According to polyhobbies.com, the snob effect describes an unnatural demand behavior. The snob is a consumer who only becomes active as a consumer on the market when exclusive goods are offered there. But the snob is less concerned with the quality of the goods. He buys luxury goods and other expensive goods because he wants to stand out from the crowd.

This lesson is about the snobbery. You will learn what a snob is and how his needs stand out from the crowd of other consumers. Finally, we will introduce you to the bandwagon effect. In economic terms, this is seen as the opposite of the snob effect. To deepen your knowledge, you can answer a few exercise questions after the text.

• Synonym: Veblen effect
• English: snob-effect

How is the snobbing effect noticeable?

The snob effect represents the opposite of market behavior. Suppliers and buyers appear on the market. As a rule, the cheaper the products are, the higher the consumer demand. If the products become more expensive, a decline in demand can be observed. The goal of the market is the equilibrium price to achieve. This is the price at which the sellers offer their goods and the buyers pay for the goods. The amount offered and the amount requested are the same here.

Snob effect

For a snob, the connection between supply and demand does not matter. He is not interested in buying the products for the lowest possible price. On the contrary, a snob values ​​exclusivity. It is important to him that he stands out from the crowd. That is why the snob is mostly on the lookout for luxury goods. His only concern is his prestige. Economically, this behavior is known as the snob effect.

Example

A car dealership is opened in a small town that sells used cars cheaply. The demand grows with every additional day that the car seller advertises his offers.

A snob does not respond to the car dealer’s advertisement. For him it is only relevant that he is made an offer that not everyone gets. So he turns to a competitor of the car dealership. Here he buys a new Bentley that the dealer has imported from Great Britain.

What are the hallmarks of a snob?

The snob effect occurs due to consumers who have the following characteristics in particular:

• A snob shows that he has money.
• He likes to flaunt his financial superiority.
• It is irrelevant to him whether he actually needs the products he has bought.
• He is not at all interested in the goods themselves. The only thing that matters to him is that he stands out from the crowd of other consumers.

What does the bandwagon effect mean?

The bandwagon effect (also known as the follower effect) is economically considered to be the opposite of the snob effect. The follower makes his purchase decision dependent on the mass of consumers. In this way he promises a certain success. The bandwagon effect is relevant for market providers, as they benefit from the fact that some consumers are interested in their products and others follow suit. This increases the demand. In the best case, it does not decrease if the provider increases the prices slightly.

Market providers benefit from both the snob effect and the follower effect. However, no statement can be made about which effect is more profitable for the provider. To do this, additional factors, e.g. B. the demand behavior in the event of a price increase can be analyzed.