Wednesday, November 13, 2013

Imply High Risk with Low-Price Sacred Goods

If the price is low, people buy. The most common reason is it seems like a good deal. Now researchers at Arizona State University and Tulane University have identified another reason: Lower prices can imply a higher risk of bad consequences if you don’t buy.
     Student participants in the study were advised to get a flu shot. Some were told the price of the inoculation was $25, while the rest were told it was $125. So that the decision to get the shot wasn’t influenced by whether the student could afford it, all were told that the fee would be reimbursed by their health insurance.
     In addition, some of the participants in each of the two groups were told it was important to get the shot in order to avoid the illness and possible lost income from missing work. The other participants in each of the two groups were given public health instead of personal health reasons: Avoid spreading the flu and burdening the economy with work absences.
     After all this setup, each participant was asked to estimate how likely it is he or she would get the flu if passing on the shot.
     Overall, those who were told the shot cost $25 judged themselves as more likely to get the flu. This was especially true for those given the personal health rather than the public health rationale.
     The researchers explain the findings this way: When it comes to goods like medications, consumers tend to figure that a lower price signifies a need for greater accessibility, and therefore a higher risk on nonuse. People are more likely to get the shot if the price is lower because it is more affordable and also because the prospect of not getting it is scarier. The impetus to action is accentuated when the individual thinks about personal risk rather than social risk.
     Medications are in a category the researchers call “sacred goods.” The rules for retailing these goods are not always the same as with other items. Research findings from University of Colorado-Boulder, Tulane University, and University of Pennsylvania give another example: Consider the retailer selling pharmaceuticals who announces special programs to allow those without adequate funds to get the drugs at a reduced fee. Most customers would consider this to be ethical. Yet if a dress shop said they’d charge less to the economically disadvantaged, many customers would consider this unfair.

Click below for more: 
Adjust Ethical Expectations to Surroundings 
Depend on Interdependency for Price-Quality

No comments:

Post a Comment