Perception is reality. I'm not a psychologist but if someone is fooling themselves into thinking they're consuming a better product, so much so that they actually pay a premium for that product, who are you to say that it's not "substantially" better? The connection many people have in consumption is very personal. Imagine someone telling you their spouse is better than your own in all objective criteria.

I've heard (although can't verify) that products were differentiated in the Soviet Union by where they were made. So essentially, the consumer would have a choice of "factory 1 shampoo", "factory 2 shampoo" and so on. Meaningful? Sure, but seems silly to me.