Tag: Business

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