Why free chocolate makes us crazy

Why does free chocolate make us crazy? Why is the higher price in the Broadway theater selling more fire? Why do 1 million dollars of pleasure, 4 million dollars to make it double? Why bargain, must be preemptive quote, and must lion?

In the priceless: insight into the popular psychological play price game, the author [Mei] Poundstone told us the answer: Price is only a collective illusion. In the psychological experiment, people can not accurately estimate the "fair price", but by the unconscious, irrational, political and other incorrect factors strongly affected.

Marketing experts quickly applied these findings. "Price advisers" advise retailers on how to persuade customers to pay more or pay less, and negotiators offer similar advice for business people to deal with. Brand new price psychology requires business design prices, recipes, rebates and other concessions. It can be said that price is the most common master of stealth persuasion.

The price strategy is actually a hoax:

Scam One

Suppose you're going to buy a jacket for 125 dollars and buy a calculator for 15 dollars. The calculator salesman tells you that the model you want to buy can be bought at another store in the firm for 10 dollars, but you have to drive for 20 minutes. Are you going to the store?

Most respondents said they would go. Another group of randomly selected respondents heard another version of the problem: The jacket was sold for 15 dollars and the calculator was 125 dollars. The calculator at another store sells 120 dollars. Is it worthwhile to go to that store?

This time, most people say "no need".

Retailers have racked their brains trying to understand why ordinary people would prefer to pay high prices here, and not be willing to take the time to buy bargains elsewhere. The results are quite provocative (assuming the survey also applies to real consumers) and are beyond the scope of standard economics. In the two versions of the problem, buyers are planning to spend 140 of dollars and 20 minutes to save $5. "Why would we want to buy a small piece of stuff and drive through town and save some money for something valuable instead?" "Obviously, there is the role of psychological physics." For 15 dollars, saving 5 dollars seems like a lot, and for 125 dollars, 5 dollars is nothing. ”

Scam Two

On a hot day afternoon, you lay on the beach, eager to have a bottle of iced beer. A friend volunteered that he would go to the only small grocery store nearby where he could get a beer. He reminded you that the beer there might be expensive, so he asked how much you were willing to pay. He will buy only if the price in the shop is not beyond your limit. If it's over, he'll come back empty-handed.

In the early 1980s, Taylor presented the puzzle to corporate executives, who were quoted on average at 1.50 dollars. He told the same story to another group of listeners, only to replace the beer place with the bar under the luxury resort hotel. The average price quoted by this group of audiences is 2.65 dollars.

The two versions of the story make it clear that friends buy your favorite beer brand. No matter where you buy it, it is the same product. The atmosphere of the hotel has nothing to do with it, because beer is bought back and drank on the beach. However, executives are willing to offer an average of two dollars for beer at luxury hotels, but the same kind of beer sold at small grocery stores is not worth the price. The bar at the hotel is priced at two dollars, and people think it's a fair price, and it's a rip-off for a small grocery store.

Taylor suggested that the small grocery store "invest in some seemingly superfluous luxury facilities, or add a bar", which he believes will raise the psychological expectations of the right price for beer and lead to more sales.

Another suggestion Tyler gave to the small grocery store was that the oversized beers were not usually 12 ounces, but 16 ounces. Because consumers remember how much a can of 12 ounces of beer would cost, I'm afraid I don't know how much the 16-ounce beer should cost (they can count, but most people don't). In addition, large-capacity beer is more likely to generate extra profits than small cans.

Both of Taylor's ideas can be seen in today's supermarket industry. Upscale supermarkets such as the Whole Foods Market (Whole Foods CMC) make full use of most of the "excess luxury facilities". As a result, they are able to offer high prices that customers cannot accept in other circumstances. Every "Whole Foods" branch has a distinctive production department. "How small are these potatoes?" "The Russian finger potatoes, which are hawking at the Manhattan Time Warner Center, are standing on a billboard," he said, with a kindly question. Obviously, cuter than your little finger--------------do you have the audacity to compare prices?

Store-style supermarkets such as good city and Sam's membership sell the blue cheese salad sauce sold in gallons, and 32 rolls of toilet paper. You think it's a good deal to buy in bulk-sometimes it does, but at other times it's not as good as you think. Many consumers do not know what the cost of a 6-pound pineapple block should be.

"Organic" and "green" labels make the high-grade supermarkets make a fortune. Whatever these terms mean, they are not meant to be: the higher prices no longer appear to be killing customers.

Scam Three

Another beer problem:

Old Joe picked up the beer on the shelf. There is a premium beer, priced at 2.6 dollars, and the other is a cheap brand, selling only 1.8 dollars. Advanced Beer is more "good" (whatever it means). The connoisseurs of the wine-tasting made 70 points for the quality of the premium brands (percentile), while the cheap brands were only 50 points. What kind of beer should old Joe buy?

