定价策略 课件 Chpt 05 - Psychological Influences on Price Sensitivity

TimJ.SmithPricingStrategy:SettingPriceLevels,ManagingPriceDiscounts,&EstablishingPriceStructuresPowerPointbyTimJ.Smith,PhDManagingPrincipal,WiglafPricingAdjunctProfessorofMarketing&Economics,DePaulUniversity©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Chapter5PsychologicalInfluencesonPriceSensitivityTheRoleofNon-PhysicalInfluencesonthePerceptionsofAlternatives,Value,andPrices©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Whydopricesendinnines?Ifprivatetransactionsarejustthat,private,whydocustomerscarewhatotherspaid?Howdocustomersperceivepricesandofferings?Aretheirinherentbiasesthatinfluencetheperceptionofvalueandprice?Canafirminfluenceacustomer’sperceptionofthevalue?Stretchquestion:Isthebestpricealwaystheonethataccuratelyreflectsvalue?©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AgendaQuantitativeMethodsAloneareInsufficientforPricingDecisionsPricingaproductproportionaltovalueisfundamentalprincipalinstrategicpricing,howevervalueisasubjectivematterValueBasedPricingTechniquesallsufferfromaninabilitytofullyincludesubjectivebehaviorExchangevaluemodelsrevealthepotentialvaluewithinaproduct,yetdependuponthebenefitsthatarequantifiedwithinthemodel,andwhichbenefitsshouldbequantifiedisasubjectivedecision.Conjointanalysisrevealsthecurrentperceivedvalue,butnotthepotentialtochangevalueperceptionsEconomicpriceoptimizationignorestheothermarketingvariablesundercontrol:branding,placement,pricestructure,Convincingcustomersofthevalueshiftsthepricingchallengetomarketingcommunicationandsalesprofessionals,whomustconfrontcertaindecisionmakingbiasesofcustomers.Customerbeliefsareundertheinfluenceofthefirm©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.InfluencingPriceAcceptanceTherearenumerousfactorsthatinfluencehowcustomersperceivevalueandprice.Manyofthesefactorsarisefromdeeper,psychologicalinfluences,andperhapsevenbiologicallyevolutionaryinfluencesintheirdevelopmentandexpressioninhumanbehaviorRatherthantakinganapproachofattemptingtocorrecthumanbehaviorandmakepeoplesomehowmorelogicalinourpurchasedecisionmaking,itismoreusuallyefficienttoUnderstanddecisionbiasesinpurchasingbehaviorUncoverapproachestoreducingpsychologicaldissonance,UnderstandthelimitationstopricingpowerAndthusfacilitatecustomerdecisionstopurchase©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BrainasaPredictiveMachineCurrentresearchinneuroeconomicsisrevealingmanyintriguinginsightsintohowhumansthinkInonemodel,thehumanbraincontinuouslygeneratespredictionsaboutwhattoexpectintheenvironment.Forexample,ifyouseeachairthatyouhaveneverseenbefore,youcanstilldeterminewhatitis,itsfunction,approximateweight,approximateprice,andothersuchcharacteristics.Toderivetheseexpectationsrapidlywerelyonsurprisinglylittleinformation.Neuralcircuitsmediatevitalmentalskillsthattranslateinformationintoimpressions,preferences,judgments,andpredictions,andthereforewillingnesstopayConsiderusasCOGNATIVEMISERSrelyingonHURISTICStomakedecisionsfaster©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.It’syourbraintoo.

Useyours,Don’tfixtheirs.Someofthebetterunderstoodfactorsthatinfluencepriceperceptionsandvalueperceptionshavebeenwelldocumentedinresearch.Somedecreasepricesensitivityandcanbeinfluencedbythefirm’sactionsanddecisions,thusformanareatoimprovethepricingpowerofthefirmOthersprovideinsightsintothepsychologicalinfluencestoacustomerspricesensitivityandwillingnesstopay,thusprovidingguidancetorestraininappropriatepricingpractices©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.TrueEconomicCostsSharedCostEffectSwitchingCostsExpenditureEffectDifficultComparisonEffectPerceptualChallengesPriceEndingsin9sFairnessEffectOverconfidenceinFutureEconomicEfficiencySmallPieBiasPromotionalInfluence ProspectTheory LossesWeighHeavierthanGainsInflectionatthePointofReferenceDiminishingSensitivityRiskAversioninthePositiveFrameandRiskSeekingintheNegativeFrame UtilityFunctionfromProspectTheoryPrescriptionsEffectsRelatedtoProspectTheoryReferencePriceEffectsEndowmentEffectAnchoringComparisonSetEffect FramingEffect OrderBiasEnd-benefitEffect©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BehavioralEffectsthat

