Question

Topic: Strategy

Can You Tell Me The Name Of This Marketing Tactic?

Posted by Anonymous on 2/2/2009 at 10:47 AM ET 125 Points
Hi everyone, I'm looking for the proper terminology for a marketing technique. Let me describe. Best Buy puts out an ad. They show three TV's all at different price points. What is the name of the technique where they out price one, low ball the other just so they can get you to buy the middle priced (which also has the highest margin).

Thanks!

C/S
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RESPONSES

  • Posted on 2/2/2009 at 10:52 AM Member
    Though not as formally "educated" as many on this list (no degree in marketing), I've always thought that was "loss leader." Get you in the store - (may not even have a good inventory of the lower priced item) and attempt to "up-sell" you to the more expensive. I have also heard it referred to as bait and switch. If I am not mistaken, there are some states that have laws pertaining to that practice.

    CVN
  • Posted by koen.h.pauwels on 2/2/2009 at 2:56 PM Accepted
    Hi,

    The term you are looking for is the 'compromise effect'. Below Washington Post article explains it managerially and also correctly attributes it to Itamar Simonson:

    https://www.washingtonpost.com/ac2/wp-dyn/A41329-2002Jan26
  • Posted on 2/2/2009 at 4:21 PM Author
    The Compromise Effect - that's it!. Very good article. I stumbled it. Thanks for the responses everyone!
  • Posted on 2/3/2009 at 5:47 PM Member
    I have always heard it called "Good, Better, Best" - when shown three choices most consumers pick the middle one by price/features. There is nothing wrong or illegal about it.
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