The Learning Curve

New tricks for an old dog.

Small, medium, or large

This story is so old, I’m chagrined to admit that I clearly remember the time when McDonald’s offered drinks in two sizes only – small and large.

It seems that when McDonald’s introduced three sizes of drinks – small, medium, and large; the new small remained the same as the old small, the newly introduced medium size was actually the same number of ounces as the old large, and the new large was bigger than the old large. Essentially, they simply changed the name of the old large to “medium”, and introduced an entirely new large size drink.

Obviously, it was an easy migration for those who were in the habit of buying the old large to continue to ask for “large,” and to receive the new and bigger large. Presumably, a certain percentage of those who had previously asked for “large” switched to medium, which was simply the new name for what they had purchased before.

The really interesting effect of the change was that a certain percentage of those who had previously ordered “small” then switched to “medium.” Overall, the result was that McDonald’s sold more soft drink by volume, to the same number of customers, with higher net profits.

This is interesting from a psychological point of view, but I don’t know who has put it to a scientific test. I suppose there is a certain group of the McDonald’s demographic who were not so much interested in “small” as they were in “not-large.”

From a marketing point of view it seems significant in that, within limits, a range of consumer options increases overall sales, and we see this in practice all the time. It also point out that perceptual differences are often more significant than are factual differences.

Clearly, there are those who take the “image is everything” jive way too far, but from a nuts-and-bolts marketing perspective, it is important.

I’m a graphic designer and I sell t-shirts on CafePress.com, so it doesn’t make any sense for me to offer all t-shirts at the same price. Perhaps it would make more marketing sense to offer t-shirts at, say, three different prices.

Now I wonder if there needs to be any obvious design quality difference (the physical quality of the t-shirts is up to CafePress and it’s out of my control) to justify the different price, or if any difference in price needs to be explained.

I suspect that I could offer two identical t-shirts, each with exactly the same design but with different prices, side-by-side, and that many people would invent some justification for preferring the more expensive version.

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Written by Tom Fox

09/11/2007 at 11:16 am

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