Dan Ariely author of Predictably Irrational and The Upside of Irrationality is a Professor of Psychology and Behavioural Economics at Duke University and a founding member of the Centre for Advanced Hindsight.  In a TED talk Ariely did a number of years he looked at the way the Economist presented their pricing structure and was puzzled at what he found.  It seemed that the Economist had presented a useless option and in true Ariely style he challenged the rationality of including such an option by calling the Economist and asking them why? 

While he got no joy fom the Economist he did complete his own research on the pricing strategy using MIT student and here is a short excerpt from the talk.  As you watch it think about the Contrast Phenomenon and how you can change the way people experience anything by what they experience first.  After the video I will draw some conclusions of my own for you.

So what Ariely found was that while the middle (print only) option was seemingly useless from a product selection perspective and from an anchoring or Contrast perspective it was vital in framing the third option in its best possible light.

We can only assume that the Economist wanted people to take up the print and on-line option (#3) as it was better for them, otherwise why include option #2.

What they had cleverly done with the inclusion of the seemingly useless option of print only for $125 was draw a contrast for final option (print and internet) presenting it in a much better light so people chose that option based on value.  When the useless option was absent the internet only deal was preferred based on price alone (i.e. it was selected because it was cheaper).

Value vs Price

I get asked all the time how do we compete on value and not price.  This is a valid question regardless of where you work or what you do.  If you are presenting a service or a product it breaks down to how much the person making the decision gets for what it costs them.  If the decision is price alone ultimately someone will always be willing to do what you or sell what you sell for a cheaper price to win the work.  As this research shows however the key is thinking about how you are framing your proposals and showing people that the recommended option is of better value and perhaps you need a useless option to help highlight that for them.

So while on the face of it the Economist’s approach may have seemed wrong-headed, we as persuaders know that the contrast of the second option was critical to presenting the final option (and best one for the Economist).

So think about how you are framing your preferred option and perhaps that useless option is not so useless after all!

 

Are your recommendations presenting your preferred option in the best possible light?

 

 

 

 

 

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