On Sun, 9 Jul 2017 17:34:56 +0000 (UTC), Chaya Eve
wrote:

On Sun, 9 Jul 2017 13:35:42 +0000 (UTC), Chaya Eve
wrote:

They always tell us to have a "good/better/best" lineup, because people
*want* to pay more for "better" stuff, but at the same time they teach us
about 'economies of scale' where you slightly differentiate the product
(e.g., gold-plated trim) so that people will *think* that it's a better
product (even though it's the same product).

I realize I said economies of "scale" when I meant economies of "scope".

The marketing genius in the L/XL/GXL lineup is that you get everyone if you
break your product into three fundamental "good/better/best" ranges (where
the idea is to gouge as much money as you can from the consumer).

What you do is offer the item which does the job at the "L" level.
Then you add a few nice-to-haves at a good price markup for the "XL level.
Then you throw in highly marketed costly items for the "GXL" level.

Most marketing is aimed to get people to jump to the GXL level, while most
consumers will resist the extremely high price, but they don't want the
"cheap stuff" which is why you have to have a "good/better/best" range.

They "think" they're getting a good value by going for the "better" because
they don't want to "think" much when they buy. They just want to associate
dollars to quality, so you make that association for them with the
good/better/best L/XL/GXL pricing tier.

You give the educated consumer a lot less credit than they are due.
The "educated consumer" doesn't need a degree in marketing.

Particularly in today's automotive market, where there really are very
few "options" if you want, say, a sunroof on a car, you need to buy a
minimum trim level that is NOT base. And if you want, say, the high
end infortainment system with navigation, you need to buy the next
level up - which ONLY comes with the sun roof. Gone are the days, to a
great extent, of ordering from the "menu" where you could order the
big motor on the "stripper" and get a "sleeper" - with eithe bench or
bucket seats, in any colour you wanted, with any colour pait you
wanted - and any tire and wheel combo, and any gear ratio the company
made, with or without Posi.
You have 3 choices, Base, Medium, and high content - or L, GL, or GLX
You can't make the L-to-XL pricing jump too high, but you can get away with
making the XL-to-GXL price jump very high (because you're playing on
consumer emotions).

No, you are playing on consumer's WANTS. They WANT the sunroof and the
navigation system and high end audio - so they buy the GLX

Everyone wins when you market it right.
* the cost-conscious consumer thinks they got good product at a good price.
* the value-conscious consumer thinks they got a better value at not too
much of a bump in price
* the status-conscious consumer pays through the nose for status and gets
it if the marketing department can maintain the status feelings
* the company makes out because they sold essentially the same product to
three different types of customers, making the most profit on the third
type but still making profits on the first and second type due to economies
of scale (volume) and economies of scope (differentiation).
* the marketing department wins awards and bonuses for increasing the
perceived value of the GXL "best" model, even though it's essentially the
same item as the other two (only it has special options and gold trim and
free coffee and free car washings, or whatever makes people feel good).
No, that's why you have a chevy, a cadillac, a BMW and a Mercedes.
THAT is where pride and emotion make people do stupid things.
Mer bought homself a loaded Kia or Hyundai for less money than a
"base" BMW or Merc or Caddy, that will cost him WAY less in
maintenance and repairs, where he will get WAY more for it at resale,
in percentage terms than either of the options, or a lower contented
car - meaning he got VALUE for for his money. REal value, not based on
"marketing BS"
It's "marketing BS" that sells Mercedes, Audi, Porsche, Caddy,
Lincoln, Lamborgini, and Ferarri et al.