At the beginning of this past summer, my friend was charging extremely reasonable prices for professional photo services in our home country (it worked out to approximately 20 to 30 pounds an hour). He wasn’t getting many enquiries – not more than one per week. With nothing to lose, he decided to do what he called a ‘social experiment’. He doubled to tripled the hourly charges he quoted on his website and while he was at it, he lengthened the “list of services included in package” by adding the most obvious of entries.
To his amusement, approximately a week after the edits on his website, he was receiving an average of one enquiry a day, and most of these potential clients eventually engaged him for the shoot. While I shared his amusement 5 months ago, I realise that things we’ve learnt in this module can explain much of what had happened.
|A peek at my best friend's photography equipment, some of which he could only add to his arsenal after the success he enjoyed last summer!|
By increasing his hourly charges, my friend had unintentionally made use of what is sometimes called the ‘expensive is good’ heuristic that potential clients might have employed when searching for photography services online. Plenty of research has illustrated the effect of high prices on consumer decisions. Cialdini (2009) begins with an anecdote about how jewelry sales had shot up after an accidental doubling of prices, and Olson (1977) suggested that consumers who are unsure of a product’s quality are likely to apply the stereotype of ‘expensive is good’. In a more specific experimental study by Raju (1977), participants were asked to evaluate the overall quality, amongst other things, of 9 stereo receivers across a price range.
|Figure 1. Graph from Raju (1977) showing effect of prices on evaluation of overall product quality and post-purchase service.|
The results showed that people’s evaluation of a product’s overall quality was systematically higher for more expensive products. In an integrative review, Rao and Monroe (1989) analysed findings from multiple studies using multiple regression analyses and concluded that there was a significant positive relationship between price and perceived quality of consumer products. These research findings suggest that the surge in interest that my best friend’s photography business experienced could partly be due to the higher hourly charges quoted, pushing potential clients to evaluate his services more favourably.
Furthermore, people looking online for professional photo services are not likely to be photographers themselves. If they were photographers, they would most likely have fellow hobbyists they could have engaged, or they could have taken the photos themselves (especially for casual anniversary photo shoots, which can be easily self-shot using a tripod and remotes). Thus, it is reasonable to assume that people who look online for professional photo services are probably not the most knowledgeable about photography. The lack of expertise in this area is likely to lead them to use heuristics based on stereotypes or folk knowledge such as “you get what you pay for”, making them even likelier to engage more expensive service providers.
The other edit he made to his website that could explain the upturn in his business was that he explicitly spelled out details that are usually assumed to be included in photography services, such as “high-resolution photos” and “photo editing included” under his “list of services included in package”. Which professional photography service wouldn’t provide high-resolution photos?
On hindsight, he was being a great negotiator by ‘artificially’ expanding the list of services included in his package. By explicitly listing out all the little things that his package includes, it was akin to disaggregating the gains for his potential clients, making a strong case for why they should engage his services. As discussed during the lecture earlier this week, the number of positive attributes of a product that are perceptually salient and available can affect a consumer’s judgment of the product’s quality. In a series of experiments, Alba and Marmorstein (1987) showed that frequency of attributes influences consumer decisions when there are time constraints or when information about frequency is better learned than other information. It could be the case that the clients my best friend had were indeed unfamiliar with hiring photography services and the longer list of “services included” helped him to seal the deal!
Looks like my best friend (he does engineering, not marketing or business) is quite a natural salesman!
Peng Ning TAN
Alba, J. W., & Marmorstein, H. (1987). The effects of frequency knowledge on consumer decision making. Journal of Consumer research, 14, 14-25.
Olson, J. C. (1977). Price as an informational cue: Effects of product evaluations. In A. G. Woodside, J. N. Sheth, & P. D. Bennett (Eds.), Consumer and industrial buying behavior. New York: North-Holland.
Raju, P. S. (1977). Product Familiarity, Brand Name, and Price Influences on Product Evaluation. In W. D. Perreault Jr. (Ed.), NA - Advances in Consumer Research Volume 04 (pp. 64–71). Atlanta, GA: Association for Consumer Research.
Rao, A. J., & Monroe, K. B. (1989). The effect of price, brand name, and store name on buyers’ perceptions of product quality: An integrative review. Journal of Marketing Research, 26, 351-357.