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Why do these types of market partitioning practices anger people so much? Isn't it a good thing that these companies are offering different price points for peo

Why do these types of market partitioning practices anger people so much? Isn't it a good thing that these companies are offering different price points for people to choose from?

joelhaasnoot 16y ago
The anger comes from essentially paying for air, or just adding profit for the company. If two parts are almost essentially the same, why am I paying more just for a different label? Chip manufacturers actually do sell you a different product when you buy the high performance product, and it's related to chip yields.
- dfox 16y ago
  In this case it might be exactly same as with chips, with headphones failing some QC test being labeled as cheaper and getting additional piece of foam to partially fix whatever badness was discovered in such test (like unintended resonance caused by manufacturing tolerances).
  - varjag 16y ago
    It most certainly isn't the same. It doesn't work like that with defective speakers.
    - dfox 16y ago
      In my opinion, the high-res photos in the original forum thread clearly shows some difference in build quality between both models. Compare for example how cleaner is hot gluing job on the driver on the 595 and that there is glob of something (hot glue?) on the external grill catch (lowest on first picture) on the 555 where there does not apear to be anything like that on the 595. Extruding things from plastics (and especially ABS which this appears to be made from) is surprisingly inexact process and one would assume that manufacturing headphones selling for hundreds of dollars requires quite tight tolerances. My assumption is that the foam is there to damp rattling of case that is made from not exactly matched parts (and this is consistent with few posts in the forum which describe sound quality getting worse after removing the foam). And I don't see why speakers/headphones/whatever can't be differentiated on quality, while having same overall design.
      - varjag 16y ago
        There is no way to sort out speaker driver rejects into 1st, 2nd and whatever category. If a sample has quality issue, it is likely to deteriorate further in use rapidly. Lower quality speakers are not rejects of high quality speakers, they are just cheaper designs. As to the mold, the holes there require no tolerances, they are there just to avoid air cushion behind the driver and serve no other purpose. Similarly, a foam pad is a rough hack to reduce its effectiveness, driving the speaker's response down. Do you really feel like this foam cut is some precision fix to tolerances problem?
- defen 16y ago
  > The anger comes from essentially paying for air, or just adding profit for the company. If two parts are almost essentially the same, why am I paying more just for a different label? I think this question is rooted in a flawed "cost-based" perception of product pricing, which is intuitive and seemingly "fair", but not how the world works. In reality businesses should charge based on the value (perceived or actual) their product brings to their customers.
  - prodigal_erik 16y ago
    Consumer surplus through cost-based pricing is the very goal of having a free market. We route resources to the most efficient producers because they're capable of offering lower prices. If Sennheiser can come out ahead by doing useless things to reduce the value of their products (that don't even reduce costs!) without fear of being undercut, that represents a market failure. This is really disappointing. My excellent HD-280s are finally cracking after years of heavy use, and now I have to reconsider doing business with them for a replacement.
    - defen 16y ago
      A perfectly efficient market is nice in theory but I don't think it exists outside of commodities like "sorghum and gypsum" (I think those are tptacek's words). Consumers are usually not going to be perfectly informed so there's always room for marketing to increase the perceived value of a product.
      - tomjen3 16y ago
        And that is why marketeers are the scum of the earth. And why your company cannot afford to not have them.
- deleted 16y ago
  [deleted]
thefool 16y ago
Because it feels like your being cheated when you are sold something that the person that is selling it to you broke on purpose. It doesn't really matter if the practice actually lets more people use a product, it just feels dirty.
- dman 16y ago
  On the flip side - whenever I see stuff which is so easily modded to its full version I usually imagine an engineer inside a large corporation grinning because he knows some kid somewhere will figure this out and get an early christmas present. Case in point - the amd 6950 radeons that can be flashed to radeon 6970's, earlier nvidia cards that could be softmodded to quadros etc . I mean the product differentiation could be actually a lot more involved and sometimes it just feels like the product was designed to be unlocked by the hackers and tinkerers.
- thematt 16y ago
  I see a lot of Web 2.0 applications these days that have their own pieces of foam. It's really all the same code on the backend and theoretically it wouldn't cost them anymore to enable all features completely. They purposely disable features or put their own pieces of "digital" foam in between plans in order to provide different price points for users.
  - extension 16y ago
