How to Raise your Prices So It CAUSES More Sales
by Kevin Hogan
Page 2
Groucho Marx famously said that he wouldn't want to join any club that would have someone like him as a member. But if you are on the outside of some deal that benefits another group more than you, would this make you more or less interested in the product?
Researchers asked study participants to choose between drills and other products with different promotions. (Credit: Image courtesy of Duke University)
- For example, guess how female Victoria's Secret customers would react if they found out that male customers got better deals on the same items.
- How would plus-sized women react to a dress that is sold for less in smaller sizes?
According to research from Duke University's Fuqua School of Business, the excluded consumers would be turned off and would be less likely to make a purchase.
- But how would competitive swimmers react to a product claimed to improve speed if they knew the product is given away free to Olympic swimmers?
- How would vodka consumers react to superpremium Belvedere vodka if the company offered free tastings exclusively for bartenders?
In these examples, the consumer ends up wanting the product more, said Alison K. C. Lo, a recent doctoral graduate at the Fuqua School of Business. She and marketing professors John Lynch and Richard Staelin explain why in the article "How to Attract Customers by Giving Them the Short End of the Stick," published in the February 2007 Journal of Marketing Research.
KEYPOINT: "As consumers, we sometimes buy things when we feel clueless in telling good-quality products from bad but we think more savvy consumers can tell the good stuff simply by inspecting the merchandise," Lo said.
"In such cases, naive consumers are attracted to a product with a freebie that is not available to them but is offered to a more savvy group of buyers, like bartenders or Olympic swimmers. These savvy buyers presumably would turn up their noses at low-quality merchandise, so the naive consumers reason that products promoted to experts must be good.
"On the other hand, if we are excluded from a deal and the group benefiting is not more savvy or we are more certain of the product's quality, we are put off," she explained. "We buy less -- like the woman who sees that Victoria's Secret is offering a better deal to men than to women."
What happened in another experiment?
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Kevin Hogan
Network 3000 Publishing
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Eagan, MN 55123
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