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Intro to Marketing_Herzenstein_Date_051210

Intro to Marketing_Herzenstein_Date_051210 - Mental...

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The Psychology of Pricing continued Psychology of consumption: - Mainly care about the cost to the seller Cost-driven consumption - $95 willingness to pay for ticket example - Placebo effect—conclusion: price high - People think (like) more expensive is better Timing: - Pay at consumption o (Food) McDonald’s, movies - Payment in advance o Concerts, sports events (tickets) - Payment after/during consumption o Cars or houses Theater event slides: - Pay yesterday: most people go to the theatre (60%) - Pay 6 months ago: most stay at home (70%) Decrease consumption: - Golf nice Sunday morning o Increase price, higher members only, sell cheaper membership during weekdays o Break consumption cycles—example gym in January Payment policies: - Vacations o Economic theory suggests pay after o In class people prefer to pay before - Dryer: most pay after (86%) o Why do we prefer to prepay? Because hope to enjoy product unencumbered by cost Avoid unpleasant experience of paying for something that had need enjoyed - Take home point: set payment before (or at least offer it as an option)
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Unformatted text preview: Mental accounting:-If lost a $20 will you still pay for the ticker? o 88% said Yes because two events are unrelated-If lose ticket do you buy another one? o 54% said No because related What it mental accounting? “We have accounts in our heads” Mental accounting arithmetic 1. Multiple gains: o Example: A is happier because 2 for 2—wont twice Segregate them to increase happiness 2. Multiple losses: o Example: A is more upset because 2 letters are worse to have 2 negative events Prefer integrated losses 3. Mixed gains: o Example: B because no negative events o Prefer integration 4. Mixed losses: o Example: B because no positive event o Prefer segregation Transaction utility: A. Beer at fancy resort: $3.88 B. Beer at grocery store: $2.00 o Prices are form 1988-Assume that costs more for resort (cost driven consumption) Fairness: main determinant of reference price...
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Intro to Marketing_Herzenstein_Date_051210 - Mental...

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