Any time opportunity appears, there is going to be cost associated with it. Managing opportunity cost is crucial. One can think of opportunity cost as the measure of what you gain over what you lose. Any decision, no matter how small, is going to involve some opportunity cost. HBR Blog contributor Shane Frederick has a great article about this concept that any aspiring or existing salesman should take the time to read. We will outline a few of his key ideas below.

Understanding opportunity cost can be extremely useful for selling a product or service in a crowded marketplace. Cheaper products tend to draw attention to the fact that they’re inferior to more expensive ones; however, you can redirect their attention to something more positive by emphasizing the positives of saving the difference. Help the customer understand that if they buy your brand, then they can also buy a chocolate bar and a drink to go with that razor.

Similarly, if you have a high-cost or luxury brand product, you can show them that by paying more now, they will gain more in the long run. For example, if your product lasts longer, then customers save money by having to purchase less. Also, if you’re dealing with razors, for instance, you could focus on the cost of getting a cleaner, closer shave from a quality razor versus the cost getting of getting cuts and bumps from a cheaper one.

You can also downplay the cost of making a particular purchase by de-emphasizing the negatives rather than highlighting the positives. Frederick highlights the example of De Beers selling diamond earrings. They used the tagline “re-do the kitchen next year” to establish the idea that investing in diamonds now won’t set you back as much as you think – even if that isn’t necessarily true. It might take you much longer than a year to save up that much money again, but their marketing distracts you from that fact by making it seem like an inconsequential amount.

How effectively you manage your product’s opportunity cost is dependent on how intelligently you are able to frame it. If you can successfully trivialize or draw focus away from negatives while emphasizing positives, then you may be surprised at how effectively you can boost a product’s reputation in the minds of your consumers.

 

Lance | WI Blog