HOW CAN BEHAVIOURAL PRICING POSITIVELY IMPACT YOUR MARKETING AND SALES RESULTS?
Why will some people pay £4 for a cup of coffee and others walk away at the thought. Why do some people spend £200 on a pair of jeans whilst others spend no more than £20. The answer lies not in the price but in its two key consumer components – value and affordability.
Affordability needs no introduction. Many of us would like a brand new Bentley to drive – but most of us just can’t afford it.
Value on the other hand is subjective, illogical and painstakingly fickle. And when it comes down to value, the brain plays games with us.
Value is driven by emotions. What holds value to some will not hold value to others. We buy emotionally and we buy on how something makes us feel – or just as importantly how we ‘think’ it will make us feel. Even if we logically know that feeling doesn’t stack up in cold light of reflection.
It’s partly why illogical financial offers work so well.
It’s also why EMI signed the Sex Pistols (but that’s for another time!)
The Great Cash Back Swindle.
It’s not exactly a swindle but it allows me to keep the Pistols thing going… There’s actually no logic in buying a BMW for £25,000 with £2,000 cash back – the car priced at £23,000 should appeal more. If you looked at this purely from an economics point of view then that would be the conclusive argument, but like I say the brain likes to play games.
The negativity of handing out £25,000 is emotionally balanced by receiving the car. So an ‘additional’ £2K back sends our emotional pleasure state into an upward spiral, with us feeling far better than if we’d have ‘just’ spent £23,000 on the car.
And if we’re financing, with little initial financial outlay, then the emotional positivity we feel goes into hyperdrive.
The Discount Swindle
What’s better value; a product at £75 or the same product at £100 with 25% off? Again, pure economics states there’s no difference in value as it’s the same product for £75. But we’re not talking economics when we purchase, we’re talking emotions, so the discounted product will stimulate us more, seem of better value and emotionally be classed as a bargain. In short, we will feel we have won without even having to do anything. Actually barter it down yourself and your emotions intensify further.
In short, this means that the value ‘feels’ greater when we see a price of £100 and receive a 25 % discount than if we see one of £75.
In the second part of this article we’ll look at several other trusted, effective yet illogical ruses that marketers such as myself use to part us from our hard earned money.
The nothing to pay for twelve months con
The anchor price swindle
Buy one get one free shakedown
The xxx hoax
The subscription hustle
How can Behavioural Pricing positively impact your marketing and sales results…