- Product Differentiation
Article – Huffington Post [5 Keys to Product Differentiation for Fun and Profit]
Product differentiation is all about setting your product apart from competitors by pointing out what makes it different, and ultimately better.
Marty Zwilling makes some excellent points about Product Differentiation. He points out that a discredited Differentiation is the same as a ruined reputation, in that it hurts business and is extremely hard to recover. So what should you do to make it effective? Zwilling points out that you should quantify the difference, and that anything less that 20% (20% off, 20% more, 20% more effective, etc.) is ineffective. He also points out that it’s most effective to focus on a specific demographic. Rich customers are more likely to care about a difference in features, whereas the plebeians are more likely to care about a difference in cost.
2. Using Cookies to Charge More Money
Article – USA Today [Do travel deals change based on your browsing history?]
A trick that Airlines (and possibly other goods and services purchased online) is to read your cookies, use systems to track how you arrived at the site and use databases with user information to determine how much money to charge you. A trend that many have been noticing is that ticket prices seem to mysteriously go up after searching around to compare prices, or even using an account that has previously purchased multiple airline tickets; with the price going back down after clearing their cookies or using a different browser. Is this an ethical business practice? Hell no.
However, it is important to remember that ticket prices will also change based on availability, the date of the flight and other factors not related to spying on you to wring as much cash out of you as possible. Just remember to continue comparing prices, but clear your cookies or use a different web browser while doing so.
3. The Decoy Effect – Popcorn
Video – National Geographic [The Decoy Effect]
When psychological pricing was mentioned, this was the first thing that came to mind. This video is one of my favorite examples of an effective pricing strategy. In the video, it explains that having a large gap between prices (where the small is $3 and the large is $7) makes the large popcorn seem ridiculously expensive (it is). However, when a medium is added in for only $0.50 less than a large, suddenly the large seems like an excellent deal. When offered a poor, medium and luxury options for a product, most people will tend towards the medium option. Article – Profit Guide [How to Achieve Movie-Popcorn Pricing] However, when the medium option is only $0.50 less than a large, suddenly it seems foolish not to upgrade, despite the fact that $7 for a bucket of popcorn is still ridiculous.
Marketing++ 