Pricing Wang Yusong School of Management Fudan University l1-1
11-1 Wang Yusong School of Management Fudan University Pricing Pricing
. Consumers' Reactions to rIce a Price awareness Mindless shopping a Ave time between arriving and departing from product category 12 seconds in 85% of purchases only the chosen brand was handled, and 90%o of shoppers inspected only one size a 21% could not offer a price estimate when asked
11-2 I. Consumers’ Reactions to Price Price Awareness Price Awareness Mindless Shopping: Mindless Shopping: Ave. time between arriving and departing from Ave. time between arriving and departing from product category = 12 seconds product category = 12 seconds in 85% of purchases only the chosen brand was in 85% of purchases only the chosen brand was handled, and 90% of shoppers inspected only one handled, and 90% of shoppers inspected only one size 21% could not offer a price estimate when asked 21% could not offer a price estimate when asked
Price Awareness(cont a only 50% were able to state correct price 93% did know relative price(i. e, higher lower or the same as other brands in category
11-3 Price Awareness (cont.) only 50% were able to state correct price only 50% were able to state correct price 93% did know relative price (i.e., higher, 93% did know relative price (i.e., higher, lower or the same as other brands in lower or the same as other brands in category) category)
Prices ending in“9 common pricing strategy a assumes that consumer will underestimate true price experiment designed to test this assumption: actually consumers do not underestimate the 9-ending price but rather overestimate the price of goods that do not end in 9 11-4
11-4 Prices ending in “9” common pricing strategy common pricing strategy assumes that consumer will assumes that consumer will underestimate true price underestimate true price experiment designed to test this experiment designed to test this assumption: assumption: actually consumers do not underestimate the actually consumers do not underestimate the 9 -ending price but rather overestimate the ending price but rather overestimate the price of goods that do not end in 9 price of goods that do not end in 9
Reference Prices Consumers do not evaluate price absolutely, but rather relatively Context matters! Two kinds of reference prices a External reference price a Internal Reference price
11-5 Reference Prices Consumers do not evaluate price Consumers do not evaluate price absolutely, but rather relatively absolutely, but rather relatively -- Context Matters! Context Matters! Two kinds of reference prices Two kinds of reference prices External Reference price External Reference price Internal Reference price Internal Reference price