InfluencePriceSensitivitySharedCostEffectPricesensitivityisreducedwhencustomersuseotherpeople’smoneytopayforaproductForinstance,businesstravelersoftenreceivefullreimbursementfortravelexpenses.AirlineloyaltyprogramsenableairlinestomarginallyincreasepricesbecausethepriceispaidbythebusinessbutthechoiceofairlineisinfluencedbythetravelerToalesserdegree,rebatestolowerpricesensitivityduetothepartialpaymentoftheproductthroughtherebate.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.FourFundsofMoneyFundsSourceFundsPurposeThemselvesSomeoneElseThemselvesSomeoneElse1ModeratePriceSensitivityHighUtilityPersonalSensitivity2ModeratePriceSensitivityHighUtilitySensitivityofGiftGiving3LowPriceSensitivityHighUtilityPersonalSensitivity4LowPriceSensitivityLowUtilitySensitivity©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.FourFundsofMoneyPeoplespendtheirownmoneyonthemselves.Whentheydoso,theypayhighattentiontogainingutilityfromtheproductandgettingthemostutilityperdollarspent.Peoplespendtheirownmoneyonsomeoneelse.Whentheydoso,theyareseekingtomaximizetheutilityofthegiftrecipientaswellasmaximizetheirutilityingivingthegift.Thus,theyremainpricesensitivebutthedefinitionofutilitychanges.Peoplespendsomeoneelse’smoneyonthemselves.Inthiscase,thecustomerwillbeverybenefitoriented,butlesspricesensitive,thanwhendrawingfrompriorfundsofmoney.Andlastly,peoplewillspendsomeoneelse’smoneyonsomeoneelse,suchasinthecaseofbuyingproductsforabusiness.Intheabsenceofdecisionmakingoversightandproperincentives,peopledrawingfromthislastsourceoffundsareneitherverypricenorbenefitsensitivity

©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SwitchingCostsEconomicSwitchingcostsareanycosts(opportunityanddirect)relatedtoswitchbetweensuppliers.Theyarisefromproduct-specific

investmentsbuyersmake,whichmaycomederivefrominmonetaryorpsychologicalfactors.Productspecificinvestmentsdecreasepricesensitivityforexistingcustomers©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ComplimentarygoodsAcustomerpurchasesaniPodandlaterpurchasesaniPoddockingstationtolistentotheirmusicinthehome.Thedockingstationisacomplimentarygood,andpurchasingthedockingstationmakesthecustomermorelikelytorepurchaseaniPoduponthenextpurchaseoccasion.LearningAcustomerpurchasesDreamweaverandlearnshowtomakewebsites.SwitchingtoPagemakerrequiresrelearning.EngineeringCostsAcustomerlearnshowtoimplementaspecificchipforaspecificapplication.Changingthechiprequiresre-engineering,re-certification,andotherdirectcosts.(ProductYields/TQM)BrandLoyalty©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SwitchingCostsfrom

ProductSpecificInvestmentsExpenditureEffectTheexpenditureeffectreferstotherelationshipbetweenthepricetagandthewillingnessofcustomerstoshoparoundWithlargeexpenditureproducts,customershaveanincentivetosearchforalternativesandpricecompareinordertoreducetheirexpenditure.Withproductsthatareassociatedwithsmallerexpenditures,thefinancialincentivetopricecompareisreducedwhilethesearchcostsremain.Thewillingnessofcustomerstoevaluatealternativesdependsonhowlargetheexpenditureisrelativetotheeffortnecessarytoreduceit.Higherpricesensitivitywhenexpenditureislargerportionofbudget.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.DifficultComparisonInfluenceBymakingproductandpricecomparisonsdifficult,marketerscanincreasesearchcostsandthedecisionmakinguncertaintyofcustomers,thusdiscouragingproductswitchingandreducingpricesensitivity.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BrandedCommoditiesAspirinBrandedpainreliefmedicineandunbrandedgenericmedicinecontainthechemicallyidenticalactiveingredients.Howeverconsumersarereluctanttotrustanunbrandedsupplierandtendtohaveahigherwillingnesstopayforpainreliefmedicine.Brandingitselfmakesinter-productcomparisonsmoredifficultandenableshigherprices.WholeFoodsPricingQuakerOats:$3.49365WholeFoodsStoreBrand:$2.99©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Vonagevs.AT&TIncumbentsliketomakethepricecomparisonmorechallengingbetweenoffers,obfuscatethebenefitsandprice,thusincreasingtheinformationgatheringchallengeforpotentialswitchersanddiscouragingbrandswitchingNewEntrants/Attackerliketomakethepricecomparisonexplicittoenabledecisionmakingandbrandswitching©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.NewEntrantsvs.Incumbents

