Saturday, August 25, 2012

Detail Subsequent Upgrade Price Comparisons

Once your shopper has made the decision to purchase an item from a product category, they might consider an upgrade. If this is the first upgrade decision the shopper has made during this visit to your store, research indicates they’re more likely to choose the more expensive alternative if the prices for the two are presented as round prices instead of as just-below prices. So if the prices on the bin tags are $19.99 and $29.99, the salesperson says, “For only $10 more, here are the additional features you’d get.” The easy comparison facilitates acceptance of the upgrade.
     But during this same shopping trip, you might subsequently be offering upgrade opportunities in other product categories. The first task for you is to confirm to yourself that this upgrade will actually be of benefit to the shopper. The next task is to convince the shopper of the benefits. The third task is to gain acceptance for the additional expenditure. Here, shopper agreement to the upgrade is more likely when the price comparison is more difficult. Researchers at Babson College and Baruch College found that people tend to perceive the differences in prices between the regular and upgraded versions to be smaller if the comparison is harder to compute than in a prior upgrade decision.
     For these subsequent upgrade price comparisons:
  • Quote the actual price points rather than rounding. 
  • Lengthen the conversation by encouraging the customer to ask you questions about the prices. 
  • Be more comprehensive in discussing the prices, such as talking about per unit costs or percentage differences. 
     Statements in unexpected units increase the consumer’s interest in understanding reasons to make the purchase. Researchers at University of Cincinnati, University of Indiana, and University of Twente told study participants that a tuition increase of 7500 cents was slated. The participants given this information, rather than being given the amount in more conventional dollar figures, showed increased acceptance of the cost difference.
     How to explain why this works? When the shopper has expended mental energy in deciding whether to put out money for an upgrade, two conflicting processes occur:
  • Their reservations about spending even more money on another item upgrade increases. 
  • Their resistance to accepting an upgrade which benefits them is worn down. 
     The way out of this for the shopper is to convince themselves they’ve made the upgrade decision carefully. Having a bunch of details available to them accomplishes this.

Click below for more: 
Round Prices to Whole Dollars for Better-Best 
Number Costs and Benefits for Desired Effects

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