Some economists don't appreciate branding or product management

So they take a pet theory and stretch it like chewing gum. Here's a great example of such wrong thinking: 'Product sabotage' helps consumers by Tim Harford on the BBC website.

I am against this statement of his

"But the really clever tricks are where companies tweak their product line in an attempt to persuade customers to identify whether they are lavish or stingy - the lavish customers are simply turkeys voting for Christmas."

I think tuning a product or service "package" that's a necessary way of making sure that your most precious customers - the ones that pay - see the extra value you deliver. So those customers who pay less get less and those so called "lavish" customers who pay more get more.

Which is absolutely fair.

This also means if a company wanted to give a customer a discount, the most effective way of doing so would be to offer them a higher product spec for the same price. It would be even better if the extra value offered was intangible.

Even intangible value drivers are real. Here are some examples
A "good" doctor
A "friendly" attendant at a restaurant
"Fair-trade" coffee
The list goes on....

And as a pricing consultant, I can confidently advise you and Tim that if you wanted to pay the cheapest for a cup of coffee, you could brew it at home.

Tags: Tim Harford, pricing, product management Trust me I'm an economist

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