We spent our last lecture talking about pricing, from basic concepts and factors, to the various pricing strategies. Now I want to draw your attention back to one topic, psychological pricing, and a related concept anchor pricing or more simply put anchoring. This concept is at the center of a recent book on pricing Priceless: The Myth of Fair Value (and How to Take Advantage of It), by William Poundstone. For this assignment, you will have to read the book review recently published in Business Week. After reading the page-long article, you have to write a short reaction (a minimum of 10 lines). Then, think about when you encountered anchoring while shopping or maybe in another setting. Analyze and recount that experience in detail. Why was it anchoring? Why did it work on you?
Click here to start reading the review. Once you are done reading, return to this post to complete the assignment. When you have a chance, I strongly encourage you to read the entire book. It is an easy read and can help you become a smarter shopper & seller.
Points: 20
Deadline: Friday, March 26th, 11:59pm.
After reading the article on, Pricless: The Myth of Fair Value (and How to Take Advantage of It), by William Poundstone I felt a little surprised and ashamed at how accurate he was. I always believed myself to be a smart shopper, searching for the best deals and priding myself when I did so. But he made a good point,"If you're sure you're too smart for their pricing tricks, that makes you dumber still, because you don't even realize you're being exploited." This is so true because I always fall for a stores sales and discounts, or when a rival store lowers their prices just a little but is still a ridiculous price. When he says, "makes everything else look afforadble by comparison." I often make that excuse for myself. I'll find myself saying, "Well it's so much cheaper compared to so and so's."
ReplyDeleteA time when I experienced anchor pricing was when I was 16 years old and living in southern California. Like Uggs to upstate New York, Rainbow Sandals were a must have to any trendy SoCal teenager. Typically they range from $40-$60 a pair, depending on the style and size you select. Personally, I coveted the single layer arch which was $46. My friend told me that there was an original Rainbow shop in Newport Beach, that sold for a flat $35, with no added tax. We took a three hour roadtrip just to this little shop to buy a pair. This was anchoring because I saw a set price of $46, and therefor began to compare it to that. When I learned I could purchase them for just $11 cheaper, I was hooked. It worked on me because in my head I thought, "Well this is such a great deal. I might as well get them because they're cheaper and I won't be able to find a better deal."
After reading the book review I actually would be really interested in reading it. One of the reasons I like the way the book sounds is because it is extremely true. Every time I go shopping for anything specific I usually like to have a reference price with which to compare it to because it makes me think that I won’t be tricked by a company to pay the higher price. Now that I’ve read this, however, I am definitely more aware of companies planting very outrageously priced items on the market just to increase sales of another more, or less expensive item that they really wish to sell. Call me naive, but I like to think that companies are not trying to deliberately pull the wool over my eyes, but in reality, that’s exactly how it is. Each company is trying to gain the competitive advantage over another, and now they’ve found a way to “bid” on their own products. Now that I am more aware of this type of psychological pricing strategy I will definitely be more perceptive to prices.
ReplyDeleteIn my own experience, it was slightly difficult to think of one, specific time in which I have encountered anchoring. This is a problem because it actually shows just how commonplace this strategy really is in our world. After a while I came up with the perfect instance. One time while at a friend’s house, her boyfriend was checking his bids for something he was selling on eBay. He was really excited because two of his friends had been bidding on his product in order to force other buyers, who actually wanted to purchase it, bid higher and higher. This is an extremely unfair way to sell something because people who actually want to purchase a product are forced to pay way more for something just because other bidders are posing as people actually wanting to buy it. Once this happened, however, it completely backfired because once the bids began to get ridiculously high, each potential buyer began to drop out of the bidding and refused to offer any higher. After a while, my friend’s boyfriend began to notice that other products very similar to his own, offered at a much lower price, were being sold very rapidly. His offer became the “anchor” for other similar products because he continued to increase the bids using his friends as “buyers,” and eventually lost the sale.
