Real Estate Staging / Home Staging Blog

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Chipping Away at the "PRICE IS KING" Myth Too Many Realtors Rely On

 I hate to break some Realtor's chips... but for many of you the belief you have, regarding the role pricing plays in real estate sales, is not cracked up to what it could be. Believe it or not there is a simple yet profound parallel lesson that can be learned from how Lay's potato chips are packaged, priced, marketed and sold and how real estate is packaged, priced, marketed and sold.

Let me be clear... when it comes to selling anything, be it real estate or potatoe chips, Price IS King. It is a fact that the seller (market) will only get the price the buyer (market) is willing to pay... that makes price "KING".  But I think that too many Realtors have collapsed the concept of "KING" down to mean it is the ONLY thing that matters when it comes to selling real estate. They don't understand the full ramifications of HOW pricing is but one factor managed and integrated into the overall real estate marketing and selling process.

So let's crunch on the pricing lesson to be learned from the potato chip...

Yesterday I saw a compelling news segment on CBS Sunday Morning. In the piece the correspondent reported on the dynamic, and well-regulated world of food labels. Intererviewed for the segment was the Product Manager at FritoLay who is responsible for marketing their "natural" potato chip product. While we all know that Classic Lay's Potato Chips (Bet'cha can't eat just one!) have been a snack "staple" for years, FritoLay knows consumer tastes change. Because markets and tastes change, FritoLay ongoingly develops new potato chip products.

Surprisingly on camera, the FritoLay's marketing manger shared a little "secret" about one of those newer products they sell... the Natural Potato Chip. She confessed that basically Lay's Natural Chips are exactly same product as the Classic Chips. BOTH, nutritionally the same product, are made using the same type of potato and cooked in the same way. The only real difference in the two is that the "natural" chips are salted with sea salt, a salt PERCEIVED to be more natural, are cut thicker and are put in bag that is earth tone in color and has a matte (paper bag like) finish. Classic Chips go into a shiny yellow and red bag.

Ok, so what! The chips are the same. What's the point?

Well... there is one major difference between Natural and Classic chips. FritoLay admitted that they put LESS chips in the Natural Chip bag AND the charge MORE for them. That's right, less product for MORE money. How could they get away with this if PRICE IS KING? Well, FritoLay's knows that buyers buy what they want...in this case what the want "natural" chips. Buyers do not perceive Classic Chips as natural... even though they really are.  If they want to sell chips to the "natural" buyer, they have to sell a product that is viewed as "natural." The packaging then becomes essential in driving home the "natural" point.

So even though these chips are basically the same, because the potato chips are packaged in a way that buyers relate to them... they buy them. FritoLay knows that buyers buy products, as simple as potato chips, when they connect to it.

Or said another way... even though homes are often the same, when homes are packaged (staged) in a way that buyers relate to them... they buy them. Stagers know that buyers buy products, as COMPLEX as a home, when they can connect to it. A stager's job is to package the chips (homes) in a way that the buyer will relate to. THAT is what staging is all about.

So, while it is important for a listing to be priced right, if as a Realtor you are not considering or have not looked into working with a home stager in your area, because you believe in the myth that "Price is King," then in my opinion you are relagating yourself to be a Real Estate Couch Potato.

Chip It Forward...

Me

PS: 2 of my past posts, originally posted and "featured" here on Active Rain, describe the importance price plays in selling a home, and to this day are still quite popular and downloaded on a regular basis. If you are interested, check out:

 

Comment balloon 27 commentsCraig Schiller • March 31 2008 04:22PM

Comments

Thanks for popping my bubble, same chip, same calories and only sea salt. hummmm

Seriously, I love your analogy to home stagging, that's why all my vacant homes are stagged by a professional, if they must move before it sells. It works, even if I don't get an offer, the feedback is excellent. 

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 12 years ago

Craig ~ I love the way you correlated the potato chip story to home staging!  I know from reading Missy's comments on other posts that she is a staging believer.  I'm curious to see what others have to say.

BTW, nice pic!

Posted by Kathy Passarette, L.I. Staging/Decorating (Creative Home Expressions) over 12 years ago
Thicker chips, different salt, fancier bag, higher price.....hmmmm.  I see the point you are trying to make - perceived vs. actual value.  Sure, there are things sellers can do to bring top dollar (and things they don't do that reduce their value), but I still say that an accurate list price takes those things into consideration.  I still think price is "king," but believe it has to be the correct price....
Posted by Greg Steffens (Mountain Country Realty) over 12 years ago

Really good post Craig. I think you are right that appearance and perception help in the selling of any product. When I was young I stocked shelves in a grocery store. If an item wouldn't sell at $.29 we could change the price to 3 for $1 and they would fly off the shelves!!! It was a perception issue not a pricing issue.

