BackOne-time Australian Prime Minister John Howard – is said to have said that – ‘context is everything.’ While there are any number of subjects that I would struggle to agree with Howard (or any politician) on, I agree with him on this one. To say that context is everything is hyperbolic and lacking in nuance […]
One-time Australian Prime Minister John Howard – is said to have said that – ‘context is everything.’ While there are any number of subjects that I would struggle to agree with Howard (or any politician) on, I agree with him on this one. To say that context is everything is hyperbolic and lacking in nuance – there is no doubt that context is central to cost-effective marketing.
In 2009, Duke University behavioural economist Daniel Ariely worked with The Economist magazine to test reader responses to a series of offers and price points. The study involved two stages, each one with options to choose from. In stage 1, respondents were presented with two options to purchase The Economist magazine – ‘print and digital’ for $125.00 and ‘digital only’ for $59.00. In stage 2 of the study, respondents were presented with three options – ‘print only’ – $125.00, ‘print, and digital’ – $125.00 and ‘digital’ – $59.00. In stage 1, the sales were – ‘print and digital’ – 32% and ‘digital-only’ – 68%. In stage 2, the sales were – ‘print only’ – 0%, ‘print and digital’ – 84%, and ‘digital-only’ – 16%.
Including the third option – what psychologists call a ‘decoy,’ boosted sales of the dearer $125.00 option, significantly increasing profits.
Joshua Bell is among the greatest violinists in the world today, regularly playing at the most famous of venues, including Lincoln Centre, Kaufman Music Centre, and Carnegie Hall. Tickets to his concerts sell for hundreds and sometimes – thousands of dollars. 2007 Despite his fame, after busking in a Washington subway for thousands of people over several hours, Bell earned just $52.17, including $20.00 from one person who recognised him. In the concert hall, consumers were happy to pay big bucks, but out of context, they would pay very little in the subway.
A New York Department of Consumer Affairs study examined 90 consumer products, with colour being the only differentiator. Some products were said to be for men, and others were said to be for women. The study found that pink products targeting women were an average of 7% more expensive than those targeting men. Further, 42% of products targeting women were more costly than those targeting men. Colour created a context and made the pink products more appealing to women, so much so that they were prepared to pay more.
John Howard was right – context is everything. No variable, price, or anything else is ever considered in isolation. Consumers evaluate all products and prices in context. As such, it is important to understand the context within which variables of importance will be considered. There is also merit in creating the context using a decoy.
What is the context in which your products and their price points are judged?
D. John Carlson – Marketing Consultant Perth.
Maximising performance through ethical customer-centric marketing, branding, and communication.
Advisor – Director – Mentor.
Consumer insights – strategic planning – marketing consultancy – branding consultancy – communication consultancy – culture consultancy – strategic marketing advisor.