I agree with William Poundstone when he says that we are all gullible because consumers really do not have any idea at all what a specific product should really cost in the market. For all we know, the cheapest product on the market could even be overpriced but as long as people keep buying these products, companies will keep selling them at the established prices or even higher. I think that we should all take his advise to stop and think about if a price could be unreasonable or not. Most of the time we really don't think too much about the prices of the things we buy which is why we tend to waste money. We all think we know what something is worth and something might be worth more to someone than the next person, but the point is that most products really aren't worth as much as they sell for. He also says that something can be expensive but it will look cheap compared to the same product that is a lot more expensive. I never realized that we are being tricked by these companies that apparently have the lowest prices.
ReplyDeleteI love Vera Bradley handbags and they tend to be a little expensive considering they are just cloth and nothing fancy like leather or suede so last year when I wanted to purchase a bag that was on sale for $60.00, I thought it was a steal because other bags by Vera Bradley can be $80.00 and up. This is an example of anchoring because Vera Bradley's bags are expensive as it is, but when they add more bags to their line that are more expensive, it makes the cheaper bags look like a steal so people will buy more of the cheaper bags. This anchoring worked on me because I am one of those people that doesn't tend to think about if a price is unfair or not. I thought the bag was a good deal since most of the other bags were more expensive.
Sadly, I think William Poundstone is correct when he identifies consumer behavior as gullible. We, as consumers on the outside, have no idea regarding what the true value (dollar amount) of products are. Often times, what were willing to pay is not determined by an arbitrary value we have in our head going into a purchase, but by how much we see priced by retailers. This number could be way beyond how much the item actually cost to make, and often times it is, as businesses look to maximize profits. Individuals often compare products when making a decision, which is where we see anchoring run its course. The fact that luxury companies have the power and ability to deceive their consumers says a lot about the state of a free market economy. Businesses will continually look for ways to get the most out of their consumers, even if that means being fooled into overpaying for goods.
ReplyDeleteOne example of anchoring can be found in the financial world in investments. Some investors invest in the stocks of companies that have tanked in a short amount of time. In that case, the investor is anchoring on a recent "high" that the stock has achieved and consequently believes that the drop in price provides an opportunity to buy the stock at a discount. It is vital, however, to use a thorough thought process when conducting investment planning. The best investors are the ones that take all perspectives of the company into consideration, in order to see the picture the clearest possible.
After reading the book review, I have to agree to the fact that consumers are gullible. No one really knows how much an item should be so we put our own value on it to decide if it’s worth the price. I’m sure businesses sell their products for double what it costs to make, if not more. Some companies way overprice their products so when they put a sale on it, customers will be influenced to buy more and companies will make more and more money off of it. Even though most things aren’t worth the price we pay for them, consumers decide that they need them and will pay the amount that the company is asking for. So why wouldn’t the company have a high price if people are willing to buy? It’s all about what an item is worth to you. Advertisers can trick us and make us believe that something is worth much more than it is, so of course we will go and buy it.
ReplyDeleteJust like the article said, an anchor is “a high-priced product that may never sell but ‘makes everything else look affordable by comparison.’” One time when I have experienced anchoring was at the store Marshall’s. Marshall’s sells last season designer items at low prices and puts two prices on the tag. They put the price they are selling the item for and then put a “compare to” price that has what the item would have been sold for in the designer stores. When I look at the price tag I think to myself that the item isn’t worth it’s designer price and I would never buy it. But, since the price is cut in half I would just have to buy it because I can’t let a deal like that get away. So in this case, the anchor is the designer price, which makes people want to buy the item because they see that it’s worth that price but they are getting a huge sale on it. The price tag encourages people to buy because consumers are gullible and no one can turn down a sale.
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ReplyDeleteUp until now I always thought of myself as a professional shopper! Spending on average $500 a month for the past few years on clothes and shoes, I always considered myself a pro at finding the best deals and bargains on things. The article “Priceless: The Myth of Fair Value (and How to Take Advantage of It)”made me stop and think about those “great deals” and I realized I was a victim of anchoring. As Poundstone said “If you're sure that you're too smart for their pricing tricks, that makes you dumber still”.
