Shot #53: The influence of "FREE"

The famous Hershey’s-Lindt experiment

Hi, this is Luv .

Here’s your weekly marketing shot.

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Let’s begin.

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The famous Hershey’s-Lindt experiment

This experiment was conducted by Dan Ariely, author of the book- Predictably Irrational.

The experiment was simple.

He offered the subjects 2 chocolates:

• Hershey’s Kisses (common and inexpensive chocolate)

• Lindt Truffle (premium swiss chocolate and expensive compared to kisses)

The subjects could buy only 1 chocolate-

Hershey’s Kisses for 1 cent (actual price was 2 cents)

or

Lindt Truffle for 15 cents (actual price was 30 cents)

What do you think, which chocolate was sold more?

Customers acted with a good deal of rationality. They compared the price and quality of the Kiss with the price and quality of the Truffle and then made their choice.

More than 73% of the subjects bought Lindt Truffle. The Truffle was considered a good bargain.

Now part 2 of the experiment.

The prices of both the chocolates were lowered by 1 cent.

So, the new prices were:

• 14 cents for Lindt Truffle

• 0 cents for Hershey’s Kisses (FREE)

What do you think would have happened? Would there be a difference?

A surprising result. This time only 31% of the subjects chose Lindt Truffle and the rest went for the FREE Hershey’s Kisses.

What happened here?

Most transactions have an upside and a downside, but when something is FREE we forget the downside. FREE gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is.

Fear of loss is hard-wired in our brain. Once something is offered for free, the fear of loss eliminates. “Free” wins over rational choices because it carries no risk of loss.

Do you think you are not influenced by FREE?

Here’s a quiz for you by the author of the book.

Assume you are offered a choice between:

-$10 Amazon gift card for FREE
-$20 Amazon gift card for SEVEN DOLLARS

Which one would you take? Be quick.

If your answer is the FREE gift card, you are like most of the people who picked the FREE Hershey’s Kisses.

Check again: a $20 gift card for seven dollars gives a $13 profit.

That’s clearly better than getting a $10 gift card free (profit of $10).

Can you see the irrational behaviour in action?

(You can find more such experiments in this amazing book- Predictably Irrational: The Hidden Forces that Shape Our Decisions)

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Luv 📝 @luv1oh1

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Thanks,

Luv
Co-founder ExperienceSaga.com

(About Me)