In my market a well presented house may not sell for more but it may sell quicker. Staging is not being used in my area yet. If I can just find a seller that isn't in some stage of foreclosure I may give it a try.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 12 years ago

Craig;

    Awesome analogy!  Staging's all that and a bag of chips! 

By the way...talk about packaging...Love the new you photo! 

Cheers!

Posted by Gina McNew, Host of Diva in the House - The Voice of Real Estate Staging Radio (diva la difference interiors) over 12 years ago

1) Love the new picture

2) I worked in Department stores for years (yes really). A good store manager knows the "potato chip factor" as well. One store I worked in had an abundance of wool sweaters and it was well after the holidays. (If you needed a sweater you would have purchased one already) The store manager insisted that we NOT fold them. We put them on a table at the entrance with a big sign (full price) and left them unfolded. People perceived that they were getting a good deal. If the sweaters were back in the department and folded it wouldn't have been the same thing. MORAL of the STORY: People perceived what they want.

3) Staging is  thinking out side the bag?

Posted by Dena Stevens Coriz, Putting The Real Into Realtor Since 2004 (Rocky Mountain Realty ) over 12 years ago

Always a good read & I did not know that about the chips.  I use the tomato soup analogy - one torn label and dented, one in pristine condition.  You may buy the dented one but not at full price.  The soup is the same - the price will be different because of perceived value.

Real Estate Couch Potatoes take heed!!!

Posted by Kathleen Lordbock, Keller Williams Realty Professionals (Keller Williams Realty Professionals) over 12 years ago
Great analogy. Packaging the product (staging the house) is definitely one component of an effective marketing plan to sell a house, yet overlooked by many sellers and realtors. I was in a house yesterday that has taken multiple price reductions (total of 149 K!) over several months. A few gallons of paint would do wonders to improve the selling features of this house. If price is king, why hasn't it sold? 
Posted by Linda Sticklin (Home Staging & Organizing) over 12 years ago

The analogy is great, Craig. Thank you!

Unfortunately, I think that most people (some Realtors included) have the perception that a staged property has something to hide and this is why it is "packaged' to sell (too many horror stories of defects covered with a lick of paint?...). I've seen Realtors embarrassed to admit that yes, the house was staged when asked the question.

We all agree that a staged house that is priced right sell faster and for more money than one that hasn't been. We just have to "spread' the word out there.

Posted by Monica Stanciu, Staged 2 Sell Solutions, Markham, ON (Staged 2 Sell Solutions Inc.) over 12 years ago
Craig, you never disappoint! Another great post with another great message. It is true that priced LOW enough anything will sell. Why go there? When a bit of thought about the packaging and the perception will take a product to the top of its class then it only makes sense to ride that pony. Hey, could you pass me some chips please, I'm not thirsty enough yet. Thanks!
Posted by Yvonne Root, Home Stager - Northern Arizona (rooms b.y. root) over 12 years ago

Great food for thought Craig!    

Posted by Cathy Lee, ASP, IAHSP, RESA Danville, CA (CL Design Services Home Staging) over 12 years ago
Craig, what a magnificent analogy.  Packaging is indeed a form of Marketing and I am sure you know that many of us don't prescribe to the "Make it pretty" theory in home staging.  We believe that a home that is packaged (Staged) properly will increase the marketability.  Linda has always believed that while price is King, it also shares the throne with Presentation and condition when it comes to real estate.  Well my friend, you have done it once again.  When it comes to conveying a thought, you are King.  Thanks for sharing this with us.
Posted by Gary Barnett, Home Matters Property Stylist Group, Indianapolis (Home Matters) over 12 years ago
Craig, I used to work for Loreal Cosmetics & Fragrance out of France.  Long story short, they are sister companies with Lancome, a much higher end line, only sold in dept. stores.  Guess what, it's the same stuff, made in the same vats, etc., but Lancome commands a much higher price point, and they get it, why...marketing, packaging, and perception.  But don't tell anyone I told you!
Posted by Cindy Bryant, "Houston Home Staging Pros" (Redesign Etc. Home Staging) over 12 years ago

OOOH Craig ..picture is sexy ...I lIke

Chip.....Burger.............pepsi......chip

Posted by Fernando Rosado, 561-906-0050 or 561-840-8950 over 12 years ago
Craig, Great post.  My clients, for the most part, take pride in their properties and want to get the most out of their investment.  This will be a geat analogy to use to help them understand the importance of staging.  Thanks for sharing.
Posted by Patty Hill, BIC, Local Homes and Land, Inc (Local Homes and Land, Inc) over 12 years ago

Craig, once again you have clearly and eloquently defined the purpose of home staging.  Thanks for the links, I will be checking those out as well!

