Bandwagon EffectOf iphone in

india

Compiled by:Raghvendra naragund

DEFINITIONS A psychological phenomenon whereby people do something

primarily because other people are doing it, regardless of their own beliefs, which they may ignore or override.

The bandwagon effect: “the extent to which the demand for a commodity is increased due to the fact that others are also consuming the same commodity (Leibenstein, 1950).”

The bandwagon effect is when people do or believe something just because the majority of others are doing it. The bandwagon effect is a great example of conformity and groupthink. More and more people will join a group or belief just because others are doing it.

The bandwagon effect has wide implications, but is commonly seen in politics and consumer behavior.

This phenomenon can also be seen during bull markets and the growth of asset bubbles.

This tendency of people to align their beliefs and behaviors with those of a group is also called "herd mentality.“

In politics, the bandwagon effect might cause citizens to vote for the person who appears to have more popular support because they want to belong to the majority.

Bandwagon Effect:An example of the bandwagon effect is if someone buys a new iphone just because everyone else it. This person may not have any need or use for the electronic, but it’s a popular item and everyone else has one.

Examples of Bandwagon iPhone

Apple can increase its prices by 30% and still see an increase in demand of almost 200%!!

Apple BandwagonA statement suggesting that everyone is using a

specific product, so you should, too!Join the “in crowd.”

One explanation for the bandwagon effect with Apple products is due to the lure of conspicuous consumption - to display one’s high status, hence increasing the appeal of owning and displaying the product.

In much of the same way a peacock displays its vast array of colorful feathers to attract mates and ward off enemies, Apple customers can display their ability to pay high premium prices; thus, displaying to people that they are successful, different, and intelligent.

on Jul 23, 2015Cook said that the sales of iPhones in India saw a massive 93 percent year-on-year growth in the third quarter of this year. While having a comparatively smaller user base to China, the growth in India is bigger than the 87 percent growth witnessed in China, Hong Kong and Taiwan

The formula for calculating price elasticity of demand is:

Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price

Consider the following data related to the Apple iPhone 4 versus the Apple iPhone 5:

iPhone 4: $499 Demand in first 3 days of release (iPhone 4): 1,700,000 30.1% iPhone 5: $649 Demand in first 3 days of release (iPhone 5): 5,000,000 194.1%

(Data on prices and demand are from Wikipedia and other news releases )

Price change Duration Demand %

When we divided the change in quantity demanded by the change in price demanded our price elasticity of demand = 6.46. The price elasticity of demand is therefore elastic (greater than one) as the price has an effect on the quantity demanded. By the way, revenue is maximized when price is set so that the PED is exactly one (both % changes will be the same).

With a 30% increase in price the demand for the new version of the iPhone increased 194%. This is a direct correlation to the bandwagon Effect and so the Apple iPhone would be considered a bandwagon product.

Conclusion: The bandwagon effect is positively affecting the sale of iphones in india.

Thank you