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Welcome to the Owl Street Studio Podcast, where we talk about how marketing and design affect the unexpected areas of our lives.
Today we’re looking at the magic of the number three (and yeah you’re in the right place, this is an episode of Owl Street, not Sesame Street, so just stick with us for a second.) The number three is actually pretty magical in marketing because the number three tells you what to buy and what not to buy.
But to see the magic of the number three, we first need to understand the magic of relativism. See all of us are great at measuring, evaluating, and analyzing stuff so long as….we have something to compare it to. But If we don’t have a reference point, if we don’t have something to compare to, we pretty much suck. For example, everyone is extremely sensitive to temperature changes. We can feel the air get colder or warmer with extreme accuracy. But we have no idea if it went from 75 to 78 or 64 to 67. We just know it got warmer. In other words, we can tell the relative difference but not the absolute difference. We can tell when something changes but we can’t tell it’s specific value, metric, number, etc, etc.
But what does this have to do with the number three and what does it have to do with marketing? (Remember, just stick with us for a second). Relativism shows up all over marketing in all kinds of ways, but for now let’s look at one place it shows up the most: prices. For example, if we’re being really honest, you have no idea how to tell a good price from a bad one. You just know one price is more or less than the price next to it. In other words, prices are relative. Just like you don’t know if it went from 75 degrees to 78. You also don’t know if a price is really good or bad. You just know it’s more or less than the other one.
And it doesn’t matter if you’re buying a house or a gallon of milk, you only know if it’s a good or bad price by comparing it to the price standing next to it. Again, prices are 100% relative. They’re never absolute. Which means there is no such thing as the perfect price. There’s only the perfect price in comparison to the price on the left and the price on the right.
But what do relative prices have to do with the number three? Well…actually….they don’t really have anything to do with the number three. What they have to do with is groups of three like small, medium, and large or mild, medium, and spicy. And with prices, it’s about the groups low, middle, and high. Annnd…it’s not really about the specific labels of these groups, it’s really about the emotions you attach to each one. Which I know sounds complicated (and maybe a little crazy), but trust me, it’s real and you do it everyday.
For example, you’re buying oregano at the grocery store. Do you buy the cheapest one? The generic one? Well, if you see yourself as someone who’s not gonna get suckered by those over-priced name brands and you believe there’s absolutely zero difference in quality, than yeah you’re buying the bottom shelf stuff.
But what if you see yourself as someone who doesn’t cut corners, you value quality, and you’re not a cheapskate but you also don’t want to be frivolous or pretentious. So you buy the middle price oregano.
Orrrrr what if you want to impress your date or you see yourself as a true foodie and passionate cook, do you buy the generic bottle? No, you buy the top shelf, the directly imported oregano from Italy in the glass jar that costs three times as much as the bottom shelf.
But here’s the kicker. The truth is….it could be the exact same oregano on each shelf, but people will group them into three separate tiers based on the price. Then, each person self-selects which tier matches their self-image and situation, and that’s how three different people will pay three different prices for exactly the same thing.
But why three? Because you can only hold about 3-5 items at a time in your short term memory. Of course there’s some outliers. Some people can remember more, some less, but on average it’s 3-5 (that’s why trying to remember a seven digit phone number is so friggin hard and why we just have people text it to us instead of tell us). So three groups like low, medium, and high are right in the sweet spot for your short term memory, because anything more than three starts to over tax your brain.
And on the other side, anything less than three doesn’t really feel like a choice. Two groups feel like opposites, diametric, and opponents. Groups of two feel like yes/no, black/white, left or right. They don’t feel like a choice, and obviously one group is literally zero choice. So, three is just enough to feel like a genuine choice without having so much information you get overwhelmed and can’t decide (called information or decision paralysis).
So again, you use prices to group items into tiers, typically three tiers, and then you self-select which tier matches your self-image and situation, and that’s how you decide what to buy and what not to buy. (annnnnd typically marketers already know about the power of three so they intentionally group prices into three different tiers in order to tap into your behavioral psychology.)
Now some people place themselves in one tier across everything they buy like they buy generic everything or high-end everything. But usually, you mix it up. For some things, you’ll buy low, other items mid, and others high. For example, you buy generic oregano, expensive toilet paper, and mid-tier laundry detergent.
But once you see that all of us organize items into three different price groups, you can learn a lot about yourself. Why do you buy generic for this but not for that? Did you buy the expensive choice because it’s really better quality or is it because you don’t want to look (or feel) poor?
For example, I’ll use myself as an example. For me, I only buy craft beer, and I would never, ever buy Bud Light or even PBR. Of course, I think those brands taste terrible, but really, if I’m being real with you, I don’t buy them because I think they’re cheap. It’s the same reason I would never buy Barefoot wine or anything else from the bottom shelf, because I see myself as more sophisticated than that (which I know may be complete horse shit) but whether it’s true or not it’s what I believe and that’s why I buy what I buy.
Now you may think what I buy and why I buy it is dumb (which I don’t know, you might be right) but…what’s your craft beer? What’s the stuff you buy because the other ones are cheap or pretentious or so and so forth. Again, once you see the magic behind the number three, you’ll gain a whole new insight into yourself, into what you buy, and into everyone else around you.
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