I have always found the idea of anchoring fascinating as a marketer and a voracious consumer. While I urge people to learn how to talk to people, position their products, create an unfair advantage and play with their audience’s perspective of the business, I also see immediately the value in it as a consumer technique. As a consumer, this anchor technique leads me to upsell for a better product and encourages me to be more discerning. Be it I take the bait or not is an indicator of how effective the move is. Here’s how anchoring works and how you can do it with your business.
Anchor Marketing and the Value of Comparative Perspective
The idea of anchoring has been used many times but it’s not a very interesting way to put such a fascinating method. It’s better demonstrated than explained: if you have a 200-dollar reputation management service, it’s always best to find a rival reputation management service and show that one has a 500-dollar price tag. If you’re selling a 1000-dollar laptop and your competition are 300 to 500-dollar laptops, focus on the idea of premium quality, durability and performance – things that a cheaper product may not have. See my point?
If you present your idea initially, serving as your “anchor”, and let it sit beside a comparable competition, you need to show them that your product is better “because”. This involves playing with consumer psychology, buyer perception, understanding your competition, knowing your market intimately and having things that you can do that others can’t, be it a lower price or a disparity on quality.
As an example, McDonald’s likes to position its dollar bundles as much better than their competition and they cite more expensive burgers for lower the weight and lesser taste. This is a value proposition to the customer. In the same breath, Hungry Jack’s will try to compensate their more expensive burger menu as premium, meatier, tastier and better. Though there’s nothing wrong with both approaches, they are both prime examples of how a unique perspective is veiled over a product.
Marketing Your Anchors with the Decoy Effect
Another way to do anchoring is to present multiple options within your business model and create a cheap bundle, a premium bundle and a “value” bundle, with a few other nuanced combinations in between.
The cheap bundle is a bottom dollar bundle, giving them a taste of what you can offer. Your premium bundle is an offer of your best products without adding your cheap options, creating an air of scarcity and exclusivity around the offer. Finally, the value bundle is a combination of your cheap and premium bundle which, when bought in this offer, are cheaper than buying them separately.
This creates a decoy effect for your products and services and lets you win on multiple fronts at the same time. The cheap option is a tripwire offer, giving your audience a taste of what you can offer to them. This primes them for your upper bundles.
The premium option allows them to be in an exclusive club of like-minded people who are enjoying a very scarce privilege for a service that cannot be achieved with the tripwire offer. This needs to be of high value in itself, but should be asymmetric and entirely different with the lower, cheaper choices.
The value option is a nice final touch and must be used with utter care. The value option is only slightly more expensive than the premium offer while it combines the contents of both the cheap and premium option into one. I like calling this the “Upsize option”. When you see that large fries and cola are just a few cents away if you upsize, you bite to get the best value. What this does is capitalize on the loss aversion of customers, wanting to go up one more peg to get the best results without seeing the upsell that you just did.
Handled well, anchoring can help you attain a good position in your market by playing with the perception of your consumers. This does not mean that you’re cheating them out of their money, so much as you are repositioning the value of your product in comparison to either the competition or your own products. You’re urging them to go higher on the options and trying to do so with a good marketing proposition.