The Big Market

A few years ago, one of my consulting clients, a large, independent appliance store gave me an education in the marketing of refrigerators.


Walking me past a lineup of mostly white machines, the president said, “Look at the pricing, and tell me the one that most customers will want.”


I can’t recall if I guessed right, but soon enough he gave me the answer.
“The middle one,” he said. “They don’t want the cheapest, and they don’t feel they can afford the most expensive, so they take the one that’s priced, in between.”


That makes sense, I thought. But the fun was just beginning.
“Now,” he continued, “Guess which machine is the most profitable to us; the one with the fattest margin.”
”The most expensive?” I guessed.
“Wrong; it’s the middle one!”


He went on to tell me that his margin was the thinnest on the “best” machine, and he really hoped buyers wouldn’t select it.


Interesting, isn’t it? The average grade is the winner.
He noted that the costliest is the best value, having a longer warranty, disproportionately more features, better energy efficiency, and so on. In fact, it is the cheapest to own, in the long run.


My boss in the leasing business shared this notion:
“Gary, do you know the only way to beat the car business? Buy the very best car you can get, and then keep it running, forever!”


But that’s not what we do, generally. We buy a middle grade vehicle, become dissatisfied quickly, trade it frequently, and our overall cost of driving might exceed that of someone who owns the Bentley or Rolls for a few decades.


The lesson, for all of us is pretty clear: whether you sell goods or services, offer a middle grade, then step back, and let people convince themselves that it is the reasonable choice for them!


Dr. Gary S. Goodman, President of Customersatisfaction.com, is a popular keynote speaker, management consultant, and seminar leader and the best-selling author of 12 books, including Reach Out & Sell Someone® and Monitoring, Measuring & Managing Customer Service. He is a frequent guest on radio and television, worldwide. A Ph.D. from USC's Annenberg School, Gary offers programs through UCLA Extension and numerous universities, trade associations, and other organizations in the United States and abroad.