Price biases (customer) Flashcards
The introduction of an inferior (decoy) option provides a strong justification to purchase the superior option
Decoy or attraction effect
Addition of irrelevant attributes influences product attractiveness
Independence of irrelevant attributes
The context in which decisions take place influences choice
Framing & context effects
Setting prices moderately higher than what consumers expect to pay
Willful overpricing
Influence consumer behavior even when customers know they are exaggerated
Advertised reference price
WTP is influences by arbitrary numeric anchors
Anchoring
A product obtains a larger utility and choice probability when it becomes an intermediate in the assortment
Compromise effect
The low value option is more highly valued than the high value option in the single evaluation method but not in joint evaluation
Preference reversals
Prices for components or attributes are separated to increase consumer purchase intention
Price partitioning
Perception of scarcity increases consumer WTP and purchase quantity
Scarcity effect
Response to price discounts/rises depends on the rational provided for it
Justification for discounts
Customers derive more pleasure from higher but predictable fees than from lower but fluctuating fees
Pay more & be happy about it
Customers buy more and pay more to experience the benefits of a deal
Deal obsession
Attributes expressed on a scale with higher numbers appear larger
Unit (scale) effect
Low probability events weigh more heavily when expressed in absolute than in relative (%) terms
Denominator neglect
