Question

Consider how the psychology of pricing affects you. Describe a recent instance where you were influenced by eight biases in pricing tactic (such as a two-for-one offer, coupon, and so on) to make a purchase.

What was the company trying to achieve?

Did the tactic hurt or help the company overall?

Discuss price adjustment considerations and legal and ethical considerations

Answer 1

Pricing is one of the major components of marketing. There are 4Ps of marketing i.e. product, price, place and promotion. The influence of price is more as the first thing that the customer wants to know about a product is its price. The influence of price is ao strong that the customers will decide whether to buy a product or not based on the price mainly. The deciding factor therefore, in any purchase decision is price mainly. Sometimes companies try to influence the pirchase decision of a customer by changing the price of the product . These can be through discounts , offers, coupons etc. Recently I have experienced this myself while purchasing a tea packet. There was a half kg packet available and a 1 kg packet also. The half kg packet had a noodles pack free on it whereas no such offer was available on the 1kg pack. This influenced my decision to purchase and I ended up purchasing the half kg pack as it had a noodles pack free with it, though I had initially planned to buy the 1kg pack. Later on I realised that the sales of the half kg pack was less ans hence the offer was provided to boost the sales of the same. The tactic therefore helped the company as it was able to attract more customers to buy the half kg pack. The legal considerations are that the price should be as per the market price of other companies. The ethical consideration is that there should not be any frauds involved in the setting of the price.