Fortune ran a story on Target that demonstrates one of the key marketing insights of all time:
Being perceived as more expensive means you are more expensive, even when you’re not.
In February, Citigroup managing director and analyst Deborah Weinswig polled shoppers and found that though Target consistently underprices supermarkets on groceries by about 10% to 15%, shoppers perceived the opposite: that Target’s prices were a full 20% higher. Moreover, though prices at Target average out to within 1% to 3% of those of Wal-Mart, 87% of respondents said they shopped at Wal-Mart because it was the cheapest. “The problem could be that some of these stores are so clean that you just assume you’re paying more,” says Weinswig. [emphasis added]
I want you to say this three times every night before you go to bed: “Customer perception is customer reality.”
That survey is actually good news for Target (and for job seekers, product developers, and anyone who is selling something). If you increase the perceived value of your product via a better user experience, you can attract customers who will gladly pay for that extra value.
More insights from the Fortune story:
- Target has a User Experience Lab: “I am watching from behind a two-way mirror as two people struggle to assemble a $299 Grill King gas grill. Next to me is a camera crew filming the event, along with Target’s buyer for lawn and patio, Paul Bein, who is scribbling notes. Already Bein has noticed that the screws are falling off the screwdriver and will ask the vendor to magnetize them”
- Target’s secret Superteam of creatives: A secret rotating roster of 12 demographically diverse “cool hunters” (one of them is 80 years old) consults on strategy and marketing. The group never meets: “There’s no power in bringing them together as a body,” Francis says. “The power is in their working independently. We’re the cross-pollinator. We’re the integrator.”
- Target doesn’t get, um, targeted like WalMart. It’s like mostly lovable Apple vs. convicted monopolist (and now perma-punching bag) Microsoft.
- It can be tough for a big box retailer to sell “high end” products under flourescent lights: “Yet communication alone is not going to solve the problems Target is facing now. Last fall Target, MTV, and Go International designer of the moment Erin Fetherston put out a two-minute-long “film” called “Morning, Till Night,” which showed a bevy of beautiful girls who lived in brownstones and attended parties in sleek white spaces wearing flirty, ruffly clothes. It was aspirational, of course, and that was the point. But on the floors, under fluorescent lighting and hanging close to busy checkout lines, Fetherston’s clothes seemed to promise a bit less. That’s the reality of shopping at any discounter - but at image-obsessed Target, that disconnect can be jarring. “They’ve had inconsistent merchandising, and sometimes [it] doesn’t live up to the marketing,” says one former Target senior executive who walks the stores regularly.”
2 Comments ↓
“Customer perception is customer reality.”
That’s good or bad, depending on how you look at it and/or what it applies to. If your sole concern is profit, alright. But if you consider pressing social issues and the ways in which the “customer perception is customer reality,” you begin to uncover how this phenomenon cripples and hinders bringing about real change. Greenwashing of products is a perfect lens through which to investigate this sometimes unfortunate reality. Americans today are addressing environmental problems in a largely novel way: through consumption. The tactic can be summed up as a call to shop in order to save the world. Increasingly, consumers are choosing to funnel their earnings towards purchasing products they believe will halt global warming or save precious rain forest, not to mention make them happier, healthier, and even more fashionable. In this consumer-centric model for change, there is often little to no emphasis on corporate (producer) or governmental responsibility; the consumer, rather, is both the party responsible for environmental problems and the party possessing the solutions to imminent environmental catastrophe. What this popular but naïve notion of environmentalism ignores, however, is both the overwhelming amount of waste generated in the production phases of even the most “green” products and the implications of the materials life cycle of these products (e.g. even organic, local food scraps end up in poorly designed landfills, producing methane gas; this is largely excluded from mainstream discourse on the topic of food as it relates to environmental problems). As Paul Hawken points out, “individual activity is empowering, but it cannot of itself change the nature of social and environmental degradation.” So while many of these consumers may earnestly have the environment’s best interests at heart, their steadfast belief that we can collectively buy our way out of environmental problems is ultimately futile, if not dangerous.
Very good points. The thing is, environmentalism is a worldview that borders on religion for most people. I don’t mean that the environment doesn’t need saving, I mean that people are sold (not just by companies but by their friends and neighbors) feel-good beliefs or prejudices and cling to them even if they are ineffective or even dangerous. As with religion, conforming to group expectations becomes the primary virtue regardless of results.
The Prius is the best example. It looks different so it signals your “virtue” to others. That’s why it outsold other hybrids by such a wide margin. Too bad the environment would be better off if you drove a used Japanese car, or even better, an old biodiesel converted Mercedes.