How People Are Predictably Irrational Summary

First of all let me explain why people like to buy a items/goods those are higher in price’s. Those who are purchasing the target brand items are making a selection, spending only a few seconds before moving on. This leads me to suggest that consumers are not paying much attention to prices. On the other hand, we know from scanner data that consumers respond a great deal to price changes. It appears that rather than looking at prices per see on every shopping occasion, consumers may check prices only periodically (say, every ten shopping times) or rely on cues in the environment—e.g., buy whatever brand is on sale. Other, thing which I realized is that different people live in a different

Therefore, Chatime using psychological pricing strategy which is set those ending with nines or other odd numbers on all beverages to stimulate consumer demand and sometimes these are referred to as “just below” prices as they are often “just below” an even price such as RM1.99 vs RM2.00. For example, Chatime instead of charge RM6 for a milk tea beverage you might charge RM5.99 per beverage. Some consumers associate the price closer to RM5 than RM6 even though it is only one cent less and they may subconsciously be partially ignored. The theory that drives this is that lower pricing such as this institutes greater demand than if consumers were perfectly rational. Psychological pricing is one cause of price points to get more customers and the psychological pricing method helps Chatime build an impression of the brand without making significant changes to the product. Simply revising the pricing structure can make the product seem like the best on the market compare with other competitors or elevate the Chatime’s milk tea to the top of the available options. Although the price of Chatime’s milk tea is lower than competitors, customers are those who important of quality and price attributes will buy the products too. It is because customers are relatively insensitive to the product price. Customers willing to pay more for own

What drives bids up in an auction is the irrational behavior of the participants. The emotional desire to win drives the bids high, and the fear of losing drives them higher.

Such a bold position requires a new approach to marketing.  The authors present a thesis of the Influence Mix, which introduces that there are three influences on consumer decision-making — the individual’s prior preferences, beliefs and experiences (P), other people and information services in the form of reviews and

As most books pertain to a single cultural group due to its themes, development and context, Dan Ariely’s “Predictably Irrational” is universal in its message to better explain the reasoning behind day-to-day behavior of people. It addresses all people who have ever made any decision of any kind. Because Ariely does not narrow the parameters of any test for his research, the hypotheses, concepts and conclusions are truly universal to all people on earth. The theme behind this book is simply the reason behind any choice to any decision. Due to this theme the author can only have a singular message to the entirety of his book.

that a product possesses these attributes. A larger attitude towards a product increases the probability of

Price is an important characteristic, which makes customer’s opinion about the place. The highest might scare a lot of customers, while low ones might

Dan Ariely is set out to disprove the common assumption in conventional economics that a consumer behaves rationally when he/she makes economic decisions, in his book, Predictably Irrational. With the help of thought-provoking, lucid and fun experiments, he discovers the irrational side of consumer behaviour. According to Ariely, we generally think that most of the decisions we make are well reasoned and smart but this is unfortunately not the case. We constantly overpay, procrastinate, underrate, overvalue, and fall for marketing tactics that we think we are too smart to be deceived by. But our irrational behavior is so consistent that it is predictable. The book deals with behavioral economics, a new field that applies insights of psychology

The automobile may cost $100,000, and if some customers perceive the particular price to be reasonable price for the automobile, they will purchase it based on their perception and not because of the fact that marketers set the price of the automobile as $100,000. Same customer may feel that $30,000 for different automobile is too expensive even though he or she felt that $100,000 for the automobile was reasonable for them because they perceive each products differently. Kotler and Keller (2012) also mentioned that customer are less sensitive to price of the product when they believe that 1) there are not too many similar products in the market that can replace the quality of the given product; 2) the high price of the product can be justified; 3) stated price of the product is just a small cost of obtaining unique product for the life time.

Behavioural economists and psychologist alike have long experimented with framing, the way in which an offer is put in context matters in a world in which people are prone to bias. Framings role in marketing is perhaps best explained through prospect theory, a term described by Kahnemen. Groups were given a choice of either getting $900 for sure or a 90% chance of getting $1000. The majority chose the safer option of $900 since people are generally risk averse. The second problem was a choice between losing $900 or a 90% chance of losing $1000, in this situation the majority took the risk. The lesson here as Kahnemen describes is that “losses loom larger than gains”. Similar experiments by () have shown that people will only risk losing money if they have an equal chance of gaining twice that amount. So, when it comes to the discussed anchor price firms should instead set retail prices which include all extras or perhaps a range of prices rather than a single number for a vehicle. This means that consumers will have that higher number or range as an anchor by which they negotiate with. If salesmen fail to convince the customer to buy a certain extra they can revert to the default price. This makes the customer feel as if they are gaining more as they are giving up less than the retail price.

The more additional product information that are presented, the weaker COO effects on consumers’ product evaluations. If consumers have a source country of the product as a single cue, all perceptions and characteristics about the product can only be inferred on the basis of COO image (Han, 1989). However, if COO together with other extrinsic cues such as price, brand are presented, a product’s COO effect on consumer purchasing decisions will be diluted since more marketing-stimulus as reliable information input are conducted into consumers’ information processing (Elliot and Cameron, 1994; Jaffe & Nebenzahl, 2001; Kalicharan, 2014). The COO may be an important element in the perceptions consumers have of products and services especially where little other information is known.

It is important for marketers to understand how product pricing impacts product demand. Determining whether your target market is sensitive or insensitive to price changes influences price setting strategies. Tanner and Raymond (2014) explain that “price elasticity, or people’s sensitivity to

"The set of expectations, memories, stories and relationships that, taken together, account for a consumers decision to choose one product over another..." - Seth Godin

Consumer behaviour is always a crucial part for business firm development. International firms invest myriad of money to understand their customers, in order to satisfy the need and wants of customers. For example, IKEA, the world’s leading home furnishing company, spent a total of £30 million in 2012. It aims to improve the shopping experience for customers, including the bedroom showroom redesign. It is crystal clear that consumer behaviour plays a vital part in the success or failure of a product. Meanwhile, consumer behaviour is a process which consumers go through when they make purchases and it involves numerous factors that influence their decisions. As a consumer, we make decisions every day. Some are far-reaching while others may be trivial and inconsequential. However, we all know that human beings are irrational, our preferences often deviate from rationality in the standard economics. We often make the wrong decision and it may bring unfavourable consequences along with negative side effects. There are countless reasons for making irrational decisions. One of the most astonishing arguments I recently discovered is that people feel the pain of loss more acutely than they feel the pleasure of gain. Why this happened ? For instance, when we buy a sofa from IKEA, they often provide a 30 days money-back guarantee. However, even if we noticed that the sofa has imperfections, we seldom go back and return. Why ? It is because we consider returning the sofa as a loss. A

What comes after the thinking that takes place in the black box are the buyer’s responses. These refer to the buying attitudes and preference of the person. Also, the purchase behavior is an outcome. The purchase behavior explains what the consumer buys, where, when, and in what quantities. Finally, the relationship behavior towards brands and companies is a result of the things going on in the buyer’s black box. Thus, the black box is the central element of the consumer buying behavior. (Kotler and Armstrong,