The New Normal: The Rise of Affordable Flagship Products

November 2021

Products that offer premium features without the high price tags are becoming popular. What are the factors driving this trend and how are companies like Apple and Samsung affected?

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Key findings

A change in consumers’ attitudes towards spending

The COVID-19 pandemic has negatively impacted global finances and consumer sentiment. As the world slowly transitions to the “new normal”, consumers are no longer obsessed with having the greatest and latest.

Consumers unwilling to comprise on features switch to lower cost alternatives

Affordable brands offering competitive specs are good alternatives for those consumers unwilling to downgrade in terms of technical features. Premium brands, including Samsung, have launched lower cost models to seek growth in the mass market.

E-commerce helps affordable brands gain acceptance

Emerging brands have better prospects through competing in the online channel. The pandemic has further accelerated growth in e-commerce across various consumer electronics categories.

Best-for-value products to drive total consumer electronics growth

The rapid development of e-commerce has put greater pressure on prices. Seeking best-for-value options is made easier due to information transparency.

Companies are not immune to the affordable flagship trend

As sales of consumer electronics reach saturation, growth will be mainly driven by upgraders rather than early adopters. These consumers are not willing to pay a premium just for “bragging rights”.

Scope
Key findings
Why affordable flagship models are becoming popular
Ageing population puts pressure on disposable incomes
Consumers look for better value as incomes declined due to pandemic
Rapid growth of Chinese companies
Affordable no longer means compromise
Chinese brands are investing in technology as competitive advantage
E-commerce acceleration due to COVID-19 pandemic
E-commerce is helping affordable brands gain acceptance
Price and brand are the key purchasing criteria in e-commerce
Consumers are more adventurous and knowledgeable
New affordable brands flooding the headphones market
Apple: smaller impact as its customer base tends to be affluent
Samsung: if you cannot beat them, join them!
Xiaomi: two-pronged strategy by the master of affordability
Key findings
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