Working Note · Method

Two Markets in One: Detecting Latent Price Segments, and the Logic of a Premium Price

Tommaso Marson

Working note · 2026

1The problem with an average

A price decision rests on an estimate of what a market will bear. When that estimate is a single figure, it carries an implicit claim: that the market is coherent enough for one number to represent it. The claim is usually left untested, because the figure itself offers no indication of whether it is describing a population or averaging over several.

An average is faithful to its population only when the population is unimodal — distributed around one centre. Where two groups with different valuations are pooled, the mean falls between them, at a value that may correspond to no one. The resulting number is not imprecise; it can be perfectly stable under re-measurement. It is simply misleading, in a way that precision conceals rather than reveals. This is the pricing instance of a general hazard in aggregated data, in which a relation that holds within every subgroup is distorted or reversed once the subgroups are combined [Blyth, 1972].

2The study

The product was Apple AirPods 4, chosen for a strong and public brand and a retail price high enough to make the purchase a genuine decision rather than a reflex. Participants were Italian consumers. Each judged the product at a range of prices under a simple, time-pressured buy / would-not-buy task, so that the measure of resistance was drawn from immediate response rather than from deliberated justification. Separately, the same participants completed a direct, conventional elicitation of the prices they considered cheap, expensive, and unacceptable — a standard stated-price instrument [Van Westendorp, 1976]. The two measures are of different kinds: one reads behaviour under pressure, the other reads a considered statement. That difference is what makes the second measure useful as a check on the first.

This note reports the study at the level of its results. The measurement and estimation procedures are LIMEN’s method and are not the subject here; the argument that follows depends only on the reported quantities and the independence of the two instruments.

3A threshold that described no one

Estimated across the whole sample, the implicit price threshold — the price at which the population, on balance, tips from acceptance to refusal — fell near €129. The figure was stable under re-estimation and unremarkable on its face.

It did not survive examination. The variation between individuals was not a single spread around that centre but two separated concentrations: a group whose resistance set in far below €129, and a group that remained receptive well above it. The €129 figure was the gap between them. Almost no individual buyer actually changed their decision there. On that basis the single population threshold was withdrawn, and is reported here only as the number that was retired — a figure that was accurate as an average and false as a description of anyone.

4Two thresholds

Estimated separately, the two groups resolved into two clearly different thresholds. One segment — call it price-sensitive — showed a sharp threshold in the region of €100–105: acceptance held below it and fell away steeply above. The other — premium-receptive — carried a threshold near €149, roughly €45–50 higher, with resistance building gradually across the premium range rather than collapsing at a point. The two segments were of comparable size — roughly half the market each, directionally, at this sample size. What had looked like one market with a moderate ceiling was two markets with two ceilings and a wide gap between them.

5Establishing that the segments are real

A division of a sample into two groups is not, by itself, a finding. Any dataset can be partitioned into subgroups that differ on the measure used to partition them; the difference is then guaranteed by construction, not discovered. The question that matters is whether the two groups differ on something they were not split by.

They did. The groups were defined solely by their implicit purchase behaviour under time pressure. Tested against the separate stated-price instrument — a different task, taken deliberately, with no shared mechanism — the two groups diverged decisively in what they said they would pay, at a level far beyond chance (p < 0.001). Directionally, the price-sensitive group’s stated valuations sat near €105 and the premium-receptive group’s near €160. The groups do not merely react differently under pressure; they say different things about price on an independent test. That convergence of two unrelated instruments on the same boundary is the evidence that the segmentation is a property of the population, not an artefact of the model that first suggested it [Cronbach & Meehl, 1955; Wedel & Kamakura, 2000].

6Where brand strength acts

The two segments differed not only in where their thresholds sat but in how they arrived at a decision. For the premium-receptive segment, the disposition to buy was strongest not where the price was comfortable but where it was a stretch: brand equity did not pre-load the easy decisions, it engaged at the point of resistance, where the price demanded a reason and the brand supplied one. This is the opposite of the intuitive picture, in which brand loyalty is spent on the cheap purchases and exhausted at the top of the range. In the segment that Apple actually monetises at a premium, the brand’s pull was largest precisely where the price was hardest to justify.

7The logic of the retail price

Apple’s retail price for the product sits essentially on the premium-receptive segment’s implicit threshold — at the top of what that segment will bear, not in the comfortable interior of the demand curve. Read against the two-segment structure, that is a coherent position rather than a coincidence. At the retail price the price-sensitive segment is almost entirely priced out and only a minority of the whole population would buy; but each of those sales is taken at the edge of the receptive segment’s acceptance, where the margin per unit is at its greatest.

The price is therefore best understood as a margin position, not a volume one: it maximises what is earned per buyer rather than the number of buyers, and it anchors at the psychological point where the addressed segment is on the boundary between yes and no. A single-market view cannot see this. It would read the same price as leaving demand on the table. The two-market view shows it doing exactly what a premium strategy is meant to do — and, more usefully, shows the sharp lower threshold that a different, volume-led strategy would have to respect.

8Scope and limitations

The findings are bounded. The sample was drawn from a single national market, so the brand-strength result in particular is specific to these consumers and should not be assumed to transfer across markets. The segment proportions are directional at this sample size, not precise; the finding is that two segments exist and are independently corroborated, not that the split is exactly even. The lower threshold is characterised as a sharp region rather than a finely located point, its position read from the choice curve rather than resolved to the euro. And the independent stated-price instrument was administered after the implicit task rather than counterbalanced against it, which recommends caution in reading the two as fully insulated from one another; the corroboration is strong on direction and should not be pressed for its decimals. The analysis underlying these results remains under internal review.

9Conclusion

A stable price threshold is not evidence of a single market, and a precise number is not evidence that it describes anyone. Here an aggregate figure that was both precise and reproducible turned out to be the midpoint of two populations that transact at very different prices. What established the division as real was not the model that revealed it but an independent instrument that agreed with it — two measures, one of behaviour and one of stated intent, meeting at the same boundary. Once the two markets are visible, a premium price that looks like forgone volume resolves into a deliberate margin position at the edge of the segment it is meant for. The practical lesson is prior to any particular technique: before pricing to a threshold, establish how many thresholds there are.