Tag: Discounts

Learnings

When you discount, don’t discount across the line of colors… Discount a few select ones.

Chris Labs

What they have seen, is that people will still get the color that they want. But this tactic will spike the traffic, spike the interest, people will come in and buy the color they want even if it’s full price. That works very well with things like Prime day as it allows you to benefit from the traffic without losing all your margins. – Mike Beckham (SimpleModern), E006: Marty Wholesome Goods, De-Risking Talent, Data & Testing, Gamers, Panzerism, Prime Day & More. Continue reading When you discount, don’t discount across the line of colors… Discount a few select ones.

Virality

Practical value is more effective the easier it is for people to see.

Chris Labs

Take the shopper discount cards that you get at your local grocery store or pharmacy. These cards are certainly useful. They save consumers money and sometimes even give them free gifts if they have accumulated enough purchases. But one problem is that the practical value is not very visible. The only information people get about how much they saved is hidden among a half dozen other pieces of information on a lenghty receipt. But what if stores made the practical value easier to see? They could put up a sign at checkout that shows other people in line how much … Continue reading Practical value is more effective the easier it is for people to see.

Learnings

How to frame a deal with The Rule of 100

Chris Labs

A simple way to figure out which discount frame seems larger is by using something called the Rule of 100. If the product’s price is less than $100, the Rule of 100 says that the percentage discount will seem larger. For a $30 T-shirt or a $15 entrée, even a $3 discount is still a relatively small number. But percentagewise (10 percent or 20 percent), that same discount looks much bigger. If the product’s price is more than $100, the opposite is true. Numerical discount will seem larger. Take a $750 vacation package or the $2,000 laptop. While a 10 … Continue reading How to frame a deal with The Rule of 100

Learnings

Promotional offers that seem surprising or surpass expectations are more likely to be shared

Chris Labs

This can be because the actual deal itself exceeds expectations (for example, the percentage off is so unbelievable) or because the way the deal is framed makes it seem that way. Quantity limits work the same way. Retailers sometimes create limits around the number of a given discounted item a given customer can buy. “One per household” or “Limit three per customers.” You might think that by making it harder for people to get as many as they want these restrictions would hurt demand. But they actually have the opposite effect by making the promotion seem like an even better … Continue reading Promotional offers that seem surprising or surpass expectations are more likely to be shared

Learnings

Diminishing Sensitivity

Chris Labs

Imagine you are looking to buy a new clock radio. At the store where you expect to buy it, you find that the price is $35. A clerk informs you that the same item is available at another branch of the same store for only $25. The store is a twenty-minute drive away and the clerk assures you that they have what you want there. What would you do? Would you buy the clock radio at the first store or drive to the second store? If you’re like most people, you’re probably willing to go to the other store. After … Continue reading Diminishing Sensitivity

Learnings

The psychology of deals – Importance of reference points

Chris Labs

Kahneman received the Nobel [prize] for his work with Amos Tversky on what they called “prospect theory”. […] One of the main tenets of prospect theory is that people don’t evaluate things in absolute terms. They evaluate them relative to a comparison standard, or “reference point”. Reference points help explain the barbecue grill scenarios we discussed a few pages ago. People use the price they expect to pay for something as their reference point. So the grill seemed like a better deal when it was marked down from $350 to $250 rather than when it was discounted from $255 to … Continue reading The psychology of deals – Importance of reference points