Multi-solution products are also attractive to retailers. Researchers at Northwestern University find that shoppers expect to pay more for a multi-solution than for a single-solution product. In fact, the shoppers will believe that performance on each feature is inferior unless the multi-solution product is priced higher.
For maximum profitability, present the item to consumers in the category associated with the highest margins. If you're selling a cold beverage which both satisfies a thirst and enhances physical strength, figure that the strength-enhancement category probably yields higher profit margins than the thirst-quenching category, so in ads and merchandising, place the beverage in the strength-enhancement section.
Another technique for guiding product categorization is suggested by study findings from INSEAD-Europe, INSEAD-Asia, and University of California-Berkeley: Put the multi-solution product into a category that already has a number of subcategories. The researchers asked study participants to consider a product named the Exercise Buddy. It was a combination MP3 player and heart-rate monitor. Along with the product, the researchers gave the participants brochure copy that had five entertainment electronic subcategories and two health electronic subcategories.
The result was that the participants were more likely to consider the Exercise Buddy to be primarily entertainment electronics rather than health electronics.
It might seem that consumers would put a multi-solution product into a category that has fewer subcategories. But it looks like consumers consider the more thorough organization as helping to ease complexity, not increase it.
For your profitability: Sell Well: What Really Moves Your Shoppers
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