Marketing Needs To Make An Offer

Offers get a bad rap in marketing. To most, they’re a price discount that erodes margins or low-budget, late-night ads that scream “ACT NOW.” Mention offers in a meeting and most advertising strategists will look at you like you've asked them to unjam the fax machine.

Yet offers are core to human psychology. They form the bedrock for how we all make decisions. In 1985, Richard Thaler launched the field of behavioral economics on the idea that if we frame the mental starting point that launches a decision, we can create the perception of higher value and spur customers to act.

Offers aren’t just discounts. They are framing devices to give us perception of benefit in a transaction. Done well, they boost conversions at zero cost.

Marketers need to reassert the offer.  Here are several proven ways to do that.

Set a reference point. This is the most basic form of marketing offer: showing a lower price compared to higher starting reference price, e.g. a leather jacket priced at $300 marked down 50% from $600. It’s brute force and costly, but it works.



Obscure price. This adds unique packaging or features to make a price comparison difficult and increase mental value. When Apple launched the iPhone with a flat screen and camera tacked on, the unique package spelled good deal.

Bundle services. Surround your core product or service with other items for a “bundle” of value perception. For example, Omaha Steaks jacks up response rates by selling meat with side dishes and cutlery.

Hide costs. Ask anyone if Amazon Prime has free shipping, and most will say yes; but it really costs $119 a year. It feels free because Amazon delivers so many no-charge shipments while streaming music and video. The more service gains you offer, the less visible the real cost is.

Use decoys. Make a good/better/best offer so customers pick the product in the middle. That’s why Apple markets several iPhones at the same time. The iPhone 12 Pro costs $999, making the $699 price on the lower iPhone 12 seem like a deal. While some will buy the Pro, its prime purpose is seemingly to generate regular 12 sales.

The right offer not only differentiates a product, it can realign a category. Volvo created a new pricing frontier when it reframed its car leases to “subscriptions.” Similarly, Nationwide Insurance set itself apart when it renamed discounts for good drivers the “Vanishing Deductible,” creating a feel-good offer out of thin air.

Marketing misses the offer when CMOs tunnel in on budgets and project management, creative agencies focus exclusively on strategic brand concepts, and media agencies immerse themselves in data and optimizations.

So, in your next interagency meeting, move beyond brand, creative and media. Start by challenging your team to make an offer.

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