The Goldilocks Effect
“Frame and anchor” is a tool of marketing psychology that wine buyers should know about. It was described by Ron Wood, a retail pricing strategist, at the recent wine conference, Savour, in Adelaide on September 17.
The “anchor” is the price announced as the full price of something, such as a Coco Chanel handbag. The public is encouraged to believe this is the right price, so anything cheaper is perceived as a bargain.
The “frame” is the range of prices that might be applied to that product. Wood gave the example of Chanel handbags at $90,000, $50,000 and $5,000. “How do you sell a $5,000 handbag? Put a $50,000 handbag on display and one at $90,000. You won’t sell many of the expensive ones but you will sell a lot of the $5,000 ones, because customers will use $90,000 as the reference point.” The $5,000 bag appears good value in comparison.
Wood says this is not a trick, just part of the ‘theatre’ of retailing. We can see many examples of this in wine. There is also a phenomenon wine marketers refer to as the Goldilocks Effect. Remember Goldilocks and the three bears’ bowls of soup: one was too hot, one too cold, but the third bowl was ‘just right’.
Marketers place a product at a high price, one at a low price, and one in the middle. Customers perceive one as too dear, one as too cheap, but the one in the middle is just right, and they buy it – even though it may also be expensive.
Example: Torbreck’s $290 RunRig (tastings), which may seem like good value to some people compared to the $900 The Laird (tastings), and they don’t want to be seen as cheapskates buying the $20 Woodcutters (tastings). (My favourite Torbreck red is The Struie, which is $49.)