Tuesday, 13 April 2010

Gift voucher arbitrage

I received the following emails today:


What should I do? Are these two offers exactly equivalent?

The John Lewis voucher somehow sounds better, because they sell better stuff. I could get (a fortieth of) a Macbook!

Then again, I buy stuff in M&S more often, so the voucher is more likely to be used - and I could get a very nice dinner there for £25. If they'd offered to buy me dinner in return for my time, I'd probably be even better disposed towards them.

And yet, if a client offered me £25 cash for 30 minutes work, I'd turn it down. Is it possible that I feel more positive towards B2B Marketing and Vocus than I do to my clients? Hardly.

The only possible rational explanation is that I am less worried about establishing a reputation for cheap work in the eyes of a market research company than in the eyes of my customers. If this were happening, it would be a strange form of intuitive price discrimination. But this isn't really what is going on.

It's simply that products and tangible rewards are more salient than cash - and in this case instead of thinking about the numerical difference £25 will make in my bank account, I think about what I could buy with the voucher. They're taking advantage of my lack of ability to make two different things (a nice meal versus 30 minutes of time) commensurable and compare them objectively.

This is one of the reasons money is such a great invention, because it does allow us to convert different things into a common measure and compare them.It is a tool that helps us to maximise utility. The continuing task for marketers is to distract us from making that comparison and keep us just irrational enough for them to profit from it.

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