MarketShareFightsProductSizeVelkýorMalýPivo?AtahospodainPrague,onecanenjoylargebeerfor20CzKorsmallbeerfor14CzK.Onthefaceofit,asmallbeerappearscheaper.Howeveralargeprovides0.5litersofbeer,makingtheunitcostsof4.0CzKperdeciliter,whilesmallisonly0.3litersofbeer,makingtheunitcosts4.7CzKperdeciliter.Onaperdeciliterbasis,largeislessexpensivethansmall.Inthiscase,thedifficultcomparisoneffectenablesthesuppliertoprovideproductatahigherperunitpricebutatalowerperceivedprice.Hieneken5LMiniKegor24Pack?©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SharedCostEffectFourfundsofmoneyimpliesindustrialpurchasesinvolveseveraldecisionmakersanddecisioncriteriaSwitchingCostsProductspecificinvestments,whetherrealorpsychological,increaseswitchingcostsanddecreasepricesensitivityforexistingcustomersExpenditureEffectInindustrialmarkets,increasesintheabsolutesizeorstrategicimportanceofthepurchasedriveincreasesintheincentivestosearchforalternatives,andthereforepricesensitivityDifficultComparisonEffectMakingcomparisonsdifficultbetweenoffersincreasessearchcostsandthereforedecreasespricesensitivity.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.TrueEconomicCostsTrueEconomicCostsSharedCostEffectSwitchingCostsExpenditureEffectDifficultComparisonEffectPerceptualChallengesPriceEndingsin9sFairnessEffectOverconfidenceinFutureEconomicEfficiencySmallPieBiasPromotionalInfluence ProspectTheory LossesWeighHeavierthanGainsInflectionatthePointofReferenceDiminishingSensitivityRiskAversioninthePositiveFrameandRiskSeekingintheNegativeFrame UtilityFunctionfromProspectTheoryPrescriptionsEffectsRelatedtoProspectTheoryReferencePriceEffectsEndowmentEffectAnchoringComparisonSetEffect FramingEffect OrderBiasEnd-benefitEffect©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BehavioralEffectsthat

