The 5 Cent Hot Dog: How Value Attribution Affects Consumer Behavior

best marketing booksSway by Ori and Rom Brafman is a brilliant book about the forces than lead to irrational decision making. Understanding these forces can have many marketing applications since marketing often involves persuading customers to act irrationally.

One very interesting topic from Sway that relates directly to consumer behavior is value attribution. Basically this is when an individual is primed with a signal that forms a strong belief of the value of the item that sticks in the mind.

There are several fascinating examples of value attribution in action that are described in Sway. The authors tell a story of a Coney Island hot dog salesmen who attempted to undercut the competition by selling hot dogs for 5 cents instead of 10 cents back in the 1910’s. However, the pricing strategy didn’t work because people assumed there must be something wrong with them if they are only half the cost of the typical hot dog. Therefore people had associated a low value to the hot dogs even though they were made with real beef and tasted just as good at the 10 cent hot dogs.

There are numerous other examples of individuals who irrationally base value on one aspect of a product or person, even though additional information is present that contradicts their assumption. Sway describes an experiment in which a world renown violin player played a difficult piece on a million dollar violin at the subway while wearing jeans and a hat. Over a thousand people passed by and almost no one stopped to listen. NBA players who were picked later in the NBA draft played less minutes than players who were selected early in the draft, despite having statistics that were just as good.

The tendency of consumers to value something based on little information is very common. How can marketers use this to persuade individuals to make a desired buying decision? One method is dressing up an average product with superior packaging. Charging a higher price than competitors, having a celebrity endorse a product or advertising a single attribute that is superior to competitors can also sway consumer to assume a high value.

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