Satisfaction Cost

“How much?”

“Combien?” (French)

“Cuánto” (Spanish)

“Quanto” (Italian)

“いくらですか” (ikura desu ka?) (Japanese)

No matter which language you use this is one expression that is universally important!

How to ask the price of something is an essential phrase whether you are out visiting the market or “agora” in Greek or shopping in the neighbourhood market for melons.

The significance of this question is twofold - to find out if you can afford it and to judge whether it’s worth that price. The order of these considerations changes based on various factors.

And then there’s the whole economics of price vs. supply vs. demand. There are already many books written on this topic so I won’t go into that. However, I do want to discuss the price vs. perception of quality phenomenon.

In Hindi we have a saying, “Mehnga roye ek baar, sasta roye baar baar” meaning the one who buys expensive cries once (for having to pay a high price) but the one who buys cheap cries again and again (when the thing breaks down or lets him down).

Generally, that’s the idea, something that’s more expensive is better in quality. This was based on certain factors that were true in the industrial age. The price of the item depended on the materials used, the workmanship, the machines and other manufacturer-oriented factors.

And then entered advertising into the field. If you could make the consumer want the item, the actual quality of the item could be made secondary. Readers of my blog, and my friends (and strangers) know that I don’t like iPhones and I have commented more than once that they would be alright if they were priced at about £100-£200. It’s advertising and clever marketing that allows Apple to sell them at the exorbitant price that they don’t deserve.

So, what is the real driver for the cost here? It’s Satisfaction. Companies are able to set the prices of their products based on how much a given product will satisfy the customer. You would be more satisfied carrying the likes of Samsung, LG or Sony mobile in your pocket than some unknown brand that originated in a nameless factory in a far east Asian country. The factory maybe situated down the road from the Samsung factory but the product would not give you the same pride, same assurance, same Satisfaction if you will...

Given that it’s not simple enough in these times to compare two products and judge their intrinsic quality from holding them in your hands like you could compare two earthen pitchers, it becomes necessary to take things at face value or Brand Value.

This phenomenon causes the disconnect between cost and price. Companies no longer set the prices  of items based on their cost price and overhead but based on Satisfaction Cost, what the consumer can be made to pay for that item.

[Credit to my brother Anil Goswami, for the term: Satisfaction Cost]

Advertising in different cultures

I have just been commenting on Robi's blog. A post he had about Indian ads. I ended up saying a few things that I had once planned to use for a post of my own. If you like you can check his post and my comments here.

Also pasting it here so my readers can read it without jumping around.

Hi Robi,
First of all thanks for your comment on my blog.

This is what I had come to say when I saw this post. Struck me as quite interesting. I live in the UK so I don't get to see any Indian ads these days. Both the videos you have posted were hilarious; the first one I didn't watch after 59 seconds, it was kinda distasteful.

On the whole, I think, it is part of a copywriter's basic education to "know his audience" which would mean cultuaralizing (making my own word here for your concept) the ad campaign. I have lived in the US and seen their ad's, now I live in the UK and watch their ads, and of course, I have lived in India the most and seen a whole lot of their ads. I'd rank them, on the basis of personal preference, India then UK then US.

They are ALL tailored to their culture. If you ask me, American ads, 95% of them are just yak-yak, only words, either from an on-screen character (a celeb if possible), or voice over on images of the product or something like that. British ads have a strong weirdness factor in them, do something absurd on screen then relate it to the product with words.

Indian ads cover a lot of ground in variety and creativity. You can watch an ad for all of 59 seconds and not know what it is all about and then just see the name of the product in the last second and you are forced to nod and admit that it "makes sense".

I have been always interested in ads, they are quite fascinating in their novel, creative ways. I miss that living in a western country, here there is too much repetition of the same ads. In India, several new ads are released every week, (I am talking about TV spots), and it's fun to watch the new ones. Believe it or not quite a few ads earn their place in water-cooler chats and such.

So, coming back to your point, I think ads are already tailored to their target cultures - Americans want information as much as possible; if you convince an American with features and benefit you can force him/her to pick up the phone and order the item right away. Hence, the yak-yak ads.

British are nice, polite people with their straightforward mindset, genteel and gentle, always trying to act prim and proper. Hence the weirdness, once you got their attention with the absurd visual, feed them the information needed to make them buy.

Indian, it's simple, so many types of people, so many sub-cultures, so many mindsets, hence, so many styles of ads.

Well, that's my 2 bits, take it or leave it. :-)

Nice post, I think I am going to read some more of your posts. You have an interesting way of picking up on things and I like that.

Regards,
Sunil

How popular are you?

This first made me laugh but as I read through the FAQ and other pages, I seriously admire these guys. Fantastic idea. Check it out here:
The Popularity Dialer .

Too bad they are only in the US. I could have used some help to boost my popularity.

Good work, guys!

Advertising point of view

I watch a lot of ads and as everything else I think about them also, so you may see some more posts about ads in here.

