social mediums microbusiness monday fuzzy math consumer pyschology and pricing

by Hassan del Campo, Social Mediums

“$75 is  a better deal than $25.”

When I used to teach financial education, in my years as a Certified Educator in Personal Finance for a non-profit, my favorite topic to speak on was consumer psychology. I developed a series of classes and a guide book called Money is Sexy, in which I revealed the different emotional triggers that advertisers utilize to manipulate spending in favor of the business.

It was an eye-opening and entertaining experience for attendees. Many later remarked how they felt empowered as a consumer with their new found awareness. As an entrepreneur, the takeaways still apply.

DirecTV bundle approach

DirecTV utilizes the popular decoy tactic to nudge customers into specific bundles to upsell their monthly service packages.

Here’s our take on the popular tactic, shown below:

Bizzy's grooming

In the example above the dog walking and grooming package appears more attractive because of the cost savings (consumers use mental discounting) that package has over the other options. At first glance, many will take the sum of the first two options and compare that to the third combo deal. $82 ($25 + $57) is more than $75. Obviously, the dog walking and grooming package is the best option. Right? Advertisers often nudge consumers into a specific buying action by appealing to typical buying behaviors and psyche. You may seek a dog groomer, but stumble upon this ad and feel compelled to take advantage of the discounted dog walking and grooming bundle. You saved $7, but Bizzy’s Grooming gained $18. How Sway? In the end, dollar for dollar, the business was able to convince you to spend more. And that’s the point.

Presentation is everything.

Would the offer look as attractive if you only saw the dog walking and dog grooming package? It is likely that most of our financial decision-making relies, in part, on our ability to evaluate the value of the product or service that’s in consideration. If you were in the market to buy a bicycle, it’s probable that price will be a factor somewhere along in your decision-making process. In order to understand if the price stated is appropriate you will need to assess the value, of which is partly contingent on demand as well as the price of similar bicycles. These reference points are important because consumers find it difficult to measure the value of something without comparing it to another.

In our example ad, the consumer is presented with a menu offering three different services. Because they’re presented together a person may feel compelled to make a decision based on the information provided and not so much on what they initially were seeking – like, “I just need someone to walk my dog for the weekend.”

As a micro-business or emerging small business, it’s important to understand how pricing is used against consumers (predatory) and how the presentation of things can affect buying behavior. As you write your next ad copy, consider what fuzzy math you can use to help create marketing collateral that converts and attracts buyers.

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