    The difference is that people generally expect to own the utilitarian physical goods that they pay for. Since information can't be owned in the same sense, it's understood that buying it is going to take the form of some sort of licensing arrangement with more arbitrary conditions. In reality, the economics of the utilitarian physical goods business may sometimes resemble more those of the information business, but it's up to manufacturers to justify that to their customers.
- ringm 16y ago
  It is not only about feeling personally cheated, it is about observing such a glaring inefficiency of the economy. Sennheiser expended a lot of effort to create a perfectly good product, and then our economy stimulates them to waste a part of this effort by crippling the product just to create... a kind of pay-what-you can scheme.
paulsmith 16y ago
Did you read the post? The $200 headphones are /exactly the same/ as the $350 ones, except for a piece of easily-removable foam they crammed in the opening to reduce the sound quality. That's not "market partioning" -- that's utter hostility toward your customers.
- meastham 16y ago
  I did. I just don't see how this is any different than intentionally removing features from software in order to sell it at lower prices.
  - kenjackson 16y ago
    I agree. This seems like a reasonable thing to do if you want to have multiple price points for your product. Would people feel a lot better if instead they just went and changed the circuitry to produce lower quality sound?
    - marshray 16y ago
      Would people feel a lot better if instead they just went and changed the circuitry to produce lower quality sound? Yes, as long as there was a halfway plausible explanation that it cost less to produce.
      - jmaygarden 16y ago
        In this case it does cost less to produce since they don't have to develop a new product and setup separate manufacturing processes. That piece of foam saves a lot of money.
      - colanderman 16y ago
        My guess is the headphones cost $20 to produce. The $350 price tag covers R&D.
  - jbri 16y ago
    In the general human mindset, there's a huge difference between "they're adding extra for those who pay more" and "they're taking stuff away from those who pay less". If the feature differentiation is achieved by taking the premium offering and adding a component to remove functionality, then that feels a lot worse than taking the mid-range offering and adding components to result in the premium one.
krig 16y ago
Perhaps it's that people who bought the more expensive model thought they were buying higher quality components, but now realise they paid to have a piece of foam not be put where a piece of foam should not be? That consumers in general are happy to pay premium for premium features, but not for nothing? I mean, to me this practice is practically fraudulent when it comes to consumer goods. Yes, it makes business sense to offer product at different price points. You could argue that the higher priced model pays for the R&D that went into developing the headphones. That doesn't change the fact that these are the exact same headphones with a $150 price difference. Comparing to the software case where you pay more to have features put in that may be disabled in the cheaper version, there is a big difference there. When you buy the more expensive version you know what was taken out, and getting that is what you are paying for. Would anyone buy the more expensive headphones if the box said "unnecessary foam not added"?
sharmajai 16y ago
Because that's inNOvaTion.
marshray 16y ago
Why do these types of market partitioning practices anger people so much? Because it makes them feel ripped off. Enthusiasts were likely having positive feelings about their purchase of Sennheiser products and now they feel like an idiot. Psychology is a big part of the audio business. Isn't it a good thing that these companies are offering different price points for people to choose from? That Sennheiser is taking headphones and expending extra cost to muffle them in order to sell them at a lower price indicates that they do not consider themselves to be in an efficient economic market. Likely they are selling the muffled headphones in order to artificially inflate the price of the normal ones. It also raises the question of in what other ways Sennheiser might be intentionally degrading the quality of its products.
- cabalamat 16y ago
  > Psychology is a big part of the audio business. It's a big part of most businesses; you want the customer to have positive emotions regarding your company/product.
- mryall 16y ago
  A similar thing happens with TVs in electrical appliance stores. Brighter pictures are more appealing to the average viewer, so the stores bump up the brightness setting on the more expensive TVs. They can pull tricks like this because most people don't care that much about whether their chosen product is better according to some objective measurement. Rather, they care about getting a good deal and being made to feel happy about their purchase. Unfortunately for Sennheiser, high-end audio customers are probably one group who do care about buying something objectively better. News like this risks hurting their target market substantially, I'd say.
deleted 16y ago
[deleted]
antihero 16y ago
It's just a great example of how capitalism leads to do things that are utterly perverse.
artsrc 16y ago
If it is such a good thing, they should clearly describe what they are doing to potential customers. People who are not given all relevant information before they buy are product can legitimately feel upset.
- carpo 16y ago
  "Now without foam!!!"

