If you are wanting to be perceived as a generous giver, would it be better to give a $45 scarf or a $55 coat?
Even though more is spent on the coat, the scarf is perceived as more generous because $45 is high-priced for a scarf whereas $55 is low-priced for a coat.
It seems that perceived expensiveness and value are relative to a reference point.
Now, how about this one?
If a firm sells a product that is relatively expensive compared to other products in a category, will it matter if it promotes the product using more abstract benefits and values versus more concrete product features?
Research on the Fit Between Comparative Price and Product Communications
It turns out that it does matter, as research in a forthcoming Journal of Marketing article demonstrates.
The article, “Comparative Price and the Design of Effective Product Communications,” by professors Thomas Allard and Dale Griffin of Nanyang Technological University and University of British Columbia, respectively, presents results of a series of six studies that test the impact of matching communication level (abstract vs. concrete) with relative product price on sales, purchase likelihood, and product attitudes.
Their studies show that matching communication level with relative expensiveness does matter, and that “firms should promote the more affordable products in their lineups by focusing on their more concrete, low-level features (e.g., miles per gallon and reliability ratings for an affordable sedan) while focusing on more abstract, high-level features for their more expensive products (e.g., feelings of freedom and power for a high-end sport car) within a given absolute price range.”
Selling More Chocolates: Testing the Matching Effect
For example, in one study, the researchers set up a pop-up shop selling chocolates on a university campus. The pop-up shop offered a choice between two identical chocolates (in different shapes that varied across experimental conditions), both priced the same at $1.00.
Half the shoppers at the store were presented with a situation in which the two chocolates were next to $10 slabs of artisanal dark chocolate, making the $1.00 chocolates seem relatively inexpensive. The other half of the shoppers had the opportunity to purchase one of the two chocolates when they were shown next to $0.25 Tootsie rolls, making the $1.00 chocolates seem relatively expensive.
The only other characteristic of the experiment that varied was how the two chocolates were described. For any given shopper, one of the chocolates was described on a poster as “Rich Milk Chocolate” (a message focused on concrete product features) and the other was described on a poster as “Decadent Dream” (a message focused on abstract benefits).
Given this set-up, it’s natural to wonder if the promotional message focused on features generated more sales than the message focused on abstract benefits, or vice versa. The answer is more interesting and complex than one message versus the other, however. It turns out that both messages did better … depending on the competitive reference point.
When the two chocolates were presented next to the Tootsie rolls, making them seem comparatively expensive, 70% of shoppers to the store purchased the chocolate promoted with abstract benefits (“Decadent Dream”). In contrast, when the two chocolates were presented next to the artisanal dark chocolate, making them seem comparatively inexpensive, 56% of shoppers purchased the chocolate promoted with concrete product features (“Rich Milk Chocolate”).
In a subsequent experiment, the researchers demonstrated the same matching effect for higher-priced products such as diamonds.
Comparative Price and Marketing Communications: Why Fit Matters
The results make it clear that it is the match between relative price and communication level that matters. Consumers prefer comparatively expensive products to be described using more abstract benefits and values. In contrast, they prefer comparatively inexpensive products to be described using more concrete features.
The researchers also showed that the fit of communication level and comparative price matters because “consumers attribute their experience of conceptual fit to their preference for the associated product.” Consumers use the fit as a shorthand way of evaluating a product. In fact, the research showed that the effect is less evident or not present at all for consumers who are highly involved in a product category because these individuals are more thoughtful in their evaluation of alternatives.
Impacting the Bottom Line: What The Matching Effect Means in Practice
Importantly, the research shows that absolute price is not what should guide communication level, but rather comparative price. It’s not that cars should always be described using abstract benefits and energy bars should always be described using concrete features. Rather, products in both categories can and should be described using both communication levels depending on the comparative price of the product being promoted.
Overall, the results reveal that a company can increase sales of a product by changing marketing communications to match the relative expensiveness of a product without changing price. Alternatively, with the same communications and price, a company can increase sales by changing the competitive reference to be in line with the level of marketing communications!
Lance A. Bettencourt is Associate Professor of Professional Practice in Marketing at the Neeley School of Business at Texas Christian University, and author of Service Innovation: How to Go from Customer Needs to Breakthrough Services.