InfluencePriceSensitivityPriceEndinginNinesOneofthemoststudiedpsychologicalinfluencesisonethatdrivespricestoendinninesIfthereweren’tpsychologicalfactorsdrivingthetendencytoendpricesinnines,weshouldexpectarandomdistribution,meaningthateachdigitwouldendthepriceabout10%ofthetime.Frequencyanalysisofpriceendingsfromzerotoninerevealthatpricestendtoendinnines,andlesssoinfivesandzeros©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.DebunkingHearsayon9endingsAcommonhearsayreasonforendingpricesinninesisduetohistoricalartifactrelatingoddpricingandshrinkageatthecashregisterThistheoryisWRONGThetheorywentasfollows:Even-pricedmerchandisewouldoftenbepaidincashwiththeexactamountallowingclerkstopocketthecash.Byusingoddamounts,clerkswouldhavetousethecashregistertomakechange,thusmakingthepocketingofthecustomercashbyclerksobvioustoshoppersaswellasbookkeeperswhowouldlaterreviewthecashregistertally.Yetifitwasonlyatheftpreventionmeasure,thenalloddpriceswouldbemorecommonthanthoseendinginzero.Weseefromthedatathatclearlythereismoregoingoninpricesettingthanwouldarisefromahistoricalartifact.Infact,endingapriceinninescanincreasethesalesofanitemoverotherprices.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Theeffectofendingapriceinninesalsoextendsbeyondthelast,rightmostdigit.Informalresearchhasexaminedsellingbehaviorandoddpricepointssuchas$24.99,$29.99or$28.53,Whilethelowestpricetendstosellmorethaneitherofthehigherpricesaspredictedbyadownwardslopingdemandcurve,anoddobservationisassociatedwiththepricepointsof$28.53versus$29.99Theproductsellsbetterwhenpricedat$29.99over$28.53,adirectcontradictionofeconomictheory.QuantityPriceQHPHQMPMQLPLEconomicallyPredictedQuantityPriceQHPHQMPMQLPLObserved©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.EndinginNinesDoesHaveEconomicImpactMeaningPricesendinginninestendstoimplydiscounts.PricesendinginzerosaresuspectedtoimplyqualityPostershopsvs.artgalleriesCognitiveAccessibility.Roundnumberssuchaszeroandfiveareeasilyperceived,remembered,andcompared.Thus,zerosandfivesmayfacilitatepricecomparisonandleadtoincreasedpricesensitivityUnderestimationeffectbyLeftRightencodingWiththeArabicnumeralsystem,consumersencodenumbersfromlefttoright.Furthermore,themostimportantdigitsarealwaysontheleft.Timepressedandcognitivelybusyconsumersattemptingtomakedecisionsregardingvalue,alternatives,andtradeoffs,andareencouragedtoreadonlytheleftmostdigitanddiscardtheremainingdigitsasameanstosaveonmentalenergyandtime.Theresultisanillusioniscreatedwhichmakesthe$9.99productappearmuchcheaperthan$10,00©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.MeasuredBehavioralEffectsofNineEndingsMeasuredBehavioralEffectsofNineEndingsFramingeffect.PricingjustbelowtheroundendingpricecanbeframedasaroundnumberwithasmallgainThesmallgainmaymildlyencouragesapurchaseonapsychologicalbasisItinvokes“wins”inamentalbargainingwiththevendorPricingendingseffectsareculturallydependent.PriceendingsinfiveswereobservedtobeoverrepresentedinPolandshortlyafterperestroikaliberalizedmuchofthesovietblockcountries.ThePolishtendencyforfiveshasbeenattributedtotheconfrontationalbargainingpositionofanex-sovietPolandthatledPolishconsumerstoperceivethe9-endingpricesasalossabovethelowerroundnumberratherthanasagainfromahigherroundnumberIncontrast,priceendingsineightswerefoundoverrepresentedinAsianandJapanesecountries,wherethenumbereightrepresentsluckandprosperity©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.FairnessEffectMarshall’sandSmith’smicroeconomictheoryisstructuredontheassumptionofaself-interestasthesoleprimarymotive.Ifpricesareperceivedastoohighforthebenefitsdelivered,customersarefreenottopurchase.Likewise,ifpricesaretoolowforabusinesstopersist,theyarefreenottoproduce.Howeversuchacursoryexaminationoffairnessissuesintradingdoesapricing,sales,andmarketingprofessionaldisservice.Intrading,theconceptoffairnessispersistentlypresent.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Fairness&TheBrainFindingsinbrainphysiology,especiallyevolutionaryneuroscience,showthatthetransactionalcommercialmarketevolvedfromtheinterplayofourself-preservational(egoistic)andaffectional(empathetic)neuralcircuitries.Thus,sharingwithinfamilies,giftgiving,andcommercialactivitiesareallreliantuponanoverlappingsetofcognitivefunctions.Thepresenceofsharingmotivesincommercialtransactionsdrivesexpectationswithrespecttopriceandbenefits.Consumersexpectthatthepricerepresentsasharingofthesurplusbenefitsbetweenthecompanyandthecustomer.Whenpricesareoutoflinewiththeseexpectations,customerscancallfoulandthefairnesseffectwilldampenconsumerwillingnesstopay.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.FairnessPerceptionsCustomersperceivepricesasfairwhentheyarewithinexpectationsbasedonpastinteractionwiththecategoryLargepriceincreasescanbemisperceivedas“profittaking”onbehalfofsuppliersandproducers,orastakingadvantageoflesspowerfulcustomers.CustomersperceivepricesasunfairwhentheyvaryrandomlybetweencustomersThislattereffectplaguedAmazonin2005whencustomersuncoveredpriceexperimentationanddiscriminationattheirwebsite.Theissueoffairnessisnotspreadequallyamongallproducts.Ithasalargerroleinnecessitygoodsthanthoserelatedtodiscretionarypurchase.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.OverconfidenceinFutureEconomicEfficiencyWithsomeproducts,customerspurchasethemwithanexpectationofperforminginsomespecificbehavioralpatterninthefuture,howeverpeoplearesystematicallypoorintheirabilitytopredicttheirownfuturebehaviorExample:CustomersselectedfromacontractofmenusfromthreeU.S.healthclubs.Memberswhochooseamonthlysubscriptionoverpricedat$70attendedthegymonaverage4.3timespermonth,makingaper-visitpriceofmorethan$17.Thesesamememberscouldhaveselectedtopay$10pervisitusinga10-vistpass.Furthermore,customerswhochosethemonthlysubscriptionwere17%morelikelytostayenrolledpastthefirstyearthanannualmembers,whichissurprisingduetothefactthatmonthlymemberspayahigherfeefortheprivilegeofcancellingtheircontractatwill.Theinabilityofexpressedbehaviortomatchexpectedbehaviorwasattributedtooverconfidencebythecustomerswithrespecttotheirfutureself-controlandfutureeconomicefficiency.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SmallPieBiasTheSmallpiebiasisfoundfromresearchonnegotiationsNegotiatorsconsistentlyunderestimatethesizeofthebargainingzone,orinotherwords,believetheyarenegotiatingoverasmallerpiethantrulyexists.Byimplication,theyoverestimatetheshareofthesurplustheycaptureinthenegotiation.Inotherwords,thesmallpiebiasleadssellerstosettlefortoolittleofaprice.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.OvercomingtheSmallPieBiasToovercomethesmallpiebias,itissuggestedthatsellersmakepriceexpectationsofthebuyersreservationprice,andusethenegotiationtoseekdisconfirminginformationthatupdatestheirbeliefsofthebuyer’sreservationprice.Thedisconfirminginformationiselicitedfrombuyersbysellerswhensellersmakeinitialoffersthatareoutsideoftheirexpectedbuyerreservationprice.Inthenegotiation,theycanusebuyerreactionstoupdatetheirexpectationsoftheybuyersreservationprice,andthuspricethetransactionclosertothebuyersreservationprice.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PromotionalSensitivityPromotionsinfluencepriceoptimizationthroughtwokeypaths:Themessagecommunicatedaffectspricesensitivity.Themarketattractedthroughpromotionsholdsadifferentpricesensitivitythanthemarketoverall©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.WhatYouSayInfluencestheir

