When Albert Einstein defined relativity, he probably was not thinking of its applications to marketing concepts and how the notion of relativity would characterize brand strategies. His breakthrough, however, had immense implications on various fields from psychology to philosophy.
A fascinating thing about human brain is that it cannot think in absolute terms. If we take a bite of an apple and think it’s sour, it is only because we have other apples that we tasted in the past to compare it with. If you see car that has a price tag of $500,000, you would only think it is outrageously expensive because you know that there are several other cars out there for a fraction of that amount.
Just imagine that there is a brand new product in a brand new category that has never existed before. Let’s say that someone came up with a contraption that you can wear as a backpack, which allows you to fly just like a bird. If I told you that this device is on sale for the price of $1,000 would you say that it is a good price? How about $10,000? I asked this question to several people giving each one a different number ranging from $500 all the way to $20,000. I got the same reaction each time. Everybody thought that the price was fair when it was $500, as well as when it was $20,000. My conclusion is that when people don’t have a benchmark to compare, the price of an object becomes meaningless.
Human brain is simply not wired to think in absolute terms. We don’t have the mental capacity to think about a concept without comparing it to other pre-existing concepts. And this makes total sense. It would be impossible to make even the smallest decisions in our day-to-day lives without the help of these shortcuts. When we go grocery shopping, we decide that something is a good deal because of the pre-existing anchor price that we have of that item in our minds. When a loaf of bread is marked down $1, we think it is cheap because we know that any other day we would have paid more for the exact same bread.
How Is This Utilized By Marketers?
Good marketers are also good researchers of the human psychology. Understanding what drives consumers to make decisions is half the battle in marketing.
Businesses today must understand that consumers don’t look at their product in isolation. It is more likely than not in today’s marketplace that a brand coexists in a product category with several other competitors. In this scenario, consumers will assess your product with respect to your competitors’ products. In such competitive landscape, positioning your brand against the competitors becomes critical to create a differentiation that will set you apart.
Mac vs PC
A textbook example of this would be Apple’s famous “Mac vs PC” ads that ran for 4 years. This is a brilliant illustration of a brand positioning its product with respect to its main competitor in the market. The genius of this campaign is that it has a two-pronged effect. First, it positions the PC as old-fashioned, clunky and boring, simultaneously positioning the Mac as the computer for the hip and cool people.