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8 Cards in this Set
- Front
- Back
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When do consumers buy goods? |
View price as a proxy for value (but not identical to value) Consumers buy when Price < Value = Buy |
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Describe the two studies Dan Ariely (of Duke EW!) did on price |
-"Tom Sawyer" study: students were asked to either pay for or get paid to listen to Ariely read poetry. People then bid on the reading in direct correlation to whether they were told to pay for or be paid. -The wine/SS# study-people were asked to write down the last two digits of their social security number. Then they were asked to bid on wine. Ssn acted as an anchor for their bid on the wine. |
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What are the four inputs for consumer value? |
1. Value of net benefits 2. Production cost 3. Cost of substitutes (opportunity cost) 4. Cost of complements |
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What are the four pricing methods? |
1. Cost-plus 2. Target return 3. Value based 4. Consumer based (psychological pricing) |
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What is reservation price? |
The price right before a consumer says "no" to buying. |
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What are the ways to find a consumer reserve price? |
-survey -bidding tasks (auctions) -experiments (best)-charge different prices in different stores |
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What is the "equation" for reservation price? |
Reservation price ~=p-b+s P=net benefit value B=budget S=strategy |
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Why do consumers under-bid for products? |
P-can't appreciate value, overly cautious on future budget S-buyer strategy to lower price |
