As a business owner, the last thing you want your customers to do is to compare apples with apples. As soon as they compare apples with apples or oranges with oranges, you enter a marketing state called “commodity” pricing. This is a dreaded word in business because selling commodities means selling on price. The vendor with the lowest price wins the business. Unless you like to employ slave labor and make little to negative profits, don’t go there.
Human brains are wired to compare things. We instinctively want to pick the best between two or more choices. If we see two oranges, we want to pick the prettier one. If the two oranges are identical, we tend to pick the cheaper one. As the seller of oranges, we’d be wise to sell orange juice if there are too many orange vendors. The smart marketer wants to steer clear of the masses with their product. Some people call this differentiation. I call it the principal of comparison.
The principal of comparison is simple enough to understand. Yet businesses screw this up on a regular basis. Let’s look at a recent example. We all know that hybrid cars are hot right now. The marketing machines created a demand for green products so it’s cool to be green. It started about three years ago when Toyota got a few movie stars to drive their Prius Hybrid car. Celebrities tend to make things cool; even a car as homely as the Toyota Prius. But that wasn’t the main reason why the Prius took off and left their competitors like Honda in the dust.
Wanting a piece of the action, Toyota’s arch-rival, Honda decided to get into the hybrid car market by creating the Honda Accord Hybrid. What, you’ve never heard of the Honda Accord Hybrid? Of course you haven’t. Honda introduced the car and had to scrap it shortly after because it didn’t sell.
The Accord Hybrid didn’t sell because it looked like the regular gasoline powered Accord. The only difference was price. The hybrid car cost about $8K more than the regular car. Even with gasoline prices at $4/gallon, it would take about 10 years to get your $8K investment back in gasoline cost savings. And this was exactly what potential customers did — they used the principal of comparison to compare the two models of Accord. This was an easy exercise for them. The two Accords looked alike. Remember how our brains are wired.
The Toyota Prius, on the other hand, didn’t look like anything else in the Toyota product line. It wasn’t a Corolla nor was it a Camry. The Prius was a unique car. Consumers had nothing to compare it with so they accepted the hybrid car along with the premium price. Viola, Toyota created a hit with shrewd marketing.
What about the Honda Civic Hybrid? The answer is that Toyota outsells that car too. I’ll let you figure that orange comparison out for yourself, now that you understand the principal of comparison.
