Web Consultancy UK

I read a book a few months back that I would recommend to all budding marketers and psychologists.  It was by a rather smart gentleman called Dan Ariely, a professor of behavioural economics at MIT, and went into some detail on what us marketers have known for some time.  i.e.  The great global public isn’t nearly as predictable as we’d like to believe.

If you want to read the book, go out and buy it - it’s called Predictably Irrational, and you’ll have spent £15.49 very wisely.  Or go to his website, and save £15.49 even more wisely!

“What is the book about?” I hear you ask.  Well, it’s an in depth explanation of the new social/economic science known as behavioural economics.  If you’re like me, you’ll find this fascinating, because it does away with the old market forces hypothesis of supply and demand - and subtly slides in a good dose of human irrationality, acknowledging that people will not always go for the cheapest offer, nor are they always influenced by rationality.

Dan Ariely explains the whole thing a hundred times better than I ever could, but I’m going to throw one example on benchmarking into the pot that he’s missed out.  and one that I think we can all relate to.

I’m going to lay a bet.  I’m going to bet you that when you go shopping at TK Max, despite being a bargain hunter’s paradise, it’s not actually the price of the clothes that sways your final purchasing decision.  Of course it is, I hear you huff indignantly!

But is it really?

If you’re anything like me, when I first pick up an item of clothing, the first thing I look at isn’t the price it’s being sold at.  Oh no, what i actually look at is the RRP.  Or the price it should be being sold for.  I then do a little mental arithmetic, and work out how much I would be saving if I were to buy this item of clothing.  I then weigh up this cost saving against other items of clothing, and buy the one that I feel is the best bargain.  I even get a warm, fuzzy recession busting sense of achievement in my tummy from the experience.  Yeah, so I just spent £300 on a suit.  But look, it’s a £900 suit.  I’ve just saved myself £600!

And that ladies and gentlemen is an excellent example of benchmarking.  I had no idea what that suit should have cost until I read that RRP, upon which a benchmark is placed in my mind, and from that point on, I use that benchmark to compare all other suits.  No matter that Primark are selling a £150 suit down the road for £100.  That’s a £150 suit.  This is a £900 suit!  All other suits dim in comparison.

Try it next time you’re trying to sell a product. Put a similar product next to the one you’re trying to shift that’s ten times more expensive. Add an extra offer that’s not nearly so enticing and advertise it next to the offer you’re really trying to push. Create benchmarking points that people see first and you’ll be amazed at the results.

Better still, go out and buy Predictably Irrational.

I can sell you a copy for a tenner!