Tag: Business

De Beers: The Most Successful Marketing Campaign Ever

Perhaps the best marketing campaign ever wasn’t about selling a product directly — it was about associating a product with an emotion; thus making it a psychological necessity.

Here is the story of how De Beers, through a well-orchestrated marketing campaign, associated diamonds with romance and forever changed the social attitudes of Americans.

The message had been so successfully impressed that those who can not afford to buy a diamond at the time of their marriage generally “defer the purchase” rather than forgo it.

…De Beers proved to be the most successful cartel arrangement in the annals of modern commerce. While other commodities, such as gold, silver, copper, rubber, and grains, fluctuated wildly in response to economic conditions, diamonds have continued, with few exceptions, to advance upward in price every year since the Depression. Indeed, the cartel seemed so superbly in control of prices — and unassailable — that, in the late 1970s, even speculators began buying diamonds as a guard against the vagaries of inflation and recession.

The diamond invention is far more than a monopoly for fixing diamond prices; it is a mechanism for converting tiny crystals of carbon into universally recognized tokens of wealth, power, and romance. To achieve this goal, De Beers had to control demand as well as supply. Both women and men had to be made to perceive diamonds not as marketable precious stones but as an inseparable part of courtship and married life. To stabilize the market, De Beers had to endow these stones with a sentiment that would inhibit the public from ever reselling them. The illusion had to be created that diamonds were forever — “forever” in the sense that they should never be resold….

Since “young men buy over 90% of all engagement rings” it would be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship

How did they do this?

Movie idols, the paragons of romance for the mass audience, would be given diamonds to use as their symbols of indestructible love…

…placed a series of lush four-color advertisements in magazines that were presumed to mold elite opinion, featuring reproductions of famous paintings by such artists as Picasso, Derain, Dali, and Dufy. The advertisements were intended to convey the idea that diamonds, like paintings, were unique works of art….

…It also established a “Diamond Information Center” that placed a stamp of quasi-authority on the flood of “historical” data and “news” it released….

…Promote the diamond as one material object which can reflect, in a very personal way, a man’s … success in life.

…begin the long-term process of setting the diamond aside as the only appropriate gift for those later-in-life occasions where sentiment is to be expressed….

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Still curious? If you’re interested in learning more about the history of De Beers, read The Last Empire.

Mind Hack: Why do we prefer Coke over Pepsi?

The Pepsi Challenge, a brilliant piece of marketing, pitted Coke versus Pepsi in two unmarked cups to everyone who dared try a sample.

Consumers were asked simply, which one do you prefer?

When the final results of this effort were tallied it was clear that people preferred Pepsi.  So, by all accounts, Pepsi should be trouncing Coke but it wasn’t and isn’t. Why?

Malcolm Gladwell outlined one theory in Blink. He proposed that in small samples-“Sip Tests”-people choose Pepsi because it tastes sweeter. However, in real life, we don’t drink just have a sip and stop and there is a huge difference between a sip and a full can. Over the course of a can, the sweeter taste of Pepsi sent people’s blood sugar levels into overdrive. That, according to Gladwell, is why Pepsi won in the taste tests but Coke continued to lead the Market.

That’s not the end of the story. In 2003, Dr. Read Montague, the Director of Neuroimaging Lab at Bayer College of Medicine, decided to explore the test results through the lens of an fMRI machine. First, he asked the volunteers whether they preferred Pepsi or Coke. The results from this simple question mimicked the results of the Pepsi Challenge. The majority of people choose Pepsi. Their brains did too. While sipping Pepsi volunteers experienced a flurry of activity in the the ventral putamen, a region of the brain that’s stimulated when we find tastes appealing.

During the second stage of the experiment, Dr. Montague decided to let subjects know if they were sampling Coke or Pepsi before they consumed the beverage. The result: 75% of the respondents preferred Coke. Why?

Dr. Montague observed that in addition to a stimulated ventral putamen, blood flows were now elevated in the medial prefrontal cortex, the portion of the brain that, among other things, handles higher thinking and discernment. There was a tug of war going on between the rational and emotional spots in our brain. Emotions won. We drink more Coke than Pepsi.

Coke has spent a lifetime, and literally billions of dollars, building up emotional associations with history, big events, its logo, color, design, fragrance, famous people, childhood, Christmas, Olympics, dreams, and aspirations, .. you get the point.

As Martin Lindstrom puts it, “Emotions are the way in which our brains encode things of value, and a brand that engages us emotionally will win every single time.”

How Williams Sonoma Inadvertently Sold More Bread Machines

Paying attention to what your customers and clients see can be a very effective way to increase your influence and, subsequently, your business.

Steve Martin, co-author of Yes! 50 Secrets from the Science of Persuasion, tells the story:

A few years ago a well-known US kitchen retailer released its latest bread-making machine. Like any company bringing a new and improved product to market, it was excited about the extra sales revenues the product might deliver. And, like most companies, it was a little nervous about whether it had done everything to get its product launch right.

It needn’t have worried. Within a few weeks, sales had almost doubled. Surprisingly, though, it wasn’t the new product that generated the huge sales growth but an older model.

Yet there was no doubt about the role that its brand new product had played in persuading customers to buy its older and cheaper version.

Persuasion researchers suggest that when people consider a particular set of choices, they often favour alternatives that are ‘compromise choices’. That is, choices that compromise between what is needed at a minimum and what they could possibly spend at a maximum.

A key factor that often drives compromise choices is price. In the case of the bread-making machine, when customers saw the newer, more expensive product, the original, cheaper product immediately seemed a wiser, more economical and attractive choice in comparison.

Paying attention to what your customers and clients see first can be a very effective way to increase your influence and, subsequently, your business. It is useful to remember that high- end and high-priced products provide two crucial benefits. Firstly, they often serve to meet the needs of customers who are attracted to high-price offerings. A second, and perhaps less recognised benefit is that the next-highest options are often seen as more attractively priced.

Bars and hotels often present wine lists in the order of their cheapest (most often the house wine) first. But doing so might mean that customers may never consider some of the more expensive and potentially more profitable wines towards the end of the list. The ‘compromise’ approach suggests that reversing the order and placing more expensive wines at the top of the list would immediately make the next most expensive wines a more attractive choice — potentially increasing sales.

Original source: http://www.babusinesslife.com/Tools/Persuasion/How-compromise-choices-can-make-you-money.html