August 9, 2005
the ignorance premium (cont.)
As a customer, I want to present myself to a marketplace and have providers there compete for my business. I want to say to the marketplace (and not just to an intermediary like Orbitz or Travelocity) “I’m looking for a nonsmoking hotel room with high speed Internet service in downtown Atlanta from September 3rd to 5th. Who’s got that?” … and have something happen.
If we want to make the conversation a bit more nuanced, I’d like to say what I’m willing to pay and what frequent sleeper (or flyer or driver) membership clubs I belong to. And that’s all before revealing exactly who I am.
Why is this pie still so damn high in the sky?
Why, Doc? Simple. It’s called the “Ignorance Premium”.
With the Ignorance Premium, you’re paying extra for not knowing. Instead of MICRO knowledge, your basing your choice on the cooler, hipper MACRO Brand Metaphor. Branding is all about about being cool and hip, because branding is all about propping up the Ignorance Premium.
The less you know, the more they can charge you. So it’s in their interest to keep you in the dark as much as possible.
If it’s business as usual, the ignorance premium probably applies. I think the first to address Doc’s rant will have a huge advantage, regardless of the vertical they operate in. Travel is perfect.
I totally concur, Gary.
Is that not the model for Priceline.com from 5 years ago until…now?
It met with a fair amount of success and still has a loyal following.
Not so pie in the sky.
A victim of the .com bubble..although one that survived. Ultimately, they have straddled the fence to compete with the rest of the flock in regular online travel service.
Well that’s sort of the model Howard although out of necessity they now offer a more traditional retail path as well.
Doc did mention naming your price but really most of what he is looking for isn’t available at priceline either. Which is to say a consumer experience that is radically shaped by the needs of the consumer. For instance, you can’t pick from a list of must have features like his Internet access example before naming your price.
At least you can’t now. I can’t speak to what the site was like in the early years.
Not sure what Howard’s trying to say, but Priceline’s business model was/is taking advantage of consumer dissonance, specifically the common and incorrect belief that the customer has an advantage when he names his price.
I think what Doc’s talking about is more the idea of broadcasting yourself as a customer and getting very specific offers, with more transparency and more specificity.
I’m in the throes of trying to book a transatlantic flight right now, and once again I see what a mess the whole system is. Talk about failing to fulfill the potential of the internet!
With the airlines, there’s the problem of opaque price structures. Outside the cheapies it’s still normal to charge four times as much for one-way as for round-trip. And the free stopover in Paris which I *know* I can get at the travel agent is unavailable on the AirFrance site (which is a nightmare among nightmares anyway). So for the big air carriers, I think the stumbling block is their antiquated, customer-hating mentality.
With things like hotels, where there’s a lot more competition and a lot more small players, I think it’s a very solvable problem. The problem there is getting a *lot* of proprietors who are only marginally aware of the Internet to provide reliable real-time data. But at least there, I think most people at least want it to work better, whereas the airlines really don’t want any honest comparison shopping going on.
The first person to really crack this nut will make it big, that’s for sure. But it’s harder than it looks. Where you already have a lot of ready data, you have strong resistance to transparency. And where you have openness to transparency, you have a beautifully “long tail” with very little techical know-how.
As long as I’m in palaver mode…
Link with some basic info on the Priceline issue, though I honestly have no idea whether they still work this way:
http://www.sims.berkeley.edu/~hal/Articles/TheStandard/priceline.html
One company that’s trying to do searchable travel aggregates, though as far as I can tell the airlines (only thing I tried) are throwing in a lot of FUD:
http://www.kayak.com/
I know a lot of people in the restaurant biz and a few in the hotel/B+B biz, and unfortunately very few of them intuitively “get” the advantage of the kind of search Doc wants. (Yes, I’ve evangelized…) But I stand by my point that with most of the hospitality industry the hurdle is hand-holding and educating, not so much conceptual.
OK, I’ll shut up now. Blame the Medina wine (Serbo-Hungarian, not Saudi).
Hmm, broken comments thingee again… strange bug… Mena says Hugh must define a Template…
OK, here’s the error message:
An error occurred:
You must define a Comment Pending template.
Giving up on my follow-up, but anyone who wants reference links for the palaver above can contact me via my blog. Ah, software…
In an attempt to destroy the ignorance premium, at least locally, I finally made up my mind: the bellydance blog in Spanish is up and running and it’s all your fault.