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Interesting insight in marketting...

28 April 2000
SF Bay Area / Boston MA
I was just over at slashdot.org reading some commentary about AMD's highest end CPU. One of the comments struck a chord with what might be important to Honduh's predicament with their cars and our beloved NSX... A argument that Honduh needs to keep a uber high-end car in their line-up.

In response to:

I realize the price will go down over time, but seriously, who is going to buy this chip?

slashdot reader said:
You're asking the wrong question. Even if no one buys this chip, the chip is still worthwhile to have on the market.

A few years ago Wendy's found that almost no one was buying their triple cheeseburgers, so they took triples off the menu. When they did this, they found that sales of their double cheeseburgers dropped to almost nothing. The problem, as they discovered later, was that the presence of triple cheeseburgers on the menu helped to legitimize the double cheeseburgers as mainstream items. Without triple cheeseburgers, the double cheeseburgers became the high end item and mainstream buyers went for the singles instead.

Since profit margins on double cheeseburgers are higher, the chain was forced to bring back triple cheeseburgers, even though triples weren't selling at all, because the sales of their double cheeseburgers depended on having triples on the menu.

Point is, although this is a fast food example, the same thing applies to the computer industry. You HAVE to have a high end item available if you are to have any hope of positioning the more profitable midrange items as mainstream.

I know this topic has been beaten to death, but I found this interesting nonetheless.
That happens all the time, and is common knowledge in marketing. But it normally applies to items that do not need a price analysis on the buyer's side and are bought on impulse.

I am not sure that it applies on CPUs and I think it has very low effect on high-end cars.

Anyway thanks for posting!
The money Honda spends to make this car is unreal.
Anyone have any data on the cars actual cost to build?