Friday, 12 April 2013

The price of difference

Price is undeniably an important part of consumer decisions.  However it can influence our decisions in ways we might not expect.  It seems rational to suppose that items within a category which are priced the same would be perceived as very similar.  However a paper by Kim et al. [1] published in Psychological Science suggests that small differences in prices, rather than identical pricing, may actually heighten ratings of similarity and ultimately lead to easier decisions and fewer deferred purchases.

In Study 4, 78 participants were faced with a simple choice:

  • Buy gum A
  • Buy gum B
  • Buy neither A nor B (defer purchasing)

Remarkably 77% chose to buy one of the gums when the prices differed slightly (₩20 ~ 1p), whereas only 46% chose to buy a gum when the prices were identical.

Of course consumption decisions are rarely made between only two options and many other considerations are factored into real-world decisions.  Nonetheless, it is interesting to see that even a small pricing difference can actually have large effects on the decision to consume or defer.

Dan Siddle
Research Innovation Specialist

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