There’s been an ongoing call from consumers in recent years for honesty and transparency in marketing. After all, the last thing anyone wants is to feel like someone is pulling a fast one on them. There’s evidence of this, especially, in pricing policies. Take, for example, the increase in no-haggle car dealerships and airline ticket prices that show the total fare instead of waiting until checkout to tack on the taxes, fees and government surcharges (nevermind the $25 it’ll cost you to bring your luggage).
However, as any marketer or marketing researcher worth his salt knows, what consumers say they want is not always congruent with what subsequent behavior indicates they really want. (The human variable is why marketing research is more art than science.)
The latest company to fall victim to the fickleness of consumer psychology is ticket broker StubHub. According to Hannah Karp’s March 26th article in the Wall Street Journal, titled “The Truth? Customers Don’t Want to Hear It,” back in January, StubHub followed eBay’s lead to move to an all-in pricing scheme that eliminates hidden fees, following “years of consumer research showing that fans hate nothing more than to see their final ticket price jacked up with additional fees and service charges when they reach checkout.”
However, StubHub saw sales suffer after making the switch, with sales falling 15-50 percent as consumers moved to other ticket vendors who advertise lower base prices but hide fees. To combat the exodus and win back consumers, StubHub has absorbed the not-totally-unexpected losses by lowering its own fees and profit margins. Since doing so, the volume of ticket sales has rebounded.
StubHub spokesman Glenn Lehrman said the company had anticipated sales would dip initially after it adopted all-in pricing and Kathy Derham, a business development executive for Los Angeles broker Barry’s Tickets, described StubHub’s struggles post-pricing change as “a short-term issue.” StubHub is launching an advertising campaign to promote its new price transparency but Lehrman concedes it could still take nine months to a year for sales to recover.
StubHub’s experience serves as a cautionary tale for marketers who may find themselves listening to customers who claim to want one thing but do another. Fortunately for StubHub, consumers may still come around to the idea and the ticket broker is likely wise to stay the course. However, this story also suggests that as much as consumers demand frank marketing, they still want to be courted into making what feels like a wise purchase – and sticker-shock is alive and well.
Have you ever been in a position like StubHub’s? Has research ever steered you “wrong”? How do you respond to weak sales when you’re confident that you’ve made the right marketing decision? Can you think of other case studies of consumer psychology complicating marketing plans? What do you think of all-in pricing? Is it the wave of the future or is it too honest to work?