E-commerce
Examples of Consumers Paying Ridiculous Prices Due to Limited Supply
Examples of Consumers Paying Ridiculous Prices Due to Limited Supply
From limited edition trainers and expensive Twinkies to the enduring value of diamonds, several examples in life showcase consumers' willingness to pay outrageous amounts when supplies are low. This article explores these instances, analyzing why such behavior occurs and the impact on the market.
Limited Edition Trainers: A Sobering Reality
When it comes to limited edition sneakers, consumers often pay sky-high prices for shoes that might not even fit them properly or need replacing anytime soon. In central London, I've witnessed this phenomenon firsthand, where young people stand in cold, crowded queues and face possibly dangerous situations just to get a pair. Even my little niece mocks me for wearing those trainers, making me feel like a tramp compared to her fashion-savvy nephews.
These limited edition trainers are especially prevalent among celebrities and the rich. Prince Harry, for example, might not spend much on them himself, but his son will likely have to buy similar pairs in the future. Regular trainers simply won't do for a royal family member when hosting dinner parties or visiting the palace.
The Hostess Shutdown: Twinkies Go to Thousands
A particularly stark example of consumer frenzy over limited items is the 2012 shutdown of Hostess Brands. When the company closed, the demand for its Twinkies and other baked goods skyrocketed. Savvy sellers capitalized on this by offering boxes of ten Twinkies for thousands of dollars, with one box even tagged with a price of $10,000. People believed these items would soon disappear forever, creating an apocalyptic-like mentality.
The investment group Apollo Global Management stepped in, purchasing the company and reviving it with a $410 million offer. By the time things returned to normal, consumers no longer had to pay hundreds of dollars for a box of Twinkies. This incident highlights the market's irrational behavior in the face of perceived scarcity.
The Perceived Value of Diamonds: More than Just a Rock
Despite being merely rocks, diamonds maintain their value due to their perceived status and the marketing genius of DeBeers. The diamond industry's billions of dollars spent on marketing and advertising have conditioned consumers to see diamonds as symbols of wealth, love, and status.
The way DeBeers used marketing to create the idea that a diamond is a symbol of eternal love, rather than just a precious stone, has been crucial in maintaining the rock's high value. Even during economic downturns, when most other goods lose value, diamonds often remain unaffected. This exemplifies how perceived value and scarcity can drive up prices far beyond their intrinsic worth.