A watch that costs £500 seems very expensive to most people.

But, when you place it in the window next to a watch that cost £20,000, suddenly it sounds like a bargain.

Using price relativity is a common strategy amongst marketing professionals to seemingly reduce the price of their product in the mind of the consumer and make them more likely to part with their money.

Goldilocks marketing is the art of pricing your product “just right” or at least making it look like it is the middle option amongst your competitors.

What is price relativity

According to Richard Shotton, price relativity is “making your brand appear better value by changing the comparison set.”

In other words, it’s changing the way consumers view your product without changing the price tag.

The theory is based on the idea that consumers assess the value of a product or service based on its price, relative to similar offerings in the market.

The perception of value in the minds of the consumer often plays a crucial role in their decision to make a purchase.

How does it work?

Consumers can only determine the value of an object based on its relative value to similar products.

In other words, if you had only seen one watch in the window and it cost £500, you wouldn’t know whether it was expensive or cheap.

You would only have one data point on which to base your valuation.

In this circumstance, most consumers will shy away from a purchase to avoid over spending.

By placing it next to similar watches of differing prices, the consumer can build up a picture of what is considered expensive and what is considered cheap.

As Shotton says: “Perceptions of value can be tweaked by altering the competitors in the comparison set.”

Goldilocks marketing

Imagine three watches. One is valued at £60, one at £500, and the last at £20,000.

Most customers will think that the £60 watch is too cheap and must be poor quality.

While the £20,000 is too expensive and must be a rip-off.

The £500 watch is “just right” with a reasonable price tag and chances are it will function just fine.

Goldilocks marketing often means that advertising agencies try to place their product in the middle of their competitors wherever possible.

As a consumer it is worth watching out for these sneaky techniques, as a marketer it is even more important to harness them!

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