SUCCESS

The recession has turned many people into what a recent article in Harvard Business Review called “commoditised consumers.” Their purchase decisions are based almost solely on price because they believe there are no meaningful differences among competing products — even when there are.

How do you get shoppers to look beyond price? Among the methods business authors Bertini and Wathieu recommend is counter intuitive: willfully overprice your product to get the consumer’s attention.

Here’s the logic. When you head into a store to buy a product, a flatscreen TV, for example, you have a price in your head. For a 42-inch LCD flatscreen, let’s make it $1,000. You might be stopped in your tracks by a model selling for $1,700. What’s this model have that the others don’t? Perhaps it has features that justify the price. You read the information tags, and you compare it with the commodity-priced models.

According to the researchers, overprices can dramatically increase a consumer’s recall of specific product information and evoke a more passionate response. That, in turn, can lead to the shopper marshaling more arguments in favour of buying the product. In the end, the consumer has a willingness to pay much more than originally intended.

The key is to not overprice too little (10%) or too much (190%). In the US the differentiated supermarket products overpriced 50% to 80% seemed to be the sweet spot for price premiums.

Most important is that you have to give the customer a tangible reason as to why you have 'loaded' your price compared to another product or service.

The Science of Luck

Dead Stars Still Earn Millions