Consumer Perception of Discounts

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Proud Texan's picture
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05/30/2008

 Interesting write up concerning consumer perception of discounts:   Go  here

Weaver's picture
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01/24/2012

In my previous life costs of parts/fluids would change based on external factors - gas went up so did the cost of an oil change.

We raised the cost of an oil change to cover these costs and basically did it as a lost leader - no real profit - a hook to get them in so we could see what else the car or truck needed, then it was my turn to "sell the work".  With that said when fuel/oil costs would drop in winter and we were often dead slow waiting for our "annuals" those that did all their catch up repairs using their tax refunds to start making appointments.  I would not drop the price to get more work for still no profit, I would offer a deep discount so the customer thought they were getting a deal.  profit ratio was the same, and we found work in the winter rather than staring as the snow flakes and praying for a dead battery or frozen radiator.

Discounts work!  Big time, once I convinced the ex to do that we were busy through the holidays and right up to tax season.  And 20% perceptually is way better than $20 off even if the actual dollar discount was the same.

 

Proud Texan's picture
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I don't think it's any different in 2012.   We are programmed consumers.   I was in marketing for many years and we were always playing mind games with prices.   If our competitor was selling something for $19.99,  we would sell it for $19.67.    

We respond in a very predictable ways to marketing ploys.   Why do you think the Home Shopping Network has stuck around so long.   Why do they still sell Chia Pets?   Because they convince consumers that they NEED that crap.   Let the buyer beware.

It's certainly something to consider when offering discounts in a B&B setting.    For a room,  10% OFF sounds better that  $10 or $15.
Perception is everything.

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10/07/2008

In our industry I do believe it is diff now, with Priceline, Living Social, etc. People want to be cheapskates, and they want a bargain!

Case in point this email today:

 

we´re looking for an accomodation from june 19th to june 21th (2 nights) for 2 adults (1 couple).

If you can make us an special offer, we´ll wait for your e-mail.

 

He could save $10 by booking online, but that is not good enough, needs a special offer from us. PS 10% not only sounds better IT IS BETTER! 

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Joey Camb's picture
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04/02/2010

what makes me laugh is just had a review 2.5 for value out of 10! they stayed with us as they couldn't get a 1 night booking in York as it was the races and it would have been a minimum of $400 per room as there is such a huge demand. We are very competatively priced with similar rooms locally probably $20 more at least! what idiots they have no clue what value is.

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Kay Nein's picture
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02/13/2012

 That's really interesting.  I didn't notice it was from 1998, but they often quoted other studies conducted in the 70's.  I do wonder, however, with the economy as it has been for the last 4-5 years, how much these findings would be different if they were done in 2012...

Arks's picture
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05/22/2010

I notice it's from 1998 but the psychology of discounting probably hasn't changed much. If you don't want to read the whole paper, you can skip to the end and read the conculsion.

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