Tuesday, April 08, 2008

'And the special price, today only, is exactly what it'll cost you tomorrow, too!'

Today I'd like to talk about a marketing gimmick that's become a staple of cheesy TV product-advertising. I find it tacky and offensive, though clearly tacky-and-offensive can't be such a bad thing, because I see it in just about every ad/infomercial that comes along these days. This morning I saw it in an ad for "Debbie Meyer's Green Bags," but the actual product is irrelevant. The pitch always goes something like this:

"You get five Colonel Schlomo's wigamidgets for just $19.99. That's five for just $19.99! A tremendous value for our TV customers only! Less than $4 apiece! And if you call right now, we'll double the order! That's right! Call now and we'll send you 10 Colonel Schlomo's wigamidgets for just $19.99...!"

See, it'd be one thing if this were live television, and the advertiser, in a moment of supreme generosity, simply decided on impulse to cut his profit margin in half by giving you twice as much product for the same money. Of course, that's not what's happening here. These are prerecorded ads. The pitch is totally scripted before the shooting starts. So when the pitchman says, at first, "You get five Colonel Schlomo's wigamidgets for just $19.99," he's setting you up; he already knows that about three seconds later he's going to offer you 10 wigamidgets for $19.99. (And rest assured, the profit margin for that value proposition has been carefully calculated.) So what's the point of mentioning the "five" at all?

The answer lies in the realm of "duh": 10 sounds better than five. In fact, it sounds twice as good; like you're getting a real deal here. But to me, the insincerity and deviousness of the whole thing ruins it. The very idea that I'd be dumb enough to think that they decided on an impromptu basis to make me this special offer "if I call right now" is insulting to my intelligence, and far outweighs the allure of the offer itself. Even if 10 wigamidgets for $19.99 is a helluva deal.

I wouldn't even mind (that much) if they said something like, "Normally you'd pay $19.99 for just five wigamidgets, but today only...." But to make it sound as if the original intended bargain was five wigamidgets, and then they changed their mind about it with the cameras rolling... That really gets me gnashing my teeth. I can tell you forthrightly that I would never order any product that made use of such tactics, and I exhort my fellow consumers to do (or not do) likewise.

(Up it to 20, though, and I'd have to think about it...)


RevRon's Rants said...

Hey Steve -
I think it's probably time to think about switching to decaf, quick... before you find yourself being enraged by the lip-syncing dogs on the flea collar commercials. :-)

Elizabeth said...

Ha! That's nothing, Steve (prepare to gnash some more). There is one clothing catalog that I routinely get in the mail -- and that shall remain nameless here -- which advertises its merchandise by saying that, "These low sale prices will remain in effect only until 4/30. After 4/30, we'll be selling at regular prices again. Order NOW!"

The funny(?) thing is, these prices never really change (I pay attention). So their cat is out of the bag -- or has been, really, like, forever. And nobody takes it seriously, unless a complete newbie.

This pathetic trick should join the others in the Advertisers' Hall of Shame, like the MSRP -- the oh-so-scary Manufacturer Suggested Retail Price, which has usually no bearing on reality and is just thrown in to lure shoppers into what they should think is "getting a good deal" (by comparison with the astronomical MSRP).

Good riddance to such good deals. (BTW, that guy from the TV Guide cover makes me want to climb walls -- and not for home improvement purposes. For godssakes, somebody adjust HIS meds! And press the MUTE button, now.)

Steve Salerno said...

OK, people, I hear what you're saying...but I think my real point here is being missed (or was poorly made, which is possible, given the paucity of free time available for the blog lately). What they're doing in these ads is almost like, well, it's no more ridiculous than my saying in an eBay ad, "This rubber plant I'm selling is fully 4 feet tall--but tell ya what--order now and it's 8 feet tall!" If you are writing an ad for something, you already know what it is and how much you want to charge for it. You know that beforehand. Soo, notwithstanding Ron's point about the caffeine (and next he's probably going to tell me to try a bran muffin again), this sort of adver-teasing, wherein they construct an artificial price--and present it with a straight face--just for the purpose of springing the real price on you a few seconds later, shows a unique degree of contempt for the customer (and said customer's intellect).

Or am I really the only one who feels that way?

Steven Sashen said...

Yes, some of us are smart enough to see through advertising ploys like this on. And a sub-set of that group will be personally offended by it (even though it's not personal). But remember, they only do it because it works.

And that points to the more significant issue than the idea that advertisers are evil, horrible people who deserve to be strapped to a table for all eternity, listening to and endless loop of the Kibbles & Bits song.

Namely, these "tricks" highlight our cognitive biases, our less-than-impressive reasoning skills, and our reliably irrational behavior (Kahneman & Twersky won the Nobel for showing how, especially regarding money, we're predictably stupid and act in ways that are not in our best interest).