Joel Huber, a professor at Duke University's business school, and his graduate Christopher Pudo (Christopher puto), Chor Huber The problem to a group of business school students. Students preferred top-grade beers, and the number of high-end beers and cheap beers was 2:1. Another group of students can choose from three kinds of beer, in addition to the two mentioned above, there is another ultra-low-priced inferior beer, the price of 1.6 U.S. dollars, quality score is the lowest, 40 points.

None of the students wanted to buy this super cheap beer. Even so, it still affects people's choices. The proportion of students who chose the previous cheap beer increased from 33% to 47%. The existence of ultra-low-priced beers has made cheap beer a justifiable problem.

And one group of subjects, the three choices they faced were the initial cheap beers and quality beers and a super-class beer. Like many upscale goods, this super-class beer is much more expensive (3.40 dollars), but the quality is only a little bit better (75 points).

10% of students said they would choose Super-class beer. Surprisingly, the remaining 90% of the students chose all the best quality beers. No one wants to buy a cheap beer.

It's like a puppet being pulled by a rope! Hugh and Tripp found that simply adding a third option that few people would choose would push students around.

Choosing a homemade beer should be a pretty simple thing to do. A lot of "taste blindness" (meaning that the person who tested the taste didn't know what brand of drink they were drinking) said that the drinkers could not tell the taste of Budweiser, Miller or silver bullet beer. Because the public-facing beer tastes all the same, you just have to make a trade-off between price and quality (of course, you have to think about "quality" as a marketing illusion).

Scam Four

One of the important insights of behavioral pricing theory is that things that are not sold can affect what is being sold. Tversky like to tell the following story:

The Williams-Williamssonoma kitchenware chain, known for its good quality and high prices, has a magical toaster that costs 279 dollars. They later added a slightly larger model, priced at $429. Guess what happened?

The 429-dollar model was a mess. You're not a boarding school, do you want a bigger toaster? But the 279-dollar model sales have almost doubled.

Apparently, someone has long been obsessed with the quality of the bread machine that Williams has sold. It is a pity that prices discourage them. 279 dollars looks a little expensive. But when the store added 429-dollar models, 279-dollar machines were no longer like luxuries. People can give themselves reason to say: This is a useful machine, 429 dollar model can do things it omnipotent, and its price is cheaper. Another price point has been added, although few will choose it, raising the price that consumers are willing to pay for the toaster.

According to Tversky's judgment, Williams-the horse is not prearranged to do so. From then on, retailers ' contrasting effects on prices are getting more and more enlightened. In 1992, Tversky and Itama Simonson (Itamar Simonson) published papers that expanded the results of Hugh and Purdue's research and pointed out the two principles of manipulative retailing.

First rule: avoid extremes. By investigating (subjects including Minolta cameras, high shi pens, microwave ovens, tires, computers and paper towels), they showed that when consumers were unsure, they avoided buying items that were the most expensive or cheapest, the best or the worst, the model was the largest or the smallest. Most people tend to take the golden mean. So the way to sell 800-dollar shoes is to put a pair of 1, 200-dollar shoes next to it.

Simonson and Tversky wrote that, in terms of perception and judgment, the contrast effect was everywhere, and the same circle, if surrounded by small circles, would appear larger, and if surrounded by a large circle, it would appear smaller. By the same token, the same product will look more attractive if it has a less attractive product, and it will look less distinctive against a more attractive product. We recommend that the contrast effect not only be used on a single attribute of size or attractiveness, but also on the trade-offs of various characteristics.

Thus, they put forward the second principle: weigh the contrast. into a batch of grocery, the store will have dozens of kinds of handbags, according to anyone's standards, these goods are not the highest standards of quality. One is more practical, one is more fashionable, the other color is more interesting, and another one is 60 percent. The loss-averse consumer, uncomfortable with such a complex variety of choices, feared she had chosen a and regretted not choosing B ...

The trade-off principle is that if a object is significantly better than a poor B, consumers tend to buy a--even if there are many other options, even if it is not possible to determine if a is the best of all options. The fact that light armour is better than B is a selling point that carries a far greater weight than rationality. It is clear that shoppers want to ease their anxieties by choosing a reasonable thing for themselves, their friends, and their spouses who scrutinize her credit card bills. She can tell herself that buying a thing is because it is much better than B.

Trade-offs are particularly important in the luxury trade, where brands have flagship stores that sell their own goods. In addition, retailers with strong brands have a great deal of flexibility in price (a shopper who does not buy Choo high heels does not care about what other brands sell). The consultants at Simon Beecher's office have found that they are always blaming customers for setting prices too low. "There is no direct relationship between the price of luxury goods and any cost," a SKP report dryly declared, "The art of luxury pricing is to quantify the value of a product to consumers, regardless of cost, competitor or market price." ”

Coach assigns only one or two extra expensive handbags to each of its flagship stores. They were beautifully displayed and marked their prices with a dignified, well recognized, large typeface. These handbags don't sell much, but even if one doesn't sell, it might be nice.

