> Extremely high profit margins (>55%) could trigger a negative reaction, although this was not tested. Likewise, suspiciously low margins (e.g. negative or very low) could negatively impact the effect of trust that drives increased sales.
Show your costs to boost sales
41–50 of 144 posts
Re: Show your costs to boost sales
#42omg, brace for BS marketers start putting fake cost numbers on their products to boost sales..
Wouldn't that be illegal?
Re: Show your costs to boost sales
#43"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and what they actually do are 2 very different things. The conversion rate of actual behavior needs to be tested for this to mean something useful.
Exactly this. Plus, I didn’t see “profit” mentioned anywhere in the costs, and the article also touches upon the (mostly obvious) fact that for high margin goods this would impact them negatively.
I think the assumption is whatever the difference in what the item costs vs the total listed on the package is the profit
Re: Show your costs to boost sales
#44I think this would actually work even if forced by regulators, assuming the company is honest and publishes reasonable numbers.
I worry about companies lying to make numbers more "realistic" to customers or to hide marketing spend.
Re: Show your costs to boost sales
#45I think this generally works, at least as a justification for price increases (if your suppliers increase their price, people don't blame you for increasing yours). But this is also true:
> Extremely high profit margins (>55%) could trigger a negative reaction, although this was not tested.
We don't see Google talking much about its costs, for instance.
Re: Show your costs to boost sales
#46"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and what they actually do are 2 very different things. The conversion rate of actual behavior needs to be tested for this to mean something useful.
Author of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were di…
Chicken Nood Soup bowls for $4.95? Don't they usually sell for a buck at the grocery store? Unless it's a high end brand.
Re: Show your costs to boost sales
#47Earlier quoted context omitted.
Author of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were di…
Hi Thomas, thanks for your work. I am a fan! Just a minor comment: I find using decimals places (like 16.1% and 21.1%) in human experiments pretty irritating. It feels like false precision. After all, these experiments must have confidence intervals. If I had to guess, I’d assume at least a +/- 5 ppts variability in all these numbers. What’s your view on that?
Thank you so much!
I agree that the figures can vary for many reasons and we shouldn't expect them to be exactly the same (some things we don't end up controlling for).
At the same time, if we take the experiment of the soup for example:
They measured 9,227 sales of it so the 21.1% increase is quite robust and I'd expect the error margin to be much lower than 5% either way - so in some ways the precision is warranted.
I also feel that if I were to round a 21.4% to 20% I'd be miscommunicating the findings of the research :)
Re: Show your costs to boost sales
#48Earlier quoted context omitted.
Author of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were di…
Chicken Nood Soup bowls for $4.95? Don't they usually sell for a buck at the grocery store? Unless it's a high end brand.
This was in a cafeteria.
Re: Show your costs to boost sales
#49"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and what they actually do are 2 very different things. The conversion rate of actual behavior needs to be tested for this to mean something useful.
Author of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were di…
I’ll bet the Harvard students saw a new fancy chicken bowl and bought it out of novelty.
Re: Show your costs to boost sales
#50Earlier quoted context omitted.
Point taken, but perhaps a bad example. When I buy an iPhone, I'm paying a little for materials, but mostly I'm purchasing the culmination of tens of billions of dollars of R&D that possibly surpasses any other product on Earth. A better example might be a luxury brand wallet where they sell the illusion of better quality, but that may or may not be true.
Luxury brand wallet owners feel much the same way about their wallets that you do about your iPhone.
Perhaps, but I think most luxury brand buyers fall into one of two categories:
1) They are paying more for quality materials, durability and perhaps a hand-made feel (that may or may not be in line with reality).
2) They are paying more so that they can get something that most others can't only because it's too expensive.
I really can't believe that people who buy $2000 handbags think that the handbag company is doing any R&D into handbags.
But perhaps they do...