In "Gotcha Capitalism" there's a story of a hotel chain that decided to advertise it's REAL rates -- not the rates *prior to* all the extra and hidden charges that magically appear on your bill. So, even though the competitors' "$29.95 per night... ASTERISK" really becomes $49.95, when this chain told the truth, without the advertising gimmicks, sales plummeted.

And, they're not the first to discover that you'll sell more of something that's $29.95 + 10 shipping, than something that costs $39.95. People will STILL by more of a product priced at $19.99 than the same product at $20.00 (and, lately, testing shows that $19.97 does even better).

So, imagine you're the company selling the product... you have 2 choices:

1) Ignore that your customers have not evolved much in the past 100,000 years and will respond better to "ACT NOW, this deal ends tomorrow" and make less money than your competitors, have less to pay your (fewer) employees and possibly go out of business, or;

2) Keep your business afloat by using 20th century technology to communicate with -1,000th century brains.

I think there really is a difference between taking advantage of a phenomenon ABOUT people and taking advantage of people.

For the latter, the implication is that there's nothing we can do about it or that we're victims in some way. For the former, there's an obvious answer: education.

What, me contrary? ;-)

Steven Sashen said...

Oh, here's the short version of my post:

It's not that they're showing contempt for the customer's intelligence.. it's that customers (ALL of us) are, in fact, STUPID!

And we're stupid in predictable ways (ask Kahneman and Twersky).

Elizabeth said...

Yes, Steve, I agree, it does show contempt for the consumer, but this is probably a side-effect of the main drive here, which is to sell, fast, and with the highest profit. Any trick is justified. The consumer is not a person with intellect, feelings, and, god forbid, dignity, but a walking wallet to be emptied by any means possible.

And, frankly, this approach must work for some (many?) people at least, otherwise it would be discarded and replaced with something more "innovative."

Elizabeth said...

And, let's face it, this is a typical SHAM-like tactic: Hype IT up, make a lot of noise and smoke, throw in tons of "positive attitude," along with ridiculous claims about "the exceptional price," and who can resist that?

By the time you realize you bought an overpriced piece of crap they'll be vacationing on Cayman Islands.

They do it because it works.

ourfriendben said...

Hun-nie! (As my very Southern college roommate used to say.) Aren't you forgetting that little truism about one being born every minute? To find ads that simply describe a product and then tell you what it costs, you have to turn to the seed catalogs--and the small, family-owned, organic seed catalogs, at that. Or, say, the Vermont Country Store and Lehman's Non-Electric catalogs. Otherwise, you are on your own "out among them English," and have been long before the mediaeval minor clerics started selling millions of pieces of the True Cross.

Yes, it's repellent, but at least now the advertisers assume you're already in the game, not just some patsy lining up for the latest bottle of snake oil. You pays your money and you takes your choice. I still maintain that the best choice is just to turn off the damned TV! Within seconds, you'd feel your IQ shooting up, and you wouldn't even have to switch to decaf.

Elizabeth said...

Steve, speaking of Advertisers' Hall of Shame, see below:


And a couple of bizarre vintage pharmaceutical ads:

Enjoy! ;)

Anonymous said...

If this upsets you, Steve, then I suggest you stay away drom the midway at the State Fair. I paid $1 to view "a Real, Live 6 Ft. Tall Man-Eating Chicken" - I've seen a lot of chickens in my day, but never one 6 ft. tall. I paid my money, went in the tent and waited a few minutes (for more suckers to join me). The drape was pulled back and there was a guy, sitting on a stool eating fried chicken. He stood up and said "See? I'm 6ft. tall! What did you expect?"

Biily Mays is The Man! His Mighty Putty is holding my house together right now (six tubes of it because I ordered right away.) I just wish he would use his indoor voice on those infomercials.

Case said...

The other side of the low price debate is the image that a ridiculously expensive self-help program/seminar is more valuable than the $19.95 book. Many times, the content is one in the same, but people still pay an additional $995 for the same information.

Steve Salerno said...

Case makes an excellent point. There are many people who believe that the cost of a Tony Robbins Fiji seminar must self-justify: i.e., that because it costs twelve grand, that alone must mean that some precious wisdom is communicated. High achievers with money to burn are notorious for that kind of thinking.

Fortune-500 America often falls into the same trap; the idiotic assumption almost seems to be that if you're not overpaying for the training, then the training has no value at all.

Carl said...

We're all guilty Steve, we know it's b.s. but we buy in anyway, why is that? It's like an unspoken agreement between the people selling things and the people buying things in this country, where everybody knows nobody's telling the truth. But it never changes!

Elizabeth said...

