What would large women think if a dress sold for lower cost to women of smaller sizes?
Common sense says this would turn them off.
But swimmers react well to items claimed to improve speed if they know the product is given away free to Olympic swimmers.
If you perceive the person getting the good deal as being smarter than you, you are okay with it. You are even more likely to pay full price.
Alison K. C. Lo and marketing professors John Lynch and Richard Staelin explain why in the article "How to Attract Customers by Giving Them the Short End of the Stick," published in the February 2007 Journal of Marketing Research.
"As consumers, we sometimes buy things when we feel clueless in telling good-quality products from bad but we think more savvy consumers can tell the good stuff," Lo said. "In such cases, naive consumers are attracted to a product with a freebie that is not available to them but is offered to a more savvy group of buyers, like Olympic swimmers. These savvy buyers presumably would turn up their noses at low-quality merchandise, so the naive consumers reason that products promoted to experts must be good.
"On the other hand, if we are excluded from a deal and the group benefiting is not more savvy or we are more certain of the product's quality, we are put off," she explained. "We buy less -- like the woman who sees that Victoria's Secret is offering a better deal to men than to women."
Roy Rogers endorsed lots of things - he was perceived as a good guy who cared about quality.
In one experiment reported by Lo and her colleagues, student volunteers in Duke's master of business administration program were asked to choose which of two cordless drills they would prefer to receive as a gift.
The researchers tested the effects of varied promotions by pairing the drills with either a $15 Nordstrom gift card or the book "Graphic Guide to Frame Construction: Details for Builders and Designers."
The study participants overwhelmingly preferred the gift card, but they thought the book would be more appealing to people with expertise in construction and carpentry.
Participants then were asked to guess the prices of the drills, and they gave a higher price to whichever drill was paired with the book compared with the one paired with the gift card.
"This is important because even though the book was not as valuable as the gift card to our participants, they realized the book would be valuable to someone who might know a good drill when he or she sees one," Lynch said. "They reasoned that only a manufacturer of a high-quality drill could lure such an expert to buy."
The research team found similar results in experiments focusing on other products, including camcorders and headphones.
The researchers say the findings challenge some long-held notions regarding consumer reaction to targeted promotions. "Our findings apply to a specific set of circumstances where the customer is not able to judge the quality of a product, but believes that other consumers are expert in judging that product," Staelin said. "But a lot of marketers sell in exactly those kinds of categories, so our findings can be used to sell products from wine to jewelry to home electronics to financial services."
Written from a news release by Duke University.