Kristina, KFM Staging & Design - a Minnesota Home Staging Company 

Posted by Kristina Leone (Lionheart Home Staging, LLC) over 12 years ago

In my humble opinion:

It's really about VALUE.  There's always someone who can afford your price (high or low), but to motivate them, there must be good VALUE.

May I respectfully suggest that: Price doesn't necessarily connote Value.  Sometimes even cheap old me will buy an article of clothing at full price.  Why?  Because I know that when I've worn something similar I've received compliments or felt good about myself.  I value those things highly, and as we see in the world of high fashion, so do many people. 

Home Stagers consciously or sub-consciously, trigger value-connection-points (for you HSR folks it's kind of like the emotional connection point).  We utilize visual stimulus that evokes a subconscious reaction in our guest's minds.  While they think they 'like the way it looks', it's actually a deeper reaction: "Hey, this room, house, land, is of great value to me".

We see too many examples of good house who suffer markdown after markdown,  month after month, only to find that a good staging (combined with correct pricing) sells the house in one day!

This is a really big topic, and one that I hope continues to create dialogue in the community.

 

Posted by Alicia Barrington, Houston Home Staging Presents Alicia Barrington (THE ORIGINAL HOUSTON HOME STAGING) over 12 years ago
totally irrelevant.....just wanted to let you know that I'm digging your new sexy picture! :)
Posted by Rick & Ines - Miami Beach Real Estate (Majestic Properties) over 12 years ago

Craig - What a lesson!  I wonder if Lay's will start selling fewer natural chips now that the secret is out?

Packaging and presentation - same product.  The same house - but if the Presentation includes new paint, scrubbed, lawn mowed, etc, the Perception is that the home is worth more.  Same idea for staging.  Great post.

Posted by Stanton Homes, Design/Build Custom Home Builder in North Carolina (Stanton Homes - New Home Builder) over 12 years ago
Very clever analogy...I guess if price is KING, then presentation is QUEEN? And perceived value is...DUKE? And...oh, never mind. Now, I have a craving for chips.
Posted by Elaine Manes Gage, Staging done ONLINE! (Home Staging Online Services) over 12 years ago
Can someone please pass the kettle cooked lays?  Good Post!
Posted by Jeremy Blanton, Myrtle Beach REALTOR®- myrtlebeachhomesblog.com (Myrtle Beach Homes Blog) over 12 years ago
Well, I'm a Ruffles girl myself.  Nah,,, I get the point and the point is well taken.  Simply, "It's all in the packaging" (as Kym Hough's slogan says).  Creative post.
Posted by Terrylynn Fisher, HAFA Certified, EcoBroker, CRS, CSP Realtor, Etc. (Dudum Real Estate Group - BuyStageSell.com) over 12 years ago

I helped (in-store, West Palm Beach) Macy's-Burdines merchandise and sell more $250 Fendi sunglasses (that looked suspiciously like the $58 Calvin Klein ones) than all the other sunglasses.

Only difference was, I "staged" the $250 sunglasses with props. You'd find the Fendi's peeking out of Coach bag pockets (a day of window shopping), joining the Timberland travel luggage (a cruise vacation) and paired with a pair of Birkenstock's (day at the beach). Oh, some times I would even wear them while I was setting the "stages".

SO, I am NOT surprised about the Lay's potato chips! Only they better not do that to my bags of Bugles! 

Posted by Leslie Hoyt, Hello Home! (Hello Home!) over 12 years ago
Wow...well worth the time...GREAT blog.  I'm utterly shocked the exec admitted that on national television. It is true though, buyers buy what is appealing to the eye.
Posted by Minnesota Home Staging Firm, Minnesota (Minnesota Home Staging Network~ MN's Top Home Staging Firm) over 12 years ago

We are essentially buying packaging, not the product itself. Many designer brands are produced in the same factory as no-name brands with same materials, the same workers, but designer brands charge much more because of you are basically paying for their branding.

I am a little surprised to hear the Lay's people admitting it themselves. I am sure their "natural chips" buyers won't be too happy when they heard they are essentially spending more money but buying the same less product!

Great blog as always ;)

Cheers,

Cindy 

Posted by Cindy Lin, Host, The Home Staging Show podcast (Staged4more School of Home Staging) over 12 years ago
Yep should have been a star !
Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 12 years ago

Great analgy, It a lot of comments and people thinking about staging, I wish all realtors would "get it". Onward and upward...

Posted by Jill Nelson, Interior Design (Jill Nelson Design Services) about 12 years ago

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