how powerful a car is, it will not be able to fulfill its transport function faster. To a certain extent, due to reliability, safety, mechanics and comfort, the price increase makes sense. However, there are luxury cars characterized by their enough power and elements in great detail. People buy those cars because it is the way to make sure that few people will take them. The more expensive and exclusive the more people of that class will want it.
The snob effect is a rich source of studies concerning consumer choice. A consumer does not always buy the optimum economically speaking. Which explains that we are not always totally rational.