Comparison-Set Anchoring
Change what your product is compared against and you change what people will pay
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 85%
When people judge whether something is worth the money, they do not compute benefits on a universal scale. Kahneman argued they substitute a hard question (what is this worth) with an easy one (what did I pay for something similar). So value is anchored to whatever comparison set the buyer reaches for. The lever for a marketer is to change that comparison set through packaging shape, naming, imagery and shelf placement. Red Bull escaped the cheap-soft-drink anchor by shrinking to a tall thin 250ml can; Seedlip sat in the spirits aisle rather than beside cordials; Grenade priced against protein snacks rather than chocolate. In every case the product broke an unhelpful benchmark and reset willingness to pay far higher than a within-category premium would have allowed.
Origin
Richard Shotton attributes the mechanism to Daniel Kahneman's account of attribute substitution, popularised for marketers via his and Rory Sutherland's behavioural-science work and detailed in Shotton's book on brand tactics.
Core principles
- 01Value is perceived relatively, not absolutely
- 02People replace the hard question of worth with an easy one: what did I pay for something similar
- 03The reference category is a design choice, not a given
- 04People adjust from a benchmark but never adjust as far as they should
How to run it
- 1
Map the default anchor
Work out which category and price point buyers currently compare your product to by instinct.
Pro tip Ask what shelf or context a shopper first encounters it in; that is usually the anchor.
- 2
Choose a higher-priced adjacent category
Pick a neighbouring category whose typical price sits well above your current anchor.
Pro tip Rolls-Royce shows at yacht and air shows, where a car is cheap next to a private jet.
Watch out The new category must be plausible; a wildly unrelated anchor reads as a con.
- 3
Redesign the signals
Change can shape, bottle, naming and imagery so the product reads as a member of the new category.
Pro tip Red Bull's tall thin can alone broke the squat-cola comparison.
- 4
Relocate the physical context
Place the product in the aisle, event or setting that reinforces the new comparison.
Pro tip Seedlip in the non-alcoholic spirits aisle, not next to Ribena.
- 5
Hold the premium and let people anchor
Set the higher price confidently; buyers adjust down from the expensive benchmark but never far enough.
Watch out Do not discount early or you re-anchor to the cheap category you escaped.
In the wild
UK soft drinks sold in squat 330ml cans at roughly half the price Red Bull wanted. Launched in that same can, Red Bull could have won a 5-10% premium for extra caffeine but never double the price. By moving to a tall, thin 250ml can it broke the cheap-soft-drink comparison entirely and set a new, much higher benchmark.
→ Sustained a price roughly double mainstream soft drinks by escaping the category anchor.
Seedlip is essentially a non-alcoholic cordial, but it is sold in the spirits aisle in craft-gin-style bottles at about £20. Buyers compare it to a £30 craft gin and feel £20 is reasonable. Had it launched in dayglo colours next to Ribena, shoppers would never pay five or six times cordial prices.
→ Premium cordial positioning; the brand later sold to Diageo for tens of millions.
Common mistakes
Leaving the default anchor in place
If you launch in the same packaging and aisle as commodity rivals, buyers benchmark you against them and cap your price no matter how good the product.
Choosing an implausible comparison
Anchoring against a category buyers cannot connect to your product reads as manipulation and destroys trust rather than lifting willingness to pay.
Is it for you?
Best for
Launching or repositioning a premium product that risks being lumped in with commodity competitors.
Not ideal for
Products whose entire strategy is to win on being the cheapest option in an existing category.
From the transcript
“if I can change my mental comparison set, I can change the willingness of my consumer”
“you change the shape of the can. You make it smaller to 250 mils. You make it tall and thin. And essentially you've broken this…”
From the episode
11 Psychology Tricks From the World’s Best Brands - Richard Shotton - #1053
Richard Shotton