December 9, 2016
We all know that businesses use plenty of weird psychology tricks to get consumers to buy more, from the way grocery stores are laid out to how restaurants design their menus. But two tricks in particular seem to work against each other. By looking cheap, stores can get more customers… but by looking expensive, other stories can do exactly the same thing.
Call it the IKEA meatball strategy verses the Apple Store strategy. Here's how each trick works.
Meatballs Are Loss Leaders
The NY Post explains the concept behind IKEA's business psychology trick, using an expert's opinion:
“Chris Spear, a chef who previously worked at an IKEA food-service operation, explained that the whole purpose of the quick-service restaurants is to ‘reinforce their low price profile' on items in the rest of the store, even if it means selling food at a loss.
‘You have no idea how much a couch costs. You see one you like for $599. Is that a good price? You have no idea because you’ve never bought a couch before,' he explained. ‘But, you can get a full meal that’s only $3.99.
[…] They’re reinforcing the low-price profile of the store. So, they take a hit on the food, but just sold you $1,000 in furniture. It’s the same thing other stores do with loss leaders to get you in the door, but I thought it was interesting to use food to sell furniture and housewares.'”
The same principle applies to the whole chickens that Costco sells: They price them at $4.99, losing money but luring in loyal customers. So how come some stores pick an opposing strategy?
Apple Stores Earn Prestige
As one respondent in a Reddit thread on business psychology explains it, Apple stores create the illusion of expensive, prestigious locations: They're all glass, they offer sleek, symmetrical tables, and even the laptops are always tipped at the same angle. The end goal is a “luxurious consumer experience.”
Forbes agrees with this analysis, saying:
“One of Apple's biggest commercial advantages is the Apple Store. Once you step into its physical domain, the potential is there to turn you from a browser to a customer, and then from a customer spending a few dollars to a customer spending tens of dollars, and beyond.”
Why Both Tricks Work
So which is it? The illusion of savings or the illusion of luxury? Surely it can't be both.
The answer, like most marketing solutions, comes down to the audience demographic. Everyone wants furniture, so it makes sense to go for the cheaper kind. But those looking for a Mac or an iPhone are looking for quality in particular, and creating an expensive-looking atmosphere creates an aura of quality.
So pick one option: What is your startup's audience looking for?
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