Pricing strategies boot camp session 1

Editor's Notes

• #5: If women have to ask, they think they can’t afford it. If men have to ask, they think you are changing the price depending on what you think they will spend.Put on your tags! Make them visible! If you can’t attach swing tags, then use signs!
• #6: P11, braininfluenceCornell study looked at several common restaurant price display techniques.Numerical with a dollar sign ($10.00). Numerical without a $ (10.00). Spelled out.Researchers expected written scripted prices would perform best.Guests preferred simple numeral prices – without dollar signsSpend significantly more than the other 2 groupsUnfortunately, they didn’t include WHY!Link --- Use $signs for products consistent with selfish feelings – self-indulgent (sports car), financial independence.Products focussed on others – like gifts, charities – avoid using financial imagery.
• #8: There is an interesting phenomenan that occurs when we round our prices.Lets look at it.In this case, we have a Notepad- $20We estimate it might be worth $19 or $18 or $21. we see the number as being rounded, and then we think in rounded numbers further.So we may think the shop, or the wholesaler or whoever is selling this product has rounded, and possibly rounded it up.Starting point is $19.95 – mental measuring stick is different – we are thinking more about the cents, not the dollars - we might think $19.75 or $19.50 is accurate.
• #9: But what about big purchases? Or big sales? They decided to look into the real world. 5 years of real estate sales in Florida, Alachua County. Compared list prices and actual sale prices of homes.Sellers who listed their prices more precisely (like $494,500) –- Got closer to their asking price- Sold more quicklyBuyers were less likely to negotiate the price down as far from a precision price.
• #10: University of Florida marketing department – study written up in Scientific American 2008.Mental measuring stick based on initial price. – it runs in INCREMENTS away from the opening bid. Size of increments depends on the opening bid. Some characteristic of the opening bid itself might influence the way the brain thinks about value.Most of us are motivated by the desire for a FAIR DEAL. We employ some sophisticated cognitive tools to weigh offers and so on.Notepad- $20 – we estimate it might be worth $19 or $18 or $21. Round numbers.Starting point is $19.95 – mental measuring stick is different – we are thinking more about the cents, not the dollars - we might think $19.75 or $19.50 is accurate.----------------------not below hereThe participants were required to make a variety of educated guesses. One study - they were buying a plasma TV, and were asked to guesstimate the wholesale cost. They were told the retail price, plus the fact the retailer had a reputation for pricing TVs competitively.3 scenarios - $5,000, $4988, $5012.$5,000 - lower wholesale price. Guessed round number. May perceive $4988 as a HIGHER VALUE than $5000!!!!WHY?Mental measuring stick based on initial price. – it runs in INCREMENTS away from the opening bid. Size of increments depends on the opening bid. Some characteristic of the opening bid itself might influence the way the brain thinks about value.Most of us are motivated by the desire for a FAIR DEAL. We employ some sophisticated cognitive tools to weigh offers and so on.Notepad- $20 – we estimate it might be worth $19 or $18 or $21. Round numbers.Starting point is $19.95 – mental measuring stick is different – we are thinking more about the cents, not the dollars - we might think $19.75 or $19.50 is accurate.
• #17: Amazing revenues – didn’t hire more staff, improve products, better graphic design, hang up more bunting, overhaul the shop… all these costly things.The retailer refused to participate in the study again, when they saw how much money they LOST through the other catalogues.