Even if your economics foundations are at 101 level, like me, you are probably familiar with theories of value. In general, supply and demand are the foundational elements of all theories of values. These theories capture the interplay between supply and demand based on aspects like product availability and the eagerness of the consumers to buy the product.

Alfred Marshall is recognized as the most prominent thinker among all thought leaders associated with various theories of value. Other prominently known ones who came before Alfred Marshall are John Locke, David Ricardo, and Leon Walrus. In contrast, John Maynard Keynes is one of the most widely recognized after Alfred Marshall. Obviously, they were all Western thinkers who had the opportunity to leverage the then-available print media and advances in education systems to propagate their ideas. Therefore, it is not surprising that they are more widely recognized names.

Ibn Taymiyyah’s benevolence theory

However, the person who fascinates me is the Islamic scholar Ibn Taymiyyah. He essentially postulated all the theories, in his own version, of course, three centuries before the 1691 publication by John Locke. Ibn lived around 1300AD, and most of the Western world, at least those not economics majors, are unaware of how ahead this man was in his game for his time.

One of the quotes from Ibn on the perceived value of a product was: “To compensate for a thing by its equivalent is an obligatory justice, and if payment is voluntary increase, it is far better and desirable benevolence. [1]” It was a coincidence that an hour before I was reading this paper that listed his quotes, I came across this article on Business Insider:

https://www.businessinsider.com/apple-fans-says-iphone-15-is-disappointing-underwhelming-2023-9

The gist of this article was similar to some other articles and tweets I have read, with fans and hardcore followers complaining that not much has changed since the 11 series (though I disagree). However, the fact remains that when you look at the last couple of years, design changes that can be termed transformational have been limited.

The benevolence margin derived from brand value

A couple of weeks ago, before the Wonderlust event, I wrote a post about why these annual launches and the pressure of expectations from consumers to see something “wow” can actually do more harm than good. It was in the context of iPads, though. The link to this article is here:

Innovative products that combine hardware and software are becoming increasingly complex from a launch strategy perspective. But smartphones are more complex than say smart TVs. As I read Ibn’s quote above, I believe that smartphone makers are actually banking more on benevolence to keep asking those insane prices with minimal value additions (at least as perceived by the customers).

Companies like Apple have a product fan following (I am one of those people). So, while you may see many of us rant, the fact is that if we need to upgrade or afford to, we will still admire the products we own. We are obsessed with the foundational innovation on which Apple has been launching subsequent generations. Hence, some of us, who do not see marginal value from one year to the next in terms of features, still upgrade. But at this point, it is slowly inching towards the benevolence. To Ibn’s idea, if you are paying more than the value, it is benevolence.

In modern terms, I would replace benevolence with brand value. Hence, as the perceived difference in value decreases from one launch to another, it actually hampers the brand value. And that is what is at the core of Apple’s everything. There needs to be a strategic evaluation at Apple’s end to understand how to optimize the timeline of launches AND the range of products for every product line to maximize brand value. And while the concept of brand value may seem too intangible to model as math, data science can help Apple solve this problem.

Data science to the rescue

The core of the concept behind behavioral economics is that classic economics tries to quantify everything. And not all behaviors that drive economic principles can be captured in mathematical terms. While that is very true, some intangibles, like brand value, can be translated into numbers for specific analysis.

I emphasized “for specific analysis” because the aggregate brand value is more difficult to quantify. But for a specific problem, you can derive a mathematical equation to calculate brand value (I can think of how you would do so for the problem I am highlighting here).

With the objective function of maximizing brand value, you can play around with product lines, associated product attributes, launch timelines, and pricing as an optimization problem. Building this model will be time-consuming but worth it for companies like Apple, who, in my opinion, have expanded product lines a bit too much. The time-consuming part will be framing the problem, associations vs. building the model. But it should work.

References:

[1] Legal principles from the economic concepts of ibn taimiyah.