By Dr. Uchechukwu Ogah
At 23, Julius Caesar utilised the Veblen Effect so much that it has become a marketing strategy till date because Caesar knew that reality begins in the mind. Interestingly, the Veblen Effect is an effective psychological strategy that has been in use for thousands of years and generations. The best part is that despite the availability of so much of knowledge, technological advancement and information, Veblen Effect refuses to let go. The Veblen Effect is when consumers perceive higher-priced goods to be worth much more, simply because they cost more.
As an individual, when you organize (package) yourself well to portray the illusion of invaluable person, people accord you same high estimation and would be dealing with you as such. Call it illusion but that is the reality. People deal with you exactly how you present yourself.
A good example of Veblen Effect is Johny Walker (JW) Double Black which has no age statement unlike JW Black, labelled at least 12 years aged scotch. JW Double Black is sold at a higher price than JW Black with a perceived notion that ‘double black’ should be much better than just ‘black’, especially since Double Black is pricier than Black! That is how the human mind works and Julius Caesar maximised this. How?
In reality, no one knows what is so special in Double Black except that the label claims it to be very smooth, without actually saying it is smoother than Black! Many believe that this is simply a marketing strategy to pass off un-aged scotch at a much higher price, through the Veblen Effect!
How you stake a claim in the mind is by creating a perception. And how you create that perception is by controlling the context. So, the most important piece of real estate in which to stake a claim is the human mind. Control the context and you control the mind. Control the mind and you control reality.
At 23, Julius Caesar was a junior politician on the way up. But he had an advantage: confidence and brain. While sailing across the Aegean Sea, he was captured by Sicilian pirates. They demanded a ransom: 20 talents of silver – That’s about 620kg, worth about $600,000 in today’s value. Caesar told them they were being ridiculous. He couldn’t possibly allow himself to be ransomed so cheaply. The pirates hesitated; they were confused. Caesar insisted the ransom must be raised to 50 talents of silver – that’s around 1,550kg, worth about $1.5 million.
Now, the pirates didn’t know what to make of this. Normally, their captives tried to escape as cheaply as possible. They didn’t understand what was going on. But if Caesar said he would double the ransom, why argue?
They let Caesar’s men go back to Rome to raise the money. And in Rome, in his absence, Caesar suddenly became very famous and well known. No one had ever been ransomed for such an enormous sum ever before. He must be very special, he must be incredibly important. Consequently, the demand for such amount of silver for ransom put Caesar on the political map and made him famous. He had just invented the Veblen Effect.
Like Rolex, Bentley, Rolls-Royce, Louis Vuitton, Cristal Champagne. None of them may be actually any better than their cheaper alternatives, but the price alone makes them seem more desirable. Caesar effectively made himself a Veblen brand. He placed a much higher value on himself than anyone in Rome. But, as far as anyone in Rome knew, it wasn’t him who had done it. It was an independent valuation. So it must be true. And because Caesar was now so highly valued, his men had little trouble raising the ransom. They returned to the island and freed him.
But Caesar wasn’t going to allow the pirates to keep that sort of money at all. As an important and famous man he had become, it was easy to raise a huge force which he used to hunt down the pirates and took back all the money, plus everything else they had pillaged, then executed all of them.
Thus, Caesar became both very rich and very famous. And in time, with that same combination of confidence and brains, he became ruler of all Rome. And he presided over the golden age of the Roman Empire. Expanding it from Spain to Germany, from Britain to the Middle East. Because Caesar knew that reality begins in the mind.
Do have a productive Thursday and remember that with Veblen Effect, your stock can rise!
• Dr. Uchechukwu S. Ogah is the Minister of State, Mines and Steel Development.