In 1974 an article appeared in Science magazine with the dry-sounding title “Judgment Under Uncertainty: Heuristics and Biases” by a pair of psychologists who were not well known outside their discipline of decision theory. In it Amos Tversky and Daniel Kahneman introduced the world to Prospect Theory, which mapped out how humans actually behave when faced with decisions about gains and losses, in contrast to how economists assumed that people behave. Prospect Theory turned Economics on its head by demonstrating through a series of ingenious experiments that people are much more concerned with losses than they are with gains, and that framing a choice from one perspective or the other will result in decisions that are exactly the opposite of each other, even if the outcomes are monetarily the same. Prospect Theory led cognitive psychology in a new direction that began to uncover other human biases in thinking that are probably not learned but are part of our brain’s wiring.

Thinking fast and slow.

The Sage Encyclopedia of Social Science Research Methods

Blink: The Power of Thinking without Thinking / Strangers to Ourselves: Discovering the Adaptive Unconscious

A model of consumer buying behavior is used to identify household characteristics that should affect deal proneness. The model treats household purchasing and inventory decisions like those of a firm. In other words, the household's purchasing decisions are assumed to be based on such factors as transaction costs, holding costs, and stockout costs in addition to product price. Household characteristics then are related to these cost parameters to identify households that are likely to be deal prone. The predictions are tested empirically by use of panel data for five frequently purchased products. The empirical results indicate that deal prone households can be identified and that the key variables affecting deal proneness are household resource variables such as home ownership and automobile ownership.

Identifying the Deal Prone Segment

Pricing is one of the most crucial determinants of sales. Besides the actual price, how the price offering is presented to consumers also affects consumer evaluation of the product offering. Many studies focus on “price framing,” i.e., how the offer is communicated to the consumer —is the offered price given along with a reference price, is the reference price plausible, is a price deal communicated in dollar or percentage terms. Other studies focus on “situational effects,” e.g., is the evaluation for a national brand or a private brand, is it within a discount store or a specialty store. In this article, a meta-analysis of 20 published articles in marketing examines the effects of price frames and situations on perceived savings. The results reveal many features that significantly influence perceived savings. For instance, while both the percent of deal and the amount of deal positively influence perceived deal savings, deal percent has more impact. Further, the presence of a regular price as an external reference price enhances the offer value of large plausible deal and implausible deals, but not of small plausible deals. Thus, high value deals should announce the regular price, but not low value deals. Overall, the results have several useful insights for designing promotions.

A Meta-Analysis of the Impact of Price Presentation on Perceived Savings

Assessing the sales effectiveness of differently located endcaps in a supermarket

Behavioural and psychographic characteristics of supermarket catalogue users

Purpose




The purpose of this paper is twofold: first, to provide a descriptive analysis of consumers’ ability to comprehend and use common price promotion information when they choose to do so (e.g. to find the least expensive price or to understand the savings amount); second, to identify which consumer groups (in terms of demographic characteristics) find price promotion comprehension particularly challenging.




Design/methodology/approach




An online questionnaire with 14 measures (four literacy, ten numeracy) was administered in the study. Data from 607 Australian consumers were analysed using descriptive, cross-tabulation, and multiple regression analysis via IBM SPSS analytics software.




Findings




On average, 20 per cent of the consumers surveyed were unable to comprehend the price promotion signage. On average, 13 per cent of the consumers were unable to carry out arithmetic tasks using the information on price promotion signage. Multiple regression models showed that income level was the main driving factor for the consumers’ price promotion literacy and numeracy levels.




Research limitations/implications




The present study is the first exploratory examination of consumers’ levels of comprehension (literacy) and effective use (numeracy) regarding common types of price promotion communication. The use of online samples and data collection method overestimates the results effect.




Originality/value




This is a pilot field study to investigate whether levels of consumers’ price promotion literacy and numeracy are adequate for everyday decision making. The information can be used as evidence and justification for further research.

A descriptive analysis of consumer’s price promotion literacy skills

Manufacturers pay premiums for endcap real estate because shoppers navigate the perimeter of stores, avoiding the aisles. Research has not established how the physical and visual reach of endcaps—product displays strategically placed at the end of a shopping aisle—might vary across locations in a store. This study explores how foot traffic and visual reach of endcaps differ by location. The most prominent endcaps, in terms of both foot traffic and visual reach, were at the back of the store. These had 24 percent more foot traffic and 30 percent more visual reach than front endcaps. Evidence from this study will help marketers reach more shoppers in different endcap locations in the supermarket.

The Real Estate Value Of Supermarket Endcaps: Why Location In-Store Matters

The quality of ambulance services has an immense impact on patients' future well-being and quality of life. Patient satisfaction is one of the key metrics for evaluating the quality of this service. Yet, the patient satisfaction measurement may be limited in its ability to accurately reflect this service quality, and even reflect factors beyond the patient experiences. We analyze 10 years of survey data to reveal a number of factors that systematically bias ambulance satisfaction ratings. Taking into account these biases provides more robust comparison of ambulance performance over time or across different jurisdictions.

Pei Jie Tan

Papers

Assessing the sales effectiveness of differently located endcaps in a supermarket

Behavioural and psychographic characteristics of supermarket catalogue users

A descriptive analysis of consumer’s price promotion literacy skills

The Real Estate Value Of Supermarket Endcaps: Why Location In-Store Matters

Understanding the factors that influence patient satisfaction with ambulance services.