Friday Research: Look Out For Number 1.3 - Not Number 1!

You thought:   

It's effective to focus on the advantages of using precise numbers (50, 100, 530, etc) in the marketing messages.

New facts:  

Various products like energy drinks and aspirin pills are often marketed based on the numerical amount of a key characteristic that they contain. For instance, an energy drink may be advertised as having a certain amount of caffeine, whose number might be communicated as 100mg or 102mg. Although these numbers are similar in magnitude, 100 is a round number, whereas 102 is a precise number. Current research found that using a round (vs. precise) number in a product description increases consumers’ perception of a product’s lasting performance and ultimately enhances purchase likelihood. For instance, an energy drink with 100 (vs. 102) mg of caffeine is perceived as providing energy for a longer time, and as a consequence consumers are more likely to buy it. In addition, this effect occurs because when round (vs. precise) numbers are used in product descriptions, they bring to mind an associated concept of stability.

What Marketing Doctor ordered:

In order to design more persuasive marketing messages, use round numbers in product descriptions. Furthermore, these findings could also apply to consumers’ perceptions of product durability. Consumers might expect a 20-watt (vs. 23-watt) CFL light bulb to have a longer product life.


Source: Pena-Marin, Jorge & Rajesh Bhargave. Lasting Performance: Round Numbers Activate Associations of Stability and Increase Perceived Length of Product Benefits. Journal of Consumer Psychology, forthcoming.

P.S. When you’re done reading, I’d love for you to share your experience with round and precise numbers? Leave a comment or Tweet me, let's chat!

Friday Research: Make It Rain - The Bliss of Coupons

You thought:   

Consumers only crave coupons for the thrill of knowing that they discovered a good deal. But is that it? Check some fresh insight into consumers' psychology below.

New facts:  

As per just produced research, people who received a coupon had a 14% increase in oxytocin, an 8% decrease in the stress hormone adrenocorticotropin, a 4% decrease in heart rate, a 27% decrease in respiration, a 4% decrease in skin conductance levels, and a 90% increase in high-frequency heart rate variability. These factors showed almost no change for those who did not receive a coupon.

Mamamia! There is a real, measurable change in people‘s bodies and mental state from using coupons. Better mood. Happy high. Sweet relaxation. Do you know that oxytocin (which increased by 14% in coupon-holders blood) is also known as the love hormone and it profusely floods the systems of new lovers during the first six months? 

What Marketing Doctor ordered:

Short and simple - coupons is cheap, easy and nontoxic high for your customers so.. keep them coming, folks!


Source: Veronika, A., Tripp, S., & Paul J. Zak, P. J. Preliminary evidence for the neurophysiologic effects of online coupons: Changes in oxytocin, stress, and mood. Psychology of Marketing, 32, 2015.

P.S. When you’re done reading, I’d love for you to share your best experience with coupons? Leave a comment or Tweet me, let's chat!

Friday Research: Breath Fire into Your Retail Pricing Strategies

When Will You Use This?  

Creating retail pricing and discount strategies.

What’s The Red-Letter Bite Today? 

We all love good deals and low price. So can one retail pricing strategy be better than the other?

Current research* looked at the impact different pricing strategies have on the stores people shop at when they do not know the product prices unless they visit the store. Results revealed that when trying to maximize savings, consumers will choose retailers they believe offer the lowest prices the majority of the time.

 As authors explain, “to simulate 100 weekly purchases from a retail store, study participants were asked to purchase products from one of two competing retailers 100 different times. Participants were given a monetary incentive to minimize their total spending and were instructed to base their selections strictly on price. On each shopping trip, participants first selected a retailer before they were shown the store prices for that week. The authors manipulated the pricing strategies, but in most cases, one retailer used deep-discount pricing while the competing retailer used everyday low pricing or frequent (but small) discounts. While the average price of the two retailers was the same for most experiments, results showed that people consistently tend to choose the retailer they believe is less expensive more often than the retailer they believe is cheapest on average. This pattern held whether or not the retailer used frequent discounts or an everyday low price guarantee."

Discount rule: many little ones are better than banging one!