ReplyDeleteTwo years ago I felt as if I needed a new flat screen TV for my home. I looked online and got an idea of prices and what I wanted to spend on one. When I went to Circuit City I found a few TVs that I wanted and narrowed it down to two or three TVs. The was a Samsung 46” TV for around $1,400 and a Samsung 42” TV for $890. For only a few inches less I could save $500!!! Just because of the price difference I thought I was getting such a great deal. Of course not only did I buy the 42” TV but I also got a new DVD player and surround sound speakers! These items were optional-products but I felt as if they were captive products! In reality I bet that Samsung never thought their sales on the 46" TV would be higher than those on the 42"TV. I am sure they knew all along that by having such a drastic price difference with only the few inches difference they'd lure shoppers right in!
The book review definitely caught my interest. I already believed that consumers, myself included, are gullible. What I did not ever realize is that there are price games I would have never considered. Anchoring is a price strategy that the vast majority of consumers having never taken a marketing, or other business course, would not be aware of at all. Poundstone outlined the price anchoring of Ralph Lauren handbags and this is something that I have seen many times without realizing the strategy behind it.
ReplyDeleteIn the case of luxury or designer goods I would have always believed that the higher or seemingly outrageously priced items were simply for someone in a higher class than me with more disposable income. Since I still wanted the designer brand products I was just buying from the lines that were lower priced. I would have never realized that the higher priced lines may not even have large forcasted sales but that their sole purpose may be to legitimize the price I am paying for the lower priced goods. This has happened to me while shopping at Anthropologie. I had wondered while in the store why some items I picked up were nearly double the price of similar items and ultimately decided it must be the brand or materials. Now after reading the review and looking back I see that this store is certainly using anchoring strategies and I will recognize this pricing strategy in the future.
The book review sounded really interesting to me, and a lot of what William Poundstone was saying was 100 percent true. Although we do not like to admit it, he is right in that people think they have the best deals when they see a sale item or an item that has been marked down by the slightest bit. But instead, were just being tricked by the store to buy another product. When I go shopping, I always do this, and I’m just noticing now that it might not always be the best deal. Poundstone made a good point that people do purchase items when they compare them to another price. I know that when I see an item that was originally 100 and has been marked down to 70, I think it’s such a great deal, but Poundstone points out that it’s not and it’s just a trick. After reading this article it makes me realize how easily persuaded we all can be when it comes to shopping because in reality we do not know what a specific product should actually cost.
ReplyDeleteFor me it’s very hard to think of one time I’ve experienced anchoring because now that I notice it, there has been so many different times that I see the original price of an item and compare it to the price it is now. When I do this I say to myself wow look at how expensive this was, and now it’s a pretty decent price to its original value. For example, I always do this with shoes. I do this with Steve Madden, who doesn’t have the cheapest shoes, but they always put the original price of the shoe before it went on sale. For example I bought a pair of boots that were originally $200 for $130. To me that sounded like a great deal because it was pretty much half off. But when I think about it now, $130 is a lot of money to spend on a pair of shoes considering I’m a broke college student. I fell for the anchoring strategy of the “compare to.” Sadly, I have done this at least three other times with expensive shoes that I think are a great deal, but when I think about it, I can buy two pairs of shoes at a department store for one pair of Steve Madden shoes. Now I think that next time I walk into a Steve Madden shoe store, I’m not going to fall for the “compare to” and try to walk out without a pair of shoes.