For example, they have a 7, 000-dollar alligator purse and a similar bag that is ostrich-skinned and sells 2, 000 dollars. Most consumers find it hard to guess which is 7 000 dollars, which is 2 000 dollars, and even some people think ostrich skin is more advanced than crocodile skin.

To make trade-offs work, one option must be "bad." Because almost everyone, even the coach's customers care about the price, so, a price seems to be unreasonable things, in the price of this scale, undoubtedly become a "bad" option. The 7 000 dollar package makes a similar 2 000 dollar package more popular (it's so much cheaper and comes from the same designer's brand). As a result, sales of 2, 000-dollar ostrich leather handbags increased – if not, consumers might find it too expensive and too extravagant to buy it.

The realities of the fashion world perfectly coincide with the two principles of Simonson and Tversky. True fashion is always expensive, uncomfortable, shocking and outrageous. Only a handful of immaculate bodies and ample wallets can afford to wear it. Others are satisfied by buying something more comfortable and more affordable. A few near-unreachable things can manipulate the vast majority of consumers.

Prada is the most highly regarded environment-building. It looked for the famous architect Koolhaas (Rem Koolhaas) to design its own Soho store, the cost is 1 700 dollars per square foot, the rent is paid, but also 1 700 dollars. It would never use a floor space to place things that could hardly be sold, unless there was a secret. The trade-off between the cost of the sale is the same as advertising, window display, or "architect" design. If something is similar to a high-priced anchor, the price is 1/10 of the former (which is uncommon), and people who can't afford a high-priced anchor can always buy a pair of 300-dollar sunglasses to try. Otherwise, the 110-dollar mobile phone pendant is OK! The British Prada website will prompt you where to pick up the cheap (at least online). It offers 10 women's shoes, 23 handbags and 54 "gifts"-gadgets like keychains, bracelets and golf nails. A chain of bracelets to sell 60 pounds, the profit margin how astonishing Ah!

Scam Five

In 2001, Brude's "DB Modern Bistro" (DB Bistro Moderne) sold a 28-dollar burger (with pork ribs and foie gras), a stunning price. It attracts a lot of media attention, a time to emulate the crowd. Bru had to raise the stakes and sell a hamburger with 20 black mushrooms (seasonal dishes) for a price of $150. Subsequently, one of the imitators, the "Wall Street Burger Counter", sold a burger with 25 Wall of shiitake mushrooms and Kobe beef, 175 dollars a Burger.

The hotel restaurant accepted the idea that, after all, in theory, anyone who could afford a hotel in Manhattan had money to burn. 1 000 dollar caviar and lobster omelet were found on the menu at the Novotel Meridien Hotel, The Westin Hotel, where 1 000 dollars of mushrooms and medlar were produced. Put these things on the menu and the restaurant won't cost much. If it's naïve to have a point, the chef will be in the first prize. But the 1, 000-dollar bagel is mostly magic to customers, so that they inadvertently spend more money, the effect is fantastic.

"In places like ' red peppers ' (chili) and ' Apple Bee ' (Applebee), it's a science," said Jim Laube, a former restaurant owner who later changed to a menu consultant, "to these places, Take care to see how they are trying to pay attention to what they want to sell. Listen to me, they know what they want to sell. ”

Shile (Sizzler), Owls (Hooters), Fridays (TGI Friday) and Olive Gardens (Olive Garden) are all of the names of American chain restaurants. No matter how clever the cooking technique, they rely on a set of cutting-edge menu science. The goal of menu psychology design is to direct the customer's attention to the profitable (ie "overpriced") project. According to the tradition of the catering industry, items on the menu are divided into stars, problems, ploughs and thin dogs. The star refers to the popular high profit item, in other words, this kind of thing, the customer is willing to pay than the production cost much higher price buys it. The profit of the problem product is high, but not popular; A thin dog is neither popular nor profitable. Advisers try to turn problems into stars, encourage customers to stay away from the tiller, and call all customers to believe that the price on the menu is more reasonable than it appears.

"Encirclement" is a common trick. Divide expensive items like steak into two components. The customer can't see how little the small part is, but it doesn't matter. He thought the small price was more attractive because it cost less. In fact, the restaurant is originally wanted to sell "small" steak, the so-called "low price" is what they want to open the price. If you have three of such things on your menu, you can really improve your profits!

This digest is from Poundstone, "priceless: insight into the psychology of the public to play price game," a book