Pricing Compression: Patterns in Numbers

People love patterns, and the majority of us don’t even realize them. When patterns show up in promotions, it influences the perceived value. In a study conducted by King & Janisewski (2011), they looked at how people perceived the value of two different pizza promotions.

1.) 4 small pizzas with unlimited toppings for $24

2.) 4 small pizzas with 6 toppings for $24

The flexibility and economics of the second option position the promotion as a more valuable deal. But the study found people were more likely to buy the second deal.

The second promotion leaves you with a sneaky feeling that something feels familiar. When things feel familiar, we are more likely to assign them value and ultimately buy them.

See the pattern? 4 x 6 = 24

This is a valuable lesson for retailers and brands when combatting pricing compressions. Your customers are looking for value. Value is not only in the form of low prices. But they are leveraging what feels familiar to the audience. Patterns in numbers can support this.

So what can you do?

Retailers
1. Think about how this can influence pricing. The way the numbers show up tells a value story to your customers and to your budtenders. Two different audiences need familiar information to either buy or sell your products.
2. Promotions need to be very thoughtful. The success of promotion is not only about the products or the touchpoints but the ability to create a sense of familiarity.

Brands
1. How does this influence sell sheets? The way the numbers show up tells a value story to your buyers. Buyers and budtenders are two different audiences; needing familiar information to either buy or sell your products.
2. What information can you arm your reps with to support retail stores? Are there patterns they see and that your retailers don’t?