The consumer experience

My wife and I went shopping this weekend for a product about which we know virtually nothing. We hit four stores to look at varieties and learn how it works. This is an item where first-time buyers usually go in cold, so to the retailers, we were typical clueless shoppers.

Store #1 was full of customers, employees, and stock. We spent a long while (15, 20 minutes) looking around the overstuffed sales floor and were never approached by an employee. Finally we asked for help, and the woman behind the counter shrugged, and said, "Maybe in a few minutes someone can help you." She did not offer to help us herself, nor did she attempt to ease our wait. As soon as she turned away from us we left.

Store #2 was as busy as store #1, but had clear aisles for browsing and an inviting atmosphere. Sales clerks had their hands full, yet when we made eye contact with one, she responded with, "I'm with a customer, but I'll make sure someone gets to you as soon as we can." Moments later she approached us, saying, "My client stepped away for a minute, I'm still with her, but can I help you in the meantime?" She worked with us until the client returned, politely refocused on the other customer, then came back to us a second time when she was free. She patiently walked us through different products, pros and cons, noting her favorites--which seemed unbiased by price point or commission.

Store #3 was quiet, and a saleswoman approached us immediately. She answered a few questions, then faded into the background, letting us explore without pressure. Each model was on display in several colors and with varying options, making it easy to compare styles. A few minutes into our shopping, the saleswoman returned to us with a print catalog and handy photocopies of each product's dimensions. On the sheet she had handwritten the prices of each item we were considering, too, so we could review at home and make a decision on our own time.

Store #4 had the smallest display collection we'd seen. Half the items had no tags displaying product names or pricing. The store seemed to have very few sales staff, and after a few minutes, we shrugged and left.

At home, we reviewed our one piece of printed literature, and spent time measuring and discussing our options. We looked around online sparingly, since we'd seen so much in person.

Guess which stores are most likely to get our business.

Pricing right

A fascinating study was released last week that observed people find expensive items more desirable simply because they're more expensive. The same bottle of wine is more appealing to consumers who believe it's worth $90 than others who are told it's worth $10.

Pricing reactions also rely on contextual cues. Panasonic has found midprice items sell better when shown next to pricier models. The "reference prices" around a product significantly affect their perceived value.

These discoveries are not really new. Consider the make-up artist my wife hired for our wedding five years ago. After agreeing on a price, he forgot what they had decided, and quoted a second rate 80% higher. When my wife expressed shock, he quickly reverted to the original price. He explained that many of his clients were upper-class women who wouldn't think he was as good a stylist at the rate we were paying. Raising prices actually appeals to his audience, the cost verifying the talent on offer.

These theories are particularly interesting with regard to online merchants. As noted in the New Yorker article, websites create price transparency, which makes for savvier consumers both online and off, and forces retailers to compete in other ways.

The most intriguing question is raised by reading the two articles above as a single unit. In the first, The Economist argues that prices create emotional response, which could be used to sellers' advantage. In the second, James Surowiecki suggests almost the opposite: that the Internet has eliminated much pricing opacity, creating empowered consumers who understand right-priced items. Observing which one proves more accurate--or whether these theories work in parallel--will help define a generation of sales strategies.