- Los Angeles Is the Latest City to Consider a Minimum Wage Hike
- Corporate Taxes Are 10 Percent of Federal Revenue, Down from 30 Percent
- Spare Tires Are Disappearing From New Cars
- Ask Stacy: How Am I Supposed to Live on Social Security?
- What If You Can’t Pay Your Medical Bills?
- IPhone 6 Is Expected to Include a Mobile Wallet
- SAT Tutor Caters to the Kids of the Very Wealthy
- Report: Students Should Beware of Campus Debit Cards
This post comes from Julie Tilsner.
Attention, marketers: Consumers are much more resourceful these days, and your old tricks of the trade won’t work anymore.
A radical change in how people shop is illustrated by two studies by a professor at the Stanford Graduate School of Business, according to The New York Times.
The first study was done years ago when the professor, Itamar Simonson, was at Duke University. He showed participants three cameras from the same manufacturer — one cheap, one midprice and with more features, and one expensive. He showed another group only two cameras.
The participants who could choose between two cameras almost always chose the cheaper one. But those with three choices more often chose the midprice option.
Simonson called this the “compromise effect” – the idea that consumers can be prompted by marketing to move to a higher price point, even if the product is not what they actually want.
Compare that with the results of the new study. Says the Times:
It was similar to the first, except that consumers could have a glimpse at Amazon. That made a huge difference. When given three camera options, consumers didn’t gravitate en masse to the midprice version. Rather, the least expensive one kept its share and the middle one lost more to the most expensive one.
In fact, with copious product information available with a simple wave of your smartphone, the dark art of marketing is being radically undermined. Consumers base their purchasing decisions on peer and expert reviews, product demonstrations and other fact-based information, rather than on marketing spin.
Good for us. Not such great news for companies trying to sell us stuff.
“It does represent a sea change for marketers,” Simonson told Money Talks News in an email.
“Now that consumers can find out the real quality or absolute value of things, those quality proxies, such as brands and loyalty, are losing their power, and marketers are losing control,” he wrote.
What’s this mean for marketers? They’ll have to adapt and use the technology to their best advantage.
“Instead of trying to predict what customers will want in the future, they need to learn how to track what reviewers and experts are saying today and be able to respond quickly,” wrote Simonson, whose book on the topic, “Absolute Value,” will be available next month.
“Also, in addition to trying to build products that have the best shot to generate good reviews, marketers should make it easy for likely reviewers to have the tools to appreciate the products they build and share their opinions with others,” he wrote.
What do you think? How do you make your purchasing decisions these days? Let us know in the comments below or on our Facebook page.