Why People Buy. Louis Cheskin
test, we have an indirect preference test that shows actual preference, consumer action in which self-interest is involved.
We don’t want to know merely whether the potential consumers remember the ad. We want to find out whether the ad makes the potential consumer favorably disposed toward the product. We want to know whether it motivates the potential consumer to buy the product.
Price
The fourth side or wall of a marketing structure is price. The average consumer assumes that price is based on cost. We all know that the manufacturer must consider a multitude of factors in determining the price. He has to add up the cost of producing, promoting and selling the article before he can establish its retail price. Here I want to discuss an often neglected factor in pricing, the psychological factor.
Before going further into the discussion of pricing, we should divide all merchandise into necessities and luxuries. These are broad classifications which are important elements in pricing.
Seasonal vegetables and fruits are necessities. The same produce, out of season, is a luxury. In June, strawberries can be considered as a necessary food, but in January, strawberries are definitely a luxury. Meat is a necessity; steak is a luxury. Fish from a nearby body of water should not be classified as a luxury. Sea fish on the coast is not a luxury. Any food that has no more nutritional value than a less costly food should be classified as a luxury.
Commodities that are necessary for daily living are highly competitive and, at best, are profitable only because they are sold in large volume. Pricing of staples is almost entirely based on cost plus a small margin of profit per unit. Retail prices of common foods and other necessities in communities of unskilled workers whose incomes are minimal can be set primarily on two considerations, cost and competition.
In the United States, in communities where the standard of living is generally high, luxuries become necessities, psychological satisfactions become needs and emotional factors become daily habits.
In primitive and agricultural societies, symbolism played a major role only in religion. In our present-day, highly industrialized society, symbolism plays a vital role in almost every aspect of life.
Most people buy symbols, not products. Consumers generally know little about the actual quality of the product. They buy the image of the product, the image that is inspired by the brand name, the brand-identifying image, the label, the printed advertising, the filmed commercials and the publicity about the product or company that makes it.
A man buys a Chevrolet, Ford or Plymouth for transportation, but he gets a Cadillac, Lincoln or Imperial for other reasons, mainly psychological reasons. The luxury car is a class symbol. It is a prestige identification element. It provides ego satisfaction. It has social status.
The ego-involvement and prestige identification in owning a luxury car are not often admitted by the owner. Generally, the owner is not aware of the psychological reasons for getting a luxury car. If you ask a man why he drives a Cadillac or a Lincoln Continental, he will nearly always try to give you practical reasons. He will point out the safety features and even economy. He will normally say nothing about the ego satisfaction, the prestige symbolism and the social status it gives him.
Because consumers know little about most products, they look for labels, trademarks and brand names in the super market, the drug store, hardware store and in the department store.
Price is a major factor in the “quality image.” To the consumer, a high quality product is a costly product. A fine article is an expensive article.
To most consumers, poor quality and low price are synonymous. When a woman says this is a cheap garment, she usually means that it is both poor in quality and low in price.
Price, like the package, is a psychological factor. High price is a symbol of status and is associated with prestige. High price and an expensive looking package are the necessary marketing twins for articles that are commonly used as gifts by the upper middle classes. The package has to express the price. To have status, an article has to look expensive and be expensive.
Many a product failed because the package or the product styling looked cheap and the price was too low. Of course, many products also fail because they are too high in price for the particular strata of consumers for which the product is intended.
The market for the product is an important factor in pricing. If the product is to be sold to consumers in the lowest economic strata, the lower the price the greater the volume of sales there will be. If the product is intended for executives, it is generally advisable to have the most attractive packaging with a high retail price.
In some communities, there are shoppers who will not buy an object because it is priced too low. In other communities, shoppers will not buy the product or cannot afford to buy it because it is priced too high.
Articles that are commonly bought to be used as gifts have to be priced in keeping with the gift concepts of the particular class of consumer. For some markets a typical gift is a $2 or $3 article. In others, a gift is generally from $5 to $10, and for some special markets, gifts range from $25 to $100 and more. Gifts are status symbols.
Price, the fourth side of profit is as complex as the other three because it too involves psychological as well as practical elements. The right price of the particular product for a specific class of consumers is vital in successful marketing. The price is a status symbol.
How do we know whether the product or article is priced right? The answer is by testing. We have founds that the ideal way is for the consumers to decide the price. Tests conducted with potential consumers, on an unconscious level, show clearly what the right price is for the product. I have seen many examples in which consumers priced an article higher than the actual price. I have seen cases in which consumers priced a product much lower than the actual price.
In one test most consumers priced a set of dishes at $35, whereas the manufacturer was going to have it retailed at $24.50. Another set of dishes was to have a retail price of $45, but a large majority of consumers in controlled tests priced it at $29.50. This part of the test in itself indicated that the set of dishes was overpriced for the market and the marketing program would not be a success.
I recall a study of ladies’ sports clothes that were to be sold at $7.50 and $12.50. In this test, consumers priced the articles the opposite way. They thought the $7.50 articles were superior to the $12.50 ones, and they priced them accordingly.
In another study, four grades of men’s shoes were tested. The retail prices were $12.50, $17.50, $19.50 and $24.50. A large majority of consumers thought the $17.50 shoes were the best and the $19.50 ones were second best.
Determining the consumers’ idea of the price of the article is one way of measuring the marketability of the product. The shopper likes to feel that he is getting the maximum value for his money. Often, the best quality does not look like the best to the shopper.
Product tests that are conducted at the Color Research Institute are designed so that they reveal three marketing aspects; 1—consumer attitudes, 2—price evaluation and 3—actual preference.
The Four Sides
Product quality is the number one side in a profitable marketing program, the package is the number two side, advertising is the number three side and pricing is number four. Actually, a marketing program depends on all four, equally. Weakness of any one of the four sides will cut sales and diminish profits.
The total brand image in the mind of the consumer is the key to successful marketing. The XYZ Company is not selling vegetables, it is selling XYZ vegetables. The ABC fruit grower’s corporation is not selling fruit, it is selling ABC fruit, which is no ordinary fruit.
The fruit stand on the highway is there to make sales. The farmer sets up a fruit stand and hopes to attract many of the travelers who happen to drive by the stand. A company cannot grow merely by making sales. A company must make customers. The growth of a company depends on building brand loyalty and making repeat sales.
Products such as fruit, fish and meat obviously cannot be identified with a company