Do you think that your customers patronize you because your price is right? Have you been made to believe that giving constant coupons and discounts is a sign that your products are top quality and better than other brands? Consumers have various theories about what the market and marketing is all about. Some would tell you that when the price of a product is low, then that product is of low quality. On the other hand, some would claim that they had a poor deal when the price of a product is high while others would also claim that a high price means that product has a high quality. Advertising and marketing can influence customers for good or bad. Halcyon/Flickr.comThese are naïve theories, consumer research experts tell us, but they are the wont of the market. Because of these myriad of thoughts in the mind of your customer it is important that sellers, marketers and advertisers be careful when trying to influence the public.
If you try to influence your customers using price, your strategy would backfire based on labeling. If you tried using label and people influence, your strategy might backfire based on price or even the perception of that particular product in the market, which perception has been created by another company who must wield huge influence in the market.
Bias cues shape perception.
Hmm! That makes the work of marketers and consumers difficult, not so? It is difficult for marketers because they want you to buy the products they have on sale. It is difficult for consumers because they do not make decisions based on their thinking, but also on their budget and the perception of others.
These factors are what consumer researchers call “bias cues”, or attributes that help shape consumer perception and buying decisions. Bias cues could be price-, label- or quality-based. These cues could be correctly interpreted by the market, such as when consumers believe that low prices for a product is a signal of low quality. They could also be incorrectly interpreted by the market, such as when they believe that the high price of some orange juice with an attractive label is a signal of high quality. To make matters even more interesting, these bias cues could be meaningless at best. Have you ever wondered why companies decorate children’s shoes with shining lights? So, what theory do marketers and consumers work with? As for consumers, they have a variety of deceptive naïve theories about prices and products and can deceive any marketer who attempts to deliver a product message based on consumer perception.
Yet, some marketers have developed workable rules of practice.
Be careful when trying to influence their perception.
Some marketers have found that consumers might think a product is expensive when it is grouped with other expensive products. This is called the discrimination mentality and is evident when setting prices. Your customers might either discriminate on the price of a product when they make general inferences about that product because it is grouped amongst similar but expensive products. AdvertThese set of customers are usually ill-informed about the product quality or reputation and depend on this sort of categorization. On the other hand, some customers will ignore this categorization and concentrate on the salient features of a product even when grouped with expensive and similar products because they have a little more knowledge about the product, especially where similar brands are well known. Marketers should be careful when setting prices based on categorizations else they end up being accused of deceptive practices by customers.
It has also been found that people perceive or think a product is expensive if a relative or friend buys it cheap. On the other hand, if a stranger or someone distant to them buys it cheap, they might believe the product is cheap and maybe a good deal than if they had bought it themselves. What this means to marketers is that influencing consumers perception of your product quality and price through relatives or friends might really backfire.
The market has also found that because you have a higher knowledge about the market than consumers, you can deceive them by tweaking their perception of a product. consumers cannot be deceived twice. If a marketing gimmick can successfully make consumers think that a low-priced product is of high quality when it is not, they can learn from their mistakes when making repeat purchases. Keep that in mind when trying to influence your consumers. Decorating children shoes with colorful lights or other meaningless cues that excite emotions can give you sales today, but if you fail to meet their expectations, your marketing might eventually backfire.
As a rule: do not depend on consumer perceptions or their naïve beliefs about market prices and product quality as a guide in marketing your products.
Stop press: The worst deception is giving your customers reward that they would not need, or that are useless to them. I received one recently. After buying a popular brand of toothpaste here in Nigeria, I discovered that I was rewarded with a toothbrush which use caused pain to my gums. What humanity!
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Consumer research teaches us one lesson: to sell to the masses, create products that are uniform in character and design, but to sell to a customized clientele, to people in the know, create products that have unique experiential aspects. I breached this topic in another blog concerning the different ways novices and experts seek new knowledge and how much they are ready to cost those new knowledge. iPhone Size. Hand of the beholder. Flickr.com/The SearcherWe can go one step further: to give your customers satisfaction when designing a reward program, design the reward program with the target in mind when you aim to create a satisfying experience.
If your target is the general public, deliver reward programs that can be easily counted, that can be easily measured. On the other hand, create reward programs that are not easily counted or measurable by your clientele if you are targeting a specific subset of your customers.
In a recent study, Jingjing Ma and Neal J. Roese, of the Kellogg School of Management, Northwestern University, found that customers are often less satisfied when they receive products that are easily counted. But when they receive products that are not easily counted, they are more satisfied. When gifts or rewards are easily counted, it spurs comparison. More especially is this evident when money or cash is at stake. A customer is more satisfied if he receives a gift which cash value is above that of others, and might feel denigrated when the monetary value of his gift is below that of his peers. On the other hand, if a gift cannot be easily monetarily estimated, the customer is equally satisfied but concentrates on the intrinsic qualities of the gift.
AdvertWhen it comes to building your business, make sure you have all the right tools. Full-color flyers, brochures, sell sheets, signs and banners are all effective ways to get your name out, highlight new products and services, make big announcements and drawCustomers are humans. Humans always compare. It is a natural impulse. This is because we learn from watching others. According to social comparison theory, humans compare themselves to others in order to create uniformity, and to measure up to what is expected. Sometimes, comparing oneself to others can be a source of inspiration. When this is taken too far, it could be a self-denigrating tool, a tool for self-punishment. This is not fair but that is how we are built.