After reading the book review recently published in Business Week, I am now aware how businesses sell items that I believe are highly priced. They come out with an item that they expect to fail and price it ridiculously high so it makes the others look cheap (not necessarily cheap, but cheaper). As a consumer I have to admit that I have been a victim of “anchoring” many times. Businesses trick all of their consumers by doing this, and it works! People who consider themselves bargain shoppers are vulnerable to businesses’ tricks such as this. They get sucked right into stores that have discounts and sales. Anchoring is a strategy that as Poundstone says "makes everything else look affordable by comparison." People are always caught saying “I saved so much money today. This was so much cheaper than their other items.” These people are victims of anchoring as well. The sad thing is most are unaware of their stubbornness.
ReplyDeleteI have encountered anchoring while shopping many times in my life, as has everyone else in this world. Unfortunately, before today I was unaware of this. When I bought my ATV I thought I did a good job of bargain shopping. There were other ATV’s that were thousands of dollars more expensive. So when I bought mine I thought I was getting a good deal. Well come to find out, those really expensive ATV’s never sold (I know this because I know the owner of the shop). Those expensive ATV’s were never meant to sell, they were simply marketed to sell other ATVs that people would think were cheaper when in reality they probably are all worth the same amount. Now that I am more aware of this type of psychological pricing strategy I will definitely change my style of shopping.
After reading the review on Poundstone's Priceless: The Myth of Fair Value (and how I take advantage of it), I was not to shocked to hear about the way people perceived "great deals". As Poundstone cited, "the human brain evolved for success in a world blessedly free of teaser rates, rebate coupons, and late-night infomercials". This means that when people see a sale and a rebate after purchase coupon, they get the idea that they are saving money because that store is offering something the other one isn't. Consumers believe that that sale or rebate offer is the best deal for them and therefore trust that company because they think that they are trying to save them the most money.
ReplyDeleteA time I have encountered anchoring while I was shopping was when I was shopping at one of my favorite stores, The Home Depot. They have a guarantee that they have the lowest prices and if you find a product somewhere else for less, they will match that product price and beat it by 10%. They call it the meet and beat. So I went there looking for a refrigerator for college and found one I really liked but I talked to my friend and he said he had gotten the same exact one at Lowe's but for $25 less. Since The Home Depot is one of my favorite stores, I decided to do my business there because of the great guarantee they offered. Not only did I get the fridge I wanted, but I got it for 10% lower than anywhere else! I couldn't beat it.
I found this review and the concepts that William Poundstone discusses in his book to be very true. Most people wouldn't want to admit that they have fallen for pricing tricks such as anchoring. I think this is something that we all have done before. As humans, we tend to judge the value of things off of things that they are compared to. For example, as soon as you get a test or paper back, you always turn to your friend and ask what they got. This is how we justify our grade. If you got an 70 on a test you might not be happy but if you find out that everyone else got 50's your grade would suddenly seem much better. This concept applies to us when we shop. I've done this many times without even noticing it. This has shown me that I need to stop and think about the actual value of the object and ask myself if I really need a pair of flip flops for $50.
ReplyDeleteOne specific time when I had fallen victim to anchoring was when I was purchasing jeans. The pair of jeans I wanted to buy were $80. I thought that this was too expensive for a simple pair of jeans until I saw the ones hanging up next to them that were priced at $100. Because I saw the more expensive jeans, I justified my purchase of the $80 jeans by telling myself that it was a good deal and that at least I wasn't spending $100 on a pair of jeans. I realize now that $80 is a lot of money to spend on one pair of jeans, especially when I could've bought 2 pairs for the same price at a different store. These pricing tricks are definitely sneaky and I didn't even realize I was falling for them.
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ReplyDeleteWilliam Poundstone is dead on in his explanations of how consumers are exploited every day. I never thought of the use of "anchoring" by stores to get me to buy their products. Not only that I consider myself a very smart shopper, I analyze the entire market for products that are cheaper or give me more value, but in the end I'm still gullible for a product that is a mere fraction of that company's higher end model. His examples about the breadmaker and the Ralph Lauren bag completely backed up his opinions. I am now very interested in buying that book because of the consumer advice that's throughout it. I feel like the $26.99 for the book would save me hundreds with the advice that's inside it. I also really liked his design on the cover of the book with the price tag to make it seem cheaper, very brilliant.
