How to profit from consumer trade-offs

Time of India

21-04-2025

'There are no solutions; there are only trade-offs'-Thomas Sowell.
Our life runs on trade-offs.
Brands
are chosen on trade-offs. Even some of the negative characters portrayed in religious epics trade off on their positive traits before they decide to act. So, what's new about trade-offs? Recent research has opened many interesting insights into this domain; besides, these research pieces enable a marketer to think in an era where they are hard pressed both for time and strategies due to competitive pressures. Human beings seem to be created to make use of trade-offs. Perceived pleasure and loss of something that is traded off in almost every decision we make, and neuro research has established the importance of emotional feeling and rational thinking being useful in decision making, contrary to the widely held beliefs on completely rational decisions in decision making with respect to high involvement purchases.
In 1847, the Governor of Gomm (Mauritius) issued a limited-edition stamps (500 red ones and 500 blue ones) to commemorate the fifth anniversary of his Government. The engraver made a mistake with respect to the stamps. Instead of 'Post Paid', the stamps had Post Office' on them. Subsequently after a century, two of these stamps costing 2 p each were sold to a collector, in an auction for US $3.5 million !Citizen the watch brand in Feb 2025, introduced a limited-edition Citizen 8/831 Mechanical model (restricted to 1800 pieces worldwide) at a price of US$1800.
The examples reflect that trade offs associated with
consumer behavior
is not just limited to functional aspects of an offering ; they may also include social signaling value.
Triggers on insights
A paper published in
Journal of Consumer Research
(Dec 2024) , differentiates between two categories of consumers, one category consistently preferring quantity over quality in their purchases and the other category the other way over. We all decide on this simple criterion in various buying contexts. The paper found that consumers who have the quantity criteria exhibited behaviors like spending more, borrowing more and accruing more debt ( interestingly, such a direction of thinking could also be applied to the data on credit cards and huge data sets are available given the usage of cards in a retail context). Another research paper that was published in
Journal of European Marketing
(Dec 2024) suggests that whenever consumers perceive anthropomorphism with respect to objects /products having human like qualities , they are likely to compromise on monetary value . For instance , if a two-wheeler is given a smiling look by design ,consumers may compromise on the monetary value. Incidentally, providing human names is quite common these days. Cyclones are given human names. Celebrities who are important influencers provide human associations to brands.
Basics of category development and the impact of culture
In an interview with Economic Times, Sanjiv Mehta, the former Chairperson of Hindustan Unilever had underlined the importance of basics with respect to category development in India -the four approaches are raising the consumption, penetration, increasing the frequency of consumption and premiumization.
A product line is a string of similar offerings that have distinctive segments of consumers who choose their trade-off. A shampoo category has the basic one to convert a non-user of shampoo into shampoo usage and ladders up with several levels of benefits at varying prices. Higher the price, more exclusive in the benefit. Demographic and psychographic data
trends
can identify inflection points in consumption that lead the marketer to acquiring consumers at higher price points. But the approach is not linear; the changes in consumer behavior reflecting trade-offs happen in a cultural setting. For instance, after the introduction of instant coffee during the seventies, filter coffee (the one prepared in a traditional manner) has declined and over the last five decades the penetration and consumption of instant coffee variants have diffused considerably. Recognizing the need for a quick process of preparing coffee (the convenience offered by instant coffee) and the trade-off made by consumers of instant coffee with respect to taste , Tata Coffee introduced a premium offering Quick Filter, that provides the taste of the traditional filter coffee and can be prepared instantly. But cultural practices may not always support products that bridge trade-offs.
At one point in time, P&G's research showed Italian housewives used to spend 21 hours a week, on household chores besides cooking as compared to 4 hours for Americans. Italian women used to wash kitchen and bathroom floors 4 times a week compared to Americans who were doing it once in a week. Time taken for cleaning and the cleaning efficiency of a product are generally the two criteria for choosing a cleaner. Unilever's all-purpose spray Cif and P&G's best-selling mop Swiffer were failures, because consumers were not interested in trading off the performance of cleaners and use cleaners that will save time. In fact, Italian women who were using dish washers used to rinse the dishes before they were loaded into dishwashers because the users did not completely did not attribute reliability to the machine. Research also revealed that 72 percent of housewives at that point of time owned more than eight cleaning products to ensure that the cleaning job was completed to perfection. Cultural trends and lifestyles too drive trade-offs that consumers apply in situational contexts. During the sixties and seventies, consumers had relatively a conservative lifestyle and discretionary income too was limited to a few households. Despite limited options for entertainment,
Indian Coffee House
branches in cities (some of them also had a juke box that would play film songs from records for a charge, when a coin is inserted) attracted limited consumers. But after the new millennium, Café Coffee Day other cafes became a hit. The trade-off was on the socialising experience in a café Vs monetary value.
Importance and Complexities of price-benefit relationships
In a category like cars or mobiles, trade-offs can be complex. How do consumers go about making decisions using trade-offs ? Do consumers use trade-off amongst several attributes of the offering? Does more than one attribute appear important with respect to decision making? Are there primary and secondary attributes in the perception of consumers? How do consumers vary across segments? These interesting ways to approach trade-offs have several implications on brand strategies. Advanced marketing research and analytical techniques are used to resolve such challenges.
Psychology on trade-offs will ensure that brands will use appropriate trade-offs with respect to their strategies.
(The author was Professor of Marketing at IIM Bangalore from 1995 to 2022.
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