Many consumers find it more difficult to justify buying frivolous, hedonic purchases — in other words, purchases from fine chocolates and DVDs to vacations that are motivated by fun and are often frivolous or luxurious — than to spend money on utilitarian purchases, such as food or gas. New research from Columbia University and Tsinghua […]
Read More… from Why Promotions Work Better for Luxury and Hedonic Purchases
Bundling products and services together impacts the perceived value of the individual items in that bundle in surprising ways. Recent research from professor Ayelet Fishbach of the University of Chicago’s Booth School of Business, working in collaboration with doctoral student Franklin Shaddy, shows an asymmetry in the valuation of individual items depending on whether the […]
Read More… from Contradictory Attitudes of Consumers to Bundling
When it comes to business – and most areas of life – we tend to think in straight lines. For example, if one shelf holds 50 books, two shelves will hold 100 books and three shelves will hold 150 books. Graph the number of shelves on an x-axis and number of books on a y-axis […]
Read More… from How Linear Thinking in a Non-Linear World Leads to Wrong Decisions
Companies struggle with two apparently contradictory goals. They want their brands to be central in their category — in other words, the brand of record, similar to the position held by Coca-Cola in the soda category or McDonald’s in fast food. At the same time, however, they want their brands to be distinctive, standing out […]
Read More… from Mapping Brand Strategy: Balancing Centrality Vs Distinctiveness
Before going to a store, consumers have an expectation in their minds about how much the product they want to buy will cost at that store, and at other stores. Once they see the actual price in the store, they will update their expectations about the prices they might find for the product at other […]
Read More… from How Price Expectations Drive Customer Purchasing Decisions
Özalp Özer of The University of Texas at Dallas and Yanchong Zheng of MIT Sloan researched the role of regret and availability misperception in shaping a retailer's pricing and inventory strategies. They found that forward-looking consumers who see a product they want to buy will hesitate: should they buy it now, or wait till later when […]
For most consumers, waiting in a long queue is a frustrating experience. There is nothing to be gained from standing in a slow line at the grocery store or waiting endlessly on the phone as a call centre automated voice intones again and again that “your call is important to us.” Most consumers don’t realize, […]
Read More… from The Surprising Benefit of Long Queues for Customers and Business
Many managers believe that quality is something that they as managers and decision-makers can control. Quality is internal and stable, unlike prices, which are subject to changing market conditions. Although prices are set internally, of course, these outside market pressures effectively, in the view of managers, take price decisions out of their hands (for example, […]
Read More… from Do Your Managers – Responses to Market Results Damage Profits?
Competing aggressively and repeatedly on price can threaten the future of companies. The losers of price wars have been known to go out of business, and the survivors to suffer a long-term squeeze on profitability. Generally, the winners are companies that have a superior cost structure. It is, however, possible for a ‘weaker’ company to […]
Through crowdfunding, investors choose to participate in new projects by becoming ‘pre-buyers’. The term ‘pre-buyer’ is used because no money changes hands until the venture has enough funds to start operations. If not enough money is raised in the allotted time, the venture fails. The investment occurs sequentially, so that new pre-buyers can see the […]
Read More… from How Crowdfunding Affects Product and Pricing Decisions