ReplyDeleteI was in Cozumel, Mexico on a cruise a few years ago and everything was overpriced, from the food to the souvenirs. However in one jewelry store, (filled with knock off jewelry), the prices were upwards of a thousand dollars for some stuff. So me and my brother go to look at some of the jewelry for our girlfriends and after a while of looking and deciding we didn't have enough, the jeweler blurts out, "500 dollars!". So we stopped and looked some more but still decided it was too much and again he blurted out a lesser number. Eventually me and my brother settled on $50 dollars each for nice earrings and a gorgeous necklace. However we came to realize that even after talking the jeweler down $950 dollars, we were still scammed as the fake jewelry only cost him about $10 dollars each. The jeweler used anchoring to make the value seem unbelievably higher than it really was.
After reading the review it is kind of scary how true William Poundstone's view on today's market is.Being involved with a lot of buying through work never once did I look at pricing the way William Poundstone explains it. It all makes sense when you really start to break it down. Going out there you really think your getting a great deal, but from Willaim's stand point you are just another shopper stuck in the trap. I totally agree with what he is saying, and I think everyone has once been caught in this trap. I also feel that companies do these kinds of things on purpose just to push other products. These high priced anchor products are out there to make other products look like a steal. Anchoring seems as though it is a great way to move products because everyone has been tricked by it so far.
ReplyDeleteOwning a business with my dad we do a lot of buying and selling of goods. We try and search around for best prices on products, however, we are still looking for the best quality. one specific time I remember price anchoring was when we were in the process of buying some new equipment. We were buying a new mower for the season and we needed to make sure we got the right one. The dealership we were at had two different kinds of mowers. One was Dixie Chopper, that machine was priced about 3,000 dollars over the Hustler equipment the guy also had. So needless to say we purchased the Hustler equipment because it was almost the same quality as the Dixie Chopper. The following year we went back to the same dealership and the Dixie Chopper franchise was gone. We asked the guy what happened and he said that none of those expensive machines would sell. After reading this article that makes me think that those machines were there just to make the Hustler equipment look cheaper so more would sell.
After reading William Poundstone’s article, “Why the Price is Rarely Right”, I definitely agree with his main point which said that consumers are gullible when it comes to price. For the most part, consumers have little knowledge about prices for products. This leads to them buying products which are probably way overpriced. For the business selling the product, they are definitely happy with consumers being gullible because it creates more profits for them. The pricing strategy of anchoring adds to the idea of consumers being gullible because of the way the products are being priced. I think consumers need to be made more aware with the pricing of products rather than just purchasing the product because they believe it is a good deal.
ReplyDeleteWhen I purchased my cell phone I experienced anchoring. When I saw the phone that I wanted it was a bit expensive, but I was pretty sure that was the phone I really wanted. When I saw a similar model to the phone I was getting that was priced about $100 more than the phone I wanted, I justified my purchasing thinking I was getting a great bargain. The more expensive more looked just like the less expensive one, but just had features that I didn't necessarily need. I believe seeing the more expensive phone in comparison to the phone I wanted made my purchasing decision easier and justified.
After reading Priceless:The Myth of Fair Value(and How to Take Advantage of It)by William Poundstone I relized that I was not suprised by the consept that many consumers are culeless of the true value of many products. As it is said marketers are banking on the fact that consumers are vulnerable and will think they are recieveing a deal. I know that eventhough I have known this concept for years I still fall for anchoring. This is because I like to convince myself I am getting the best price for the product I desire. For consumers to be less gullible it is important to understand what a product should really cost.
ReplyDeleteUnfortunately I fall for anchoring all the time when I shop. Last summer for instence I really wanted this plaid billabong bikini which cost $60 at PacSun. This is definately more than I wanted to spend on a new suit but I really wanted to have it. So I tried to look around to find the best deal, this is where anchoring caught me. I ended up buying the bathing suit because the online store was having a discount. The suit cost around $40 for the set. I know this is way more than a swimsuit should cost but I convinced myself it was a good deal because it normally costs more. This is how anchoring ensnared me.
