By Kate Wolters
I had an economics profession back at University in 19mumblty6. He was a jaded old dude, who used to ask us the most impossible questions about how value works in the world. Questions like whether you should dump nuclear waste in developed or developing countries. Whaaat? Questions with no satisfactory answers and that were like a match to the tinder of our inflamed youthful idealism.
He once asked why a Bles Bridges CD would sell for so much less than a Nirvana CD (that should answer which mumblty decade I avoided in paragraph 1). We all answered pretty much the same: because Bles is kak and Nirvana is rad.
He challenged us again, pointing out that the CDs are made in the same factories, using the same materials and often the same labour. The artists, arguably, put in the same grunt work. And their backup singers and musicians the same.
The difference in price lay solely in the perceived value to the listener.
It was my first lesson in brand economics. That dance all businesses do between what it actually costs to produce their goods or services and what the market — you — is willing to pay.
Marketers work extremely hard at making sure you will pay the maximum for something you perceive to be worth the money.
Think Apple vs Samsung. Woolies vs Pick ‘n Pay. Nike vs Asics.
Think about the number of hours you’ve spent arguing the merits of your brands of choice. This kind of post-rationalising is all about convincing ourselves that our willingness to fork out half our salary on a gadget or a pair of shoes is worth it. Shit, one brand even TELLS you you’re worth it.
Marketers know that most of our purchasing decisions are rooted in one part rational decision making and one part emotional yearning. Even the neuroscience backs it up. Brands that can tap into that emotional wellpoint typically strike gold. If they can make you think you’ll feel happier, more confident, cooler, more streetsmart, more badass, less afraid, they know you’ll come back for more.
Ka’ching. Sith-lord level mind tricks, I tell you. And before you know it, you’ve spent three times what you budgeted for.
So what’s the average human to do? Here are three thoughts…
Do your research
BORING!! I know. But honestly, that’s what Google is for. Google “brand name / reviews” and “brand name / complaints”. Ask your most sensible friend for their opinion (and really listen to their answer). I once changed my opinion on the car I was going to buy because I read the ‘service experience’ reviews on Hello Peter. Enlightening, let me tell you. Even a little bit of research might help you realise that while brand A is amazeballs, brand B is actually just as good (it’s just maybe not going to come with the admiring glances at the water cooler).
Make a want vs need list
So you want to buy that new thing? Why? Now be honest. You might genuinely need it and have all sorts of reasons for needing it, but in your want column make sure you really have a frank conversation with yourself about why you’re angling for brand A. Is it because all the cool kids in your circle have one? Is it because it reminds you of your wild youth? Is it because you think expensive = better? Now I’m not saying that you can’t have your emotional needs met by a purchase if you can afford it. But if money is tight, being savvy to your want buttons can help save a few precious ronts. Also, if there is more in the want column than the need column, then you might want to rethink spending the dosh at all.
Wait a week. Or three. Or 52.
The impulse purchase is the average marketers’ glee point. That’s why supermarkets have the aisle of doom — retailers make more ‘extra’ purchase money off that aisle than anywhere else in the store. You know the old saying “sleep on it”? It’s true. Take your time. Even for little sweet treats, but especially on any item that is going to cost the GNP of a small island country. I once bought an MP3 player before MP3 players were even a thing. It was awesome. It looked like an old Walkman — huge and clunky. And it held 20 CDs worth of music. TWENTY dude! I was sooooo cool for about 3 months. Then the first iPod came out. DOH! Tech is notoriously bad for becoming obsolete quickly, so that’s where your want vs need exercise is going to help you make a purchase you can live with. The more time you can live without the thing you covet, the more time you have to think about whether you really need it.
Of course, all of this is irrelevant if you’re rolling in it. Buy what you want. But if you’re wondering where all your money goes, maybe it’s time to rethink what you value.
Originally published at blog.22seven.com on March 10, 2016.