A comb. A book. A can of soda. These are simple products. What you pay for is what you get nothing more, nothing less.
But some products go a bit further, offering consumers choices about which set of options, if any, they want to include with the base product. Dell, for instance, offers bundled software, zip drives, game devices, and speakers with a basic computer; Palm Pilots can be bought alone or with accessories and additional software; even the simple bike comes with a lock, a water bottle and a headlight if you want them.
Some experts say that offering such options gives customers the chance to design a product around their personal preferences what marketers call "mass customization." Ideally, this marketing strategy increases customer satisfaction and loyalty to the brand.
All well and good. But one question remains: How should these options be presented along with the base model?
ADDITIVE VS. SUBTRACTIVE OPTION STRATEGIES
You, the marketer of a product or service, have at least two ways of presenting options. On the one hand, you can tell consumers that the product or service has a base price, and that for an extra charge they can choose from a list of product enhancements. The marketing field calls this an additive option strategy because consumers can add whatever options they want from the base model.
For instance, let's say you are selling a car with a base price of $18,000 and $4,000 in options. With an additive option strategy you tell consumers that they can add certain options to that base model. Consumers have complete freedom to add none of the options and buy the car at $18,000, buy all of the options at a cost of $22,000, or buy some subset of the options at a price somewhere between $18,000 and $22,000.
There is a second way of presenting options. You can offer the product already fully loaded, and allow the customer to lower the product's price by subtracting options. Marketers call this a subtractive option strategy because consumers can delete whatever options they don't want from the fully loaded model.
Another example: You sell the car, fully loaded, for $22,000, and allow customers to choose which options they want to eliminate. With this subtractive option strategy, they could delete none and pay $22,000, delete all and pay $18,000, or delete some and pay somewhere between $18,000 and $22,000.
DO THESE STRATEGIES PRODUCE THE SAME PSYCHOLOGICAL AND ECONOMIC EFFECTS?
Is there any meaningful difference between the two strategies? Isn't an $18,000 base model with an optional $4,000 worth of enhancements exactly the same as a fully loaded $22,000 model that allows you to strip options away at your discretion?
Mathematically yes but psychologically speaking, there are huge differences. While the additive option strategy is more common, recent research suggests that subtractive option strategy is much more effective. This approach inspires consumers to buy more enhancements. It leaves the customer feeling more satisfied. And it is more economically profitable for the seller!
WHAT RESEARCH SHOWS
In several studies, researchers presented consumers with a base model or a fully loaded model of a set of three products: cars, computers and treadmills. Consumers were told to add whatever options they wanted to the base model, or delete whatever options they didn't want from the fully loaded model. Researchers then asked them a series of questions about their perceptions of quality, prestige, satisfaction, and buyer's remorse.
What did they find? In all of these studies, the subtractive option strategy was more effective. Customers confronted with this approach chose more options and paid far more for the total product. They said that they were much happier with their decision and felt more satisfied with the product they ultimately chose. Finally, with the subtractive approach, customers were more likely to believe that the product belonged to a higher quality group of products in that category.
To top all this off, although these customers found making option choices more difficult and time consuming, they found the task more enjoyable and felt that they got more value from their final choice.
WHY DOES THIS HAPPEN?
Apparently, customers faced with subtractive option use the fully loaded model and its price as their frame of reference, or anchor. As they anchor, the customer perceives the product as high in quality and prestige. Any options they eliminate make the product less than ideal, and also less expensive. But above this, subtractive option appears to focus consumers' attention on the benefits of the options (not their costs) and makes them averse to giving up these benefits.
With additive option, consumers use the base model (and its associated price) as their anchor. At this point, they focus on the fact that their product that has a pretty low price. While they can add options -- and hence benefits -- doing so is costly. Here, then, consumers focus more on the cost of the options than on the benefits they provide. They perceive less value with their choices here and feel less satisfied with their final choice. In their minds, choosing any options means that the product is more expensive than the base price.
In sum, additive and subtractive options focus consumer attention on different aspects of the option. Subtractive option focuses their attention on the benefits of having the option. Wanting to maximize benefits, they retain more options and are happier with their final choice. Additive option focuses they attention on their costs. Wanting to minimize costs, they choose fewer options and are less happy with their final choice.
From the standpoint of consumers, the preferred strategy seems to be the less common subtractive option method. Consumers are happier. They perceive the product as higher in quality. They believe that their product has more value. And, much to the marketer's pleasure, customers also pay more for the product they finally get.
