Do you fall for $ 2.99...?
Onion - Rs.14.95/kg; Tomato - Rs. 9.95/kg; Kashmir Apple - Rs. 99.95/kg. When we enter a Mall or a Super Market or any grocery mart for that matter, we can see the above type of pricing for almost all products. When you buy just a kg of onion and pay Rs. 15, are you going to get back Rs. 05 (5 paise) as the balance change? NO. Then why price it as Rs. 14.95 instead of the honest price of Rs. 15/kg? This is what is universally known as 'psychological pricing'. This is designed to play on your emotion rather than rational thinking. It aims to make you (the customer) believe that the actual pricing is lower than what you rationally think it is! To attract the customer.
Today, this type of pricing is prevalent in most of the products across all product-mix. Though most of us realize the fact, we still fall for it. It is proved by a statistical study. That is why traders still continue to do the pricing thus. Our mind perceives the 'first left digit' as the price point. For example, when a product is priced at $ 2.99 rather than $ 3, we (our mind) perceive and associate the price with 2 and not 3. But in the actual purchase of the product, we will be paying $ 3 only. But the very fact that the pricing done attracts us in the first instance, is what the trader needs. It makes us decide in favor of buying the product. It plays on our psyche.
This 'pricing strategy' has been practiced for more than a century. It was popularized by a footwear manufacturer. And this type of pricing is also called '.... price'. No footwear in the shop will have a round figure for its price! We can commonly see books priced @ $ 6.99. Even in real estate marketing it is widely practiced. Instead of saying Rs. 3,000 per sq. ft., it is advertised as Rs. 2,999 per sq. ft. Our mind thinks the price in terms of Rs. 2,000 rather than the real price of Rs. 3,000. Even high-end car dealers adopt this pricing strategy.
A recent news item caught my attention : Indian government has launched a new portal to fast track loan sanctions for micro, small and medium enterprises, vide which loans up to Rs. 1 crore (Ten million) will be approved within 59 minutes, without entrepreneurs having to visit the bank. Why can’t they simply say within the day, the loan will be sanctioned? What is the big ‘fuss’ about 59 minutes? Especially in the present scenario, where there are so much of NPA loans….! The documents have to be verified properly, which needs quality time. The bank has to verify and satisfy with the veracity of genuineness of the loan applicant. I do not know how in practical situations, this scheme works!
Are we so gullible? Yes, the study says so! May be we should use our head more (rather than our mind) in such situations. When the population is getting more and more educated and they can rationally think, this should change over a period, in my opinion. But most of the purchasing decisions are made by 'emotional bent of mind' rather than 'rational thinking'. Hence our mind will prevail over our head in most of the shopping situations.
Today, this type of pricing is prevalent in most of the products across all product-mix. Though most of us realize the fact, we still fall for it. It is proved by a statistical study. That is why traders still continue to do the pricing thus. Our mind perceives the 'first left digit' as the price point. For example, when a product is priced at $ 2.99 rather than $ 3, we (our mind) perceive and associate the price with 2 and not 3. But in the actual purchase of the product, we will be paying $ 3 only. But the very fact that the pricing done attracts us in the first instance, is what the trader needs. It makes us decide in favor of buying the product. It plays on our psyche.
This 'pricing strategy' has been practiced for more than a century. It was popularized by a footwear manufacturer. And this type of pricing is also called '.... price'. No footwear in the shop will have a round figure for its price! We can commonly see books priced @ $ 6.99. Even in real estate marketing it is widely practiced. Instead of saying Rs. 3,000 per sq. ft., it is advertised as Rs. 2,999 per sq. ft. Our mind thinks the price in terms of Rs. 2,000 rather than the real price of Rs. 3,000. Even high-end car dealers adopt this pricing strategy.
A recent news item caught my attention : Indian government has launched a new portal to fast track loan sanctions for micro, small and medium enterprises, vide which loans up to Rs. 1 crore (Ten million) will be approved within 59 minutes, without entrepreneurs having to visit the bank. Why can’t they simply say within the day, the loan will be sanctioned? What is the big ‘fuss’ about 59 minutes? Especially in the present scenario, where there are so much of NPA loans….! The documents have to be verified properly, which needs quality time. The bank has to verify and satisfy with the veracity of genuineness of the loan applicant. I do not know how in practical situations, this scheme works!
Are we so gullible? Yes, the study says so! May be we should use our head more (rather than our mind) in such situations. When the population is getting more and more educated and they can rationally think, this should change over a period, in my opinion. But most of the purchasing decisions are made by 'emotional bent of mind' rather than 'rational thinking'. Hence our mind will prevail over our head in most of the shopping situations.
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