In my previous post I mentioned Dan Ariely’s book Predictably Irrational. Ariely discusses a number of studies on human behavior that marketers routinely use to manipulate consumers. One of the chapters I found extremely provocative and thought provoking was called “The Myth of Supply and Demand.”
But before we get to that chapter he demonstrates how seemingly intelligent people (students at MIT) made illogical choices in study after study because of a simple human behavioral quirk he calls the relativity factor. It goes something like this. If you give a person three choices A, A- and B, and you price them accordingly, with the two A’s being almost the same and one of the A‘s a little bit cheaper, both A and B will be thrown out in favor of A-. If you offer just A and A-, they will choose A-.
With new products people often don’t know what a good price should be, and may not feel confident buying it because there is nothing to compare it to. Among other things, Ariely used the Williams-Sonoma bread machines as his example. When bread machines were first introduced people weren’t buying them. After consulting with a marketing firm, Williams-Sonoma introduced the new “Deluxe” Bread Machine and priced it fifty percent higher than the original. There was actually no reason to price it fifty percent higher. It wasn’t fifty percent better, and wasn’t much improved over the original. It seems counter-intuitive to introduce a new more expensive product on top of a failing product, but amazingly it had the intended effect. When consumers could compare two bread makers, the original cheaper bread makers began selling like hot cakes. That’s how relativity works in marketing.
I have been thinking about how Ariely’s relativity chapter applies to hearing aids. Back in the 1990s when digital hearing aids first came out, it was unthinkable to buy a pair of hearing aids for $6000.00. It’s funny because I can see now how sneaky they were in introducing the digitally programmable analog hearing aids at the same time. That would be Ariely’s A- choice. They weren’t digital hearing aids and they weren’t just plain analogs. I can’t remember what I paid now, but the cost was in between the plain analogs and the full digitals. They seemed relatively reasonable. Eventually when I bought my first pair of fully digital aids, the extra $1000 didn’t seem like a huge leap after being primed with the inflated price of the digitally programmable hearing aids.
In his chapter on supply and demand, Ariely discusses numerous studies on another concept called “arbitrary coherence” and its application to price anchoring. Apparently we get attached to paying certain prices for certain items and it‘s hard to move us away from that price. Once we‘ve formed an attachment to a price we will continue to pay it even it if it’s a ridiculous price. A good example was people moving from Lubbock to Pittsburgh will squeeze into an uncomfortably smaller home, while a family moving from LA to Pittsburgh will move into a absurdly large mansion. It’s all in what you’re used to paying for a home. The idea of paying a different price will be distressing for many people because they always pay THAT price.
So the big question is how do you get someone to pay $4.00 for a cup of coffee at Starbucks that only costs $1.00 at Dunkin Doughnuts? And more importantly, how do you get people who normally pay $3000.00 for a pair of hearing aids to feel comfortable paying $6000.00? According to Ariely, you have to convince them their experience will be very different when they pay $6000.00 as opposed to the $3000.00. At first a person may be reluctant to try it.
Studies have found that putting objects in fancy packages will make people rate them higher. This should come as no surprise. For example, while rating coffee or wine, over and over researchers found that the same brands were rated higher when they were sampled in fine china or crystal on a linen table cloth with a bouquet of flowers and a little dish of candies, as opposed to being rated in paper cups, no table cloth with a garbage can next to the table.
Starbucks didn’t do the fine china thing, but they created an exceptional ambiance that convinced consumers they were buying a new coffee experience, not just a plain old cup of coffee. The hearing aid industry has been working on its image too. Years ago, when I was in my early 20s and got my first pair of hearing aids, they were beige and came in an ugly brown pouch. The care pamphlet I was given had drawings of old people on it. Today hearing aid pamphlets show glossy photographs of busy families walking in the park and riding bikes. You can’t tell who in the picture might be wearing the hearing aids. No one looks very old. Also, in the past seven years hearing aids have been coming out in sleek new shapes and colors never before seen in audiology.
Suddenly we are calling them hearing “devices“ because they are so much MORE than a hearing aid. This is not unlike Starbucks renaming their $4.00 coffees to the French sizes “grande” and “venti” to give the customer a more cosmopolitan experience, helping to justify the $4.00 expense. Your hearing aid is no longer just an aid. It’s a device- a technological wonder with bluetooth capability and automatic everything!
And the new mottos! “Life is ON” “The energy of understanding!” It makes you feel so ALIVE! I don’t recall hearing aids having mottos in the past.
And look at the names of the hearing aids– “Fusion, Agil, Motion, Solana, Nitro. . .” They could almost be rock bands, or athletic shoes, or sports cars! The hearing aid industry isn‘t selling hearing aids anymore. They‘re selling life.
This is why the average pair of digital hearing aids cost $6000.00 today. It has nothing to do with supply and demand. If you are in the market for a new pair of hearing aids, I cannot tell you what to buy, but please consider shopping around. Try several brands aids out including the so called “cheap” brands. You might be surprised! This consumer guide may be helpful to first time hearing aid buyers.