Why do these types of market partitioning practices anger people so much? Isn't it a good thing that these companies are offering different price points for people to choose from?

joelhaasnoot 16y ago

The anger comes from essentially paying for air, or just adding profit for the company. If two parts are almost essentially the same, why am I paying more just for a different label? Chip manufacturers actually do sell you a different product when you buy the high performance product, and it's related to chip yields.

dfox 16y ago
In this case it might be exactly same as with chips, with headphones failing some QC test being labeled as cheaper and getting additional piece of foam to partially fix whatever badness was discovered in such test (like unintended resonance caused by manufacturing tolerances).
- varjag 16y ago
  It most certainly isn't the same. It doesn't work like that with defective speakers.
  - dfox 16y ago
    In my opinion, the high-res photos in the original forum thread clearly shows some difference in build quality between both models. Compare for example how cleaner is hot gluing job on the driver on the 595 and that there is glob of something (hot glue?) on the external grill catch (lowest on first picture) on the 555 where there does not apear to be anything like that on the 595. Extruding things from plastics (and especially ABS which this appears to be made from) is surprisingly inexact process and one would assume that manufacturing headphones selling for hundreds of dollars requires quite tight tolerances. My assumption is that the foam is there to damp rattling of case that is made from not exactly matched parts (and this is consistent with few posts in the forum which describe sound quality getting worse after removing the foam). And I don't see why speakers/headphones/whatever can't be differentiated on quality, while having same overall design.
    - varjag 16y ago
      There is no way to sort out speaker driver rejects into 1st, 2nd and whatever category. If a sample has quality issue, it is likely to deteriorate further in use rapidly. Lower quality speakers are not rejects of high quality speakers, they are just cheaper designs. As to the mold, the holes there require no tolerances, they are there just to avoid air cushion behind the driver and serve no other purpose. Similarly, a foam pad is a rough hack to reduce its effectiveness, driving the speaker's response down. Do you really feel like this foam cut is some precision fix to tolerances problem?
defen 16y ago
> The anger comes from essentially paying for air, or just adding profit for the company. If two parts are almost essentially the same, why am I paying more just for a different label? I think this question is rooted in a flawed "cost-based" perception of product pricing, which is intuitive and seemingly "fair", but not how the world works. In reality businesses should charge based on the value (perceived or actual) their product brings to their customers.
- prodigal_erik 16y ago
  Consumer surplus through cost-based pricing is the very goal of having a free market. We route resources to the most efficient producers because they're capable of offering lower prices. If Sennheiser can come out ahead by doing useless things to reduce the value of their products (that don't even reduce costs!) without fear of being undercut, that represents a market failure. This is really disappointing. My excellent HD-280s are finally cracking after years of heavy use, and now I have to reconsider doing business with them for a replacement.
  - defen 16y ago
    A perfectly efficient market is nice in theory but I don't think it exists outside of commodities like "sorghum and gypsum" (I think those are tptacek's words). Consumers are usually not going to be perfectly informed so there's always room for marketing to increase the perceived value of a product.
    - tomjen3 16y ago
      And that is why marketeers are the scum of the earth. And why your company cannot afford to not have them.
deleted 16y ago
[deleted]

thefool 16y ago

Because it feels like your being cheated when you are sold something that the person that is selling it to you broke on purpose. It doesn't really matter if the practice actually lets more people use a product, it just feels dirty.

dman 16y ago
On the flip side - whenever I see stuff which is so easily modded to its full version I usually imagine an engineer inside a large corporation grinning because he knows some kid somewhere will figure this out and get an early christmas present. Case in point - the amd 6950 radeons that can be flashed to radeon 6970's, earlier nvidia cards that could be softmodded to quadros etc . I mean the product differentiation could be actually a lot more involved and sometimes it just feels like the product was designed to be unlocked by the hackers and tinkerers.
thematt 16y ago
I see a lot of Web 2.0 applications these days that have their own pieces of foam. It's really all the same code on the backend and theoretically it wouldn't cost them anymore to enable all features completely. They purposely disable features or put their own pieces of "digital" foam in between plans in order to provide different price points for users.
- extension 16y ago
  The difference is that people generally expect to own the utilitarian physical goods that they pay for. Since information can't be owned in the same sense, it's understood that buying it is going to take the form of some sort of licensing arrangement with more arbitrary conditions. In reality, the economics of the utilitarian physical goods business may sometimes resemble more those of the information business, but it's up to manufacturers to justify that to their customers.
ringm 16y ago
It is not only about feeling personally cheated, it is about observing such a glaring inefficiency of the economy. Sennheiser expended a lot of effort to create a perfectly good product, and then our economy stimulates them to waste a part of this effort by crippling the product just to create... a kind of pay-what-you can scheme.

