Photo by Josh Thompson
It was the summer of ’98. It was San Francisco and it was cold. The dot-com craze was in full swing in all its lunacy. Literally.
And it was during this time that I was introduced to the amusing perception that shapes more buying decisions than we’d like to admit. Yes, even yours.
ENTER GAVIN NEWSOM
Gavin Newsom was not yet the “Honorable” Lieutenant Governor of California, nor had he begun his successful bid to become mayor of San Francisco. He was busy building his downright provincial (read: “not a dot-com”) and enormously successful PlumpJack empire that included a winery, restaurants, commercial and residential properties and multiple resorts and spas.
The winery, PlumpJack Winery, produced a variety of high-end wines and its best was the 1997 Reserve Cabernet Sauvignon. It received high marks, was produced in limited quantities, and retailed for $125 per bottle. Why mess with a good thing, right? Wrong.
DON’T SCREW TOP IT UP
It was at this time that wineries began experimenting with the marketability of and consumer reaction to using the screw top closure on their wines. There was one major problem. Screw top wine was synonymous with cheap wine. Jug wine. Night Train.
Considering this, wineries proceeded cautiously by introducing a screw top closure on their lower-end wines to avoid harming the reputation of their flagship varietals, and their names. Not surprisingly, Mr. Newsom and PlumpJack took a different approach.
STOP THE MADNESS
PlumpJack Winery believed in the screw top and took a shrewd – even audacious – step forward. It announced that its premier wine, the 1997 Reserve Cabernet Sauvignon, would be released with half of production available with a screw top and half available with the traditional cork closure. Critics were skeptical. Moreover, it seemed PlumpJack was taunting us with a side-by-side comparison that would, as critics believed, inevitably fail. Yet the madness continued.
PlumpJack announced that not only would it offer both a screw top and a cork version, the two would be priced differently. Suicide! Pricing the screw top for less would torpedo the very misconception they were trying to correct – that screw tops are inferior.
EXPENSIVE = GOOD
Here’s the brilliance. It wasn’t the screw top that Gavin Newsom and team priced for less. Understanding the predictable buying behavior inbred in all of us, they priced the corked version at $125 per bottle. The screw top? $135. A $10 increase for the screw top. Remember, this was the same 1997 Reserve Cabernet Sauvignon – same grapes, same production, same everything – sold side by side. No gimmicks. And how did sales compare? The screw top version of the 1997 Reserve Cabernet Sauvignon began flying off the shelves and was sold out long before the corked version.
It was stunning and amusing. It was so simple. So beautiful. Given two options, people will follow the conditioned belief that higher price equals greater value. Expensive equals good. Was it superior? Who knew. Yet, in a single move, PlumpJack had altered the perception of the screw top by increasing its price thus establishing it as a superior product.
PlumpJack played us – and became the first Napa Valley winery to use the Stelvin brand screw top closure on high-end wines. And the screw top has never been the same.
MORAL OF THE STORY
Be mindful of how pricing can affect your customers’ perception of the quality of your product. Don’t assume that by lowering prices you will increase sales. There are more strategic ways of winning the customer and improving the marketability of your products and business.
Written by Brian Trapp, @btrapp
