Visual illusions and the malleability of price perceptions
How can brands make themselves appear better value without changing the price? ZenithOptimedia's Richard Shotton explains.
Take a look at the picture. The monster at the front clearly appears much smaller. However, if you're in the mood for a Blue Peter style challenge, print the picture and measure the figures. You'll find they're exactly the same dimensions.
This illusion illustrates that an item can be made to look smaller without changing its size, just by amending its surroundings.
There are mental illusions just as there are visual ones. The same price can be tweaked to appear smaller. This means brands can boost the appearance of value without resorting to expensive, profit destroying price cuts.
ZenithOptimedia recently conducted a survey amongst 500 nationally representative consumers to understand the ideal way to communicate a deal. We showed the participants a genuine financing deal for Mazda and asked them to rate the deal on a variety of metrics.
Participants were randomly put into groups and they saw the price either as a daily, weekly, monthly or annual figure. In all cases the total annualised amount worked out to be the same. So for example an annual cost of £1,668 was either shown as £4.57 per day or £32 per week.
The results were conclusive: the shorter the time frame, the more appealing the deal. When the prices were shown as a daily figure they were five times more likely to be rated as a great deal than when they were shown as an annual figure. When compared to monthly rates the daily deal was 28% more likely to be referred to as a good or great deal.
It seems that when calculating the deal's desirability consumers over-weight the sum quoted and place too little emphasis on the time-frame. Just think how striking this is. It's as if consumers repeatedly estimate 6x4 to be smaller than 4x6.
The results are of direct interest to car makers but the learnings extend to any brand who offers a time-based contract, whether that's mobile phone networks or life insurance. Brands can appear better value simply by changing the time-frame around which they communicate their deals.
Our experiment illustrates just one of many ways a brand can change its value image. A previous experiment by ZenithOptimedia amongst 1,000 consumers showed that brands can be made to look better value by changing their competitive set.
We asked over 1,000 consumers whether they considered a range of brands to be good value or not. Each participant was asked the question in one of two ways, with the brand in question either being compared to a cheaper competitor or a more expensive one.
So, for example, we told one group of consumers that a Bentley Flying Spur cost £118,651 and a BMW Series 5 cost £30,265. In this scenario 47% audience thought the BMW was good or very good value.
We then asked another similar group of consumers the same question but with one small change. We swapped the Bentley for a Ford Mondeo priced at £20,495. In this scenario only 33% of people thought the BMW represented good value.
These experiments suggest that marketers should treat the communication of their price as one of their most important tasks. The price they have to promote may be fixed but the perception of that price is malleable.
A few, simple changes to the messaging could significantly boost profitability.
Richard Shotton is head of insight at ZenithOptimedia