Retail Anthropology - The Science of Sales

Selling a product is largely about perceived value to the customer. There are a lot of ways to achieve that: packaging, brand reputation, advertising, etc. One way that sometimes gets neglected is pricing.

In "Any Port in a Storm" Columbo goes into a wine shop to learn about wines and asks the proprietor "How can you tell a good wine from an average one?" The proprietor smiles and replies "By the price."

There is a story that has made the rounds of the business schools of a jewelry store proprietor in Arizona who was selling silver/turquoise necklaces for $25 each and sales of the item were very sluggish. On a suggestion from a friend she put a sign out on the necklaces that said "40% OFF SALE! Regularly $50 - This weekend $30!" She sold out of them in a day. Same product and at a HIGHER price. But because the "regular" price indicated substantial value and the sign suggested that they were suddenly a great bargain, the perceived value of the items was higher and people bought them.

Related note -- today I was in a grocery store here in Ewa Beach and saw a display of Pepsi 2-Liter bottles with a sign on them "Super Value! $2.09!" $2.09 is not a super value unless you mean a super BAD value. Almost every other grocery store sells the same thing for between $1.25 and $1.75 on Oahu. I noticed a K-Mart ad the other day advertising it "4 for $5" ($1.25 each). But by putting these on an end-cap with a sign advertising it as a "Super Value" there is a perception by the consumer that the price is especially good.

Luckily for me I pay attention to what these things are supposed to cost.

-B-