Manipulating Demand in business
Business often resort to manipulating demand in the market to push prices or demand up.
1. Creating Social Proof: If all your friends are on Skype, the chances are you likely to be using Skype than any other communication mechanism. Same applies for heaps of other social media platforms like Facebook which builds and feeds off network effects.
Likewise, if your friends have a particular type of car, a particular type of TV, the shop a particular set of stores, the chances are that you're more likely to shop in similar type of stores. So if you want to reach a greater degree of control in the market, you need to understand the connectivity between these individuals who hang out together and behave in a similar way.
2. Helping customer self select: It is quite similar to showing in the most expensive TV and the front of the store or showing the best product as you're entering the shop and then showing you medium or inferior quality products. By now your prospective customers have anchored theselves to the best product and possibly a highest price. There is significant work done in this area by Cialdini and his book Influence1 is highly recommended on the topic.
Once your prospective customers have anchored their mind at a more premium, more expensive product or service or the gold standard or the Platinum standard, after that you are trying to show them what other possibilities that might exist, it's very difficult for them to move away from higher value position to a lower Value position.
In simpler terms, if the higher value position has shown first, and the brain of the prospect is anchored to the value proposition then everything else seems to be discounted. If you take a flight you will be paraded through from first business, our Premium Economy to Economy Class just to show what's out there. It shows you what you are missing out before you put yourself on cattle class or Economy Class seat. It pushes you to score better.
3. Offering Reciprocal Concessions. As a club owner you can reciprocally offer benefits from other clubs, this may include discounted or reciprocal membership. You suddently get reach to a wider market and its customers. The customers and club both win in this case. Part of being a bigger group may also bring economy of scale and scope. The chain hotels and motels certainly have this advantage. The advantage of reciprocal consessions sometimes outweigh the disadvantage or inconveniece of odd locations of say hotels or being slightly away from prime locations. Customers may not be aware of, or unlikely to pick these non-prime locations by default but as they are getting huge range of benefits they are likely to stick to the club that offers reciprocal concessions.
4. Refer a friend to get something free: Your loyal customers get rewards. Two things are bound to happen with loyal customers
A. In the terminology of Seth Godin, they become sneezers and to and tell others to promote your business.
B. You are also hammering a message constantly to your loyal customers relaying their points, entilements, where they are at in the ladder. It tells them that they are getting love, care and respect in exchange of their commitment to be your customer.
1 Robert B. Cialdini, Influence: Pearson New International Edition
Disclaimer: Author is not responsible for any incidental or consequential damages due to the information provided above. You should seek advice from your consultant to ensure any information provided is relevant to you.