In yesterday’s post I wrote about the how you can benefit from this ability of the brain to easily adapt to the new normal. So if you get money automatically deducted from your account for a systematic investment, then your brain will quickly adapt to having less money to spend and you will be able to build a decent amount of corpus. While these two categories are considered as “sin” products, even in things like milk or bread or shaving blades you can see this “hedonic” adaptation play out.

Lets look at how this can also help you in your marketing and how some brands actually utilise this. If you look at alcohol and cigarette companies – they have been able to pass on price increases or tax increases to customers without any dent on their profits. This is because our brain gets used to the new price rise very fast and justifies the price to itself with the lack of taste in other brands.So someone who is used to having the Chivas Regal will have it at almost any cost and similarly someone who’s used to having Jack Daniel’s will have it even if they increase the price.

On the other hand in the B2B space, in IT, the cloud has been one of the key drivers for a lot of applications with a lot of software companies now offering their products on a pay per use model (also called SaaS offerings). Now once you get used to working one set of applications that you have subscribed to, then a two dollar increase on a per month basis, initially gets you thinking, but after couple of months you don’t even think about it. But the software company who has more than a million subscribers has suddenly increased its revenue by more than a million dollars a month with this minor increase. Some people who are really tight financially and find the existing price per month already on the edge of their spending capability may decide to close the subscription, but most will continue.

Therefore your agenda should be to figure out a way to get the customer, because once you have the customer and your product or service is good, then you have the ability to influence higher margins either on the same product or alien products.

Till ext time then.

Carpe Diem!!!