A few random tidbits are strangely connected:
The cost of college, the cost of Herman Miller furniture, and the price I charge on Craigslist.
I was listening to NPR today, the show called Planet Money (see Footnote #1). Episode 370 from last year is called "The Real Price of College." For any of you who have not paid college tuition in the last 10 years, the price has doubled over that time period, and the trend continues. My business school charged 1300/credit in 2011. While that is quite expensive, it is not the most expensive program out there. Apparently colleges are increasing prices dramatically because we, the American college student target audience, think that the more expensive the program is, the better it is. "Please take my money."
What do you think, are you more satisfied if you pay more? If you are curious, research the Chivas Regal Effect. (See footnote #2). In summary, when price is the main criterion of product comparison, people think that higher price is correlated to higher value. (I did not add a pic for Chivas Regal intentionally). Even if I drank alcohol, I would not put expensive whiskey on my blog, it seems like posing.
Anecdotal evidence: Three years ago I had a 50" TV that I could not give away. As soon as I listed it for sale at $100 instead of free, I had a buyer that offered me $75.00 "Please take my money." Believe it or not, the buyer in this story would feel more satisfied if I bargained the price up to $80, thus leading him to believe that he did not leave any money on the table. If I quickly accept his offer of $75, he will think that he overpaid. How can I argue with the Chivas Regal effect when I have seen it happen in my own experience?
Lastly, office furniture. Herman Miller is a premium brand for office furniture, and it is well known that they design and produce premium products. If you google Aeron Chair you will see this:
According to the site for Madison Seating, the list price for the chair is $930.00, but you can have it for the low, low price of 589.99. When I see this I start to think that the typical person going out to buy something can't be fooled by this obvious pricing hooey, right? MSRP is a joke, right? Nonetheless, when I shop at Marshall's and see that the shirt I am buying costs twice as much at a department store I feel better about purchase. "Please take my money."
Footnote #1
The cost of college, the cost of Herman Miller furniture, and the price I charge on Craigslist.
I was listening to NPR today, the show called Planet Money (see Footnote #1). Episode 370 from last year is called "The Real Price of College." For any of you who have not paid college tuition in the last 10 years, the price has doubled over that time period, and the trend continues. My business school charged 1300/credit in 2011. While that is quite expensive, it is not the most expensive program out there. Apparently colleges are increasing prices dramatically because we, the American college student target audience, think that the more expensive the program is, the better it is. "Please take my money."
What do you think, are you more satisfied if you pay more? If you are curious, research the Chivas Regal Effect. (See footnote #2). In summary, when price is the main criterion of product comparison, people think that higher price is correlated to higher value. (I did not add a pic for Chivas Regal intentionally). Even if I drank alcohol, I would not put expensive whiskey on my blog, it seems like posing.
Lastly, office furniture. Herman Miller is a premium brand for office furniture, and it is well known that they design and produce premium products. If you google Aeron Chair you will see this:
Footnote #1
Footnote #2 Effects of Competitive Context and of Additional Information on Price Sensitivity
Journal of Marketing Research
Vol. 23, No. 3 (Aug., 1986), pp. 250-260
Published by: American Marketing Association
Article Stable URL:http://www.jstor.org/stable/3151483
Vol. 23, No. 3 (Aug., 1986), pp. 250-260
Published by: American Marketing Association
Article Stable URL:http://www.jstor.org/stable/3151483
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