Question

Topic: Customer Behavior

Can You Sell Expensive - Fictionally Expensive?

Posted by Anonymous on 8/31/2008 at 4:05 PM ET 50 Points
We're evaluating a plan to introduce two luxury beverages under the same brand name. The most expensive would serve as a reference for consumers to buy the second less expensive. The real objective is introduce the second less expensive bottle. Proper differentiation has been made between the high-end beverage, the second less expensive, and a cheapest third which is already in the market (although still a premium brand, above the medium price in the market). This strategy works for appliances and similar goods in department stores. Do you think it would work in this case?

It would be great if you can shed some light on evidence or studies to support your recommendation.
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RESPONSES

  • Posted by steven.alker on 9/3/2008 at 2:04 PM Accepted
    It should work, but you need to be careful – customers are smarter than most people imagine and they can see a false price anchor for what it is – same thing as 50% discount on usual price – what usual price?

    Oh one that we offered for 2 weeks in one of our stores. Oh thanks, I’ll shop somewhere less slimy!

    I believe that Tim Smith, Wiglaf on this forum has done some pricing studies on this concept. You might contact him directly in the event that any of his information could be propriety to a client.

    PS His nickname “The punk pricer” rather overlooks the fact that he is a Professor!

    Best wishes


    Steve
  • Posted by khullarsfromc on 9/11/2008 at 5:06 PM Accepted
    It would have been great to know the rough price and the nature of the beverage. First what I want to ask you is why do you want to do that. I can see if you wanted to get them to try a lower price beverage and then suggest if you wanted a more premium taste, go for the higher priced drink.

    There are huge differences between appliances and a luxury drink.
    1) Appliances you buy one and then you are set for few years. I thought appliance companies advertise lower priced products and then get you to come in and that gives them a chance to introduce you to higher priced brands.
    2) Out of Pocket Expenses-What you are going to spend on an appliance is going to be lot and lots higher than a drink. You can try even an expensive drink one time and you may never repeat that ever or for a long time and not so in case of appliances. Once you have bought it, more than likely you are going to keep it for a while.
    What are trying to gain by your marketing plan? What if consumers start liking the higher price drink. Are you prepared for that? To me, utlility (functional) is lot different than taste. Please shed some light on your thoughts.
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