Tuesday, September 8, 2009

Some thoughts about Champagne marketing and my irrational bidding for a trinket

If you read Gevlon, you would think that undercutting is the normal way to make business and be successful on the market. It does make sense, doesn't it? It's the classic balance between demand and supply and the invisible hand that makes it work out to the best for everyone.

However this isn't the whole truth. There are actually brands that make a point out of exactly the opposite: they don't outbid each other by making things cheaper. They outbid each other on making them more expensive.

The Champagne example
I admit that the thought seems a bit strange at a first look, but the professor who presented it to me in a marketing course at the university was pretty convincing.

He gave us an example of a champagne brand, which had made "expensive" into their "unique selling point", the thing that would distinguish them from their competitors and make their offer attractive. Their strategy was to make sure that their brand always had the highest price on the market. Whenever someone else appeared, making a more expensive champagne, they raised the price of their own, to make sure they were on top. This worked remarkably well.

The price they set had absolutely nothing to do with the costs they had in producing the champagne or the quality of it. It was only, I tell you, ONLY about positioning. Their target group was people who were obsessed with the social ladder and wanted to connect to the people on top. They wanted to live and experience the dream by drinking the same champagne. The manufacturer actually didn't have to invest much in media costs, according to my teacher. Too much of advertising could have the opposite effect to what they wanted: an air of exclusivity.

Vanity shopping
It's easy to laugh at such a story, at the stupidity and the complete lack of rational thinking that some people display. How can they be so easily fooled?

But at the same time, if I look long and honest at myself, I can display tendencies to the impulses.

Before I make any confessions I want to make clear that I've never ever considered buying a chopper or any other kind of extremely expensive vanity item in WoW. I do buy some useless stuff just for the laugh of it, but it's limited to rather harmless costs, like a 40 g vanity pet at a vendor. It hasn't got mammoth proportions but on the other hand, it hasn't got the "most exclusive champagne" impact either. It's just for my own amusement.

However I'm not completely free from the influence of those "Ape subroutines", as Gevlon would label them.

I came to think about it the other night, after I just had won the dkp bidding for a new little toy, Reign of the Unliving, which dropped from Anub'arak in Trial of the Crusader as we killed him for the first time.

Considering how much dkp I paid for it, The Lost Jewel would have been a more appropriate name. I end up paying 151, which is on the top 10 list in the guild history and left me with a hole in my pocket. It will take me three or four weeks of raiding, maybe more if I can't attend every raid, before I can earn it back.

Was it worth it? Definitely: yes. But this statement isn't only based on reason. If I'm completely honest with myself it's also based on completely irrational psychological mechanisms, connected to the ones that the champagne company so shamelessly benefit from. I can almost hear Gevlon grumbling from his corner: "Shame on you Larisa, shame on you".

Reasons for bidding
Now, this item is far from useless. As a matter of fact it's quite the opposite. I had done some research and I knew it was a good thing for my class, possibly a best-in-slot-one, although Rawr told me something else, but I had my doubts about it. It seemed as if the theorycrafters weren't completely done with their thinking and calculations.

If my bidding on this item had been driven entirely by logic, I would have calculated on beforehand exactly how much dps increase it would give me, I would have given a certain dkp value for every extra dps unit, and would have adjusted my bidding according to this. Nothing more, nothing less. With the tier token prices falling, I could probably have gotten two pieces of those for the same price as I got this trinket within a couple of weeks. Maybe that would have kept me from going so high in my bidding.

But my decision to bid all the dkp I had wasn't just about rationality, it was as much about emotions and desires. I was under influence of the rush of a guild first kill and the fact that it was a RNG item (as opposed to the tier tokens which guaranteed will drop over and over). No one could say how long it would be before I saw it again. And as if that wasn't enough, the description of the effects of the item was intriguing: "You gain a Mote of Flame each time you cause a damaging spell critical strike. When you reach 3 Motes, they will release, firing a Pillar of Flame for 1741 to 2023 damage."

A Pillar of Flame! It would be coming out of the sky with regular intervals and it was "on equip", so I didn't have to do a thing to make it happen, just staying on my normal rotations. Isn't that anything a fire mage could wish for, in combination with the +150 spell damage that also came with it? I bid what I had, and so did the other casters, but it ended up in my pocket.

You bet I was happy! And this is where the Ape Subroutine Confession comes in: I actually think that the fact that I had spent such an insane amount of dkp on it made me appreciate this item even more. "Everyone else wanted it, people bid like insane, therefore I was lucky to get it!" It wouldn't have been the same thing if everyone else already had it and the price had been 15 dkp instead of 151, even though this clearly would have been a much better deal for me.

