Persuasive Advertising - J. Scott Armstrong [81]
5.4. Barriers
It is common when advertising a product to emphasize the reasons why someone should purchase it. Another approach is to look at the reasons why people do not purchase, and to explain why these are not important or how they can be overcome.
Barriers to be removed might involve issues such as technical support following a computer purchase, finding parking spaces near a restaurant, or arranging delivery of heavy products. Or it might be something as simple as a product with an ambiguous name. A 1924 ad for Chrysler automobiles explained, “pronounced as though spelled ‘Cry-sler,’” to help people who might be embarrassed if they mispronounced it.
Advertisers have long advertised that they can overcome barriers to customer satisfaction. An ad on a wall in Pompeii said: “The troops of gladiators of the Aedil will fight on the 31st of May. There will be … an awning to keep off the sun.”
In an effort to overcome the negative perceptions about features of dry dog food, Bakers marketed its Bakers Complete as “moist looking.” The campaign won an IPA Award for Effectiveness (Binet 2006).
5.4.1. Offer credit for currently owned products
[Sewing] machines of other makers taken in exchange at their market value.
Ad for the Wilcox & Gibbs Silent Sewing Machine, 1869
Suppose that you are selling men’s suits. Your advertising agency proposes two possibilities for print advertising, each with the same price. Which would you choose?
A) Clip this coupon and we will give you $100 off any suit in the store.
B) Bring in your old suit and we will give you $100 for it when you purchase any suit in the store.
An economist would note that alternative A is the better deal. It is easier to clip the coupon and take it to the store than to take an old suit. More importantly, using the coupon would enable you to buy the new suit and keep the old suit. Hal Arkes (personal correspondence) conducted this unpublished experiment in a menswear store in Washington, D.C. The result? The advertisement that offered money for an old suit was much more effective than coupons in generating sales, because the purchase seemed wasteful—why buy a suit when I already have a suit that is still presentable?
This perception of “waste” can occur when customers already possess similar items. Advertisers can overcome this by offering credit for the owned item, as they commonly do via automobile trade-ins.
This problem of waste is related to the sunk-cost fallacy. Once people make an investment, they are reluctant to ignore what they have already spent when making decisions about the future.
Many firms use this principle. For example, in 2007, when Apple wanted to encourage people to purchase music albums on iTunes™, it realized that people would be less likely to purchase an album if they already owned one of the songs on the album. Therefore, it advertised that people would receive credit for the songs that they had previously purchased.
The objective of this principle is to help customers overcome the perception of “wasteful” behavior for the mutual benefit of both buyer and seller. One way to overcome this irrational behavior—and to enhance the purchasing experience—is to make a trade-in on the currently owned product a larger proportion of the transaction.
Evidence on the effects of offering credit for currently owned substitutes
In a lab experiment on a new-car purchase where two deals were financially equivalent, customers preferred the one where they were paid more on the trade-in—and, of course, more for the new car (Purohit 1995).
In a field experiment, people who approached the Ohio University Theater ticket booth to purchase season tickets were assigned randomly to pay $8, $13, or $15 per ticket. Those who paid lower prices (i.e., those with a lower sunk cost), attended fewer plays over the next six months. The rational rule, of course, is to ignore sunk costs and focus only on the costs that