The Perils of Price Advertising

I get nauseous every time I see or hear an ad for LASIK that talks about the price: “Call now for our $699 special,” or, “For a limited time, you can get both eyes treated for the price of one,” and so on. It's hard to think of this incredible procedure being bandied about in the same fashion as mattresses, long distance phone service, and fast food. I had the procedure back in 1995, and I recommended it to many friends and family. And now, it's just embarrassing to think that the message that dominates consumers thinking about LASIK is: “Choose us because we're the cheapest!”

LASIK IS NOT A COMMODITY
As consumers, we are bombarded with several thousand messages a day asking us to consider purchasing a particular product or service. Although the direct promotion of price can be effective, it's usually applied to those products that are considered equivalent offerings among all providers, otherwise known as commodities. Because commodities offer little distinction between brands, price becomes the prime consideration. Most retailers of commodities are betting that convenience, selection, or other value-added components can help distinguish them from competition. But even these retailers have gotten smarter when it comes to price advertising.

FIELD OF DREAMS
The theory behind LASIK advertising goes something like this: “If I advertise, they will come” (with apologies to Kevin Costner). For this month's column, we have the sequel to Field of Dreams: “If I advertise price, even more of them will come.” While many readers can point to someone who has implemented a low-price strategy with success, there are many more examples which created financial disasters for the laser center provider and soured consumer perception about LASIK in their market. Keep in mind that the low-price strategy requires price advertising because it is dependent on high procedure volumes to offset the significant loss in profit on each procedure.

I could end the column right here by concluding that if the procedure is not price-sensitive, one shouldn't advertise price! But for those readers who believe that price is the key determinant in procedure volume, I offer seven bad habits of advertising—specific to price advertising—and show how each negatively impacts your potential customers, driving them further away from having LASIK.

SEVEN BAD HABITS

Bringing quality into question.
Low-cost providers argue that they do not sacrifice quality compared to other LASIK providers. However, there is a definitive consumer association between price and quality. Remember two important consumer mentalities: 1) if it costs more, it must be worth it, and 2) if it's this cheap, they must be cutting corners. The focusing on low price in LASIK advertising (as opposed to the low price itself) leads many consumers to believe that something is missing in the procedure.

Eliminating a reason for patients to call.
By advertising your price, you've already answered the question of “how much?” without the prospective patient having to ask. Chances are that the consumer will conclude he or she is not interested today and never call. If your advertising effort doesn't generate leads, it becomes money ill spent.

Devaluing the provider.
“If the procedure is this cheap, all the surgeons must be doing it and they all must be pretty good at it.” This consumer reaction is an undesired by-product of price advertising, especially when multiple providers in the same market area engage in the tactic. It creates the perception that pricing for the LASIK procedure mimics pricing for personal electronics—it just keeps getting better and cheaper. Price promotion also improperly creates a perception of the “going price” in the market. Providers in every market have maintained high price and, not uncommonly, high volumes at the higher price. Unfortunately, with repeated exposure to price advertising, it is the price of the procedure, not its quality or benefit, that people remember.

Creating the perception that price must be the only important issue. As a group, providers are slitting their own throats by promoting price. Customers are quickly trained to stall their purchase decision until the special price returns or until their provider of choice caves in and lowers his or her price to match the lower price of other advertisements.

Rousing suspicion.
Considering that this procedure was originally offered in the range of $2,000 per eye, advertising of prices that are 70% lower automatically creates suspicion and skepticism. It sounds too good to be true, and in many cases, a closer reading of the fine print reveals the reason: “does not include astigmatism treatment,” or “offer applies to the ‘much less experienced doctor' (author emphasis) only,” or similar “bait and switch” tactics. The fine print may pass legal scrutiny, but most consumers are not fooled.

Permanently turning off the potential candidate.
Some laser owners like to brag about how their low price promotion jacked up their volume. What they don't realize is the number of listeners and readers who were permanently turned off by the message and won't call. Many consumers dislike the mention of price, and are skeptical of a surgical procedure with such heavy advertising.

Poisoning the market.
That group, divided evenly between “early majority” and “late majority,” tends to be less risk-taking than today's LASIK patient and significantly more price sensitive. Keep in mind that just because numerous providers believed they had reached this level of penetration in their markets does not automatically mean they were right. Their conclusion was usually based on anecdotal evidence (“everyone in our town has heard about LASIK…”) being inappropriately linked to consumer behavior (“and everyone who has heard about the procedure probably knows enough about it to make a decision to have it”). Consumer behavior in this category is ruled by two main factors—fear and price. Clearly, overall market procedure numbers and growth rates would indicate that fear remains the key issue limiting market growth, not price (hint to the skeptical: there was sufficient availability of low-cost providers in FY2000 and they didn't make a dent in consumer demand). Those who chose to do price advertising (generally a “low” price) were way ahead of their time.

AND ANOTHER THING
Had enough? Well, here's one more issue to consider: You rarely see price advertising used in other elective medical categories. Plastic surgery, cosmetic dentistry, and orthodontics are closely related medical consumer categories, each requiring consumers to use disposable income rather than insurance. Outside of refractive surgery, providers in these other categories have largely determined that price advertising doesn't provide sufficient benefit to offset the risks to both profit and perception.

What began as an interesting marketing gimmick has turned into a nightmare for the refractive surgery industry, as many providers were fooled into believing that low price was the way to riches for themselves. This strategy may have its time and place, but so far it has done more to delay rather than accelerate consumer adoption of refractive surgery. Next month, we'll delve into the mindset of the consumer and how lack of attention to understanding basic consumer needs in refractive surgery has adversely affected growth of the procedure.

Shareef Mahdavi is a business consultant focused on helping clients improve their marketing. He formerly headed the marketing efforts of VISX, and is based in Pleasanton, CA. Mr. Mahdavi may be reached at (925) 425-9963; smahdavi@home.com
Jim Feinstein is the Marketing Director of Chicago Cornea Consultants, Ltd., in Chicago, Illinois. He may be reached at (847) 882-5900. jim@chicagocornea.com