I was treated to a presentation given by Professor Joydeep Srivastava from the University of Maryland at our Frontiers of Research market research conference in May. Joydeep’s discussion focused on pricing research and perceptions of what consumers are willing to pay based on the way the prices are presented to them – whether prices for the components are bundled together or shown apart.
One point he touched on almost as an afterthought is that no one wants to pay for installation. I must agree with him that no one wants to agree to a price only to find out a few moments later that something essential (such as installation) isn’t included. This seems to break the contract, and can lead to feelings of resentment – and, as he pointed out, lost sales. On the other hand, presenting installation costs separately as an option can be enticing to the Do-It-Yourselfers who would want to be able to weigh the pros and cons of tackling that step themselves.
I was reminded of all of this when I ordered a map update to my car’s navigation system. When I received the jewel case in the mail I assumed it contained a CD which I could pop into my car CD player and install the update on my own. Only the jewel case didn’t contain a CD, it contained a memory card, and there were no accompanying instructions – not even a phone number. After popping it in my computer to look for a read-me file, I was still at a loss. So I gave my car dealer a call and they told me to bring it in for installation. When I arrived, the service technician told me I could have saved myself the trip and done it myself by inserting it in the card slot. I told him I didn’t know I had a card slot, and if he told me where to find it, I’d be happy to go do it on my own. A senior technician intervened, and taking pity on me he asked a tech install the maps and then told me there would be no service charge.
By the way, I finally found the card slot after searching for it for about 15 minutes.
There was no mention of installation in the up-front sales process whatsoever. So my first assumption was the correct one, that I should be able to do it myself. But that wasn’t addressed in the sales process nor in the product packaging. Not addressing installation up-front can lead to very different outcomes:
- The manufacturer can keep the cost low and potentially sell more updates by not having to create detailed installation instructions which can vary by model and year. But even if professional installation was not required, leaving the consumer confused after a purchase is never a good idea and no doubt leaves consumers with some ill will.
- In my case, the dealer took the view that my purchase of the vehicle (and the update) gave them the opportunity to help me out in situations like this.... And I could view it either as an extension of their awesome service or that their service was “bundled” into the original price of the vehicle. Either way, the dealer comes out looking good – so much so that perhaps they can charge a premium for this all-inclusive service “bundle” the next time around.