Our desire to be a winner
I can't but laugh at myself. I'm like a living example from the course literature of consumer behavior. Our need to feel that we've made a good deal is so strong that we'll do everything in our power to come out as "winners". No matter what the reality tells us, we'll tell ourselves that we took the right decision.

My final action to prove this to myself was to put on my new trinket and head straight to the dummies in IF. I was pleased when I looked at the following Recount report - its share of the total damage seemed to be considerable. The graphics was on the other hand a disappointing surprise. Or I should rather say: the lack of graphics. I stared and stared at the dummies but if failed to see any Pillar of Flame, except for in my imagination.

But I didn't dwell on this for long. After all I had become the owner of the probably most expensive trinket ever auctioned in our guild. I paid more for it than I did for the Skull of Gul'Dan I got from Illidan last autumn.

Rational or not, I sipped on my trinket and I enjoyed it, just as I would a glass of exclusive champagne. Being irrational sometimes isn't only a bad thing. It's a part of being human.


gnomeaggedon said...

Nothing wrong with sipping champagne from a crystal slipper every now and then...

It sounds like an awesome trinket... I would have gone crazy for it as well... of course ;-)

Shame about the animation... but for the price you paid, I dare say you can imagine the animation every now and then...

Or raise a ticket just so you can get the confirmation we all love to see...

"Working as intended"

Klepsacovic said...

It's supply and demand, of the more complex sort. Advertising tries to boost demand. But it also tries just as hard to reduce net supply. How so? By convincing you that there rest of the market doesn't exist, that it sells a different product which isn't the one you want.

As long as they've understood the concept, companies have tried to produce monopolies. In the early part of the 20th century they would consolidate; then they moved on to patents to make it legally impossible for others to compete on the same product (they'd have to make a different and potentially inferior product); now they try to make you think the product is different. Starbucks is a good example, they sell decent coffee, but what makes them special is how they sell it, you can't buy that somewhere else. They have made their own monopoly, and best of all, it doesn't look like one, so they're safe from anti-trust laws, not that those do much anymore anyway.

And please don't tell me you're surprised that Gevlon has only half an understanding of something. I suppose that's an unusually high amount.

It's outright stupid to try to pretend that everything has an objective value and nothing else matters. Subjective values matter. Most value we place on items (beside food or gasoline) is subjective and not due to any intrinsic properties, so unless our dear goblin friend is advocating a 90% drop in all non-commodity prices and an even greater economic collapse than we have ever seen, he should be careful.

B_Dragon said...

I don't think it's an irrational desire - heck, even I have irrational cravings now and then. Think of it as an 'emotional' thing - something you do because of your inherent desire to be emotionally attached to something.

Which is why Aenur worked hard for the Charger quest, and which is why Aerhandor hasn't had his Swift Flight From even though they can do it the easy way (buy from trainer). You can put EPIC all over a bottle of champagne, but you can never attach to it that feeling you get when you're out on the balcony under a moonlight sipping it from a crystal glass =)

Zekta Chan said...

About the Champagne thing...

This would spring into a long post, but I rather just comment it short here...

The Champagne is bulked with a lot of thing, especially if it's the "best champagne you can buy".
By offering it to others, said in a business meeting, it can show how sincerity on finishing the deal.

1. The Champagne itself (Include delivery etc)
2. The Cost of fight off all the attempts to challenge the crown of "The best Champagne". (Winner-take-all game again)
3. The Cost of persuade you that offer Champagne is linked with the sincerity (Which is not as trivial as it looks like), take an example on Cigar, and golf club which can also compete with the linkage.

Because directly giving money is not a acceptable convention (take corruption for instance). Buying the champion is an acceptable substitution.

Gevlon said...

Actually, you did the right thing with the trinket.

- The trinket is itself great
- The "DKP" has very little real value. If the guild disbands today DKP worth 0, trinket stays
- You did not WORK for the DKP. You got it while PLAYing.
- If you check out items, you'll see that there are many good items to every slot, except trinkets. So you'll get lot of upgrades for very low DKP in weeks

So you made a good deal.

I constantly burn my DKP, always bidding on everything that gives an upgrade. Hoarding DKP is pointless.

The Champagne on the other hand is itself useless, and the expensive one is not even "better" than the cheap ones. Pure ape-subroutine abuse.

Larísa, no matter how good you handle things, you always find a way to belittle yourself. I can't wait to see the "Anub'rekan down, because I suck" post.

Rohan said...

I'm with Gevlon. DKP exists to be spent. The best players I know bid aggressively and often.

Anonymous said...

I spent 700 DKP on the widows embrace in Naxx 40, was a server first and put me over +1000 to healing!!! So i can understand how you feel about yuo shiny new trinket !!


Carra said...