" (...) advertisers are evil, horrible people who deserve to be strapped to a table for all eternity, listening to and endless loop of the Kibbles & Bits song."

Mmmm... I like the way you think, Steven Sashen.

Yekaterina said...

"They only do it because it works."

It's exactly this that bugs me most about SHAMland and the sort of advertising you mention (as well as advertising where they use human weakness and stupidity to sell junk food as healthy, for example.) No one seems to care that what they are doing is outright lying to make a buck. It's considered completely valid to conjure up an image for your product—who cares if it’s false?—all in the name of sales. If you're anything like me you're not enraged as much as you are disgusted by this.

What makes it all the worse in SHAMland is that the whole aura surrounding self help is one of love, healing, caring…becoming a better person. Hypocrisy at it’s worst. How can charlatans and hypocrites teach us to become loving, caring, healing, good people when they are not these things themselves, in reality, but only pretending to be so?

If I ever stop feeling disgust for such things I’ll try switching to caffeine!

Yekaterina said...

P.S. I think manipulation is the key word here [to control deviously] I see nothing wrong with marketing a product at $19.99 instead of $20.00 because it sells more units, there's no deception going on in the above example, but advertising a hotel room at $29.99 when the REAL rate adds up to $49.99 IS deception, the same as the example on today's SHAMblog post.

mikecane2008 said...

I suppose I should leave a comment about this.

But wait!

I can give you *two* for the price of one tomorrow!

Steven Sashen said...

I agree that: advertising a hotel room at $29.99 when the REAL rate adds up to $49.99 IS deception, but what's shocking is how consumers demonstrate a preference for being deceived.

Given two choices: $29.99 + $20 vs. a straight $49.99 offer, most people will pick the "lower" price, time and time again.

If you haven't already, read "Why Smart People Make Big Money Mistakes..."

mojo said...

Marketing 101, at least in the "hard sell" industries, like TV shopping and direct mailing. Or ads in tabloids. And anything on the internet with a screaming red headline. (It has to be RED. Patented Devious Trick Number 12.)

What I find amusing is, there's marketers now on the internet who exclusively sell their "proven" marketing and copywriting "systems" to--get this--other marketers. And it's a BOOMING business, at least to hear them talk it up.

The hysterical thing is, they'll expose some devious "tips and tricks" for free to show the prospective buyer what high quality info they're getting....and then proceed to use the exact same tricks in their marketing copy as they sell their systems.

You'd THINK when such tactics are out-and-out exposed the customer would come back with "Hey, Internet Marketer, this copy here from you trying to sell me your system is straight out of your 'Patented Devious Trick Number 23'!" but instead they just gush about what a swell fellow he is for "sharing".

Go figure.

Erik Deckers said...

The problem is, and Steve Sashen alluded to it, that those of us who read the blog and write about these issues are smart enough to see through these deceptions and refuse to buy from those companies.

But -- and I'll paint all of us on this comment page with the Smart Big Brush -- if I place us on the marketing intelligence bell, we're way down on the right side, at the point where the curve starts to flatten out.

We get it. We know the tricks. Many of us have even written or created materials using those tricks. We're going to see through their chicanery and lies. But look back up the curve at all those people, especially the ones at the very top. We're looking at the other 95% of the population who says "Holy crap, TEN megawidgets?!?! Where's the phone?!"

So, like Steve Sashen said, people do it because it works. We may smile sadly and shake our heads, but it works.

Steve Salerno said...

Erik, you're right of course in the tight-focus sense, but what still gets me, widening the lens, is this: I'm sure that some of the paint from the Big Smart Brush also drips on lots of other people throughout the curve. They know that's it's b.s., too. And they buy anyway. It's like the classic ".99" deception. Why does it work, even among those of us who not only see through it (which is just about everyone, I'd think) but feel that it insults our intelligence??

Steve Salerno said...

I guess on further reflection, what I'm really asking is this: Why do we need this big charade, this winking conspiracy between vendor and consumer? Why can't we just "sell straight"?

Steven Sashen said...

We *could* simply "sell straight" but this is kind of like asking, "Why can't athletes just NOT use steroids?"

Because there is competition, and because humans *do* respond to these "tricks", the competitor who doesn't use them will suffer the consequences.

Further, even without competition, if a vendor wants to maximize revenue, and again because humans do respond to these techniques, the vendor would best achieve her/his goals by using them.

Getting the kind of agreement that would be required for "straight pricing" -- ALL vendors doing it, all the time (and consumers understanding and believing the new system) -- would be more impressive than the agreement required for building the Great Wall.

I'd be happy to offer my consulting services to any company that wants to do straight pricing. I charge $200/hour, but for readers of this blog, they can get a $50/hour discount... today only.