Addition To Your Bag of Tricks    

Authors suggest that this research offers great insight "for companies regularly using deep discounts or pricing their products lower than their competitors’ average prices. The authors suggest a more effective strategy is to simply offer prices that are generally always lower than their competitors’ prices. <..>One reason consumers find these retailers so attractive is that their product prices tend to be cheaper than those of their competitors on the majority of shopping trips. Consumers seem to prefer many small discounts to a few large ones."

*Danziger S., Hadar L., Morwitz V.G. “Retailer Pricing Strategy and Consumer Choice under Price Uncertainty.” Journal of Consumer Research: October 2014 {Thanks for the material}

P.S. When you’re done reading, I’d love for you to share your experience with discount strategies? Leave a comment or Tweet me, let's chat!

P.P.S. Need some help on crafting your marketing message? Let's do this together.

Friday Research: Could "Out-Of-Stock" Be Another Trick In Your Marketing Book?

When Will You Use This?  

Planning and developing marketing strategy for your products.

What’s The Red-Letter Bite Today? 

Smart companies might have noticed that sometimes consumers more desire those products that are "currently unavailable".

Imagine a man called Peter who goes into a store to buy an iPhone. He comes directly to a salesperson and asks for the specific model of iPhone. Unfortunately, a salesperson informs that the desired model is out of stock. Now, there are a few possible ways Peter might react to this information: he might desire that iPhone model even more (increased product desirability) or he might feel frustrated with the store (increased source negativity).

Current research* examines how consumers respond when formerly unavailable products become available after being out-of-stock. To qoute the authors, "we examine what happens when consumers’ freedom of choice is restricted and subsequently restored." Before we go deeper into the studies, it's important to note what authors describe as high and low reactance individuals, that is "individuals who are high in reactance (e.g., young adult males) respond very strongly restrictions of their freedom of choice, and experience strong product desirability in response to stockouts. Individuals who are low in reactance do not experience product desirability in response to stockouts. However, both high and low reactance individuals respond to stockouts with source negativity toward the store."

It is interesting to go through all the studies in this research, designed to investigate the restoration of freedom.

"Study 1 used a shopping scenario. Individuals imagined going to purchase their favorite snack food at a local grocery store. In the control scenario, they purchased the item and left the store. In the stockout scenario, the item was unavailable and they left the store. In the restoration scenario, the item was initially out-of-stock, but had been restocked when they walked back through that aisle on the way out of the store. After these scenarios, we measured individuals’ satisfaction with the store and the snack food item, and measured their individual levels of reactance. As anticipated, compared to the control scenario, in the stockout scenario, all individuals were dissatisfied with the store, but high reactance individuals also felt more positive toward the unavailable (desirable) snack food item."

"In studies 2 and 3, individuals went on multiple shopping trips using a computer-based shopping interface, and chose jellybean flavors from different stores. To make the study realistic, they received their chosen jellybeans. On the restoration shopping trip, individuals were told that the store was out of their favorite flavor, and they would not receive that flavor on the current trip. They were told they would have to make a second choice, but at the last minute, the shopkeeper discovered some additional stock of their preferred flavor. We compared individuals’ satisfaction after this restoration shopping trip to a control shopping trip where they received their favorite jelly beans immediately, and to a stockout shopping trip where they did not receive any jellybeans. We again measured individual levels of reactance. As before, high reactance individuals were more satisfied with the store after the restoration shopping trip than they were after the control shopping trip; they were also more likely to return to the store on a subsequent shopping trip for jellybeans. Low reactance individuals showed the opposite results."

"Study 4 examined how individuals high and low in reactance respond to restoration of freedom when they receive different reasons for the initial stockout. Individuals imagined shopping for jellybeans. In the restoration conditions, they told that their chosen jellybeans were out-of-stock either because the store failed to order jellybeans last week, or because the jellybeans were popular. In both cases, as in the prior studies, their chosen jellybeans were later discovered, and they received these. Compared to a control shopping trip, as before, low reactance individuals responded negatively to the restoration shopping trip—regardless of why a stockout happens, low reactance individuals dislike stores and products after having their freedom restricted and then restored. As before, high reactance individuals responded positively to restoration of freedom in the product popularity condition. In contrast, however, they responded negatively in the store failure condition—this condition strengthened their negativity toward the store, overwhelming their positive desire for the jellybeans."

