Price bundling is a prevalent marketing practice, where consumers receive a discount if they purchase two or more products together (Stremersch and Tellis 2002). The existing literature primarily focuses on the type of price bundling where the products in the bundle are fixed by the retailers. Most of the research in this domain investigates the optimal pricing strategies for the goods in the bundle and their subsequent effects on consumers’ bundle evaluations, willingness to purchase, and post-purchase satisfaction (Janiszewski and Cunha 2004; Khan and Dhar 2010). In this paper, we focus on a different type of price bundling: where retailers only fix the total number of products that should be included in the bundle, and consumers can decide which products to include in the bundle. We term it “self-selected price bundling”, which is frequently seen in the form of “buy two products, get a discount on both” or “buy two products, get a discount on one (of less or equal value)”. Compared to price …show more content…
We compare two possible formats of the self-selected price bundling: (A) buy two items, get a discount on both items, where a discount is applied to the whole bundle; and (B) buy two items, get a discount on the cheaper item, where a discount is applied to part of the bundle. Between these two promotions, at any given price discount, the “discount on both items” promotion generates greater absolute savings (i.e., the absolute amount of money saved) than the “discount on the cheaper item” promotion. If consumers’ spending decisions are driven by the absolute savings, we should predict that consumers would spend more when offered the “discount on both items” promotion than the “discount on the cheaper item” promotion. However, we demonstrate in four experiments that consumers’ spending follows the opposite
Deciding whether or not you want to attend college is definitely a tough decision that needs to be taken seriously. The financial aspect of college is always the worst and most dreaded part, but it is many times the biggest deciding factor on which school you actually attend. Tuition rates across the United States are completely outrageous, and guess what? They are still continuing to sky rocket. Year by year the cost of college raises by a seemingly small about, but once it all stacks up and the final cost is all calculated up, it may bring you to tears. My question is, are you really getting your money’s worth out of college?
Extreme shoppers get a thrill out of buying more than they would be able to otherwise because of the savings they obtain from their bargains. Lyz Lenz wanted to test using coupons vs. using a bargain store. She created a shopping list of groceries needed for the week. At the bargain store she spent $103.16 sticking strictly to her list and only buying what the family needed for the week. At the local store using coupons she s...
By being constrained to only a certain amount of money made me more cautious about the quantity of products that I was buying and what brand the products were. By budgeting it made me realize that going to big name grocery stores isn’t always the most ideal option, such as Walmart and Meijer tend to be more expensive where Family Fare and Aldi’s are fairly more on the cheaper side when it comes down to prices. I realized that shopping at Family Fare and Aldi’s is more convenient for people to shop at when trying to save money and way more affordable while on a budget. While being constrained it made me find out how much cheaper the off brand products are rather than the name brand ones, which is surprisingly different when the product is basically
The critical challenge within in today’s society is that college tuition should be free or if not free, more affordable for all students. Certainly, higher education should not be considered a luxury where only the wealthy could afford, but an opportunity for all caste systems. It must be an accessible and affordable opportunity for all students in order for them to invest in their education. Higher education is important because it provides more careers to choose from than the careers offered without having a college degree. Ultimately, the issue here is whether it is right to make college tuition more affordable for the students.
In Exhibit A scenario 3, the retailer gets the same margin, we get a 3% increase in the margin and clients get a 5% discount, a win-win-win scenario. I also believe that, since we’re controlling the message and communication, unit sales will increase more than the 7% we saw in the Staples test to at least 10% as we will have creative control and will be able to communicate with the customer directly and
Atlantic Computer is a large manufacturer of servers and other high-tech products. They are known for providing premium high end servers. Atlantic Computer’s is in the process of introducing Tronn, a new basic server, which includes Performance Enhancing Server Accelerator (PESA) software. This software will allow Tronn to perform up to four times faster than its standard speed. Therefore these two new products were specifically designed to sell as a bundle or “Atlantic Bundle.” Jason Jowers, fresh off of his MBA degree is responsible for developing the pricing strategy for the “Atlantic Bundle. After much research Jowers narrowed down to four different routes on how the bundle can be priced: status quo, competitive, cost-plus, or value-in.
