Advertisers want your preferences (they’re paying for them,) friends are commanding us on Facebook to choose between pasta and rice (as if….) and now behavioral scientists are getting in the game: a group from New York University wanted to know whether us bargain hunters are more likely buy from retailers advertising “deep discounts” or “everyday low prices,” and found we gravitate to retailers we believe offer good deals on a daily basis.
“One reason consumers find these retailers so attractive is that their product prices tend to be cheaper than those of their competitors on the majority of shopping trips,” the authors wrote. “Consumers seem to prefer many small discounts to a few large ones and their perceptions of average prices do not drive their store choices.”
To simulate 100 weekly purchases from a retail store, the researchers told subjects to buy products from one of two competing retailers — 100 different times. The subjects were given a monetary incentive to minimize spending and were instructed to base their selections strictly on price. (No word if these researchers were also “husbands.”)
On each shopping trip, participants first selected a retailer before they were shown the store prices for that week. The authors often manipulated the prices but in most cases, one retailer used deep-discount pricing while the competing retailer used everyday low pricing of frequent yet small discounts. While the average price of the two retailers was the same for most experiments, results showed that people consistently tend to choose the retailer they believe is less expensive more often than the retailer they believe is cheapest on average.
So there you have it. What strategy to you favor?
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