Maybe you have heard or read about the famous graffiti artist Banksy, whose work sells for hundreds of thousands of dollars, who pulled a stint over the weekend in New York’s Central Park, hiring an elderly man to try and sell his work in a street stall. The day netted Banksy a net of $420 as a very small handful of unbeknownst buyers haggled the seller into signed pieces of art for as cheap as $60 a piece. (You can read more here-Banksy Stint)
The stint showed how value is often placed on name and marketing of a product or piece of art rather than the work itself. Whether this is good or bad, nobody can say – the bottom line is people will pay more for that which is packaged and presented in a specific manner.
The Basics of Marketing
Marketing 101 says one has to ‘create customer value’ and that this value must be examined from the point of view of the customer. According to The University of Southern California’s website Consumer Psychologist, “some customer segments value certain product attributes more than others. A very expensive product relative to others in the category may in fact represent great value to a particular customer segment because the benefits received are seen as even greater than the sacrifice made.
In the article Using Behavior Economics, Psychology and Neuroeconomics to Maximize Sales, the strategy behind smart ecommerce pricing is outlined. What did they come up with after such a boring title?
1. Price Anchor & Premium Options – Offering options allow people to compare value, with this you can convince people to pay the higher price.
2. How to Sell to “Tightwads” – Changing a single word in your copy can make a huge difference as well as reframing information can make a sell. Last bundling multiple pain points is preferred over making multiple purchases.
3. Selling Time Over Money – People value time over money and when you can include copy regarding saving time, it has shown to be effective.
Aaker asked the individuals one of two questions: “How much time will you have spent to see the concert today?” or “How much money will you have spent to see the concert today?” In most cases, asking specifically about time increased participants’ favorable attitudes toward the concert. In fact, those who had incurred the most “cost” (standing in line the longest) rated the concert best of all.
There were a lot of other case studies and examples and you can read the whole article at http://www.shopify.com/blog/6563013-using-behavioral-economics-psychology-and-neuroeconomics-to-maximize-sales#ixzz2hjKaPIJf
The bottom line is that we are complex creatures and we make purchases based on a number of psychological factors, not simply because it is the ‘prettiest’ or ‘cheapest’. How are you defining value in your company?