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The Right Way to Reward Your Customers

Guest post by John Carvalho

In today’s fragmented marketplace, true brand loyalty seems like a hard thing for companies to acquire and harder still for companies to hang onto. Yet, it’s arguably ever more important.

Loyalty programs are a key tool for doing so. From a psychological standpoint, allowing consumers to earn and use perks lead to feelings of status, stronger brand-consumer relationships, increased word-of-mouth, and increased purchasing intentions. […]

By |September 17th, 2013|

Dietary Decoys

Imagine two restaurants, one of which sold only french fries as a side dish and another that sold both french fries and salads. Which would sell more fries? While logic might suggest that the salad would poach some of the side dish business, new research shows that adding a salad to the menu INCREASES sales of the less healthy fries!

Neuromarketing readers are used to human behavior being hard to predict and sometimes seemingly inexplicable. In Decoy Marketing, we showed how adding a less-capable product to one’s mix could boost sales of a better product priced the same or a bit more. And Compromise Marketing demonstrated how adding a new, more costly product to the lineup could increase sales of the previous top of the line model. But one has to admit that adding a salad to boost sales of french fries seems counterintuitive. Here’s what the researchers found: […]

By |April 27th, 2009|

Anchor Pricing Strategies

Here’s a scenario… You decide to venture into a cell phone store despite your reluctance to deal with a bewildering number of phones, options, plans, along with a confusing price structure. As usual, you find you’ll have to wait a bit for a salesperson. The greeter hands you a card with a big “97″ printed on it, and says, “It should only be a few minutes. We’ll call your number, 97, when a salesperson can help you.” You notice that a large digital display on the wall is showing “94.” You see it click to 95, then 96, and finally 97. The receptionist says, “Number 97, please,” and a salesperson appears to assist you. You thought nothing of the numeric ordering of customers, but it’s possible that the store had an ulterior motive: they could have been attempting to manipulate the price you would pay. Sound bizarre? Read on…

When a consumer is presented with an offer, a key element in the decision to accept or reject it is whether it appears to be a “fair deal” or not. We know that buying pain – the activation of our brain’s pain center when paying for a purchase – increases when the price seems too high. But how does that value equation work? The answer is anchoring – typically, we store an anchor price for different products that we then use to judge relative value. That sounds simple enough… but it’s actually not. Some anchor prices are stickier than others, and at times totally unrelated factors can affect these anchor points. The better marketers can understand how anchoring works, the more creative and effective pricing strategies they will be able to develop. […]

By |July 18th, 2008|

Starbucks vs. McDonald’s: Coffee War Heating Up

Burger giant McDonald’s has the lucrative upscale coffee market dominated by Starbucks clearly in its sights. According to an AP report, McDonald’s Eyes Ballooning Coffee Market,

After the success of its upgraded drip coffee – which even managed to snag a thumbs-up from testers at Consumer Reports earlier this year – the fast food chain known for super-size meals is gearing up for a massive expansion into the world of lattes.

“We want to move from beverages as an accompaniment to being a beverage destination,” Don Thompson, president of McDonald’s USA, said in a meeting with analysts Tuesday. “Our speed, our convenience, the value that we can afford to customers without quality comprise [sic] will make us a formidable player.”

Restaurants will offer lattes, mochas, cappuccinos and espressos with a choice of different flavorings and milk. Industry watchers say the drinks cost about 50 cents less than at Starbucks.

Starbucks, meanwhile, is already feeling a bit woozy after its stock hit a 52 week low, as detailed by Chicago Tribune writer Mike Hughlett in New pressures grind at Starbucks). The picture isn’t entirely hopeless for Starbucks, though – neuromarketing research may hold the key to staving off the McDonald’s challenge. […]

By |November 19th, 2007|