The following article is drawn from Dan Hill's new book, About Face: The Secrets of Emotionally Effective Advertising (October 2010, Kogan Page).
In boardrooms everywhere, one can imagine what's being said: We need to make some money fast, so let's lower our prices and let everybody know. So CEOs and CFOs carry the day while CMOs beat a quick retreat to inform their ad agencies.
But the thing is... it's a bad idea to lead with price in advertising.
First, discounting, especially repeatedly, isn't sustainable. One of the key advantages of a sale is the element of surprise. How does surprise register on people's faces? Their eyes go wide, and their mouths fall open; it's nature's way of saying shut up and notice the world around you.
Surprise aids stopping power in advertising, but surprise fades when you use the reduced-price trick repeatedly.
Second, surprise is really a pre-emotion. It's brief (less than a second long) and it's followed by a verdict: either a positive "Wow!" or a negative "Yikes!" Repetitive low pricing leads to expectations of future low prices, desensitization, and the impossibility of creating a "Wow" response.
Shopper research has shown that seeing any price tag causes disgust. Instinctively, people don't like giving up their money. So creating more delight regarding the offer and generating allure that exceeds feelings of disgust about surrendering cash are what make a positive purchasing experience.
The problem is that a low-price strategy isn't about the offer's intrinsic value: It's merely a desperate attempt to lower people's disgust levels; but ultimately, because of desensitization, it's a losing game.
Third, a focus on prices is about numbers and statistics, and it ushers people from right-brain emotional involvement in advertising to left-brain analysis. That's a bad tradeoff, given that everyone feels before they think.
Results from management consulting company IPA's database of 880 marketing campaigns has found that emotion-oriented campaigns generate twice as much profitability as traditional, hard-sell, reasoning-oriented campaigns.
Fourth, price-leading advertising creates quality problems for the offer. Let's consider the value = quality/price equation. There, price at least gives the illusion of being a benchmark for inferring the quality of the offer.
So what will a lower price do? It might shape perceptions that the floating, undetermined quality of the new offer is quite low or that a previous offer was never worth what people had been paying. Put another way, cheap doesn't feel good.
Fifth, encouraging consumers to take a price-oriented, statistical, rational approach to purchasing decisions can have disastrous unintended consequences.
That's because contrary to popular opinion our emotions provide valuable insight. They steer us: A conservative estimate is that 95% of people's thought activity isn't fully conscious, and hence is intuitive and operating in the realm of emotion.
Sixth, brand loyalty is at risk because pride takes a hit. Loyalty is a feeling, and how are loyal users supposed to feel when they see the price is lower for everyone, not just for them?
Moreover, the company loses twice over. Current customers pay less for goods they were already buying (and may not buy again at full price). As for new customers who bought because of a deal, their loyalty is less real than the profit margin sacrificed.
And seventh, a brand on sale is a brand with an integrity problem. A key way we judge the trustworthiness of others and companies is the degree to which they behave consistently. With price-leading advertising, a company's identity becomes fuzzy. Suddenly, you are either a discount brand or you're signaling a lack of confidence that, in dating as in commerce, is not attractive.
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Leading with price suggests you have nothing else to say or show in advertising. Price as your main attribute doesn't mean anything. And so the marketing battle is fought in terms of price and distribution; loyalty ceases to be a barrier to entry; and surprise, hope, and every other positive emotional dynamic required come crashing down.