I know I like the sounds of the second one a whole lot more. Let’s not forget that the second sign is probably styled so that the words “80% off” are big and bold, while the “up to” will be much smaller and not as noticeable.
In a previous post, we shared another example of two different wine lists, where the same bottle of wine can be listed with two cheaper bottles (it then looks expensive) or between an expensive and cheaper option (it then looks like the reasonable alternative). This is called the compromise effect – a very closely related term to the framing effect. It’s a technique that is favoured by marketers. And I’m sure you can understand why.
A key learning point is that price is not necessarily indicative of value. Share on X
Another form of framing is glossing. Think about a falling share price that is termed a ‘correction’. Or transforming problems into ‘opportunities’, and ‘weaknesses’ into ‘areas for development’. Here’s another good example – an overpaid acquisition price branded as ‘goodwill’.
Bear with me here… When company A buys Company B, they do due diligence and determine what the fair value of all Company B’s assets is. That’s the value of all their assets, less the value of all their liabilities. Let’s say that’s R100. But Company B will only accept a price of R120. Stay with me… we need to do some elementary accounting to explain this one. And accounting is all about balancing those debits and credits.
So, when Company A buys Company B, they recognise a credit of R120 going off their bank. But every credit needs a debit… On the debit side, they recognise all the assets and liabilities they’ve taken over from Company B. But we know that comes to only R100. Oh dear! Our journal doesn’t balance. The difference, which is a debit of R20, is what Company A then calls ‘goodwill’. It’s supposed to represent the extra you paid for intangible benefits, things like access to client lists, synergies… But, other times, it’s actually just overpaying. But we call it goodwill because it frames it better.
