I have the good fortune of living close to an incredible open air market. Yes, it's noisy, crowded and dirty, but cheap fruits and vegetables are in abundance. I passed through today around closing time, when many vendors are trying to get rid of extra merchandise. At the bakery I really like, the guy was offering rolls for half price. I probably would have bought one anyways, but he made my decision a lot easier. The answer was 'yes'.
This old-fashioned marketplace has a lot of valuable marketing lessons to teach us. This time-tested selling principle never fails to impress me:
People are more willing to buy something that's cheaper than something that's cheap.
Let's say I know that Product X normally costs $5 but now it's on sale for $2.50. Compare this to the same product in a different store which is regularly sold for $2. The first product is more attractive even though it's more expensive. Why? Because humans like to compare things. And they appreciate novelty.
A $2 product costs $2 more than I would ideally like to spend. A $5 product that's now $2.50 is $2.50 that I now don't have to pay. That's the comparative element. It's the draw behind the "Comparison shopping" phenomenom which is so popular.
And the break from routine is the novelty. $2 all the time is boring. Yeah it's cheaper, but since it's always the same there is nothing attracting my attention. The $5 halved is out of the ordinary. It grabs us.
More marketing lessons learned from "the shuk" coming soon.
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3 comments:
Very interesting post. The pricing strategy between having it always at the lowest possible vs. having it hi/low reminds me of different strategies followed by retailers/supermarkets. At a Shufersal Deal or Mega Bul (Wal-Mart in the U.S) you will find very few price or 1+1 promotions, their strategy is EDLP (Every day low price), however their strategy for the rest of their store format (big, bair,sheli, etc) follows the hi/low strategy where many price promotions are observed, however in the end the total basket will for sure be more expensive.
I think you might enjoy reading a couple of posts I have made on my blog http://weissersinisrael.blogspot.com/2009/07/sabra-album-take-6-marketing-edition.html and http://weissersinisrael.blogspot.com/2009/02/sabra-album-machane-yehuda-edition.html
Thanks.
Israel.
Hi Oren,
Very nice meeting you in person at the convension.
Keep up the good work.
By the way, you are part of my blogroll.
Regards.
Israel.
Israel,
Yeah, great meeting you! Good luck with your new endeavors and keep those posts coming. I just added you to my blogroll as well. Stay in touch and happy marketing ;-)
Shana Tova
Oren
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