Relative Decisions

At one point in time, after moving to CA for an extended time, we were finding renters for our home.  In Colorado, those renting a home usually are ones that can’t presently purchase a home – this makes the decision difficult since there is always some mistake or situation they are working through.  We had one family who was anxious to move in, liked the house, but had just moved to get a fresh start.  We didn’t want to act too quickly and we started calling some references.  As we were doing that, another interested party came along and so we went through the steps with them too.  Having the additional party come along though, actually made it easier to decide to rent to the first family.

Why? Because we finally had something to compare to, we could make tradeoffs.  It wasn’t a simple decision as they were both great, but it was simpler than when we were deciding in a vacuum.  It reminded me of a story I heard about when the first bread machines were marketed.  People would look at the bread machine and think, “Hmmm, $150.  Is that a good price for a bread machine?” They weren’t sure, so they would move on.  The company decided to make a bread machine that had lots of extra features and sell it for $225.  Suddenly, the $150 model started flying off the shelves.  Again, the consumers now had something to compare to and that lead them to feel more confident in their decision.

This tendency was well documented in Predictably Irrational and that points to another example of this phenomenon. When we are trying to bring something innovative to the market, we need to make sure that those we are trying to sell to, have something to compare this with – so they can see the value and have more confidence in their decisions.






One response to “Relative Decisions”

  1. […] I’ve stated before, we like to think of things in relative terms. It’s easier for us to compare than to try to […]

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