1, 2, Many, Lots

Today I want to talk about donuts and something called the density bias, with thanks to Ted Riolo for starting the discussion.

Human brains are hard-wired to perceive the world and process information a certain way. Because of this, there are countless ways to trick your brain. A good example of that is brain freeze. When the roof of your mouth drops below a certain temperature, your brain assumes that you’re freezing to death, and opens up as many blood vessels as possible. That extra pressure is what makes your head hurt. Part of the reason that people seem more attractive when you're drunk is that alcohol blocks your brain's ability to determine a lack of facial symmetry - one of the key factors in human sex appeal.

There are ways to trick your brain to behave a certain way even without freezing it or drowning it in alcohol. As you may have heard, one of Motorcars' new business ventures is Daylight Donuts & Coffee, and there’s an aspect of the donut business that illustrates an interesting fact about how our brains work.

The retina of our eyes is actually part of our brain. Because of that, our brains - and the brains of all primates - are hard-wired to perceive quantity in a certain way. It works like this:

We can instantly recognize up to 4 of something at a glance, but our brain automatically estimates any number of items greater more than that. It’s not that we can’t count higher than 4 – of course we can – but we tend to make errors of judgement when confronted with quantities beyond that number. There’s even a joke about this that’s actually true for apes, and is one of the things that sets us apart from them: For a chimpanzee, numbers go ‘1, 2, many, lots’. Their brain can only discern quantities up to about 3 of something, so at least we’re one step up from that.

And in a roundabout way, that brings us to donuts. All primates are hard-wired with a bias toward quantity over surface volume. What this means is that you will spend more money to buy 5 or more donut holes than to buy the same net weight of donuts, because your brain is convinces you that the number of food items is more important than their size.

Brain manipulation happens all the time, and we’re completely unaware of it. As you might have guessed, grocery stores - with their tiny profit margins - are among the best at it. For an example, check this out the next time you’re at the grocery store – especially if you shop at a higher-end store:

You may notice that the size of the floor tiles change from one part of the store to another. If they do, I bet that the tiles are much smaller in the parts of the store where the store makes the most profit per item – the deli, the meat counter, and the wine rack. The reason for this is that we subconsciously hear the sound of our cart’s wheels click when they roll over each tile, and making the tiles smaller makes us slow down. The more we slow down, the more likely we are to browse and buy items that make the store more money.

If you’re interested in finding out more about how to price donuts – or anything else - by volume, I’ve included a link that explains the difference between all unit and incremental pricing: https://www.cleverbridge.com/corporate/volume-pricing-strategies-digital-goods/

No comments:

Post a Comment