When I watch some ads I wonder if the ad agencies think of the general public as a bunch of dumb idiots. And then I wonder if they are right. Case in point, 2 cases actually, 2 car ads.

Kia cee'd: This young man rings the doorbell, a girl comes out, they are awkward about hugging or kissing, can't decide, so I'd guess they have been dating for some time but not yet in the girlfriend-boyfriend stage. They get in the car, she says, "Nice car". He drives to some place, stops the car and proposes to the girl, right there, without a ring, just some stuff about "buy a house, get a dog..", and she says yes. They don't know each other well enough to hug without awkwardness and it's the first time she's sitting in his car (if had just bought it, the conversation would go differently), but he proposes and she accepts. Then they get out of the car and you see that he has parked away from the building, in pouring rain, in the middle of a grassy lawn, where there are no other cars around. With all that space he parked in a place where the car will get wet and they will have a puddle in their shoes just walking through all that grass to the building. Voice over talks about quality commitment and 7 years warranty.

My question: Do only dumb people buy Kia cee'd or it makes them so dumb just by driving it and traveling in it?

Toyota Yaris: They have a series of ads all on the same theme, one person doesn't treat the car with respect and the owner of the car gets even with them. Ad 1 - A girl is flying her boyfriend's remote control plane and then purposefully smashes it to the ground pretending to lose control. Following the gleam of devious victory in her eyes the flashback shows a scene when this guy was helping her carry stuff from the car and since both his hands were full he kicked the car door shut with his foot. The girl saw it and resolved to take revenge. Ad 2 - Two buddies crossing a muddy patch on rope and this one guy cuts the rope when the other is just above the mud, causing him to splash in the mud. Flashback shows that guy 2 had put his foot on guy 1's car's dashboard as guy 1 was driving. Voice over says, "Toyota Yaris, treat it with respect!"

My take: The people who disrespected the car did it in carelessness and negligence (or necessity, how do you close a car door when your hands are full of grocery?), but the owners of the car acted with devious craftiness, premeditation and deliberate revengeful intentions. Again, it maybe that only mean people would buy this car or they get this mean streak after they buy the car.

Every car has a character and it attracts people of that character to buy and/or it influences the character of the owner by association. I know this from my own experience with motorcycles and observing different cars and their owners in India (where the car models are not so numerous as to lose track), you can confirm this simply by asking any man who has owned multiple models of cars over time.

So, my question is - are we as dumb as the advertisers seem to think we are?

A culture of dishonesty

I am watching this TV ad for laser eye surgery, and it says that the surgery costs 395 per eye. "Per eye"! I think most people would want to fix both eyes while they are about it.

But it's not just that. It's in everything we do. Anywhere when you say something that will be read or heard by many people, honesty and factual information becomes secondary to appeal.

Prices are now always 19.95 even though it's 20 quid, they will appear as 19 to a prospective buyer, the visual appeal.

When a product is advertised the good points are embellished to the point where they are just short of falsehood. In case of several toothpastes and toothbrushes I suspect they go beyond falsehoods as long as it can't be challenged in court.

Take a good look at matrimonial ad's, words have different meanings, a "well-adjusted" girl may mean more than 2 months since she was released from the mental asylum.

This tendency is more apparent in case of businesses and corporations than individuals. Recently I had an occasion to buy a used car, and I buy a lot of things from the net, liked used books, and I find that descriptions from individuals usually contain the bad points as well as good. The system of feedbacks to create an honest reputation might have something to do with it.

A placement ad from a big company will talk all about the company's strength, it's ultra-techy image and a whole page full of things that will make it look like it's the only company to work for but there will be no mention of the fact that they laid off a big percentage of their staff in the Y2K crisis, and did it heartlessly, just before a big holiday. Or the fact that 20% of their staff resigns every year because of their policies, work environment or remuneration.

Come to think about it, how many of the "real people" ads have real people in them?

I can go on but I know I don't have to, you can think of countless such examples yourself.

Sounds like "Honesty is the best policy" is no longer the best policy. I am not a preacher of 100% of the truth 100% of the time, no culture could withstand that. On the other hand, as George Vth said, "Once people begin to deviate from the truth, they do not know where to stop!"

What is the result? The result is a common distrust. When a recruiter reads a CV he is prepared to grill the candidate to find out how much of that is true. When a candidate gets a call he always turns to his friends to ask "What kind of company is this?"

Think about the last time you tried a new product or service. Then think about the last time you tried a product or service without the recommendation of a friend or a source independent of the provider of that product or service. You might be surprised.

The ads, the press releases, the speeches, we have learned to take all of them with a grain of salt. We acknowledge them but don't accept them until we can verify ourselves.

The human race has come a long way from the caveman era. And this is the trend. What will happen in the future? Will we all become professional con-men? Will we never believe anyone who says, "Come on in, the water is fine!"?