April 23, 2012

Free Market Research!

Separating facts from beliefs has always been an obsession of mine. For example, during my first year in the DRTV industry I saw a presentation that stated, "Fact: Only 10 percent of people will buy off TV." (The presentation was meant to convince retailers that DRTV advertising creates pent-up demand for hit products that cannot be satisfied by direct sales alone.) While I had no doubt the general premise was true, I had serious doubts about the specific information (it came with no source) and set about trying to calculate the actual number. Sure enough, it turned out the actual percentage was around nine percent and, as it turned out, shrinking.

Even more common than baseless factoids are logical arguments that become common wisdom without ever being tested. The most amusing of these is the $9.95 vs. $9.99 vs. $10 debate. Each of these price points has at least one passionate defender. I've heard that $9.95 is best because it sounds like $9.00 to buyers while generating $10.00 for sellers. I've heard that $9.99 is better than $9.95 because buyers see no difference between the two and sellers get an extra four cents per sale (which is a lot of money over a few million units). I've also heard that $10 is best because it is easier for people to understand taking a $10 bill out of their pocket than nine dollars and 95/99 cents. Yet, to my knowledge, no one has ever taken the time to investigate what buyers actually think about these price points ... until now.

Over the next week or so, I will be sharing the results of a recent survey we conducted of DRTV buyers to answer this question and a handful of others. I will post the information here on the blog, free of charge, for the edification of all. Even better, I intend to conduct a survey like this one every six months or so, and I will be soliciting questions from you, my readers.

But first, here is some information from our first survey:

1. We sent the survey to more than 600 people and received 126 responses. In other words, the sample size was large enough to draw conclusions.

2. Of those 126 respondents, 63 percent were women and 37 percent were men. This contradicts another factoid I used to hear all the time, that "80 percent of purchases are made by women." Of course, the gender mix has a lot to do with the products the industry is putting out, but in general it seems men are well represented in DR.

3. The vast majority of respondents were 50 years of age or older (85 percent): 38 percent were in their 50s, 38 percent were in their 60s and 9 percent were 70 or above. This finding actually supports a bit of common wisdom, that Baby Boomers are the center of the bull's-eye for DRTV, which makes sense given current American demographics.

4. All respondents had purchased at least one DRTV product in the last few years: 24 percent in the last month, 36 percent in the last six months and 21 percent in the last year.

In my next post, I will reveal what our 126 respondents said they liked most and what they liked least about their DRTV buying experience.


  1. Survey questions and answers are different from unbiased actual purchasing behavior. I am not quite sure you could poll your way to testing the best of the price points within such a narrow range. The survey bias of the respondents might over shadow their actual impulsive behavior or conservatism. "I am not going to swayed by a mere nickel." or "Of course I would want the lowest price possible." The question of each price point would have to be asked independently over a large sample with an attractive product, as in reality the customer does not get a chance to make a comparative decision.

  2. Not sure you can accurately test the $10, $9.95 and $9.99 with a preference survey? Purchase behavior could be vastly different than a "thinking" answer to a survey.