Effective Marketing: The Value of "Opportunity Costs"

Market

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Homebuyers are just like any other consumer, in that when shown the opportunity of the purchase, this persuades the decision making process.

A column in the Harvard Business Review by Shane Frederick explains The Persuasive Power of Opportunity Costs. He writes," Decisions about whether some expenditure is worth it hinge on what the purchase is seen as displacing. Take the extra time to define that, and you can change the way your customers view your value proposition.^"

All consumers calculate the opportunity costs of a purchase, whether big or small, but helping them consider the advantages or disadvantages is an effective and often overlooked marketing tool.

Taking the risk now to purchase a home might take a little belt tightening, but showing the opportunity of future costs saved, such as rent money, or postponing a vacation in order to take advantage of low interest rates and low home prices, might be the turning point in the process. "Price differences can look large or small, depending on what else one imagines purchasing with that money."

Read the full story online at The Harvard Business Review.

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Posted on January 04, 2011 10:03:02 by Blog Author