WillingnesstoPayPriceorientedpromotionsleadstowardsbothlowerpricesandincreasedconsumerpricesensitivity.Oneformofpriceorientedpromotionsarethosethatfocusonthebrandandthepricealone.Suchpromotionsarecommonlyfoundinlocalcircularspreparedwithdistributorstohighlighttheavailabilityofawellknownbrandatalocaloutlet.Valueorientedpromotions,tendtoleadtolowerpricesensitivityofconsumers.Valueorientedpromotionsarethosewhichfocusonthebrandandthefeaturesorbenefitsoftheproduct.Theyarecommonlyfoundinnationaladvertisingeffortswhicharedrivenbytheoriginalproducingfirm.Theeffectofpromotionalmessageshasalsobeenfoundinnegotiationsresearch.Usingkeysellingpointsenablessellerstoachieveahigherfinaltransactionpricesinanegotiation.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.WhoYouTalktoInfluencesWillingnesstoPayThesecondaryeffectofpromotionsonpricesensitivityarisesfromtheabilityofadvertisingtoincreasethesizeoftheaddressablemarket.Advertisingsensitiveconsumerstendtobemorepricesensitiveconsumers.Bybringingnewcustomerintothemarketthataremorepricesensitivethanthemarketoverall,advertisinghasanindirecteffectofoverallincreasingthepricesensitivityofthemarket.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PerceptualChallengesPriceEndingsin9sMeaning,Accessibility,Encoding,FramingallimplypriceendingsinfluencepriceacceptanceFairnessEffectTheexpectationoffairnessincreaseswitheconomicsophistication,andinfluencespricechanges,differentials,anddiscriminationOverconfidenceinFutureEconomicEfficiencyPeoplebelieveareoverconfidentintheirabilitytochangeoutcomesandbehaveinaneconomicallyefficientmannerSmallPieBiasNegotiatorsroutinelybelievetherangeofacceptablepricesissmallerthanitis,andmoreoveranchortheirexpectationpricearoundtheirwalk-awaypricePromotionalInfluenceWhatyousayandwhoyousayittoinfluencestheabilitytocaptureagoodprice©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.BehavioralEffectsthat

InfluencePriceSensitivityTrueEconomicCostsSharedCostEffectSwitchingCostsExpenditureEffectDifficultComparisonEffectPerceptualChallengesPriceEndingsin9sFairnessEffectOverconfidenceinFutureEconomicEfficiencySmallPieBiasPromotionalInfluence ProspectTheory LossesWeighHeavierthanGainsInflectionatthePointofReferenceDiminishingSensitivityRiskAversioninthePositiveFrameandRiskSeekingintheNegativeFrame UtilityFunctionfromProspectTheoryPrescriptionsEffectsRelatedtoProspectTheoryReferencePriceEffectsEndowmentEffectAnchoringComparisonSetEffect FramingEffect OrderBiasEnd-benefitEffect©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedto