Behavioral Aspects of Pricing

Buyers sometimes exhibit seemingly “irrational” behavior with respect to prices and use socially embedded heuristics to simplify their purchase decisions. In some cases small changes in prices can lead to much larger than anticipated changes in sales and profitability. Sellers need to understand the heuristics consumers use, the situations in which they emerge, and recognize how they can respond in markets where information and knowledge of product attributes and competitive prices is increasingly available via the Internet. This chapter explores consumers’ behavioral reactions to price through a review of contemporary literature in the field of pricing. The chapter delineates the nature and scope of these effects based upon a critical review of the most up-to-date empirical research in the field, and concludes by providing implications for innovation in pricing, and guidance for managers to reduce the disconnect between themselves and consumers

The effects of shelf display on online grocery choices.

Research on shelf effects in traditional grocery stores has shown that a product's absolute and relative shelf position may strongly affect consumer choices. In this paper, we examine whether and how such shelf effects translate into an online grocery context. We find that a product's choice probability increases when presented on the first screen or located near focal items - especially when the latter are out-of-stock. These primacy and proximity effects have a stronger impact on choice decisions when assortments are more difficult to evaluate and when a clear shelf organization facilitates the use of shelf-based choice heuristics.Effects; Shelf; Choice;

Shelf Sequence and Proximity Effects on Online Grocery Choices

Research on traditional store shelf effects has shown that a product’s absolute and relative shelf position may strongly affect consumer choices. In this paper, we examine whether such shelf effects are still at play in an online grocery store. While traditional ‘eye-level’ placement is no longer predominant, we find that a product’s choice probability increases when presented on the first screen or located near focal (highly-preferred) items. Our results further demonstrate that these primacy and proximity effects depend on assortment size and composition. Larger and more difficult to process assortments complicate the choice process, thereby stimulating the use of shelf-based simplifying choice heuristics.marketing ;

Borgs in the Org? Organizational Decision Making and Technology

Data warehousing and the development of the World Wide Web both augment information gathering (search) processes in individual decision making by increasing the availability of required information. Imagine, for example, that one wanted to buy new golf clubs. Thirty years ago, the cost of information gathering would likely have limited an individual\u27s search process to geographically proximal vendors and the golf clubs they stocked. Today, a prospective purchaser can log onto the World Wide Web to find out what types of golf clubs are available anywhere; consult databases, chat rooms, and bulletin boards (e.g., epinions.com) to gather product information and user opinions; and compare prices across vendors around the world

Street cred : are media consumers craving more “authenticity” in the digital age?

Media organizations that provide news have traditionally relied on audience perceptions of truth and credibility to lure more readers, viewers, and listeners. The author explores whether authenticity has emerged in the digital age as an additional ingredient in media consumers’ daily decisions about where to turn – and where to return – for trustworthy information. As it becomes ever-more of a challenge for consumers to distinguish reliable information from “fake news” in the 21st century, audiences may be seeking content from media organizations that feels more authentic, genuine, and personalized. Three case studies drawn from new media, as well as legacy media, help illustrate what traditional and startup media institutions can do to better understand audience attitudes and behaviors: the HBO series “Last Week Tonight with John Oliver,” the online site Reddit, and the Pulitzer Prize-winning work of Washington Post reporter David Fahrenthold.Communication Studie

Consumer Behaviour Theory: Approaches and Models

Critique of the various approaches that have been taken towards the study of Consumer Behaviou

Road User Charging – Pricing Structures.

This project considers the extent to which the public could cope with complex price or tariff structures such as those that might be considered in the context of a national congestion pricing scheme. The key elements of the brief were: • to review existing studies of road pricing schemes to assess what information and evidence already exists on the key issues; • to identify what can be learned about pricing structures from other transport modes and other industries and in particular what issues and conclusions might be transferable; • to improve the general understanding of the relationship between information and people’s ability to respond; and • to recommend what further research would be most valuable to fill evidence gaps and enable conclusions to be drawn about an effective structure

Information Delivery, User Decision Approach, and Choice Environment: Examining the Effectiveness of Non-Compensatory and Customization-based Online Decision Support.

Decision support research has largely focused on the mechanics of tool design, with less attention paid to the way the alternatives are presented to the user - that is, the format of the output, how the decision tool design can play a role in it, and the output content (characteristics). Furthermore, little research has examined specific decision contexts and user’s cognitive aspects pertinent to the choice task, and their role during an online purchase. This study addresses these issues by investigating the impact of output format and content of a non-compensatory (NC) tool and a customization-based tool on user’s decision quality in the context of a health insurance purchase. It also examines the moderating role of context (perceived risk) and user’s decision approach (price heuristics) – both salient in a health plan choice. Drawing from risk perception, decoy effect, price order effect, and options framing, this research carries out 2 studies: 2x3x2 full factorial between subjects experiments. Study 1 examines the effect of NC Descending (price High-Low) choice sets with asymmetrically dominated alternatives, while Study 2 examines NC Descending, NC Ascending, and customization-based tools. Both studies also investigate the roles of perceived risk (high vs low), and user’s decision approach (price heuristics-driven strong vs weak). Results of Study 1 demonstrate that output content characterized by price anchoring differentially affects user’s decision quality. These dynamics change for users under different levels of perceived risk and with disparate decision approaches. Study 2 indicate that by subjecting the user to reference dependence, usage of NC Descending tool can have a negative impact on decision quality (highest price paid), and usage of NC Ascending and Financial tool have a positive impact (lower price paid). Usage of a customization-based tool, as per the design delineated here, mitigates the negative impact of NC Descending, and further lowers, the influence of NC Ascending tools, by enforcing cost-utility analysis, adopting base-level reference point, and enabling more flexible item composition. The study contributes to: a) information systems, by uncovering detailed dynamics of the interactions between information delivery and the user; and b) boundaries of reference dependence, thus, loss aversion