When shopkeepers want to lure customers into buying a particular product, they typically offer it at a discount. According to a new study to be published in the Journal of Marketing , they are 21 a trick.
A team of researchers, led by Akshay Rao of University of Minnesota, looked at consumers" 22 to discounting. Shoppers, they found, much prefer getting something extra free to getting something cheaper. The main reason is that most people are 23 at fractions.
Consumers often struggle to realise, 24 , that a 50% increase in 25 is the same as a 33% discount in price. They 26 assume the former is better value. In an experiment, the researchers sold 73% more hand lotion when it was offered in a 27 pack than when it carried an equivalent discount.
This numerical blind 28 remains even when the deal 29 favours the discounted product. In another experiment, this time on his undergraduates, Mr. Rao offered two deals on loose coffee beans: 33% extra free or 33% 30 the price. The discount is 31 the better proposition, but the experiment shows the supposedly clever students viewed them 32 equivalent.
Marketing types can draw lessons 33 just pricing, says Mr. Rao. When advertising a new car"s efficiency, for example, it is more 34 to talk about the number of extra miles per gallon it does, 35 the equivalent percentage fall in fuel 36 .
There may be lessons for officials 37 regulate prices too. Even well-educated shoppers are easily 38 . Sending everyone back to school for math seems out of the question. 39 more prominently displayed unit prices in shops and advertisements would be a great 40 .