Toro's Sno Risk
2. What other products might benefit from a promotion similar to Toro's? Pick one product and describe a promotion inspired by "S'no Risk" that you think would improve the product's business. What, if any, roles do mental accounting, reason-based choice, and time-preferences play in this promotion? Why will it work and what do you have to do to ensure that it will work? Remember: Clever and cute is good, but we also want your product to be feasible.
S’No Risk Analysis: The key driver for success was how the program changes loss perception – it makes buying expensive snow blowers a gain irrespective of whether it snows or not and “regret” shifts entirely to “not buying”. Before the program, a customer who buys may end up with low usage the following season – and suffer double the loss i) buying (expense) and ii) minimal or no use. If the potential customer didn’t buy and it snows heavily, the customer has a sense of loss as well, so there is a trade-off. With the program, a potential customer would experience loss if he didn’t buy the blower and it snows (inconvenience) or even if it doesn’t snow (could have purchased and got a refund!). Key factors are – uncertainty and tradeoff introduced by an event you can’t control (snow), buying patterns based on recent experience of pain (snow last year), mental accounting (the cost and benefit of buying is a one season decision – future benefits are not counted), and overestimating the chances of winning (from last year’s low snowfall). Application area(s): The concept can be extended to several areas where potential for a consumer “regret” impacts a buying decision – goods that are new and untried or seasonal products such as “sump-pumps”. The concept is extensible to services and business consumers. In the past, as an Information Technology Manager, I have had to make decisions on whether to purchase premium support services (paid in advance for a year, renewed annually) from software product companies. Software
S’No Risk Analysis: The key driver for success was how the program changes loss perception – it makes buying expensive snow blowers a gain irrespective of whether it snows or not and “regret” shifts entirely to “not buying”. Before the program, a customer who buys may end up with low usage the following season – and suffer double the loss i) buying (expense) and ii) minimal or no use. If the potential customer didn’t buy and it snows heavily, the customer has a sense of loss as well, so there is a trade-off. With the program, a potential customer would experience loss if he didn’t buy the blower and it snows (inconvenience) or even if it doesn’t snow (could have purchased and got a refund!). Key factors are – uncertainty and tradeoff introduced by an event you can’t control (snow), buying patterns based on recent experience of pain (snow last year), mental accounting (the cost and benefit of buying is a one season decision – future benefits are not counted), and overestimating the chances of winning (from last year’s low snowfall). Application area(s): The concept can be extended to several areas where potential for a consumer “regret” impacts a buying decision – goods that are new and untried or seasonal products such as “sump-pumps”. The concept is extensible to services and business consumers. In the past, as an Information Technology Manager, I have had to make decisions on whether to purchase premium support services (paid in advance for a year, renewed annually) from software product companies. Software