Perception Of Pricing

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tesco-penny-off

Evil marketing at its finest:
We all know that price promotions usually give an uptick in sales, but it doesn’t matter whether you’re actually cutting price – it only matters whether customers think you’re cutting price.

Case in point: GM’s “Employee Discount” pricing, launched on 2005, turned out to be hugely successful for the company in driving unit sales. However, it turns out the the average transaction price during this period was higher than usual, because shoppers had to pay sticker price (no haggling) and were unable to get the same rebates as usual. A double win for the company!

Even worse, it turns out that shoppers don’t pay much attention to pricing. Two marketing professors went around shops asking people if they could recall what the price was of the item they’d just put into their basket. Here’s what happened:

  • 21.1% had no idea
  • 31.8% guessed and got it wrong
  • 47.1% got it right

The implication there is that price matters, but perhaps less than marketing think it does. Sure, it’s not conclusive – some people could guess right, some people just have bad memories, there’s some variance depending on the item type and so on.

A subsequent study focuses on coffee only – as a staple food, one expects price sensitivity and hence recall to be higher, but the results appear similar. Score one for our conclusion.

However, if we equate “customers think we’re cutting price” with a promo barker, sticker or similar, then we’d need to do a slightly different study. The follow-on study also states that “price-recall accuracy is significantly related to promotion status of the brand and category purchase frequency of the consumer”. So, we have to take the results with a tiny pinch of salt.

Conclusion? If you’re cutting price to drive sales for a promo, just think carefully about how much you actually need to cut. It may be that creating a convincing perception of promo is more important for driving up volume sales.

Mozilla Labs Concept Series: Pie Assisted Gestures

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A few days ago, Mozilla Labs invited students to answer the question: “What would a browser look like if the Web was all there was? No windows, no unnecessary trappings. Just the Web.” I thought I’d take a crack at it myself, even though I’m clearly going to get my ass kicked by the engineering undergrads :)

Here’s a video I knocked together, which shows a very rough mockup of the UI. The basic idea is this – to extend pie menus in such a way that they can help train users into using mouse gestures, and remain as a backup for more complex commands.


Mozconcept: Pie Assisted Gestures from Shahid Hussain on Vimeo.

Non-Web Monetisation

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This week, I gave a short talk on tech business model basics to the Kellogg High Tech Club. I was following an excellent talk by a colleague on web monetisation, so I focused on non-web monetisation. We weren’t able to snag a video camera, but I did punch up some audio and sync it to the slides.

Non Web Revenue Models
View more presentations from shahid1618. (tags: model revenue)

This presentation was featured on the Slideshare front page on Monday 2nd Feb. Thank you Slideshare editors! :)

Management For Engineers

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It’s been a little while since I posted, and here’s why – I’ve been starting a new website called Management For Engineers.

I originally started knocking together material for this towards the end of last year. As we progress and get more responsibility, engineers often go into management. At the same time, we have been trained with a set of skills that make us great at dealing with some things, like logic and measures, while not as good at understanding other things like, well, what managers do all day.

I hope that the site will encourage engineers to think more deeply about management, and see it as a fun challenge rather than a pain in the ass.

Best Buy Vending Machines

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You may have caught a previous post here on iPod vending machines.

During a trip through LAX, I noticed that these machines are being used by Best Buy to sell a variety of electronics to bored travellers – headphones, flip style camcorders, and of course, iPods.

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Personally, I was just curious when I was snapping photos, but as I backed away, one fellow actually went and used it.

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As he made his selection, the local security guard looked on, either nervous, or just curious that someone was using the thing.

Is selling consumer electronics in this way actually viable?

Before I answer this question, I’ll relate an event that happened a few hours ago.

On our pilgrimage to the local Ikea today, we aimed our trolley straight for the self-service lanes. There was one employee – an older lady – looking after the six self-service checkouts, so she came and did our checking out for us.

This annoyed us.

Here’s why this happened. The Ikea assistant believed that getting service at a checkout is better than not getting service, and she wanted to help. We, the two customers, did not.

