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I was reading this article on Quartz: https://qz.com/1485141/just-20-fashion-companies-are-making-almost-all-of-the-industrys-profits/

I do not understand the following graph shown:enter image description here

What does "value" segment mean? Someone please kindly provide the difference and explanation. Thank you.

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  • $\begingroup$ In your chart you would usually expect those to be price categories in order: high at the top and low at the bottom $\endgroup$
    – Henry
    Apr 2 '20 at 22:51
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Consider the ratio $$ \dfrac{\text{Benefit}}{\text{Price}}. $$ This is not the same thing as your net benefit, $\text{Benefit}-\text{Price}$. So a good that might give you a high net benefit might have a low benefit-to-price ratio. For example, $100-50=50$ and $100/50=2$ versus $1000-900 = 100$ and $1000/900=1.1111...$.

Luxury goods have high gross benefit but low benefit-to-price ratio and possibly a low net benefit. Affordable luxury is trying to improve on benefit-to-price ratio and net benefit while still having a high gross benefit.

Value goods are trying to achieve a high benefit-to-price ratio, despite the products having a low gross benefit and a mediocre net benefit. So you feel like you got a lot for what you paid, even if it's a $\$$20 acrylic sweater instead of a $\$$500 cashmere one.

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