With the rapid growth of college tuition, it has become an important issue in higher education. College Tuition is simply defined as the charge or fee for instruction, at a private school or a college or a university. Most people agree today that college tuition is too high or that it needs to be completely dismissed. There are some however, that may disagree with the claim about college tuition and state that college tuition is necessary for college growth, and it’s primary purpose is to pay for college expenses to support the institution financially. Research shows that college tuition is too high and that debt has become a standard in America after attending post-secondary school.
Helgeson, James G., and Eric G. Gorger. "The Price Weapon: Developments In U.S. Predatory Pricing Law." Journal Of Business-To-Business Marketing 10.2 (2003): 3. Business Source Complete. Web. 15 Apr. 2014.
Customers with budget constraint may not view too many choices as favorable as they choose products base on lowest price.
This report aims to provide a mix review of theories and personal case study. I will apply two consumer behaviour theories in relation to my own purchase decisions.
Participative pricing mechanisms, depending on its innovativeness, can be an advantageous promotion tool to catch potential customers? attention. Moreover, it gives seller a unique data regarding consumers? willingness to pay for a specific product or a service (Kim, Natter & Spann, 2009; Spann, Skiera & Schaefers, 2004). These data can be used as a forecast when predicting future sales of a product or a service (Kim, Natter & Spann, 2009).
For instance, convenience offerings are low-priced goods that consumers can effortlessly acquire because they are relatively ubiquitous while shopping offering requires the consumers’ effort in comparing and contrasting various brands and retail outlet to find the best product at a good price. Besides, while convenience products are needed on a daily basis, shopping goods may not be required on a daily basis and it has a higher price compared to convenience goods. (Tanner & Raymond, 2010). Furthermore, specialty products are different from convenience and shopping offering because it is more expensive from the previous offerings and it is also not commonly sold in retail outlets. The consumers are few and the products are purchased less frequently, which give it a high margin profit. Finally, unsought offerings are different from all because they could be acquired even when it may be unnecessary at the moment. It is a product of circumstance by any
Consumers are motivated to spend more when there are incentives presented in the form of discounts and special promotions. Their satisfaction in spending less to buy a desired item indicates how incentives work by influencing an individual’s decision making ability. The fact that the item was on a discount enabled the individual to buy it as the reduction in the price of the item was a strong economic incentive. The concept of incentive is present in everyday life situations as it basically impacts the actions of every individual. Incentives are efficient tools used to manipulate the human behaviour in order to achieve desired outcomes.
... these findings could assumedly be quite broad. While priming may not convince consumers to buy everything in a shop, it could influence their choice of a single product if primes related to that product are exposed in the environment. Present research also shows that the nonconscious influence of visual and even olfactory primes influence an individual 's thinking and behavior. These could be applied to store and shop settings to influence a consumer 's choice of product. Advertised reference prices have been the study of marketing and pricing research for many years. With the continued success of sales when advertising a reference price and offer price simultaneously, it does not look like stores will be changing that sale tactic anytime soon. So next time you see that sale sign, commercial, or even catch a scent of cleaner, just know you are already being primed.
2. Kotler and Keller define six product-mix pricing methods: product-line pricing, optional-feature pricing, captive-product pricing, two-part pricing, by-product pricing, and product-bundling pricing (Kotler & Keller, 2012). An optional-pricing method implies offering optional features, products and services in addition to the main product, with some attributes included in the standard price and others being charged separately. Toyota can implement this type of pricing to its manufacturing process. For instance, the firm could put a standard price for its “mono-spec” Scion and offer a multiple of customization elements at dealerships for a separate price. Toyota can also use product-line pricing method, which suggests asking different prices for different...