In the review of William Poundstone's book,there are several interesting points that jump out at me. Probably the most obvious fact is that the process of pricing is more psychological than practical. In the article workds like "desires and the object of our desires",worth,and value. These are all subjective concepts, because what is of worth and value to me, may not be to someone else and visa versa. So a seller when establishing a price already has in mind his target market, and from there a price or reference point is made, so now the consumer, for instance who wants to purchase a Coach purse, has a pretty good idea before they even walk in the store what they will have to pay to obtain this bag. So, imagine the surprise when they find a similar bag for perhaps hundreds less!
ReplyDeleteI see examples of this at stores like Marshalls, Stein Mart, or TJ Maxx. When ever you look at the price tag, you can't help but look at the compare at price, the bigger the "discount" the bigger the deal you think you are getting.
I have fallen victim to anchoring at both levels. There have been times when I have wanted a particular item and after comparing prices I have chosen the lesser priced item because I think I am getting a deal. On the other hand, if I have extra money and have decided that I deserve something special I may actually pay for the higher priced item because I have justified in my mind that I deserve it! More likely I am just spending more money instead of getting higher quality!
Again, It's all in the mind!
After reading the review of William Proudstone's book I was surprised as to how true this is. It is true that people do shop by comparison. It is a way people can get a feel for how much something does cost vs a similar product. If they are unsure of the true cost this is all they have to go on without going into research on the item they wish to purchase. It is something that we as humans do. We can view the market and see what is expensive and then try to use the most expensive item to convince us that another item is a good buy because it is not as expensive as the other item we were just looking at.
ReplyDeleteThis happens alot actually. Clothing is probably were stores can get you without much of an effort. I mean I usually try and get shirts that are on sale at American Eagle and similar stores but, when I look at the items I am buying they are still expensive than say going to Sears and picking up shirts their. In the end I am buying a shirt made from the same material, but by comparing my purchase to that of an expensive shirt the lesser seems more acceptable.
After reading the book review on Priceless: The Myth of Fair Value (and How to Take Advantage of It) by William Poundstone, I thought a lot of what Poundstone had to say was very true. Many people might think they are getting a good deal on their purchases, when in reality they are victims to pricing tricks such as anchoring. I am guilty of doing this myself. Whenever I go shopping I always try and justify my purchases by saying what a good deal I got. I look at the discounted price of what I paid for an item compared to its original price, or compared to the prices of other items. This makes me think that I am getting a good deal when really I am falling in to their pricing scams.
ReplyDeleteOne example of a time when I had fallen into the scam of anchoring was when I bought a North Face fleece jacket which was $100. It seemed kind of pricy at first, then I compared it to other North Face fleece jackets near it, some of them costing around $165. I justified spending $100 dollars on a fleece jacket because I compared it to other similar North Face fleece jackets that were far more expensive. I thought in my head that spending $100 was a far better deal than spending $165. I now realize that spending $100 is still probably way too much for what I bought. I probably could have bought a fleece jacket from another store or company that was far less expensive and probably the same quality. I thought I was getting a great deal at the time, but now I’m realizing that I could have probably bought several jackets from another brand for the same amount of money that I spent on one.
After reading this article I find it true that people do fall for the pricing of items. People assume they are getting a better deal because they compare the price of an item with its clearance price or sale price and think they are getting a good deal. When really we dont know how much that item should cost. Everyone has been victiimized by the prices of an item, no matter what it could be. You go for items that are on sale because you think you are getting a bargain. I know I have fallen for this trap before. Going shopping I try to find the best deals I can find.
