Humans have a mental blind spot. To prioritize among information, our brain decodes the meaning of messages we see by making relative comparisons. So, both the context and presentation of an offer are keys for success. In behavioral economics, this bias is called Framing.
Affordable can be a smart trick
Framing explains why Rolls Royce sells more cars at boat shows – after seeing luxury yachts costing hundreds of millions, a car for a few million seems like a bargain.
On a smaller scale, framing explains why you gladly pay 50 SEK for coffee at Waynes even if a cup of coffee basically cost nothing at home. Expectations and the setting justify the price.
Let relativity work for you
Framing is often used in pricing to steer our choices. One interesting case is The Economist’s offer for subscriptions:
- Option 1: Online version, only – $59
- Option 2: Print version, only – $125
- Option 3: Print + Online version, only – $125
Looks silly, right? Why even include option 2?
But, there is a very good reason. When all three options were shown, 84% of new subscribers chose option 3. When option 2 was removed, only 32% chose the combo, and 68% chose the cheaper option. The “useless” option simply made the offer we wanted to push look like a bargain. And it helped generate $250,000 extra from new subscribers…
Framing for better business
Frame your product in new ways to increase perceived value. For example, dress up and package your offering by adding value, eg by presenting it as a “logistics solution with full tracking” instead of just a “transport service.”
Get creative with pricing to make your premium product look more affordable. A good advice is to add a super-premium product to your range with a price significantly higher than you normal top-of-the-line. It will probably not sell much, but it will make you premium product look more affordable.
Framing starter kit
- What challenge can you reframe?
- What new decision-making reference points can you create?
- How can you reframe perceived value?
- How can you strengthen brand associations through media?
- How can you simplify customer choices in your category through reframing?
There is a lot of interesting opportunities. If you want to discuss how you can leverage Framing as a part of your business strategy, just reach out to ulf.vanselius@comprend.com