Pain triggers harming your business?
 

I recently came across an interesting study conducted by Cornell University that piqued my interest. It was titled "$ or Dollars: Effects of Menu-price Formats on Restaurant Checks". They wanted to know if the menu price format would affect customer's spending behavior. They conducted their study during lunchtime at St. Andrew's, the restaurant at the Culinary Institute of America, in Hyde Park, NY.

They handed out identical menus with 3 different pricing formats:

1. Numerals with a dollar sign ($20.00)
2. Written out (twenty dollars)
3. Numerals without a dollar sign (20.)

Do you think these slight changes will have an effect on how much customers end up spending?  Well, they did. Let's take a look at the results.

Even though all three pricing formats had the same dollar value, customers spent less when presented with a menu that showed prices in formats 1 ($20.00) and 2 (twenty dollars), and spent more when presented with a menu that showed prices in format 3 (20.). So why is this?

It seems that the $ symbol and word "dollars" holds some weight and may trigger the brain to focus on the value of the item vs. the price. Instead of considering what to eat and focusing on the pleasurable aspect of having lunch, they are "consumed" (excuse the pun) by the pain of spending and end up spending less. The mere mention of "$' or "dollars" reminds customers of the expense and makes them more spend cautious.

On the other hand, the absence of the "$" seems to allow customers to be less "pained" by cost which allows them to focus on their consumption choices.

This leads me to ponder... what other subliminal triggers hinder businesses? Might be worth examining your website, social media pages, advertising, etc., to see if there are any silent pain triggers that prevent you from getting the most from your paying customers.

Before Starbucks, most on-the-go coffee choices were dreadful. Starbucks tasted a lot better, offered fancy-schmancy cappuccinos and, well, seemed a small daily luxury a lot of people were willing to spend an additional $3 on.  Life’s too short to drink lousy coffee and all that.

Even though espresso-made specialty drinks aren’t really in the same category as regular brewed coffee (and, frankly, Starbucks brewed coffee is not particularly tasty, IMHO) the public had been exposed to something better and was willing to divert coffee dollars to specialty drinks.

Then McDonalds unleashed their own premium brewed coffee and a line of cappuccinos and other specialty coffee drinks, with Burger King and several other fast food chains following suit. The choice is no longer between paying $4 for something that tastes good or suffering with bad coffee.  Now you can pay $1 (or nothing on Fridays) and walk away with a pretty good cuppa joe.

Three business and marketing Lessons to take away from this:

1. As people’s options change, so do their buying habits. When was the last time you looked at your customer's options and made sure yours compared favorably to the competition?  When was the last time you thought about offering up a new option? Bundled services, un-bundled services, leasing, pay-by-the-hour, etc.

Like one Hour Heating and Air Conditioning gave people the option of not waiting at home all day for the HVAC guy and people took that option in droves.

Want to grab new customers?  How about making them an offer they haven’t seen before…

2. Competitive landscape determines options.  Often times, you don’t have to be the very first to offer something or do something.  You just have to be the first in your local area or industry.  Cappuccinos and specialty coffee drinks weren’t new creations of Starbucks. But as Starbucks expanded, they were often the first to offer them in a franchised, wine-bar-without-the-wine atmosphere for their given location or town.
For the local business this has both an upside and a downside: the upside is your ability to import successes from other towns, states, nations, and especially to import strategies from other industries.  The downside is that the internet and the global marketplace often provide people with lots of options. If you’re competing against the internet, you need to face up to that and work that into your business strategy. As Tolkien tells us, “It does not do to leave a live dragon out of your calculations if you live near him.”

3. Categories don’t define perceived options. Before Starbucks no one would have guessed that you could get someone to pay $4 for a cup of coffee. But Starbucks wasn’t selling coffee, they were selling cappuccinos – they just managed to steal a lot of coffee business in the process.  And while the jump from coffee to cappuccinos, from $1 to $4, isn’t that big the principle remains the same: you are likely competing for dollars with businesses far outside your category. 

This is especially true if you’re selling a premium or near-luxury product.  In order to trade up somewhere, I generally have to trade down somewhere else. Convince me your product or service is the place where I should spend my “trading-up” dollars.

Finally, never discount the age-old option of doing nothing.  I could buy a new 27-inch iMac, or I could do nothing and be happy with my current Mac laptop.  I could go on a vacation, or enjoy a staycation instead.  As an advertiser, doing nothing is often your biggest competition, and yet, many ignore this competitor entirely.

And that’s all for me – I’m off to get a free coffee at Burger King ; )

This article was written by my brilliant partner, Jeff Sexton.

Morty Silber, CEO

Mad Strategies Inc.
a Wizard of Ads Partner

Packaging that entertains.

All it takes is 30 seconds.  That’s all the time it takes for consumers to make a judgment call and decide on the likeability and trustworthiness of your product. That’s how much time you have to make a first impression.

The limbic part of the human brain is wired to make these types of quick judgments, even before the conscious mind has time to make a logical decision. This is why it is so important to make a first impression that causes you to stop dead in your tracks and create a mixture of emotions like awe & delight, puzzled yet amused, a feeling of jaw dropping hilarity or just plain impressed by the genius of what you've just seen.

What's more, positive first impressions increase the value of the product inside and cause the consumer to assume that the quality of the product will be high.

I've found some genius examples of products that entertain and make a great first impression. Enjoy!

Thelma's cookies

This company makes scrumptious cookies and delivers them right to your door while they are still warm. The box presentation conveys that very point and reinforces that they are "fresh and right out of the oven".

Hanger Tea

A tea bag shaped like a T-shirt on a hanger? Why not? It's cute, fun and different. Just hang it from your cup. This product is clever, simple and fun, and a different colour for each variety of tea.

Just Laid eggs

This product took a very bold approach to convey its message. They wanted "to emphasise the benefit of locally laid eggs to consumers through a cheeky brand name that reinforces the idea of freshly laid eggs straight from the hen.  The creative execution is a selection of playful caricatures of hens laying eggs with three different poses/expressions for each of the three variants.”, says the design firm from the UK.

And lastly, Molocow milk. This design concept was created as a "spatial edition" bottle for the Molocow milk company and is based on a story where cows were seen being abducted by aliens during the late 1800s. Of course, the story was a hoax. But this bottle is not. I know every kid would beg their parents to buy this milk just so they could play with the flying saucer after the bottle was empty.

Your packaging doesn't have to be "genius" but it should definitely leave a positive impression in the first few seconds of the customer's interaction with your product.

Ask yourself; does your packaging add value to its contents? Does it provide an experience?

Morty Silber, CEO

Mad Strategies Inc.
a Wizard of Ads Partner