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Prof. Steve Posavac discusses the value customers place on products based on price and popularity.
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We are going to go out to Vanderbilt University right now we have professor Steve -- -- back.
Joining -- Owen Graduate School of Management how -- I'm doing great are -- doing good thanks for coming -- Still talk about three pes price popularity.
And -- this psychology of shopping.
You know -- see all of these Black Friday Cyber Monday deals 40% off 50% off the entire store.
Can -- the value of the brand or change -- consumers shop.
-- certainly -- what what's -- -- -- is that when consumers are considering.
Buying something they don't know everything there is to know about it what you're looking at a product in the store where recent advertisement or just stuff that you don't know about it whether it's.
What's the quality of the product what's its reliability or even as it could just -- your consumer need.
So consumers have to draw inferences basically semi educated guesses about what they don't know in order to feel good about not making a decision.
It -- -- things that people have.
Often conflicting beliefs about signals such as price motion what you're talking to all of us believe on the one hand that.
The less you pay for something it's a good deal that makes -- -- it was soon record shopping over the last week at.
There's a clear sign of that.
The flip side though we also off they -- one of those products that are being promoted there must be some reason firms are trying to get rid of stuff may be because -- sub standard.
So consumers can hold two conflicting beliefs about his common.
Tactics used by marketers.
And sometimes you get differential effective results as -- as a function of that in terms of the the Black Friday weekend the folks at take -- of -- sales.
They're very keyed in to value and getting good value for the purchase so deep discounts are not -- -- them all the remain extremely slight -- dollar tax holidays players sang.
The other folks are getting good deal -- -- the whole the whole psychology of the weekend and so forth and so that's that's not -- for those folks they're not taken so much about holding them of the folks more value so those discussed -- worker well.
OK so what sort of items -- what kind of people are more.
Focused on the quality of the -- -- I think all of us sometimes think about quality first and sometimes think about value person and at some -- -- -- assertion we've been doing is that.
Sometimes quality matters for example if you had an experience earlier in the day where not -- washing machine blows up when your not your vying to prod to different category.
You're thinking quality first so in this case you're gonna respond to.
Ads appeals about quality and if you see a deep discount you might be suspicious -- the discounting this product is there something wrong that at the same time.
He's been warning Beltzner shut spoken like a lot of us it's not a pleasant experience human thinking about value first and likely to respond very well to discounts and I -- -- that there's certainly the case of some consumers are going to be more deal prone than others that's -- which are.
But all of us often hold these beliefs that sometimes conflict with each other and it's which -- most salient in our -- were we thinking about that's gonna drive of the decisions that -- make.
So what type of people are more inclined to look at value in which have from our clients with -- holiday but their numbers.
-- -- -- Well again I think that there you will see some stable individual differences are some people -- leave it there.
The one might think about -- folks -- lower income we're going to be born to value but it goes way beyond that if you look at coupon usage for example people all the source comics that -- Use coupons it's the folks -- -- to be excited about getting a good deal folks who conceive of themselves as being good shoppers.
These are folks intend to was.
Onslaught what does this say about brands do certain brands come out on top let -- to say out while the top my had Apple's good equality of rights and now they're offering these.
Minor Black Friday deals but good quality good value today.
-- other from that for brands really resonate more.
The the key is you wanna match the status of your brand with the marketing intervention that you're choosing so if you're marketing a very high -- brand.
Consider -- for example if if you're marketing.
Wind at its high end.
You don't wanna be too much in terms of discounting because this really undermine consumers' perceptions of the value of the products a point of purchase -- wanna list.
The high wine spectator ratings in the sort of stuff and you don't wanna do fifteen dollars off.
In contrast more and brands are gonna move and -- some sort of as a discounts -- the that the key is getting the metro I think JC Penney were best.
Very well over the years their consumers have been very strongly conditioned to expect lots of sales promotion deals on and so forth.
What I try to go away from that recently go to everyday low pricing in just reduce the number of sales of that's.
What happened was the consumers they need -- -- -- JC -- consumers the folks attendant who select.
That store -- -- others need to have those sales Russians.
So those deals -- -- the consumers on away and got the president -- in very short or sorts -- yes people think about your brand and what you're doing on the marketing side.
All JC Penney did bank getting rid of their cells -- put their share price on a constant fell asleep at number five worst performer on the S&P 500 this year down more than 50%.
Seriously.
There was there was -- -- -- lead to disaster for them.
-- that strategy of maintaining try to maintain prices are not doing sales for other firms don't work right it's just that -- your question of who's gonna respond to different types of marketing.
For JC -- consumers they're used to -- those deals so that they need they need to do that.
What can businesses learn -- that's shouldn't like smaller businesses today try to figure out if they want to be known for quality as opposed.
Value or like I just -- don't.
Brands.
Emerson -- in the us.
-- that there's general takeaways here in general take away is it depends I'll use example mcdonalds for example McDonald's.
We'll take advantage of scarcity -- accrual -- faced with that stuff is in short supply it's hard to get it must be valuable in the marketing of the -- of sandwiched.
McDonald's very carefully controls the bill would limit to -- what is -- -- review don't know.
I know in the coming -- knowledgeable where I know -- -- Intel AM pretty.
But I insider your neighbor and friend I am okay seriously do you know -- coming out.
Well it and -- And painful disorder and a group sandwich spread there there there's web sites is is to different groups that talk about the stuff what is the going to be available -- -- -- gone yet so like making the product scarcity just.
Makes people -- feel that its exclusive -- that is ramps up demand.
-- announced -- -- -- and elasticity of McDonald's say you would think that McDonald's would just put it out sooner or so they can have a boosts to their numbers which are struggling.
Well and and the the problem with doing that I think it's always good to be comply with a pro doing that is if it's not scarce it's not gonna have that.
Through niche feel -- -- and demand is gonna -- any country McDonald's also makes the claim that billions and billions of people are sort of sort of trying to say the same time we believe that.
If a lot of consumers are making to certain -- decision that must be Smart -- so the one hand there -- leveraging.
If everybody else is doing it it must be -- good idea in -- general marketing.
With a specific product though it makes more sense to maintain scarcity is what -- would -- right.
-- in the right marketing tactic.
For the right to -- -- Steve -- an -- thank you so much for coming not from Vanderbilt University.
I question the screen a -- in the day.
