Monday, 10 January 2011

Uncertainty is a powerful marketing tool


Oh, I hate all this uncertainty!” says Rex in Toy Story 3 as the toys try to figure out what will happen to them when Andy goes to college.

Despite many of us professing to feel the same way (about uncertainty, not Andy going to college) we seem to be inexplicably drawn to uncertain situations. Take the meteoric success of eBay as an example.

eBay’s ability to bring together buyers and sellers is awesome, yet their auction system is infuriating. It’s completely addictive, whether buying or selling, and often encourages impulsive bids in an attempt to “win” an item. During the cold snap in December I watched a perfectly ordinary, inexpensive and pre-owned hat sell for over £30 plus postage. An identical new one could have been bought from the high street or an alternative eBay vendor for less than £10 including postage. It was cold, but even so …

Prize draws are another example. Have you ever found yourself dropping a business card into a bowl to win a bottle of Champagne? You know perfectly well that the company is building a mailing list and will fill your inbox with reminders about the excellence of their products and services, but still you can’t resist the chance to win. Have you ever won the Champagne? I haven’t, I think the same one comes out year after year…

What about the stock market? Do you know any shares? Do you follow their rise and fall, eagerly noting the gains, and trying not to get too despondent about the falls? Unit trusts are a much more sensible way to invest, but many cannot resist the idea of making a killing on the attractions of a share no one else has noticed.

How about premium bonds? The government’s own prize draw. You could win a million or, much more likely, you could “win” below market returns year after year. Yet the chance of winning £1m is too much for the 22 million people who hold premium bonds. And don't get me started on the lottery ...

January is traditionally Sale time, and don’t we all just love the sales? People have been known to queue overnight outside the store to get cut-price “bargains”. Interesting ….

It’s hard to conclude that we hate uncertainty. Or at least that we are not prepared to get caught up with it in order to profit in some way. It’s a lot easier to believe that we like uncertainty, despite protestations to the contrary.

Uncertainty has been used for years by marketers to give a sense of excitement or scarcity to otherwise ordinary promotions. When you stop and consider how much uncertainty adds a touch of excitement or fun to your life, it’s not difficult to see how or why this is such a potent idea.

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