One of my major hopes for our iPhone app launch is that ordinary users can experience what bargain hunters experience, the emotional ride.
The reason why lobangclub will succeed is not because users will save a few dollars on the items they buy. Some people quite rightly point out that most people are price insensitive. But there are TWO reasons why price comparison works in every country in the world despite most people being self-admittedly price insensitive.
I am this week in Hong Kong visiting my parents, doing various touristy things with my family. I visited 女人街, a famous local street market near mongkok that specialises in selling tourist “crack”, from iphone accessories to cuddly toys of angry birds. Walking the narrow bitumen you will find a veritable united nations of travellers, most dripping with LV handbags, Oakley sunglasses, iPhone 4s in hand. This was a cash rich crowd spending a getaway in THE shopping paradise.
A common sight is to see vendors hurl Cantonese expletives at the back of departing “gweilos“, the stall-owners seemed genuinely confused as to why these rich tourists drove such a hard bargain. Tourists would routinely walk away from deals where the two parties were only a dollar or two away. And these were not dyed in the wool bargain hunters, in fact it’s probable that their entire bargaining experience happens in the street markets of Asia or when they buy a used car.
People are not price insensitive, they are price ignorant
Most people will not go out of their way to compare prices, this is not to say they are price insensitive(the amount of money companies spend on promoting sales is testament to this), rather the cost of removing price ignorance is too high in terms of effort and time. Give people a clear choice between a higher and lower price and most people will spend quite a lot of effort to get the lower price. This behaviour has been studied quite extensively as Loss Aversion.
Someone can be ignorant of pricing differences and can’t be bothered to spend the time to find better prices but if you present the prices to them, they will spend much more effort to avoid “losing money” by tracking down the cheaper option.
In 女人街 Mongkok, it is not the absolute dollar value that is important, but avoiding paying too much. Since everyone knows that the vendors there are out to “fleece” tourists, the most important emotion that these part-time-negotiator-tourists value is not to feel like a loser, thus it is better to not buy something than to feel like you’ve lost a particular transaction by overpaying.
Where’s the glicken?
Glicken is a Yiddish word made famous in copywriting circles as being about the added cream on top of the ordinary benefits of a situation. Nike spends billions of dollars on making you feel connected with their brand image, let’s say you decide to buy a pair of the latest Jordans, just as you are about to spash down $300+ on the pair, your friend sms you and tell you that there is a Buy 1 get 1 free promotion at another store for those exact same Jordans.
That is glicken.
The glicken emotion you will anchor to that pair everytime you wear it, it will make your recollection of the purchase fonder. Everybody has stories of glicken, whether a salesman threw a free a pair of socks in at the purchase, or the store you bought it at happened to have a sale you didn’t know about.
Glicken is what bargain hunters are addicted to, we want every purchase to have glicken on it, and are willing to put in time and effort.
Most people however want the glicken but they don’t want to spend the time and effort.
I always shudder when people invariably describe what we do as price comparison. Let me plant this flag now, price comparison is a means to an end, what will determine whether we succeed or not is whether we can harness the glicken and loss aversion as major emotions that our users feel when using our product.