ReplyDeleteOff the top of my head I cant come up with a time when I have encountered anchoring. Considering my prom dress cost about $400 and I only paid a grand total of $25. I know there have been times when I have encountered anchoring its just hard to come up with a specific moment. When I go shopping for clothes I am sure I come across anchoring. Whether it be from buying jeans or a shirt to buying an ipod or something bigger. These could be anchoring because I dont know what the actual price to produce the product is, but I know what the retail price is. And thats what we all compare our shopping too. Is how much am I going to save if I buy this item on sale from the prices we know.
I list car parts on eBay as a part time job and I actually created my own anchor before I even learned the term from this article. There are different segments of quality for every part, the aftermarket parts are cheaper than the original equipment manufactured part because they are lesser quality. When listing the aftermarket parts, I created a "quality variance info" column on the listing to let the consumer know that it is not the best part they can buy, but for the money it is a good idea. Compare an original manufacturer listing here:
ReplyDeletehttp://cgi.ebay.com/ebaymotors/Chevy-k2500-H2-07-06-05-04-03-Front-Hub-unit-Timken-OE_W0QQcmdZViewItemQQhashZitem439d9c5af6QQitemZ290407078646QQptZMotorsQ5fCarQ5fTruckQ5fPartsQ5fAccessories#ht_2296wt_855
to an aftermarket part listing here:
http://cgi.ebay.com/ebaymotors/Pontiac-Grand-Prix-01-00-99-98-Front-Wheel-Hub-Bearing_W0QQcmdZViewItemQQhashZitem439e4ab7d5QQitemZ290418505685QQptZOtherQ5fVehicleQ5fParts#ht_3049wt_807
The aftermarket parts sell at a considerably higher volume, I would attribute a great deal of this to the information of quality and price variance I created on the listings. Especially since eBay customers tend to be looking for the best deal, not usually the best quality or most expensive.
I often do a similar cost benefit analysis in my head when deciding whether or not to buy the best of a certain product, or find the best value. My VALS survey results will tell you that I'm and Innovator and an Experiencer, explaining why I usually chose the most expensive one. I let the price of something dictate my impression of its quality for most things I buy.
I think this article accurately depicts the average shopper when it comes pricing. When most people shop that have an idea of the price of the product they are looking for, usually because when they shopped previously, they might have gotten prices from different places. When they find the product that is cheaper than what they expected, they buy it. I think this is a great business strategy because consumers will pretty much buy anything if they believe they are getting a great sale, or if they are getting the object for less than its value.
ReplyDeleteAfter reading the article I realize that I have been a victim of price anchoring many times. One recent example was getting my vehicle fixed. When the mechanic ran the test, he told me that it would cost around 1300 to completely fix my car. I told him that was a little much so he gave me a much cheaper alternative to repair my vehicle. This is an example of anchoring because the mechanic might have purposely gave me the more expensive choice so I can believe it is a very expensive job to do, so that when he told me the second option, I would think I'm getting a good deal.
The article is very clever and really explains the concept of anchoring right on the money. The article touches on how the company can have a high price and still have it considered a steal. With the example for Williams-Sonomia bread maker, the company knew the really expensive one was not going to sell well but the cheaper one did very well even though a $279 bread maker is expensive. It's all psychological because we are so into the idea of deals, that if we find any sort of deal we jump on the chance. For example, Black Friday is such a large revenue day for stores and mall because of all the deals.
ReplyDeleteMy example of anchoring is not going to be me buying a good sale. It's me experiencing others. I work at American Eagle and watch others think they are finding themselves good deals. For example, when a jacket that is originally priced at $129.00 goes onto sale for $79.95 people believe that they are getting a good deal while $80 for a jacket is still quite expensive.
I know we spoke earlier about my having difficulties posting blogs and you showed me how to make sure a post actually goes up but I can not get it to work. I keep trying but no matter what I do it will not work for me. I have had a friend that has more experience with blogs try it and he cannot figure it out either. It must be something weird with my laptop. I am going to attach my blog response to show I have had it completed before the deadline. I will bring my laptop to our next class and hopefully we can get it sorted out.
ReplyDelete