Wednesday, March 31, 2010

Advertise Tensile Pricing Selectively

Consumers are, by and large, an optimistic lot. If you advertise “Up to 45% off regular prices,” they’ll think the item they’re seeking will be one of those tagged for the full discount. The vagueness reflected in “Up to 45% off regular prices” is called “tensile pricing.”
     The power of tensile pricing to pull in customers depends on what’s being discounted and how you promote the price discounts.
  • Tensile pricing could present a range (“Save 20% to 45%”), a minimum (“Save at least 20% on every item in stock”), or a maximum (“Save up to 45%”). Research finds that the maximum format usually draws the most shoppers. If you do use the range or minimum formats, make the minimum at least 15%.
  • If you’ve a limited number of products for which you’re offering promotional discounts, tensile pricing will draw more customers than would ads showing the specific discounts on the limited items, according to research at Yale University, Ohio University, and University of Toronto. But if a comprehensive range of products are on sale, you’re better off stating the actual discounts for a sampling of those products than in using tensile pricing claims.
  • Researchers at University of North Texas and Texas Women’s University found that tensile pricing claims are substantially less useful when marketing services than when marketing products. This is probably because with services—compared to the case with products—consumers are more likely to believe that you get what you pay for.
  • Researchers at Wayne State University and University of Memphis have raised questions about whether tensile pricing misleads elderly consumers into believing they are receiving a higher discount than is true. It might be in your interest as a retailer not to use tensile pricing claims with products targeted to your elderly customers.
For your profitability: Sell Well: What Really Moves Your Shoppers

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