paulsmith 16y ago

Did you read the post? The $200 headphones are /exactly the same/ as the $350 ones, except for a piece of easily-removable foam they crammed in the opening to reduce the sound quality. That's not "market partioning" -- that's utter hostility toward your customers.

meastham 16y ago
I did. I just don't see how this is any different than intentionally removing features from software in order to sell it at lower prices.
- kenjackson 16y ago
  I agree. This seems like a reasonable thing to do if you want to have multiple price points for your product. Would people feel a lot better if instead they just went and changed the circuitry to produce lower quality sound?
  - marshray 16y ago
    Would people feel a lot better if instead they just went and changed the circuitry to produce lower quality sound? Yes, as long as there was a halfway plausible explanation that it cost less to produce.
    - jmaygarden 16y ago
      In this case it does cost less to produce since they don't have to develop a new product and setup separate manufacturing processes. That piece of foam saves a lot of money.
    - colanderman 16y ago
      My guess is the headphones cost $20 to produce. The $350 price tag covers R&D.
- jbri 16y ago
  In the general human mindset, there's a huge difference between "they're adding extra for those who pay more" and "they're taking stuff away from those who pay less". If the feature differentiation is achieved by taking the premium offering and adding a component to remove functionality, then that feels a lot worse than taking the mid-range offering and adding components to result in the premium one.

krig 16y ago

Perhaps it's that people who bought the more expensive model thought they were buying higher quality components, but now realise they paid to have a piece of foam not be put where a piece of foam should not be? That consumers in general are happy to pay premium for premium features, but not for nothing? I mean, to me this practice is practically fraudulent when it comes to consumer goods. Yes, it makes business sense to offer product at different price points. You could argue that the higher priced model pays for the R&D that went into developing the headphones. That doesn't change the fact that these are the exact same headphones with a $150 price difference. Comparing to the software case where you pay more to have features put in that may be disabled in the cheaper version, there is a big difference there. When you buy the more expensive version you know what was taken out, and getting that is what you are paying for. Would anyone buy the more expensive headphones if the box said "unnecessary foam not added"?

sharmajai 16y ago

Because that's inNOvaTion.

marshray 16y ago

Why do these types of market partitioning practices anger people so much? Because it makes them feel ripped off. Enthusiasts were likely having positive feelings about their purchase of Sennheiser products and now they feel like an idiot. Psychology is a big part of the audio business. Isn't it a good thing that these companies are offering different price points for people to choose from? That Sennheiser is taking headphones and expending extra cost to muffle them in order to sell them at a lower price indicates that they do not consider themselves to be in an efficient economic market. Likely they are selling the muffled headphones in order to artificially inflate the price of the normal ones. It also raises the question of in what other ways Sennheiser might be intentionally degrading the quality of its products.

cabalamat 16y ago
> Psychology is a big part of the audio business. It's a big part of most businesses; you want the customer to have positive emotions regarding your company/product.
mryall 16y ago
A similar thing happens with TVs in electrical appliance stores. Brighter pictures are more appealing to the average viewer, so the stores bump up the brightness setting on the more expensive TVs. They can pull tricks like this because most people don't care that much about whether their chosen product is better according to some objective measurement. Rather, they care about getting a good deal and being made to feel happy about their purchase. Unfortunately for Sennheiser, high-end audio customers are probably one group who do care about buying something objectively better. News like this risks hurting their target market substantially, I'd say.

deleted 16y ago

[deleted]

antihero 16y ago

It's just a great example of how capitalism leads to do things that are utterly perverse.

artsrc 16y ago

If it is such a good thing, they should clearly describe what they are doing to potential customers. People who are not given all relevant information before they buy are product can legitimately feel upset.

carpo 16y ago
"Now without foam!!!"