Passing by and thinking, is this really out of stock or they need to push other products too?

Addition To Your Bag of Tricks    

"Only a few left", "Disappearing fast", "Stock for 1 day only" and similar selling slogans have been used as a strategic tool in many companies' marketing. This research confirms that "some individuals (those who are high in reactance) are happier to experience a temporary stockout than to have an uneventful service encounter. In short, high reactance individuals reward firms, but low reactance individuals punish firms, for restricting and restoring their freedom."

Carefully used (not over used) scarcity marketing can be great. Creating campaigns for a limited amount of customers or valid only for a limited amount of time can beautifully boost the sales of your products. Be creative!

*Moore, Sarah G. and Gavan J. Fitzsimons, "Yes, We Have No Bananas: Consumer Responses to Restoration of Freedom.” Journal of Consumer Psychology: April, 2014. {Thanks for the material}

P.S. When you’re done reading, I’d love for you to share your experience with customers' reactions to "out-of-stock"? Leave a comment or Tweet me, let's chat!

P.P.S. Need some help on crafting your marketing message? Let's do this together.

Sunday Video: Why Comparative Pricing Is A Tricky Affair?

You might feel safer choosing the same-old-easy way and implementing Comparative Pricing in your marketing strategy.. 

Hold on.

Watch this video and learn some important aspects that will help you form a better pricing strategy.

 



P.S. When you’re done watching, leave a comment or Tweet me how did you like it. Can't wait to hear from you!

P.P.S. Apologies for the poor sound quality. I haven't brought my beautiful little equipment to India and had to use whatever was nearby :)

Friday Research: Is Divide and Conquer a Better Pricing Strategy?

When Will You Use This?  

Developing and designing your promotional materials that include price information.

What’s The Red-Letter Bite Today? 

Whether making purchases online or in person, people often come across prices that are split into two or more quantities. For example, an online fashion retailer offers you a dress with a base price of just £15, but with a shipping fee of £4.95. This company could charge a single combined price of £19.95, respectively, but instead choose to display arguably more complicated partitioned price instead.

Partitioned pricing is a widely used pricing strategy and current research* investigates the impact of regulatory focus on the perceived attractiveness of partitioned and combined pricing.

The study reveals that promotion focused individuals perceive partitioned prices to be more attractive than combined prices, while prevention focused individuals rated the two types of pricing similarly attractive.

Unite or Divide: Is "All Included" Better?

Addition To Your Bag of Tricks    

 

Following the results of current research, ads designed with higher levels of ambiguity would benefit from the addition of partitioned pricing information.

Earlier authors define promotion focused individuals as the ones who "place more importance on what they “want” to do" and prevention focused individuals as the ones who "place more emphasis on what they should, or “ought” to do." Having that in mind, current study suggests the importance of partitioned pricing for companies selling the products which are associated with promotion concerns.

Moreover, authors highlight that "companies must always balance the costs and benefits of adopting different pricing strategies, and the current research suggests using combined pricing for products with prevention concerns may be the better choice in the long run.<..>We suggest that low seller reputation turn on a red light, which leads consumers to become prevention focused and pay."

*Kay Lee, Choi, Jungsil, & Yexin Jessica Li. Regulatory Focus as a Predictor of Attitudes Toward Partitioned and Combined Pricing.Journal of Consumer Psychology: April (2014) {Thanks for the material}

P.S. When you’re done reading, I’d love for you to share your experience with pricing strategies? Leave a comment or Tweet me, let's chat!

P.P.S. Need some help on crafting your marketing message? Let's do this together.

Research Friday: Free Offer Does Not Mean Worthless Product

When Will You Use This? 

 

Consider you are deciding whether to offer a specific product for free or for a discounted price of only £10 to customers who purchase a special package for £100. What's better?

The following research will be useful while creating promotional offers for your customers.

What’s The Red-Letter Bite Today?

While promoting their products many brands offer a product for free or for a discounted price (let’s call it a supplementary product) along with a required purchase (let’s call it a focal product). How does it affect customer’s willingness to pay for the product? Is it true that a free offer might devalue the product?

