Marketing and Perception

Back in my youth I worked at Kmart. Technically I was in the sporting goods department, which was run by a subsidiary of the company. Virtually all of our items were priced at some dollar value plus 97 cents. I asked our manager why not 99 cents? Her reply: Because customers knew that 99 cents was a gimmick to get them to think the item was about a buck cheaper. They weren’t fooled by that any more. But testing showed that 97 cents still worked.

That was my first business lesson in the laziness of the consumer mind.

I was in Vegas earlier this year. No, I wasn’t making up for a bad investment, there was an international curling tournament going on…the final one before the Olympics. Whenever I am in Vegas I wander around looking at how the casinos work at getting people to travel long distances, part with their money, and leave happy that they did. Want to learn about marketing? Stroll through a casino.

While eating a slice of pizza for breakfast (the wait for the buffet was 40 minutes), I saw a sign above a section of slot machines: “100 Coin Penny Poker.” Hmmm…100 pennies. Let me do the math: 100 times one-cent equals a dollar. Why didn’t they just put a sign up that said “Dollar Slots”? Interestingly they do…in the high-priced slot machine section of the casino. They learned that some people were attracted by the higher-priced machines so they made an effort to let people know exactly where the $1, $5, and even $100 slots machines were located. The payoffs are a little better, the machines a little cleaner and the wait staff came more often.

But “100 Coin Penny Poker” was for the bargain crowd. They have money but there is no way they are going to bet a dollar per pull of a slot machine. That’s okay; the casino wants everyone’s money so they create different areas. In this one, you’ll find the one-cent, nickel, and dime machines. What’s interesting is that most of those machines had two features to them. First, you can play multiple “lines.” The more lines you play the more ways you could win once the (virtual) spinning wheels stopped. The other feature is that you could bet in multiple units.

 I have seen many a person who wouldn’t dare venture into the $1 slot machine area instead do 10 or 20 bets across 27 lines every time they pushed the button. That’s $2.70 and $5.40 if my math is correct (it is). That 100 Penny machine is just another way to get the bargain crowd to do what every casino wants…part with their money as fast as possible.

But why in the world would someone who wouldn’t venture near a $1 or $5 machine gladly bet $2.70 and $5.40 instead? Perception. Marketing, my friends is not about truth, it is about perception. And to the average person 100 pennies seem like less money than one dollar.

This is also why I was eating pizza. The glass of champagne (which probably cost the hotel less than a dollar) offered at the brunch that morning raised the normal $8.95 buffet price to $11.95. What a deal! And worth a 40-minute wait, apparently.  

This article was published under the title "Marketing Promises Great Deal"

in the Wichita Falls Times Record News on March 30, 2014