Price is often the first thing a consumer notices about an unfamiliar product—but it also plays an important, complex role in brand reputation. People certainly took notice when Dyson, a household name in the vacuum industry, recently rolled out their first-ever hairdryer at $400 a pop. Yet far from causing sticker shock, the Dyson Supersonic Hair Dryer quickly gained traction among celebrities and star stylists and was named Allure’s Best Beauty Breakthrough of 2016.
How did Dyson win kudos instead of jeers for its pricey product? It’s easy—behavioral science tells us that with the right marketing strategies, “expensive” becomes synonymous with “high quality” in the minds of consumers.
Behavioral scientist Matt Battersby, head of H+K’s behavioral insights and strategies team, notes that simply calling attention to a product’s “premium” pedigree taps into a powerful concept known as expectancy theory. This motivation concept, first introduced by Yale School of Management’s Victor Vroom, follows the logic that increased effort results in increased performance. Or in the case of products, an increased perceived effort of production results in increased perceived value for the item.
“When companies use additional adjectives that suggest finer ingredients, greater care, and more attention to detail, it leads consumers to experience what they expect to experience,” Battersby says. In other words, it’s a self-fulfilling prophecy—consumers expect the product to be better than similar alternatives, and their bias makes them very likely to think such a product is better when they use it.
It’s not just fancy blow dryers that use this tactic. The Frontier Tuque (Canadian for ‘beanie’) sold out its first two production runs last fall, despite a hefty price tag of nearly $250. Frontier bills their beanie as “the world’s best,” touting high-quality ingredients that help validate the claim. The tuque is hand-knit out of a fine blend of merino wool, cashmere, and a rare fiber called qiviut. Consumers may not know a qiviut from a kumquat, but that may only add to the appeal—rare materials, after all, may confer rare powers. But is it better? A North Face hat may keep you just as warm at a fraction of the price, but the materials used are decidedly less rare.
“Smart” is the new black
Products that incorporate technology in unique ways can also command top dollar. This year, for example, Sonicare unveiled their new FlexCare Platinum Connected toothbrush by Philips. The toothbrush features sensors which send data about your brushing to the Sonicare app via Bluetooth. Smart Sensor technology then creates a personalized 3D “mouth map” which provides the user with personalized oral health feedback and coaching.
The Sonicare FlexCare Platinum Connected retails for around $220, which is far more than any dollar-store dental products. But smart technology makes consumers smarter and more informed– in this case, you’ll have a better understanding of your oral health and how to fix it.
Research from the University of British Columbia suggests that the purchase of luxury products is motivated by two types of pride: authentic pride and hubristic pride. Authentic pride is the stronger of the two and stems from satisfaction of an accomplishment. If a smart toothbrush can make the brusher feel as though they are optimizing their oral health routine, it’s more than a toothbrush—it’s a savvy investment.
While pride plays a role, there’s no discounting the tangible benefits that come with buying a superior product that offers more value to a consumer—something smart items are quick to tout.
Putting a price tag on value
In the end, the price of a premium product is the largest signal that is it a “luxury” good. When consumers lack other information by which to judge a product, price is used as the indicator of quality.
Battersby notes that a good example of this is wine: “Most people know little about wine. Brands are not always a clear indicator, so value is judged predominantly on price.” Research from the American Marketing Association showed that consumers think wine tastes better if they are told it’s expensive. Published in the Journal of Marketing Research, the study found that “preconceived beliefs may create a placebo effect so strong that the actual chemistry of the brain changes.”
It’s easy to mistakenly assume that only wealthy people purchase luxury products. But in fact, context may matter just as much as absolute wealth. A study of Google search trends across the US showed that people in areas with relatively high income inequality were more likely to search for luxury brands than those in other areas. In essence, it’s a “Keeping up with the Joneses” mentality. “In these communities, people feel more pressure to raise their perceived social station, and are therefore more willing to pay for goods that represent status,” explains Battersby.
As the luxury market continues to grow at a rapid pace, marketers must think of unique ways to communicate the premium value of their products. Understanding what motivates customers to buy these products is the first step. Marketers will have success if they follow a few guiding principles such as sharing what makes your product distinct when compared to what currently exists on the market, communicating the rarity of the product’s elements, and researching the audience to ensure you’re reaching everyone in your market—not just the obvious high rollers.