by Dan Hill

Nowhere in marketing do emotions run hotter during today’s slowly fading Great Recession than when it comes to the role of (low) prices being highlighted in advertising. In boardroom after boardroom, one can easily imagine what’s been said: we’ve got our fixed costs, for salaries, equipment, et cetera, and we need to make some money fast. So let’s lower our prices, and let everybody know as loudly and clearly as can be. As a result CEOs and CFOs carry the day, and chief marketing officers beats a quick retreat to their offices to let the ad agencies know what they need to do.

Only it’s a bad—even terrible--idea to lead with price in advertising, and here’s why.

First, discounting—especially in relief on repeatedly—isn’t sustainable. One of the key advantages of a sale is that it has the element of surprise, thereby gaining attention. After all, how does surprise register on people’s faces? Their eyes go wide, and their mouth falls open as if it’s nature’s way of saying: shut up, and notice the world around you. Surprise aids stopping power, a vital ingredient in successful advertising. But surprise fades when you use the same reduced-price trick over and over.

Second, surprise is really in effect a pre-emotion. It’s brief (less than a second) and followed either by the verdict of the surprise being positive—a wow—or a negative, a yikes. Low pricing that gets repeated leads to expectations of future low prices, to desensitization, and the virtual impossibility of creating a wow emotional response. But don’t take just my word on this. Shopper research involving bargain price tags has shown that seeing any price tag causes disgust. The explanation is that people instinctively don’t like giving up their money. So creating more delight regarding the offer, thereby generating allure that exceeds feelings of disgust about surrendering cash, is what a positive purchase decision relies on. But the problem is that a low-price strategy isn’t about the offer’s intrinsic value; it’s merely a desperate attempt to lower people’s disgust levels about opening their purses and wallets and, ultimately, given desensitization, a losing game.

Third, a focus on prices is a focus on numbers, on statistics, and carries people from right-brain emotional involvement in advertising to left-brain analytics. That’s a bad trade-off, given that everyone feels before they think, that the emotional brain sends 10 times as much data to the rational brain as vice versa and that only the sensory and emotional parts of the brain connect to muscle activity, i.e., make something happen. An analytical response to advertising is fine in academia; but in business, results from the IPA’s database of 880 marketing campaigns has found that emotionally-oriented campaigns generate twice as much profitability as traditional, “hard-sell” rationally-oriented campaigns.

Fourth, price-leading advertising also creates for the offer being promoted. For starters, let’s consider the value = quality/price equation. There, price at least gives the illusion of being a precise, tangible entity, a benchmark for inferring the quality of the offer. So what will a lower price do? Why, it might help to shape perceptions that the as-of-yet floating, undetermined quality of the new offer is actually quite low, or that an existing offer was never worth as much as people have been accustomed to paying for it, thereby harming the offer’s equity. Put another way, cheap doesn’t feel good.

Fifth, encouraging consumers to take a price-oriented, statistical, hence rational approach to their purchase decisions can have disastrous, unintended consequences. That’s because often times, contrary to popular opinion, our emotions are providing us with valuable insight. They steer us, as is inevitable given the conservative estimate that 95% of people’s thought activity isn’t fully conscious, hence intuitive, hence operating the realm where emotions hold sway. To cut us off from the wisdom of our emotions and hence the gut-level instincts we use to evaluate an offer’s value has, as research shows, led many a consumer to make a purchase decision they soon regret. And that’s no way to build a business.

Sixth, brand loyalty is at risk because pride takes a hit. Loyalty is a feeling, and how is a loyal user of the offer supposed to feel when they see the price is lower for everyone, and not just them? Won’t they feel duped for what they bought before, losing the pride that comes from having bought wisely? Moreover, the company loses twice over. Its existing customers pay less for goods they were already buying anyway (and may not buy again at full price, when or if it gets restored, because their latest belief is that the original full price suddenly looks too high). As for the new customers who bought a deal, their loyalty is less real than the profit margin sacrificed to bring them into the picture.

And finally, seventh, a brand with offers often on sale is a brand with an integrity problem. After all, a key way we judge the trustworthiness of others, as well as companies, is to look at the degree to which they behave consistently. With price-leading advertising, the truth is that a company’s identity becomes fuzzy. Suddenly, you’re either a discount brand or else you are signaling a lack of confidence—even desperation—that in dating as in commerce is never very attractive. To further that point, leading with price suggests you have nothing else to say, or show, in your advertising. Price as your main attribute doesn’t mean anything—except that instead of emphasizing customer connectivity, aided by advertising, the battle ends up getting fought in terms of price and distribution. Loyalty ceases to be a barrier to entry, as surprise, hope—and every other positive emotional dynamic required—comes crashing down.

In contrast, what should a company do rather than rely on price-leading advertising in tough times? Here are three suggestions.

Solution number one is to leverage the sensory dimension. For most of this article, I’ve been talking about the emotional brain versus the rational brain. But in reality, we have three brains that came during different stages of evolution, starting with the sensory brain (500 million years old), followed by the emotional brain (200 million years old) and finally the rational brain (merely 100,000 years old). In other words, two principles emerge: 1) the rational brain is in scientific terms, an after-thought. It doesn’t enjoy first-mover advantage, leading to 2) the sensory and emotional brains enjoy the advantage of older, even ancient hard-wiring in the brain that links them together. So leverage that connection, adding sensory elements to your offer to distinguish it from rivals in subtle, intuitive ways.

The second solution is to enhance brand associations. The human mind isn’t really a very rational, linear, sequential machine. Or to the extent that it is, it’s more like a pinball machine and the companies that win that game do so by using advertising that keeps the ball moving, the lights on, and the score rising, by creating subconscious, positive, emotionally-charged connections. Brand associations cost nothing, and unlike a bargain price we don’t become desensitized to them, meaning they have more value by virtue of being inherently meaningful if created wisely.

The third solution is to invite the consumer into the picture. What’s the easiest way to sell to people? It’s to sell them on what they’re already bought in on, which is namely themselves. Validate their worth by inviting innovation through co-creation. Let them have a say in what the product could look like next. Surely, we’re past the point of believing that a factory-centric approach is sustainable in business. The consumer is king and queen, so promote openness, sharing and collaboration on behalf of making your company’s value = quality/price an equation they can buy into. When people have enjoyed having a hand in creating the offer, then the advertising that advocates for its value becomes a far easier sell.

About

Dan Hill is the founding president of the research firm Sensory Logic, Inc.,  (www.SensoryLogic.com) and the author of Emotionomics, chosen by Advertising Age as one of the top 10 must-read books of 2009. His latest book, About Face: The Secrets of Emotionally Effective Advertising, is likewise available from U.K. publisher Kogan-Page.