Monday, March 27, 2023

Cinch Understanding of CINCS

The order in which items are presented influences a person’s decisions. Researchers at Washington State University and University of Kentucky saw evidence of that principle in what they call the “cumulative impact neglect of changes that are sequential.” CINCS can lead to shoppers selecting alternatives which are to their economic disadvantage. Pointing out such situations to your customers provides an opportunity to earn their goodwill. If the misleading plan had come from another retailer, pointing it out might enable you to get that sale.
     In one of the research studies, participants were asked to choose between a pair of hotel pricing plans. Plan A charged $1,000 for the first night, $700 for the second, and $600 for the third and fourth. Plan B charged $1,000 for the first two nights, $750 for night three, and $250 for night four.
     Plan A, with a total cost of $2,900, is an economically better choice than Plan B, with a total cost of $3,000. Yet those participants for whom the discounts were described as cumulative (“Third day, you pay an even lower rate; you get an extra $100 off the already reduced rate”) became more likely to choose the inferior Plan B compared to the choices of those participants for whom the discounts were described as just the amount (“Third day, you pay an even lower rate; you get a rate of $600/day”). This was true whether the discounts for successive nights were described as absolute dollar amounts ($100 off) or as percentages (14% off).
      An explanation for the effect is that consumers pay undue attention to the trend of discounts. For Plan B, the discount for the fourth day was $500 more than it had been for the third day. For Plan A, the discount for the fourth day was the same as the discount for the third day.
     Prior to being presented the task, each participant’s skill in working with numbers had been assessed. Analysis of the results indicated that those with greater numeracy skill were more likely to choose the less costly plan. But for the whole set of studies, numeracy had little influence on the choices compared to the influence of the CINCS effect. Another of the studies showed how a verbal nudge to attend to the total costs and benefits was enough to lessen CINCS. Use a nudge to cinch shopper understanding when you suspect CINCS is present.

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