Core Viewpoint - The article discusses the phenomenon where higher prices can lead to increased sales, challenging the common belief that lower prices always drive better sales performance. It highlights the concepts of Veblen Effect and Giffen Goods to explain consumer behavior regarding pricing and demand. Group 1: Veblen Effect and Luxury Goods - The Veblen Effect suggests that consumers may demand more of a product as its price increases, particularly for luxury goods, as higher prices can enhance perceived value and status [11][14][20]. - Examples include a warming underwear factory in China that raised prices from 50 yuan to 140-150 yuan, resulting in a 30% increase in orders [9]. - Similarly, luxury brands like Chanel and Van Cleef & Arpels have successfully increased prices while boosting sales, demonstrating the effectiveness of this pricing strategy [12][13]. Group 2: Giffen Goods and Consumer Behavior - Giffen Goods illustrate a scenario where demand for a product increases as its price rises, contrary to typical economic expectations. This phenomenon was observed during the Irish Potato Famine [22][24]. - The article explains that when essential goods like potatoes become more expensive, consumers may buy more of them due to the lack of affordable alternatives, showcasing a unique consumer psychology [28][36]. Group 3: Price Elasticity and Market Dynamics - The concept of price elasticity is crucial in understanding consumer behavior. Products with high elasticity see demand fluctuate significantly with price changes, while necessities tend to have inelastic demand [56][57]. - The article warns that relying solely on a low-price strategy can lead to detrimental price wars, ultimately harming the industry as a whole [59]. Group 4: Consumer Preferences and Pricing Strategies - The article argues that consumers do not always prefer cheaper options; instead, they may seek products that offer perceived value, even at higher prices [44][45]. - It emphasizes the importance of aligning product pricing with its perceived value and utility, suggesting that higher prices can sometimes lead to better sales if consumers recognize the product's worth [60].

Group 1 - The article discusses the misconception that lower prices lead to higher sales, highlighting instances where raising prices has stimulated demand instead [1][4][40] - The concept of the Veblen effect is introduced, where higher prices can increase consumer demand for luxury goods, as seen in examples from the clothing and toy industries [5][6][10] - The article cites specific cases, such as the price increase of warming underwear and collectible toys, which resulted in significant order growth and resale value appreciation [6][8][9] Group 2 - The article contrasts the Veblen effect with the Giffen phenomenon, where demand for a staple good like potatoes can increase despite rising prices due to lack of alternatives [25][26][34] - It explains that the Giffen phenomenon occurs under specific conditions, such as when consumers are forced to buy more of a staple as other food prices rise [27][28][36] - The article emphasizes that consumer behavior is influenced by both horizontal and vertical comparisons, affecting purchasing decisions based on perceived future price trends [30][34][37] Group 3 - The article argues that consumers do not always prefer cheaper options, as demonstrated by the evolution of consumer behavior towards higher-priced, high-quality products over time [56][58][60] - It introduces the "V-shaped price curve," suggesting that consumers may initially reject high prices but eventually seek out premium products once low prices become normalized [57][59] - The article highlights the importance of perceived value in consumer purchasing decisions, indicating that consumers are willing to pay more for products they deem valuable [61][62] Group 4 - The article discusses the concept of price elasticity of demand, explaining that products with high elasticity can benefit from a low-price strategy, while essential goods tend to have inelastic demand [76][79][80] - It warns that relying solely on a low-price strategy can lead to industry-wide price wars, ultimately harming profitability for all players involved [81][82] - The article concludes that raising prices can be beneficial if aligned with product value and consumer expectations, suggesting that higher prices can lead to better sales outcomes [83][84]