Relative Rationalizing

Ahhh relativity. One of the most confusing - but important - topics you can go down the rabbit hole on.  Everything is relative.  A salary of $50,000 may sound like nothing to you, but it may be quite appealing to me.  But you may be comparing it to your (or your neighbor's, or you brother's, it doesn't really matter) current salary that's in the six-digit range.  But for me, I'm comparing it to my current lack of a salary.  That't pretty great. 

Here's another example.  When contemplating the purchase of a $25 pen, the majority of people would drive to another store 15 minutes away to save $7. When contemplating the purchase of a $455 suit, the majority of people would not drive to another store 15 minutes away to save $7.  The amount saved and time involved are the same, but people behave differently. 

As my Dad would tell me many times during my childhood, "It's all what you compare it to."   

How does that relate to marketing and consumer behavior?  Well, here's an example to answer just that.  

When Williams-Sonoma introduced bread machines, sales were slow. When they added a "deluxe" version that was 50% more expensive, and the machines they started flying off the shelves.  The smart marketers used the "deluxe" version as a base of relativity.  Now the first bread machine appeared to be a bargain! 

So the takeaway for marketers is make your customer think a certain way by providing a base to compare something to.   And the takeaway for us as consumer is - know what you value.  Watch out for relative thinking.