🚀#GROWTHSnacks: Price Sensitivity, Cognitive Biases and How I Spent Over $100 on Hair Products🧴
In today’s #GrowthSnack, I will discuss willingness to pay and how it relates to cognitive biases, as well as what would be an effective strategy to market and build products for consumers that are less price sensitive. Oh, before I forget, scroll to the end if you want to see $100 worth of a good hair day :)
A couple of months ago, I purchased some hair products for over $100 for the first time in my life. I was so excited, and yet — overwhelmed by my decision, that my buyer’s remorse kicked in rather quickly, and I started rationalizing this —
“Well, these are COVID-19 times — it’s been over a year since I got a haircut and visited my beloved Moshi-Moshi saloon… I’ve worked really hard lately, we never take real vacations anymore, I deserve to treat myself… I keep trying different hair products to mitigate the NC weather, and end up spending a lot more than this over time, never really satisfied with the results… What if…that’s the one product I’ve been waiting for…?”
Soon enough, I got to a comfortable place with my decision, and the doubts have been replaced with anxious anticipation for my box of personally mixed hair products, that will bring the era of frizzy hair to an end. Hello, choice-supportive bias :)
Besides my fascination with how I was tempted to make a buying decision I rarely make (more to come in the first half of the post) — I took notes of the entire buyer’s journey that I think would be interesting for Direct to Consumer (DTC) PMs and PMMs out there, and so another #GrowthSnack was born :) Enjoy 🌸
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Willingness to Pay, “Will I?” Products & “Which one?” Products
The Prose buying experience reminded me of the latest pricing course I took with the Pragmatic Institute, and particularly the concept of “Willingness to Pay” (WTP) that changes depending on the difference between these two types of products:
- “Will I?” (buy this product) — Refers to products that are less of a commodity, products that provide a certain experience or status, where the main question is whether or not we want to do or purchase something. For this reason, our buying decision is not/less price sensitive. For example — getting an iPhone, MacBook, Bungee jumping, going on a vacation in the Carrebeans and so on. Even if we contemplate which iPhone model to purchase, the price sensitivity will not be that high, once we decide it’s an iPhone that we’re going for. The cognitive bias that will play a big role here would be the “Bandwagon Effect” as it has a lot to do with perceived value.
- “Which one?” (will I buy?) — Refers to products that are more of a commodity, there are plenty of options to choose from, and we are looking for the best choice/deal for us. For example, when looking for a new TV set, you wouldn’t evaluate it by whether or not you need or want one, that’s been established already.
Pricing captures value.
Value is measured by WTP — which depends on the buyer’s perception of value.
This perception can be defined by use, choice, or deal value:
- Use: Will I use it? For example, for humans, air has infinite value in use (there is no doubt we would use it, but zero value in choice, most of the time).
If you change one of the parameters (location, quality) — then “choice” can be introduced to the equation as well. For example, during the pollen season in my beloved North Carolina, quality becomes a real issue for about 6–8 weeks out of the year, and I wouldn’t blame anyone for preferring a spring get-away, somewhere with fewer, well trees and plants…
- Choice: Is this the best choice? Using our TV set example again — in this case, I will compare the different functionality/size/cost to try and evaluate the one that is most suited for my needs. (Bonus: Barry Shwartz explains the paradox of choice and why marketers should take note that in this case — less is more).
- Deal: Did I get a good deal? We always strive to get the best deal we can. Enter “Anchoring Bias”.
Read more about this concept here.
- Small price changes can sway “which one” decisions. Only large pricing changes can sway “Will I” decisions.
- Most products are on a continuum between these two categories. By optimizing the segments you are targeting (or even, your product’s roadmap to fit what they value) — you can capitalize on this concept, and make sure your GTM is effective and precise in selling to shoppers who are asking “Will I?” before buying.
- Perceived differentiation creates value — which varies among different segments (e.g. Are you an iPhone type? Are you an Android type?). Elements that play a role in this would be product distribution (popcorn at the cinema) and competition (like monopoly vs. a more open, competitive market). Perceived value is what you are going to base your pricing on. Here’s Profitwell’s CEO, Patrick Campbell, explaining a framework you can use to analyze this for your product.
- Understanding relevant cognitive biases that are part of our shopping and buying decision-making process, is interesting to note as a shopper and a marketer :) I hope that this short part of the snack showed how these can come into play in the GTM plan, and the next part will reveal more about the messaging impact — on the customer’s side.
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A Direct to Consumer (DTC) Buyer’s Journey — Focusing on an End-to-End Delightful, Personal Customer Experience
The Prose hair products definitely belong to the “Will I category” — at least for me — frizzy-haired Shelly, living in the humidity swamp that is called North Carolina, who tries different products to mitigate all of this, all the time :)
This checks me as the right segment ✅
From the first question about my hair type and product goals, to the last — every step has made me think “These guys know what they’re doing!”. The level of customization (or perceived customization) amazed me — they asked for my age, hair length, width, volume, scalp situation, care habits, fragrant preferences, vegan preferences, and even my zip code (so they can assess what the weather is going to be like in the coming weeks/months).
Frizzy-haired Shelly indeed feels like her hair is DIFFERENT, and therefore requires SPECIAL SOLUTIONS. What can be better than carefully and personally mixed hair products, especially for her? There lies the differentiation. Another box has been checked ✅
Visual and verbal messaging around customization:
All of these have got me to a comfortable place with a little help from the confirmation bias — where I gradually started focusing on the perceived value and outcome and stopped worrying about price and product performance. Last checkbox ✅
All I needed was an intense week at work, to really want to pamper myself since “I deserve a treat”. I clicked the dark grey button to complete my purchase and the box was on its way.
We all have our hair stories — the good days, the bad days, I wish my hair was more curly/straight/had more volume/less volume, nothing can tame my hair, and so on. By going for the name Prose, this company tapped into the way we perceive and experience our hair and our care routine — “as an ongoing Saga” some would say.
- Prose — “written or spoken language in its ordinary form”, isn’t that the story we all want to tell, coming out of the shower or going out of the bed every morning? Isn’t that the desired outcome we are willing to pay higher prices for?
- The meaning of sequence also aligns with the usage of the product — where you are encouraged to apply 2–4 steps for best results.
Everything about the unboxing and user experience felt like walking into a Parisian salon (where this brand was invented) — from the carefully and beautifully designed and written informational and instructional booklets, to the fragrance of the products, to having my name and zip code on my shampoo bottle.
I was truly impressed with the glow, the level of frizziness (somewhere around 0–1 out of 10), and the delightful user experience.
So impressed — I wrote a post about it :)
Lastly, the Ultimate Question — to Renew or Not to Renew?
That’s a great question — one that I’m challenging the Profitwell team to look into as well :) Indeed I received several communications regarding repurchasing within 4–6 weeks of my purchase. I just don’t need to at the moment. It looks like this set of products has eliminated the need to use many others, and spend a lot of time styling my hair each day. So far, I think I will :)