The current series of experiments* examine the effect of a promotional price of a product on consumers’ judgment of product’s value (once the promotion is retracted). It is demonstrated that consumers are more willing to pay for the product after the promotion when it was offered for free than when it was offered at a discounted price.

This research also provides evidence that, contrary to a popular belief, a free offer does not devalue the product at all.

Moreover, it is important to note that “while the price of the supplementary product itself serves as a natural anchor when it is offered for a low price, the price of the focal product or purchase serves as a price anchor when the supplementary product is offered for free.”

Addition To Your Bag of Tricks  

 

While creating promotions to boost your short-term sales, you should have in mind that:

• promotions with low, discounted prices devalue products more than free offers.

• free offers may not devalue products as consumers use the price of the focal product to estimate value of the supplementary product. 

** Mauricio M. Palmeira and Joydeep Srivastava. “Free Offer ≠ Cheap Product: A Selective Accessibility Account on the Valuation of Free Offers.” Journal of Consumer Research: December 2013. {Thanks for the material}


P.S. When you’re done reading, I’d love for you to share your experience with promotional price effects? Leave a comment or Tweet me, let's chat!

P.P.S. Need some help on crafting your marketing message? Let's do this together.

Research Friday: Give Them Discount Not Bonus Pack?

I have been a passionate lover of research, experiments and statistics since my University years. This feeling has been patiently pampered and nurtured wherever I stepped in, be it a tiny meditation center in India or a gigantic corporate in London. That's why every Friday I want to open this half-filled jar and share with you some of my favorite findings and investigations from around the world. Most of the time you'll be able to apply the results in your own marketing activities. Sometimes it'll work as a stimulus to smile or frown. Never will it waste your time. And that's what we want, right?

When Will You Use This? 

Creating your promotions, planning discounts and bonus products.

What’s The Bright Star In Dead Night Here? 

Research* found that people prefer price discount to bonus pack for a vice good, but select bonus pack instead of price discount for a virtue good. While both of these purchases offer savings to a consumer, the final explanation comes down to... inner justification.

Scientists say that people feel greater inner conflict when buying a vice good, naturally, they need to justify it somehow. In this place, a price discount is perceived as a better option, offering reduced losses and 'saving' from over-consumption of ‘bad stuff’. Getting a bonus pack would mean getting more of vice goods, and how would you explain that to...well, yourself?

On the contrary, as people don’t feel guilty about consuming virtue goods, they perceive a bonus as additional gain of ‘good stuff’ and prefer it over price discount. We like our consciousness calm and guiltless, right?

My Personal Example As Consumer

Every time in a supermarket, I pass this huge fridge of colorful ice cream packs on my way to the counter. Sometimes they have these stickies with 30% discount offers on a pack and more often than not I go for it. Every time I do, I find myself thinking (I became really good at introspection!) – “Well, it’s bad for me and my curves, so unhealthy, I’ll have to burn so many calories after that la la la… but I’m getting it much cheaper and it’s just a onetime treat anyways.” Pack in my cart!

 Few times while passing that same fridge of ice cream I had seen another offer: “Buy a pack of ice cream and get an ice cream bar for free”. Scratching my seduced head, I was thinking – “Oh my, I want it. But then - no way. I know myself. I’ll eat that ice cream pack like a happy piggy and then I’ll also eat the ice cream bar. Big time - pig time. No way I can see myself feeling all right and shameless and sleeping peacefully at night after that mountain of sinful sugar." You guessed it right – I reached the counter without ice cream in my cart.

Addition to Your Bag of Tricks

• Offer a price discount for a vice good (the one that provides strong immediate gratification but isn't very healthy). 
• Offer a bonus pack for a virtue good (the one that offer weak immediate gratification but leads to long-term benefits) . 
• Keep experimenting to find better variations (because they are there!).

Have a funky Friday!

* Arul Mishra & Himanshu Mishra (2011). The Influence of Price Discount versus Bonus Pack on the Preference for Virtue and Vice Foods. Journal of Marketing Research. Thanks for the material!

 
P.S. When you’re done reading, I’d love for you to share your experience about price discounts and bonuses. Leave a comment or Tweet me, let's chat!

P.P.S. Need some help on creating your Promotional Campaign? Let's do this together.