Monday, September 10, 2007

The Psychology of Discount Pricing

Another article on discounting that provides even more enlightenment on the subject. Retailers like to discount using dollar off promotions. They advertise sales like "10 for $10" because they want the savings to be memorable! If they advertised 15% off, I may never take the time to do the math and know exactly what I paid for the item.

The specific dollar off discount strategy benefits "low price" retailers because they get to reinforce their claim of having low prices and great deals. On the contrary, this is bad for the brand because consumers will easily remember what they paid for the item the last time they shopped. Then, when it isn't on sale, they may think that it isn't worth paying full price.

This study claims that when the percentage off discount strategy is used, consumers are more likely to accept the product at full price the next time they shop.

Not earth shattering but interesting and another tip for any small business marketer.

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