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Why People (Don’t) Buy – The Stop Go Signals

Why People (Don't) Buy book reviewAmitav Chakravarti and Manoj Thomas have pedigrees in the business of marketing. Chakravarti as Professor of Marketing at the Department of Management, London School of Economics; Thomas as Associate Professor of Marketing and Director of Business Administration Lab at Cornell University.

Available from Amazon UK.

The two authors have put their heads together and compiled an interesting and informative book about not only why people buy things, but also what prevents them from clicking that buy button.

Perhaps because of their professorships and educational background, the tone of the book is a bit dry and essay-ish. Don’t let that put you off. It is nicely ordered in chapters that are themselves broken up into bite-size chunks which are laced with real world examples of pricing and marketing gone right and wrong.

The 100 calories paradox

In this chapter, the authors explain the go and stop signals of buying. Go signals are thoughts or feelings that propel us to want to buy something; stop signals are thoughts or feelings that inhibit our propensity to buy.

Take a packet of chocolate chip cookies for example. Nabisco discovered that it could sell 100-calorie packs of cookies containing less cookies for the same price as regular 500-calorie packs containing more. By placing the two products side by side, the 500 calorie pack creates a stop signal. In comparison with the 100-calorie pack it looks unhealthy and people fear putting on weight.

Conversely, because the 100-calorie pack is next to the high-cal cookies, it looks like an indulgence without shame.

The JC Penney pricing disaster

Another example explored in the book is that of JC Penney’s re-branding exercise between 2011 and 2013. Retail star Ron Johnson radically changed the way the shop did business. Based on his experience at Target and Apple, he set about changing the quality of JC Penney.

The customer service was addressed but so was the pricing – JC Penney was dominated by discount pricing. Johnson’s view was that the discount pricing was preventing people from buying because discounts signified low quality.

He was wrong. When the discount pricing ended, so did the sales drop – an experience also felt by Macy’s, who tried the same thing, according to the book’s authors.

Discordant pricing

The book also explores discordant pricing – where the price of a product or service is out of sync with the brand image.

For example, If you have two restaurants offering ‘Cuban casual dining’ – one for £8 a head and one for £25 a head – you may think the expensive restaurant is a rip off.

Conversely, if you see two French restaurants offering ‘fine French cuisine’ – one charging £8 and one charging £25 – you may assume the food at the cheap one isn’t really that good.

Similarly, you would expect a coffee at Costa to cost about £2.65 but only £1 in McDonald’s. If Costa were to drops its coffee to £1, you’d think there was something wrong with it.

Consumer Insight Machine
One of the illustrations from the book – showing that there is no easy way to predict what the stop and go signals might be, or what results you may see from tests and research.

I enjoyed this book because it didn’t just look at behavioural economics from the ‘how to make them buy’ angle. The go and stop angle helps you put a different perspective on it. What I really liked, though, is how this helps you examine the conflict between the two – how one action can have a negative reaction.

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