Please get back the the point

I would argue that there’s a generational shift happening. Consider these two scenarios.

  • Generally older folk: go into a Best Buy, a Staples, a Currys or Dixons and chat up the salesperson. They don’t know too much about technology, so they’re more likely to take their advice on what to buy – and that advice will be to buy something in the shop that’s in stock.
  • Generally younger folk: research everything they can about a category online before even thinking about buying it. They might buy online or in a store – they don’t value as much whatever added services might be available in store. In short – they can serve themselves.

So – if a product is strongly price controlled and generally very reliable – like the iPod – these weird looking contraptions will offer an element of convenience. 24 hour service. No one getting in your way. All while offering the same price as everywhere else, instant access to the product, and no delivery fee.

Balance that against the natural caution of getting a 300 dollar product out of a vending machine. As the machines get more popular, this caution might dissipate, and the machines become more viable.

Most new businesses have a chicken and egg problem – this one, it seems, is no exception.

British And Irish Foods

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I was delighted to discover, in a random Jewel Osco in the middle of nowhere in Illinois, a supermarket section entitled “British and Irish foods”. For a nation whose national dish is curry and whose culinary achievements are usually mocked, I was curious to see what on earth was in there.

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Here are the results:

  • Tea
  • Digestives
  • Lucozade
  • Heinz beans
  • Sarson’s vinegar

I was also tickled to note the price of said beans.

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Although the pound may be weak right now, I think I’ll wait until I’m back in Blighty before I indulge with beans on toast.

Student Politics at Northwestern

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There’s no solution to politics, which is one reason I’m not into it. (Though I do like Rage Against The Machine.)

This stand, found a few weeks ago on the pavement outside the Kellogg building, caught my eye.

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… yep, that poster on the side there says “I LOVE CAPITALISM”. (And yes, I’m aware of the irony of an MBA thinking this is notable.) It turned out to be a promo for a speaking event by someone called David Horowitz.

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Sure, we do have student politics in the UK … it just looks different.

Restoring your Linux partition in rEFIt

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If your lovely Linux icon has, for whatever reason, disappeared from rEFIt to be replaced by the generic icon (or just vanished completely), here’s how to fix it.

rEFIt, a wonderful boot manager for Mac, peers at all of your partitions when it boots, takes a guess at what OS is on there and shows and entry in the larger icon list at the top. To figure out that you have a Linux partition, it will look at the MBR of that partition and go from there.

If your icon has disappeared or been replaced with the generic one, this is where the problem is. So here’s how to fix it.

  • Boot into Linux using a Live CD like the Ubuntu Ibex install CD.
  • Open up a terminal.
  • “sudo grub”
  • Now, find your Linux partition with “find /vmlinuz”
  • It will return (hd0,2) or similar. Use this to install grub like this: “root(hd0,2)” and then “setup(hd0,2)” and finally “quit”.

Once you reboot, your rEFIt icon should be restored, and you should be able to boot back into Linux no problem.

Dual Booting Ubuntu 8.10 with Tiger on a Santa Rosa MacBook Pro

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This weekend was taken up by one huge discovery: it is possible to use Gparted on Ubuntu Ibex to resize an HFS+ partition non-destructively. This one fact made it incredibly easy to dual boot my MacBook Pro with Linux. Here’s how:

  • Backup everything you might want to keep from your Mac just in case. Resizing partitions is always risky!
  • Install rEFIt on the Mac.
  • Make enough space on the Mac for your new partition.
  • Create an Ubuntu Ibex installer & live CD.(You can just download the .iso and burn it with Disk Utility.)
  • Boot into the live CD by holding down the “c” key when you reboot. Don’t install right now, but head into GParted.
  • Just resize the HFS+ partition that contains your Mac. Keep your fingers crossed that it works OK. (It did for me).
  • Run the Installer, and go to Manual mode when you get to the partitioner. From here you can do what you want – I created a 20gb partition for root and 4gb for swap partition.
  • Finish the installer and reboot. Here’s a fun bonus – rEFIt will automatically detect the new partition, and just create a spot in the boot menu for you.

And that’s it!