Monday, September 28, 2015

Bargain for Good Value via Price Primacy

The standard advice to salespeople is to present the price late in the pitch. First describe the benefits the shopper will gain if purchasing the item and only afterwards, mention the tariff necessary to realize those benefits. Also, you might do best to say the price slowly. Researchers at HEC School of Management- Paris and at University of Pennsylvania find that this makes the shopper less sensitive to the price. So if the price is $148.29, instead of saying "one forty-eight twenty nine," say, "The price of this item is one hundred forty eight dollars and twenty nine cents." Maybe this tactic works because you don't notice the sour taste of the medicine when it goes down slowly.
     But another group of researchers, these at Stanford University and Harvard University, say that if you’re offering a bargain price on an item whose value is apparent to the shopper, you’ll do best to use what they call “price primacy.” You will make more sales when you lead with the cost.
     Their argument for price primacy is distinctive because it’s based on neuropsychological evidence. Data were gathered using functional magnetic resonance imaging of brain activity, much more often a tool for diagnosis of medical pathology than for advice to retailers. Among the study participants, the researchers saw signals in the medial prefrontal cortex showing how early rather than late presentation of the bargain price increased recognition of the justification in spending money on a quality product.
     Price primacy is an exception to that rule of leaving the pricing until the end. This exception can be especially important when the apparent value is in the quantity offered. For instance, consider which of these two is more attractive to shoppers:
  • $29.99 for 70 rolls 
  • 70 rolls for $29.99 
     Researchers at Virginia Tech give the traditional advice to put the quantity before the odd price. The second phrasing of the two above is more likely to draw buyers. But if what you’re offering is a great bargain, the first phrasing could do better.
     The Virginia Tech studies also provide an example of when the order doesn’t make much difference. Say the two options are:
  • $29.99 for 30 rolls 
  • 30 rolls for $29.99 
     Here the appeal of the two is about the same. Shoppers can easily calculate the unit cost. But when the per unit calculation is difficult, shoppers attend more to whatever is the first number given

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Ease Customer Pain About Item Prices
Put Large Quantity Before Odd Price
Interpret Brain Science Advice Cautiously

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