I’ve just finished reading Robert Cialdini’s outstanding book “Influence; the psychology of persuasion.” I can’t recommend it highly enough. Jam full of explanations of how to get more of what you want in life, and a scary insight into how the marketing people that know their job can exercise such power and influence over us.
I wanted to share one of his examples this week, as it seems so pertinent in times of recession such as these, where we need to be more creative in our thinking about the way we do business if we want to stay afloat. It’s a story about an Indian jewelry store in Arizona.
The owner had been struggling to shift some particular pieces of turquoise jewelry, despite all the standard approaches: making them more prominent in the store, getting the staff to promote them and so on. One evening she had to prepare for a trip away the next day, so she left a note for the sales manager saying “everything in this display case, price x 1/2.”
When she came back from the trip she found that they had sold out. Not only that, they had sold out at twice the normal price, because the manager had misread thenote, thinking it said “x 2.”
Cialdini goes on to explain why this happened. It has to do with automatic triggers in our brains which lead us to take action. In this case the stereotype in their mind was “Expensive = Good.” In the absence of any other data (tourists may well have lacked detailed knowledge of the pricing of turquoise Indian jewlery), all they had to fall back on was the stereotype. They were using this stereotype to help them reduce the odds of a bad purchase. They were betting that the price was an indication of quality, and that was all they needed to know to make a decision to purchase.
I find this intriguing. It could be the basis of a new sales model for businesses where the standard approach isn’t working. Maybe not where the item being sold is a commodity and there is plenty of benchmarking data available for the buyer to help them make a confident decision. But certainly where the product is a solution (eg Consultancy), is unique (eg a work of Art), or has other attributes which make it hard for the buyer to know what price she should be paying, I can see this approach working. Some products which are more like commodities have even been able to pull this off (normally by some very expensive investment in brand building). The most obvious one in the UK was Stella Artois lager, whose strapline “reassuringly expensive” deserves a medal.
As someone who works in Consultancy, I’ve heard it said many times that some clients they won’t buy from you UNLESS your price is above a certain amount. The fact that you charge x% more than the next man implies that your solution is of higher quality as well.
Of course it takes a certain amount of courage to double your prices (!), and in Cialdini’s example it was an accident. Maybe the thing to do is to experiment: try a pilot scheme for a short period or on certain products only.
I’d love to know if you have tried this approach, and if so what the results were.
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