How much would you pay for shoes from a swanky boutique? That’s what Payless, the discount footwear retailer, wanted to test in a recent marketing stunt.
The results have made for a viral video. In Los Angeles, Payless opened a pop-up store called Palessi, created a fake website, and invited social media influencers to check it out. The products were no different from what you could ordinarily find from Payless, but the influencers didn’t know that. They thought they were getting a sneak peek at an elegant new shop.
On camera, the influencers were asked how much the items should go for. One said she’d pay $400 or $500 for what turned out to be a $19.99 pair of sneakers. Another spent $640 for boots – 1,800% more than they really cost at Payless. (All shoppers got to keep the shoes for free.)
Payless wanted to make a point about how their shoes are both affordable and fashionable. The experiment delivered another lesson too. People are willing to spend a whole lot more for branding – even, in this case, when the brand is non-existent.
The lure of psychological ownership
There have been scores of studies that show how consumers are influenced by the label at least as much as by the product itself. In one, beer drinkers who did a blind taste test couldn’t tell brands apart even when one of the choices was their favourite.
National brands and private labels sometimes come from the same factory. Yes, there’s such a thing as higher quality, but we can also spend on higher margins.
Why are consumers willing to pay a premium?
In a Harvard Business Review article this fall, Colleen Kirk, a marketing professor at the New York Institute of Technology, wrote about the concept of psychological ownership.
We know that many purchasing decisions (make that decisions in general) are emotional rather than rational. Kirk argues that brands win “when consumers feel so invested in a product that it becomes an extension of themselves.”
“Companies that encourage psychological ownership,” she writes, “can entice customers to buy more products, at higher prices, and willingly promote those products among their friends.”
Kirk says that companies can help consumers to build psychological ownership by employing a couple of methods.
Some companies let customers play a part in forming the product by customizing it or submitting design ideas. That gives customers a sense of control or an investment of themselves. Even handling the product physically or virtually (touching it, assembling it, playing with options on a screen) can do the trick.
Another powerful strategy is cultivating the customer’s knowledge of/experience with a product or brand. To the point that they perceive they have a special relationship with it. When customers feel they have “members-only” perks, have a chance to get something first, and get to say they’ve discovered something, that’s psychological ownership.
Maybe it’s one reason why the very first shoppers ever to visit Palessi were so eager to pay for their trendsetting.
Brand less, pay less
Given our susceptibility to branding, it will be interesting to see how a company called Brandless fares.
The San Francisco-based online retailer launched in 2017. They sell a selection of quality but no-name household and kitchen items, beauty and personal care products, food, stationery, and party supplies. Everything goes for $3 or less, and there’s often just one choice for each item.
Fast Company has named Brandless, which already has $50 million in funding, one of the world’s most innovative companies of 2018. Co-founder Tina Sharkey says Brandless can charge so little because it eliminates the markup that constitutes a “brand tax”.
“We’re trying to reimagine what it means to be a brand in today’s world, a brand rooted in authenticity, transparency and trust,” Sharkey told Fast Company. “If we do this right we’re actually building a community where we can focus on living more and branding less.”
Remember that brand less can mean pay less. That’s no small feat at a time when Palessi shoppers remind us how easy it is to pay more for nothing.
Stuart Foxman is a Toronto-based freelance writer, who helps clients’ products, services, ideas and organizations to come alive. Follow me on Twitter @StuartFoxman, connect with me here on LinkedIn, or check me out at foxmancommunications.com. I would love to hear from you. More articles like this coming, with original posts every week about communications, writing, branding, creativity, media, marketing, persuasion, messages, etc., etc.
Dec. 5, 2018