Marketing Lessons from the Lemonade Stand
The lemonade stand--where so many budding entrepreneurs had their first taste of doing business--was the setting for a recent experiment by researchers at Stanford Business School.
The experiment was part of a study, published in the Journal of Consumer Research, that concluded that it's better for businesses to mention time and personal experiences in marketing, instead of money-related terms.
Researchers observed the results of three different signs at a lemonade stand, staffed by children. One sign read, "Spend a little time and enjoy C&D's lemonade," while another one read, "Spend a little money and enjoy C&D's lemonade." The third sign read, "Enjoy C&D's lemonade."
They found that not only did more customers respond to the sign that mentioned time, but these customers also spent more money on the lemonade, which was priced anywhere from $1 to $3 per cup. While 14 percent of passersby bought a cup of lemonade at an average of $2.50 when the time-related sign was used, only 7 percent purchased it at an average price of $1.36 when the money-related sign was up.
"We found that when individuals focus on money--associated with either a product or a brand--that tends to lead to more negative attitudes or less of an intent to buy," says Jennifer Aaker, the marketing professor who led the study.
While it's true that many customers are seeking deals these days, money-centric messages can make people focus more on the cost and less on the benefits of a purchase, Aaker explains.
For that reason, she says, it's better to craft a message that hits on why the person will enjoy their purchase over time. "I think that a message that focuses on aspects which conjure up a personal connection with that product will be much more effective," she says.