I had a "no bidding any dkp" policy for a while. Only taking items noone else wanted. That actually worked very well. Especially the tokens. It's no use to bid more then minimum DKP on them, they'll just drop next run. And the one after and... Within a few months they were alt spec food.

It all comes down to the rarity of an item and a lot of patience. Items that will drop once every two weeks are not worth bidding any DKP on. Items that drop once in a blue moon and are best in slot, go for it. I ended up saving pretty much all my DKP and just bought the super kelthuzad axe with them. Didn't see it drop again before the next dungeon rolled in. But I eventually got all the armor drops since everyone got their pieces quite fast.

I still remember two cool trinkets from the days of AQ40. One with which you could throw a meteor and another which let you summon a tentacle. We only saw one of each drop and the same player got both of them. In retrospect, I would have loved to spend all my DKP on those vanity items. All the other gear has long since been replaced. But being able to call a tentacle? How many people can do that?

Cozmo D said...

I have to agree with Gelvon on this one. A really good trinket is always a smart investment. The chance for upgrade in this particular area is small compared to others. While it does sound like you may have been suffering from a bit of buyers remorse, you made a sound decision. Now had you blown your DKP on a mount or another "useless" item, I am willing bet there would have been no post today!

Larísa said...

@Gnomeaggedon: well, you never know… maybe we’ll see a patchnote for 3.22: ”The Reign of Unliving now renders a viewable pillar as intended?” You can always hope!

@Klepsacovic: Haha, yeah, it’s funny how well Starbucks has succeeded. They don’t even exist in Sweden, yet my daughter is crazy about them. When we was in Paris she was ready to walk a kilometre just to get to a Starbucks. Original French cafés were uninteresting to her.

As long as we’re aware of the subjectivity in values we’ll be fine. We can choose to take part in the game when we have economy for it, but it’s also important that we’re smart enough to be able to make alternative, equally good choices when we’re short on money. That’s something I’d like to pass over to my children. There are times in your life when you’ll be wise to look through the tricks that the branding companies play to us.

@B Dragon: Absolutely: it’s very much about the circumstances, how it’s dropped. I got the skull trinket from Illidan in TBC. I don’t think it would feel quite as epic if I went back and it dropped for me now.

@Zekta Chan: Champagne is indeed an interesting phenomena as such. There’s SO many associations built even into the name “champagne”, any kind of cheap champagne, compared to “sparkling wine”, even though the “sparkling wine” very well may be a better product. The symbolism in it makes up for lack of taste and will give you the festive atmosphere you’re wishing for. Just because of the connotations of the word “champagne.” Odd, odd. And far from rational.

@Gevlon: woot! A goblin approval of my dkp deal! Thanks!
Hm… I didn’t suck too badly at Anub, but wow, I sucked at Hodir hardmodes… But I won’t write another self hating post about that, not right now. I’ll try to deal with it instead…

@Rohan: and a blessing from Rohan as well! Thanks!

@Cacknoob: well, this trinket probably isn’t quite on par with that one when it comes to exclusivity to be honest. But it’s good enough to make me shine a bit.

@Carra: Wow, that’s some trinkets! Call a tentacle! I love that kind of stuff. I still keep the offhand that summons a skeleton from Onyxia and the gnome-summoning trinket from ZA, just because they’re so charming. Sometimes I wish you could upgrade them somehow and make them competitive…

@Cozmo D: no, I don’t feel remorseful about it at all. As I wrote I’m happy about it and I stick to my decision. I just wanted to ponder a bit upon the fact that we’re not only driven by logics, neither when we buy champagne, nor when we bid on trinkets.

Klepsacovic said...

@Larisa@me: It sounds like there's a market for your own Swedish version of Starbucks. Go for it!

I definitely agree though that we should spend money carefully. Subjective values should vary with circumstance, so when I was eight a dollar for a candy bar was a lot, but I spent it despite having little money. Now I have more money, but I need it for more important things, so that candy is no longer worth the dollar. I tend to avoid branding tricks, though I must admit that it is partially an almost equally irrational reaction against said tricks rather than truly being an immunity.

KevMar said...

I did pass on all the special mounts but I did drop a ton of gold on gear made with the new ToC patterns. I made both the robe and the bracers about 3 weeks ago.

The gold I have is not a big deal to me. It was a status symbol to me. It was a server first to have both items. And it would shock people when they did the math on the cost of 12 orbs as 4.5K each.

Did I over pay? Yes I did. Did I get my gold worth out it if? Yes, I did that too.

Stabs said...

As a status item it's amazing. It puts a big pillar of fire that says "I am a srs raider, better than u" every time it procs.

It's worth pugging just to get the awed admiration from strangers who have no chance to get this.

Let me remind you of one of Gevlon's posts:

Basically you paid 151 dkp for a BiS trinket which is also a chauffeur-driven Ferrarri.

Good deal!