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How The Right Words Will Create A Perception In Value

How To Use The Right Words To Create Value

Is Your Business A Gourmet Street Taco?

In the marketing seminars we present at, we do this little exercise that shows a form of pricing strategy. Before we show up we always go to a local Mexican restaurant and buy a soft shell taco and bring it with us into the presentation.

As we talk about our marketing philosophy, we get into what the basics of marketing is so people can understand where we are coming from. The example we use is the Mexican restaurant. We explain things like target markets, competition, when to reach them when they want to buy and methods to use to advertise. Then we get to pricing and perception. And this is where things get interesting.

Gourmet or Plain?

We pull out the soft shell taco and show it to everyone. We tell them that what is on the plate is what we had for lunch, but we don’t say it’s a “soft shell taco”. We then hand out a piece of paper to everyone in the room, and we ask them to read it, fill it out and hand it back in. What they don’t know is that half the room gets a piece of paper that says: “They had this Gourmet Street Taco for lunch. How much would you pay for it?”

The other half of the room gets a piece of paper that says: “They had this Plain Beef Taco for lunch. How much would you pay for it?”

Now keep in mind, they are all looking at the exact same thing. The only difference is the description on the piece of paper as to what they are looking at.

So What Do Think Happens?

It amazes us every time we do this, but it make sense. Those that had “Gourmet Street Taco” written on their paper wrote down they’d pay more than those that had “Plain Beef Taco” written on their paper. And by almost two times. We’ve given this to hundreds of people and on average the Gourmet people will pay $3.45 for the taco. The “plain beef” people on average will pay $1.64.

So how you describe something has a lot to do with what you can charge for it. But keep this in mind, if you have a “Gourmet Street Taco” and you charge the higher price for it, you better deliver the quality. If you deliver the quality of a “Plain Beef Taco”, that doesn’t fit into your pricing strategy, and they probably won’t be back as customers.


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