Humans compare themselves against their peers and competition.
When companies design reward programs that are easily countable, they could indirectly be asking their customers to compare their reward against that of others. Andrew was given $50 and I was given $40. Why? What if a customer thinks he was downgraded; that your reward was unfair when he has been a loyal customer? That would be bad for customer retention.
On the other hand whether customers are faced with a reward program or with the choice of picking between competing products on the store shelf, it has been found that humans as novices always compare when they are presented with different products. Only experts take a product apart; only experts have the unique ability of evaluating products on their intrinsic features, separate from comparison with other products. Experts make up a tiny fraction of the universe of customers. So, whether it be a reward program or doing shopping, humans will always compare, will make decisions slowly and carefully after every consideration has been given to their buying and will want to choose the product that is uniform to the accepted standard. Comparison creates a veneer of confidence.
What this means is that if your reward program is targeted at the general public, like say, a sweepstake, then you should not be worried about giving them rewards that can be easily monetarily estimated. You could even be using that as a competitive strategy. The options given in the program should also reflect the values you believe your customers would usually attach to the effort needed to receive such a gift. This is because the public are usually novices. They will compare notes whether you like it or note. They will compare between your present and past programs, between your programs or offerings and that of your competitors.
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On the other hand, if your reward program has as its target customer retention, customer satisfaction, or enhancing experience and increasing their happiness, it would be a mistake to present them with rewards that can be easily monetarily estimated or counted. Your customers are assumed to know a little more about your product than the average. That is why your brand is a favorite or preferred. They would be more satisfied if you present them with an experience rather than monetary value.
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Even when experts search for apples on a tree, it takes some effort. flickr.com;hikingartist.com
Learning is a lifelong process; that is why you are reading this article. It might involve learning a foreign language, a new recipe, another trade or line of business, or starting out as an entrepreneur. Learning experiences do not always have to be new. Old hands can learn new tricks. On the other hand, you can pick out a novice from an expert based on how they chose to learn.
We seek new knowledge because we want to improve, to do the same old things in better ways. That implies a selective process; the ability to pick out the useful material from the clutter. All this is done based on experience. The more experienced you are, the easier it is to pick out the relevant information from the unnecessary. This is what distinguishes novices from experts. Novices chose information that enhance their broad knowledge, while experts seek to deepen or specialize in a knowledge area.
Different prices for novices and experts.
This difference between how novices and experts chose to increase their knowledge is the reason why seeking out new knowledge involves different costs. It is just like when seeking out the news. The general news costs differently from specific niche news, especially in the academic arena. This is because when one starts out, his selective picking ability involves very little costs. A novice usually picks from generally available cheap news sources, believing that in doing so, he could stumble upon useful finds. In short, a novice does not yet face the costs of what he is seeking. That is why new general knowledge, or knowledge that covers broad aspects, usually costs lesser than new specialized knowledge.
As for an expert, he is experienced in seeking out knowledge, understands the costs of doing so and picks out the best quality news source. Furthermore, an expert does not just select anything; an expert selects new knowledge only from a chosen area and is blind to other areas.
And so were discounts and coupons born. Without these buying incentives, novices will find it costlier seeking out new knowledge and products. AdvertDiscounts and coupons make a novice stop searching, so he does not spend more for search. Experts understand the market better. Discounts and coupons do not influence their buying decisions, rather quality of information and products usually do.
Search engines exist so you do not spend more searching for quality.
Another way to filter novices from experts is in the quality of products or information they seek. Some say you can tell a man’s education if he reads the New York Times, and his financial literacy if he finds the Wall Street Journal boring. Publishers who cater to experts know that their information and products are of higher quality, and hence price these higher than mundane and general purpose products whose quality require much more advertising signals. Some sellers even sell two types of products: one for the novice, and another for the expert. I see these most often when I visit a flea market. Mass produced clothing is of different quality than customized clothing because the latter caters to the tastes of experts and fashion connoisseurs.
Let’s take a man who searches for a job that pays highly. Because of the status of the job, he spends more in searching for it and in order to be successful, he spends more in acquiring the needed knowledge to find the job. If he is averse to spending on finding a job, then he’d have to settle for one of lower status. That is what I want you to remember: if you desire information and products of high quality, it is often wise to seek the opinion of experts, else you’d be a novice playing in the field of experts and could be hoodwinked to take a low quality product for high.
There is then a high incentive to shop around because of the difference between high and low quality products and services. To solve this problem, search engines like google, amazon, yahoo and bing exist. If you go to websites like wirefly with search facilities for electronic accessories, especially mobile phones and smart phones, you’d have to possess higher knowledge than a novice. You do not necessarily have to be an expert, but you should be adept and should be able to find your way around the universe of phones.
Even when we love seeking out new knowledge, sometimes we do prefer sticking to our favorites, to the brands and news sources that we have come to trust, whether we be experts or novices. Eventually, every knowledge becomes favorite or disfavored. Keep that in mind as you go shopping.
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