It is standard practice to offer to customers a range of quality levels. In clothing, electronics, and cars we see firms offer a range of products as a means of price discrimination: some customers are on a budget, or don't care so much about the luxury of the item, and are looking for something basic and low-price. Other customers really do care about distinctions of quality, and are willing to pay to get the best. It's not difficult then to see the logic in offering standard and premium goods. The rule of thumb is this: the quality … [Read more...]