June 20, 2019
My thoughts on the “five varieties” question
Sent by Jonathan Stark on June 21st, 2019
Folks are still sending in their ideas on how to tackle the five varieties thought experiment that Marcus B sent in the other day.
As promised, today I’m going to share my thoughts on the subject from when I first read the premise.
Remember, this was a very abstract situation so there are really no right or wrong answers… this is just the first three things that occurred to me:
- My first thought was: why even have varieties if 99% of customers can’t tell them apart?
- My second thought was: Ditch two of the varieties and sell the remaining three priced relative to each other: 1x, 2.2x, 5x, where 2.2x is very profitable. A small group of people would buy the 5x option, and that’s fine but its real purpose is to make the 2.2x option seem reasonable.
- Third thought: Work to attract customers who are aficionados of the product and CAN tell the varieties apart. Then, orient the retail experience to these ideal buyers and charge a premium for the overall experience instead of individual items.
If you go back and look at yesterday’s email, you’ll see that some people had similar suggestions. There were also a few suggestions that hadn’t occurred to me but seemed reasonable. Well done, gang!
Most interestingly, there were a number of comments mixed in amongst your replies that raised questions of fairness, honesty, ethics, morality, exclusivity, luxury, and status.
- “If my costs remain equal, I would do what seems fair to me: charge the same price for all varieties.”
- “If we sell enough of the extremely expensive one to rich and discerning clientele on Main Street, we’ll invite them to our boutique store on High Street.”
- “Simply selling certain varieties of the same product as-is at a higher price seems dishonest”
- “Given a range of prices, people will get to feel like they stayed congruent with their identity by going cheap vs expensive. But it’s misleading because it’s your job to educate them on the value.”
- “I feel like it is important to provide the options for whichever experience the client wants to go for regardless of the product itself.“
- “Sell status and good design, not the product itself.”
- “I would say increase the price for each variety so that you can serve every customers expectations, but just doing this I wouldn’t find moral because you have the same cost and the customer will get the same value”
Juicy! Stay tuned for more on this tomorrow...