Effective Use of Hurdles in a Price Discrimination Strategy

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New content has been added to the Beyond Cost Plus website. It takes a detailed look at the concept of hurdles and how they can be an effective component of a comprehensive price discrimination strategy.

It starts with a basic definition of hurdles (in the context of price discrimination) followed by a few familiar examples. It then takes an in-depth look at the way a product attribute like color can effectively be used as a hurdle. It uses the following promotion for illustration:

color-as-a-pricing-hurdle 12.26.40 PM

The key is that the discount is limited to one specific color, which is convincingly (and deliberately) portrayed as undesirable. The color itself is the hurdle – you have to take the color they suggest nobody wants to get the discount.

Limiting discounts to the least desirable color ensures that only customers who really are focussed on price above all else get the discount. It prevents the seller from needlessly discounting to customers that are willing to pay full price for the color of their choice.

The ad also employs some of the concepts explored by Dr. Robert Cialdini in his published works on persuasion and influence very effectively. It uses the principle social proof to persuade the customer that the color brown is not desirable but also a very good deal at the discounted price. The scarcity concept is used to trigger the fear of losing out on the special pricing.

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