Category: Branding

A Price Hike Can Increase Demand

Over at Landing the Deal, Dan Tudor uses the launch of the $2,500 Tata Nano automobile as a jumping-off point in the debate over whether the lowest price always wins. Below are a couple of cases where it doesn’t:

In his book Influence: The Psychology of Persuasion, Robert Cialdini writes of a jewelry store owner in Arizona who was stuck with some turquoise jewelry that wasn’t selling. She told one of her employees to cut the price, but the clerk misunderstood her and doubled the price instead.

A few days later, before they’d realized the mistake, the entire allotment of jewelry had sold out. The increased price had managed to make the jewelry more desirable to the customers who walked into the store. Cialdini explained the phenomenon this way:

You and I exist in an extraordinarily complicated environment, easily the most rapidly moving and complex that has ever existed on this planet. To deal with it, we need shortcuts. We can’t be expected to recognize and analyze all the aspects in each person, event and situation we encounter in even one day. We haven’t the time, energy or capacity for it. Instead, we must very often use our stereotypes, our rules of thumb, to classify things according to a few key features and then to respond without thinking when one or another these trigger features is present…

The customers, mostly well-to-do vacationers with little knowledge of turquoise jewelry, were using a standard principle — a stereotype — to guide their buying: “expensive = good”.

The higher price told them that this was “good” jewelry, so they bought it. Cutting the price would have steered them in the opposite direction.

Another example of this phenomenon at work appears (thank you, Chris Speer of 1190 KEX Radio) in a recent Associated Press article on a wine tasting. A research crew at California Institute of Technology discovered that a higher price tag on the bottle made the wine inside tasted better.

The lesson here is that the supply-and-demand price equation from your college economics doesn’t always take consumer psychology into account. Sometimes a price hike will help your sales.

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Why Logic Doesn’t Always Work in Marketing

It’s a cliche in the sales and marketing world — people make buying decisions emotionally, not logically. Tracy Coenen of WalletPop offers evidence from the world of cosmetics. Citing a university study of 300 women in England, Coenen reports that women using a product that isn’t working are likely to keep using it — and women using a product that actually works are likely to stop.

The researchers believe that fear may be the motivating factor behind this behavior. When the products work, women have less anxiety about the problem, so they stop using the stuff. When they think the products aren’t working and they’re concerned about their appearance, they stick with the products out of fear.

The lesson to those who depend on repeat business is to think about not just the problem that you’re in business to solve, but the underlying emotions of the people experiencing the problem — and how they really react when it’s solved.

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Of Hot Chicks and Peak Oil

My former colleague Randy White is an activist in the Peak Oil movement. On his Lawns to Gardens Blog he’s posted a split-screen video.

On the right side, a very attractive young woman, dressed for extremely warm weather, does a dance that would melt a glacier. On the left side, the same woman (I think), in much more subdued clothing, gives her views on what’s going to happen when all the oil runs out.

In addition to being an ironic commentary on the advertising business, it illustrates the attractions and pitfalls of using sex to sell:

1. I watched the video from beginning to end — nearly four minutes in all. This would not have happened in the absence of the hot dancing chick.

2. On the other hand, the speaker’s message did not register with me at all. I was too busy watching the hot dancing chick. 

We’ve all seen TV commercials that made us laugh, only to realize later that we can’t remember what the ad was for. Sex, like humor, can be an effective way of holding your prospect’s attention long enough to deliver the sales message. In order for the sales message register with the prospect, the sex or humor needs to be integrated into the pitch. Without that integration, your prospect won’t remember what you are trying to say.

Direct Mail By The Pound

Ben McConnell of Church of the Customer has made a yearly tradition of keeping all of the direct mail he receives during the holiday season — and putting it on a scale.

 This year: 21.5 pounds. Up over two pounds from last year, and a more-than-50 percent increase from 2005. His post gives some examples of other things that weigh about that much:

  • 9.75 kilograms
  • About the equivalent weight of three newborn babies (or quintuplets for one couple)
  • Two bowling balls and a tray of white russians
  • A bit more than the average weight of the handbags of some women (contributing to a 30% rise in purse-related injuries)
  • The weight of a scarily large catfish caught in Missouri last summer

    • And the comments section has a very interesting dialog about the subject, with intelligent arguments on both sides.

    My question, for those of you who’ve been using direct mail for years: 

    With an increase in postage costs and (at least anectdotally) a significant increase in mail volume, how did your direct mail efforts pencil out in 2007? Is it still working as well as it did?

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    I’ve written a white paper called The Seven Deadly Advertising Mistakes and How to Fix Them. It’s a study of some of the most common ways that companies waste their advertising dollars — along with suggestions to make those dollars work harder and smarter. Request your free copy here.

    Response is Not the Same as Results

    If you work with clients on their advertising, you’ll eventually encounter the business person who confuses response with results. Response is when the guys at the country club tell you how funny your commercials are. Results is when your commercials cause a whole bunch of good prospects to become good customers.

    Last month, I probably received ten “Elf Yourself” emails, and watched a bunch more. And yet, until I read Ron Shevlin’s smackdown on OfficeMax, it didn’t even really occur to me that OfficeMax wanted me to shop with them.

    OfficeMax definitely got response — according to Advertising Age, the campaign was watched by 110 million visitors. But it’s less clear whether the “Elf Yourself” campaign caused many of the visitors to go to an Office Max store and buy something.

    Shevlin does a terrific job reminding us what marketing is supposed to do, and how Office Max forgot what really matters. His jumping-off point is the Advertising Age article that calls the campaign “a winner”:

    My take: This is the stuff that drives CEOs/CFOs crazy. Nowhere in the article does it mention metrics like incremental awareness, improved brand affinity, or [heaven forbid] incremental sales as measures of success. According to the article, Alexa ranked Elf Yourself as a top 1000 site in 50 countries. OfficeMax does business in five.

    You want rules of viral web success? A viral web effort succeeds when it… [read the rest of the post here.]

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    I’ve written a white paper called The Seven Deadly Advertising Mistakes and How to Fix Them. It’s a study of some of the most common ways that companies waste their advertising dollars — along with suggestions to make those dollars work harder and smarter. Request your free copy here.