Tuesday, March 20, 2012

#MARKETS: "Success Depends on Phrasing"

Much ado has been made by marketing experts on how to describe a product or service qualitatively, but researchers now claim that using the correct quantitative descriptions, six-of-one or half-dozen-of-the-other, can make the difference between success and failure.

Marketing professionals have spent long arduous research sessions trying to discover the best way to present products and services to consumers, for instance claiming higher unit sales for a $4.99 price tags over $5. Other studies have claimed that "7s" often beat "9s" as in 77¢ over 99¢ where the 22¢ deficit is made up by more than 30 percent high unit sales. But the difference between six-of-one and half-dozen-of-the-other had yet to be explored by business marketing experts, until now.

According to market researchers at the Darla Moore School of Business at the University of South Carolina there really is a difference between six-of-one and half-dozen-of-the-other, but only sophisticated analytics that incorporate hitherto unplumbed distinctions can inform companies as to which is the best way to quote the price of a product or service.

The most important unplumbed distinction, according to University of South Carolina business professor Ashwani Monga, involves time. The difference, for instance, between two weeks and 14 days--the first of which emphasizes larger units, whereas the second maximizes the numerical value by using smaller units--can spell the difference between success and failure of a marketing campaign.

Unfortunately, there is no easy answer as to which aspect to emphasize--bigger units or bigger numerical values--since the answer, according to a study performed by Monga and Rajesh Bagchi, a marketing professor at Virginia Tech, depends on whether a consumer is thinking in abstract or concrete terms.

For instance, a two-for-one offer for a beach rental property could offer "two weeks for the price of one" or "14 days for the price of seven." What Monga and Bagchi found was that consumers making last minute plans were thinking concretely thus valued the bigger numerical values--14 days for the price of seven. On the other hand, consumers planning ahead in the spring for a trip in the summer valued more highly the bigger units, preferring the "two weeks for the price of one."

The difference between consumers thinking concretely or abstractly, and thus preferring bigger numbers or bigger units respectively, translates to all aspects of pricing strategies. In particular, the study verified the same consumer preferences for delays in product deliveries, maturity of financial products, the weights of nutrients, the length of tables, and the height of buildings. In every case, the mindsets of consumers mattered, with the concrete thinkers preferring bigger numbers and abstract thinkers going for larger unit sizes.