Choice Game
Success in the Choice Game depends on a company’s ability to create packages and prices that align to the needs and preferences of well-defined customer segments. Your path to growth depends on:
- Defining a coherent lineup: Segment your customers based on their value perceptions, then design a balanced, simple, and fenced portfolio that also enables customers to trade up as their needs change
- Anchoring prices to segment-specific value perceptions: Define the offer structure (such as good‐better‐best, package size variation, or a hybrid approach), then develop customer programs, transaction incentives, and prices that work as a system
- Helping customers make choices: Use behavioral science techniques such as the compromise effect, decoy effect, and anchor mechanism to guide customers and help them self-select in a mutually beneficial way.
The portfolio and the techniques you use should have the resilience to weather economic cycles as well as significant shifts in customer perceptions and preferences.
RECOMMENDED READING
More Choice Game Insights
Changing the Pricing Game in Retail Banking
Exploring the Fair Value of Work
Why “free” is a wise price for Apple GenAI
Can Wendy’s make “surge pricing” a success?
Choice Game Short Takes
How Temu Uses Psychological Hacks to Encourage Overspending — June 6, 2024
Is the popular e-commerce site Temu a sophisticated experiment in balancing supply and demand? Or is it a combination of a fun treasure hunt with games of chance? This article looks at some of the psychological effects that seem to drive the site’s growth and popularity, with low prices being only one factor.
Apple Vision Pro use cases — May 28, 2024
Now that Apple’s Vision Pro headset has been available for a week, the focus of the discussion has shifted from its price point to another fundamental question: how will it create value? Countless naysayers have already said that the device will flop because there aren’t killer applications or use cases to justify anything close to $3,499 for the headset. This insightful commentary published today in Fortune – despite its pessimistic headline – stresses that it is obviously too early to tell. Previous groundbreaking launches from Apple faced similar struggles, as the commentary points out. A vast source of value for Vision Pro could be business applications, with the creation of a supporting ecosystem. But will these be high value or low value applications? Imagine, for example, direct collaboration on a maintenance or repair effort, with one team member onsite streaming through the headset and a remote expert providing guidance based on what they observe directly. Instead of the onsite worker relying on a tutorial or the remote worker relying on verbal descriptions, the two can work together in real-time to complete a job. What would the value of that be over time? My hope is that the starting price point challenges developers to find those high value or killer applications, the ones that will make us say that we can never imagine going back to the way things were before.